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Friday, 18 March 2005

CLOSE SHAVE AS ECJ RULES ON GILLETTE DISPUTE


The European Court of Justice gave its ruling today in Case C-228/03 The Gillette Company and Gillette Group Finland Oy v LA-Laboratories Ltd Oy, a request for a preliminary ruling from Finland.

The facts

Gillette registered in Finland the trade marks GILLETTE and SENSOR for "hand tools and implements (hand-operated); cutlery; side arms; razors" (Class 8) and, through its exclusive licensee, sold razors in that country, particularly razors composed of a handle and a replaceable blade and such blades on their own. LA‑Laboratories also sold in Finland razors that were composed of a handle and a replaceable blade and blades on their own, similar to those marketed by Gillette. Those blades were sold under the mark PARASON FLEXOR; fixed to their packaging was a sticker with the words "All Parason Flexor and Gillette Sensor handles are compatible with this blade". LA‑Laboratories was not authorised by a trade mark licence or any other contract to use Gillette's marks. Gillette sued for trade mark infringement, arguing that the practices of LA‑Laboratories created a link in the mind of consumers between its products and those of Gillette, or gave the false impression that that company was authorised, by virtue of a licence or for another reason, to use the GILLETTE and SENSOR marks.

In its judgment the Helsingin käräjäoikeus held that Gillette had the exclusive right to affix its marks to those products and their packaging, and to use those marks in advertising. Accordingly, by mentioning those marks in an eye-catching manner on the packaging of its products, LA‑Laboratories had infringed that exclusive right. The Helsingin käräjäoikeus further held that Article 4(2) of the Finnish trade mark law, which provided for an exception to that principle of exclusivity, must be interpreted narrowly in the light of Article 6(1)(c) of Directive 89/104. In its view, that provision did not relate to the essential parts of a product but only to spare parts, accessories and other similar parts which were compatible with the manufactured product or marketed by another person. That court held that both the handle and the blade were to be regarded as essential parts of the razor and not as spare parts or accessories. It therefore held that the exception under Article 4(2) of the Finnish law did not apply and that LA‑Laboratories had infringed Gillette's marks.

LA‑Laboratories appealed to the Helsingin hovioikeus (Court of Appeal of Helsinki), which held that, where a razor of the type currently at issue was composed of a handle and a blade, the consumer could replace that latter part by a new blade, sold separately. The latter, being in substitution for a former part of the razor, could therefore be regarded as a spare part within the meaning of Article 4(2) of the tavaramerkkilaki. Secondly, the indication on the sticker affixed to the packaging of the razor blades marketed by LA‑Laboratories could be useful to the consumer. LA‑Laboratories might therefore be able to demonstrate the need to mention the GILLETTE and SENSOR trade marks on that sticker. Thirdly, the packaging of razor blades marketed by LA-Laboratories clearly bore its own PARASON and FLEXOR signs, unequivocally indicating the origin of the product. The reference to the GILLETTE and SENSOR marks in small standard lettering on stickers of a relatively modest size affixed to the exterior of that packaging could not in any way have given the impression that there was a commercial connection between Gillette and LA‑Laboratories. The Helsingin hovioikeus therefore annulled the judgment of the Helsingin käräjäoikeus and dismissed the action brought by the Gillette companies.

Gillette then appealed to the Korkein oikeus, which took the view that the case raised questions as to the interpretation of Article 6(1)(c) of Directive 89/104 in relation to the criteria for determining whether, by its nature, a product is comparable to a spare part or an accessory, in relation to the requirement that use of a mark belonging to another person must be necessary in order to indicate the intended purpose of a product, and in relation to the concept of honest practices in industrial or commercial matters, the interpretation of those provisions also having to take account of Directive 84/450. In those circumstances, the Korkein oikeus decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:
"When applying Article 6(1)(c) of the First Council Directive 89/104/EEC to approximate the laws of the Member States relating to trade marks:,

(1) What are the criteria

(a) on the basis of which the question of regarding a product as a spare part or accessory is to be decided, and


(b) on the basis of which those products to be regarded as other than spare parts and accessories which can also fall within the scope of the said subparagraph are to be determined?

(2) Is the permissibility of the use of a third party’s trade mark to be assessed differently, depending on whether the product is like a spare part or accessory or whether it is a product which can fall within the scope of the said subparagraph on another basis?

(3) How should the requirement that the use must be “necessary” to indicate the intended purpose of a product be interpreted? Can the criterion of necessity be satisfied even though it would in itself be possible to state the intended purpose without an express reference to the third party’s trade mark, by merely mentioning only for instance the technical principle of functioning of the product? What significance does it have in that case that the statement may be more difficult for consumers to understand if there is no express reference to the third party’s trade mark?

(4) What factors should be taken into account when assessing use in accordance with honest commercial practice? Does mentioning a third party’s trade mark in connection with the marketing of one’s own product constitute a reference to the fact that the marketer’s own product corresponds, in quality and technically or as regards its other properties, to the product designated by the third party’s trade mark?

(5) Does it affect the permissibility of the use of a third party’s trade mark that the economic operator who refers to the third party’s trade mark also markets, in addition to a spare part or accessory, a product of his own with which that spare part or accessory is intended to be used with?"
The ruling

In answer to those questions the European Court of Justice ruled as follows:
"1. The lawfulness or otherwise of the use of the trade mark under Article 6(1)(c) of the First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks depends on whether that use is necessary to indicate the intended purpose of a product.

Use of the trade mark by a third party who is not its owner is necessary in order to indicate the intended purpose of a product marketed by that third party where such use in practice constitutes the only means of providing the public with comprehensible and complete information on that intended purpose in order to preserve the undistorted system of competition in the market for that product.

It is for the national court to determine whether, in the case in the main proceedings, such use is necessary, taking account of the nature of the public for which the product marketed by the third party in question is intended.

Since Article 6(1)(c) of Directive 89/104 makes no distinction between the possible intended purposes of products when assessing the lawfulness of the use of the trade mark, the criteria for assessing the lawfulness of the use of the trade mark with accessories or spare parts in particular are thus no different from those applicable to other categories of possible intended purposes for the products.

2. The condition of ‘honest use’ within the meaning of Article 6(1)(c) of Directive 89/104, constitutes in substance the expression of a duty to act fairly in relation to the legitimate interests of the trade mark owner.

The use of the trade mark will not be in accordance with honest practices in industrial and commercial matters if, for example:

– it is done in such a manner as to give the impression that there is a commercial connection between the third party and the trade mark owner;

– it affects the value of the trade mark by taking unfair advantage of its distinctive character or repute;

– it entails the discrediting or denigration of that mark;

– or where the third party presents its product as an imitation or replica of the product bearing the trade mark of which it is not the owner.

The fact that a third party uses a trade mark of which it is not the owner in order to indicate the intended purpose of the product which it markets does not necessarily mean that it is presenting it as being of the same quality as, or having equivalent properties to, those of the product bearing the trade mark. Whether there has been such presentation depends on the facts of the case, and it is for the referring court to determine whether it has taken place by reference to the circumstances.

Whether the product marketed by the third party has been presented as being of the same quality as, or having equivalent properties to, the product whose trade mark is being used is a factor which the referring court must take into consideration when it verifies that that use is made in accordance with honest practices in industrial or commercial matters.

3. Where a third party that uses a trade mark of which it is not the owner markets not only a spare part or an accessory but also the product itself with which the spare part or accessory is intended to be used, such use falls within the scope of Article 6(1)(c) of Directive 89/104 in so far as it is necessary to indicate the intended purpose of the product marketed by the latter and is made in accordance with honest practices in industrial and commercial matters".
The IPKat can't help feeling that the Court has couched its ruling in terms that are a good deal narrower than is good for the environment of robust competition that the European Union wishes to create. But since he feel asleep three times while trying to read the decision, he promises to give it his further attention tomorrow, when he is fresher.

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