The EU General Court provides guidance on own name, unfair advantage and late evidence in trade mark proceedings

Author: Kirsten Toft (Virtuoso Legal, Leeds, UK)

Kenzo Tsujimoto v OHIM, Case T-393/12, 22 January 2015 (unreported)

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv085, first published online: May 15, 2015

Upholding a decision of OHIM's Board of Appeal, the EU General Court has found that Mr Tsujimoto's wish to register his first name, Kenzo, as a Community trade mark (CTM) was ‘without due cause’ and therefore took unfair advantage of the eponymous mark of luxury fashion brand Kenzo within the meaning of Article 8(5) of the Community Trade Mark Regulation 207/2009.

Legal context

Kenzo Tsujimoto, owner of US-based Napa Valley winery Kenzo Estate (makers of, among others, the Asatsuyu Sauvignon Blanc), applied in November 2009 to register the word mark KENZO as a Community trade mark (CTM) for ‘Wine; alcoholic beverages of fruit; western liquors (in general)’ in class 33. In June 2010, luxury French fashion brand Kenzo, founded by the notable Japanese designer Kenzo Takada and owned by the LVMH luxury fashion conglomerate, opposed the application on the basis of Article 8(5) of the Community Trade Mark Regulation 207/2009 (‘the Regulation’), citing its earlier Community word mark KENZO covering cosmetics in class 3, leather goods in class 18 and clothing in class 25.

The Office for Harmonisation in the Internal Market's (OHIM's) Opposition Division rejected the opposition, but that decision was reversed by the Second Board of Appeal. Mr Tsujimoto appealed to the General Court.

Facts

Mr Tsujimoto argued that, in failing to address his argument concerning his wish to use his forename, Kenzo, for a certain range of goods, the Board of Appeal had breached its duty to provide a statement of reasons under Article 75 of the Regulation. The General Court disagreed. Although Article 75 required OHIM to state reasons on which its decisions were based, there was no obligation ‘to take a position on all the arguments relied on by the parties before them’, and presenting ‘the facts and legal considerations having decisive importance in the context of the decision’ was sufficient (see Matratzen Concord v OHIM—Barranco Schnitzler, T-351/08, ECLI:EU:T:2010:263). Accordingly, the Board of Appeal's response that ‘no due cause [had] been demonstrated’, albeit short, was nevertheless adequate.

Observing that the Regulation did not confer an unconditional right to register a forename or a surname (see Prinz von Hannover v OHIM, T-397/09, ECLI:EU:T:2011:246), the court concluded that there was no due cause under Article 8(5) based on the fact that Mr Tsujimoto's first name was Kenzo.

Mr Tsujimoto also argued that the Board of Appeal had infringed Article 76(2) of the Regulation by considering evidence produced by Kenzo after 18 May 2012, the Opposition Division's deadline. Once again the General Court disagreed. The court stated that Article 76(2) had to be read in the light of Rule 50(1) of the Implementing Regulation (2868/95) and not, as Mr Tsujimoto contended, Rule 20(1). Following Rintisch (C-120/12 P, ECLI:EU:C:2013:638), the court clarified that the third subparagraph of Rule 50(1) expressly provided that, when examining an appeal of an Opposition Division decision, the Board of Appeal enjoyed the discretion conferred under Article 76(2) to decide whether it was appropriate to consider ‘additional or supplementary facts and evidence not submitted within the periods prescribed or specified by the Opposition Division’. The court also clarified that, as in Rintisch, when OHIM adjudicated in the context of opposition proceedings, accepting late factual or evidentiary submissions was likely to be justified where OHIM considered, first, that the late submission was, on the face of it, ‘genuinely relevant to the outcome’ and, secondly, that ‘the stage of the proceedings at which that late submission takes place and the circumstances surrounding it do not argue against such matters from being taken into account’.

In the court's view, Kenzo's late evidence was genuinely relevant. The court observed that the Board of Appeal had found that this evidence, even though it was submitted by Kenzo primarily to establish use of its earlier mark, provided supplementary evidence of that mark's reputation as use of a trade mark is a relevant factor in assessing reputation, and also confirmed the evidence on reputation submitted by Kenzo before the deadline. The court also found that, among other things, the evidence in question had been submitted before the Opposition Division reached its decision and before proceedings were begun in the Board of Appeal, meaning that the evidence was not submitted at a late stage in the proceedings as Mr Tsujimoto contended. All in all, the Board of Appeal had not infringed Article 76(2) by taking into account the evidence submitted after the deadline.

As regards Article 8(5), the court found that, first, Kenzo's earlier trade mark had a reputation based on Kenzo's evidence submitted before and, as just held, after the deadline. In particular, the evidence submitted ahead of the deadline included 400 pages on Kenzo's global advertising campaigns for its mark, covering several EU States, between 2000 and 2010, and a monograph on Kenzo Takada which, as Kenzo pointed out, was in the same series of monographs dedicated to other legendary fashion figures such as Chanel, Versace and Valentino.

Secondly, contrary to Mr Tsujimoto's view, there was a risk of an unfair advantage. Both of the marks were identical, and the earlier trade mark was inherently distinctive and had a substantial reputation. The court stated that the Board had correctly inferred that, since Kenzo's goods were at ‘the high end of the market’ for a consumer with ‘more sophisticated taste than the average consumer’ and the mark applied for by Mr Tsujimoto ‘included high-quality wines and cognac intended for equally sophisticated consumers’, a link between those goods could be established since they all ‘projected images of luxury, glamour, good taste, and social status’. Moreover, Kenzo's earlier trade mark, as the Board of Appeal found, had ‘undisputable allure’ which could readily be transferable to other luxury goods including cognac, champagne or wine. Finally, as established earlier, there was no due cause. For these reasons, the General Court dismissed Mr Tsujimoto's appeal.

Analysis

As far as the General Court is concerned, there is only room for one Kenzo in the luxury brand market. EU trade mark law does provide an ‘own name’ defence to infringement (see Article 12 of the Regulation) but, as the General Court pointed out, there is no unconditional right to register one's own name as a CTM pursuant to the Regulation.

Practical significance

The practical issue for Mr Tsujimoto is whether this decision affects his ability to trade in the EU at all under the ‘Kenzo’ name, assuming that his plan is to extend distribution of his, by all accounts, very expensive Californian wine. In Reed Executive plc v Reed Business Information Ltd [2004] EWCA Civ 159, Jacob LJ referred to Gerolsteiner Brunnen v Putsch (C-100/02, ECLI:EU:C:2004:11) in concluding that a man may use his own name even if there is some actual confusion with a registered trade mark, albeit that the amount of confusion which could be tolerated was a question of degree. Gerolsteiner, a much criticised decision on honest use, may not help Mr Tsujimoto when it comes to Article 8(5) and unfair advantage, however, particularly as the General Court here acknowledged that Kenzo's ‘undisputable allure’ could readily be transferable to wine.

Following Rintisch v OHIM, this case also provides useful guidance on the admissibility of late evidence in the context of OHIM opposition proceedings.

Apparels and appellations

Author: Peter Jabaly (Rutgers Law School)

JA Apparel Corp. v Abboud, 07 Civ. 7787 (SDNY), 12 January 2010

Citation: Journal of Intellectual Property Law & Practice, doi:10.1093/jiplp/jpq035

This case highlights poor contract drafting and the inherent difficulty of segregating a trade mark from its namesake.

Legal context

In any transaction relating to trade marks, the rights and responsibilities of the respective parties do not exist in a vacuum but are related to the specific nature of the trade marks themselves. Where a trade mark which is the subject of a transaction incorporates or alludes to the name of one of the parties to the transaction, the drafting of the contract must take care to reflect both the intentions of the parties and the separate and distinct status of the trade mark. If this is not done, the resolution of any ambiguity becomes a matter for judicial construction.

Facts

Joseph Abboud and JA entered into a Purchase and Sale Agreement by which, in exchange for $65.5 million, Abboud agreed to ‘sell, convey, transfer, assign and deliver’ to JA Apparel ‘all of [his] right, title and interest in and to’ most pertinently, ‘the names, trademarks, trade names, service marks, logos, insignias and designations identified’ in the Agreement's Schedule. The name Joseph Abboud was included on the Schedule but, as the Court reasoned, ‘there [was] no evidence of any negotiations or discussions of the sale of Abboud's name as an asset distinct from the trademarks and related intellectual property’.

At the outset of the negotiations, Abboud became concerned about his ability to compete in the industry if he should choose to continue designing after the relationship with JA came to an end. In follow-up press releases, correspondences, and draft agreements, ‘names’ would be included as a target of the acquisition. However, the parties never addressed the term's inclusion or meaning.

The relationship soured after approximately 5 years. And, once the non-competition clause had expired, Abboud began to design and to market a brand new line of clothing, ‘Jaz’. This line of clothing was advertised as: ‘[the] new luxury collection created by the award-winning designer Joseph Abboud’ underneath the comparatively larger Jaz brand name; ‘a new composition by Joseph Abboud’ in bold next to the similarly sized Jaz brand name. Based on the advertisements, JA alleged trade mark infringement and breach of contract.

Analysis

A contract between sophisticated parties, negotiating at arm's length must be respected and a court should be ‘extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to include’ (Vt. Teddy Bear Co., Inc. v 538 Madison Realty Co., 1 N.Y.3d 470, 475 (2004); Belle Harbor Wash. Hotel, Inc. v Jefferson Omega Corp. (‘a written agreement that is complete, clear, and unambiguous on its face must be enforced in accordance with the plain meaning of its terms.’). A court determines a term's ambiguity since it is a question of law. If the court determines an ambiguity, then extrinsic evidence is properly admitted and all ‘surrounding facts and circumstances’ may be considered to ascertain the parties' intended meaning (U.S. Naval Inst. v Charter Comm'ns, Inc., 875 F.2d 245, 248 (1975)).

The parties presented equally persuasive interpretations of the agreement, provided no compelling extrinsic evidence of the sale of the Abboud name except in connection with the sale of IP, and provided no extrinsic evidence that indicated that Abboud had sold his personal name in connection with all commercial purposes. The Court accordingly concluded that Abboud sold the use of his name as a trade mark or brand name.

The Court eventually recognized that the assignment of the Joseph Abboud name in connection with the marks was dispositive of the non-assignment of his name for all commercial purposes. Mindful that this interpretation left the term ‘names’ in the schedule as surplusage, the Court noted that the rule against surplusage should be ‘applied with a grain or two of salt’ as the common technique is used to ensure all meanings are included, ‘not [necessarily] to convey a separate piece of information’ (JA Apparel Corp., 568 F.3d at 407 n 4 (J Sack, concurring)).

Though Abboud had not sold the personal use of his name with respect to every commercial use, he had sold his trade mark, the Joseph Abboud name. The Court therefore next determined whether trade mark infringement, and therefore breach of contract had occurred. To succeed in a trade mark infringement claim, the plaintiff is required to demonstrate the possession of a valid mark which is entitled to protection, and that the defendant's use of the mark is likely to cause confusion as to the origin or sponsorship of the good. The Court of Appeals had determined that the defendants had made a prima facie showing.

The Court next addressed Abboud's fair use defence, which allows for a modicum of confusion and is an absolute defence to a claim of trade mark infringement. To succeed, an infringer must demonstrate that the name or term is being used descriptively, other than as a mark, and in good faith (15 USC 1115(b) (4)). ‘Descriptive use is evidence in such situations "[w]here a mark incorporates a term that is the only reasonably available means of describing a characteristic of another's goods"’ (citing EMI Catalogue P'ship v Hill, Holliday, Connors, Cosmopulos, Inc., 228 F.3d 56, 65 (2d Cir. 2000)).

Use of a term to attract public attention is deemed trade mark use. Other considerations, such as size, font, cautionary language, and location, are important in determining whether the term is used descriptively or in a trade mark sense (Third Restatement of Unfair Competition 28 cmt. C). Lastly, the lack of good faith may be inferred from the defendant's breach of an agreement not to use the trade mark (Inst. for Scientific Info. v Gordon & Breach, Sci. Publishers, Inc., 931 F.2d 1002, 1009 (3d Cir. 1991)).

In the case of surnames, the circumstances are more closely scrutinized. A surname may acquire a secondary meaning, but that may not interfere with the business of another person bearing the same name. However, the right is not unlimited in a situation where the individual had sold the right to use the name. After reviewing the advertisements' proposed formats, the Court concluded that Abboud had infringed on the trade mark, and therefore, violating the contract. The Court ordered Abboud to use a disclaimer to limit the significant confusion that would be generated by some of the proposed advertisements. In summation, ‘Abboud may alert consumers that he is the designer behind the Jaz line, but he cannot do so in an "overly intrusive manner."’ (citing Madrigal Audio Labs, 799 F.3d at 823). Further, Abboud was enjoined from using his name as a trade mark. Abboud's counterclaims were dismissed on the basic premise that he had sold the right to use his name.

Practical significance

Even something as personal as a name may become IP, capable of being sold and forbidden to the person who was born with it. One who sells his namesake trade mark may not, after becoming overcome by remorse, find refuge in the argument that it is inextricably part of his personality; limitations may be placed on its use. Abboud failed to recognize that. He agreed to sell his brand name and the attendant good will generated by it. For that reason, he was severely limited in using his name without disclaiming his association with the Joseph Abboud brand. When a trade mark holder sells his trade mark, he is effectively foreclosed from re-entering the industry and capitalizing on that goodwill.