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Thursday, 30 April 2009

PAGO: is Austria "substantial"?

This morning in the Court of Justice of the European Communities Advocate General Eleanor Sharpston QC delivered her Opinion in Case C‑301/07 PAGO International GmbH v Tirol Milch registrierte Genossenschaft mbH, this being a reference for a preliminary ruling from the Oberster Gerichtshof, Austria.  PAGO owns a Community trade mark for, inter alia, fruit drinks and fruit juices. This mark includes a representation of a green glass bottle which Pago had used for a number of years in marketing, plus a distinctive label and cap next to a full glass of fruit drink identified in large characters, known as ‘PAGO’. sold in Austria a fruit and whey drink called ‘Lattella’, packaged in glass bottles the design of which resembled in several respects (shape, colour, label, cap) that depicted in Pago’s Community trade mark. In the advertising for its drink Tirol Milch used a representation which, like Pago’s Community trade mark, shows a bottle next to a full glass. 

It was accepted that there was no likelihood of confusion, since the bottle labels bore the names ‘Pago’ and ‘Latella’ respectively, both being widely known in Austria; the parties proceeded on the basis that the conditions of Article 9(1)(c) of Community Trade Mark Regulation 40/94 (infringement of "any sign which is identical with or similar to the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trade mark") had been met in that (i) Tirol's sign was similar or identical to that for which Pago owned the Community trade mark, and (ii) the drink marketed by Tirol was not considered to be similar to that marketed by Pago.

Pago sought an injunction before the Commercial Court, Vienna, to stop Tirol infringing its trade mark by (i) promoting, offering for sale, marketing or otherwise using its drink in the bottles at issue, and (ii) advertising a representation of the bottles together with a full glass. That court granted the injunction but its decision was reversed by the Higher Regional Court, Vienna. Pago then appealed to the Oberster Gerichtshof, which referred the following questions for a preliminary ruling:
‘(1) Is a Community trade mark protected in the whole of the Community as a “trade mark with a reputation” for the purposes of Article 9(1)(c) of the Regulation if it has a “reputation” only in one Member State?

(2) If the answer to the first question is in the negative: is a mark which has a “reputation” only in one Member State protected in that Member State under Article 9(1)(c) of the Regulation, so that a prohibition limited to that Member State may be issued?’
The recommendation of the Advocate General is should be answered as follows:
"(1) A Community trade mark is protected in the whole of the Community on the ground that it has a ‘reputation in the Community’ within the meaning of Article 9(1)(c) ...  if it has a reputation in a substantial part of the Community. What constitutes a substantial part of the Community for that purpose is not dependent on national boundaries but must be determined by an assessment of all the relevant circumstances of the case, taking account, in particular, of (i) the public concerned by the products or services covered by the trade mark and the proportion of that public which knows of the mark and (ii) the importance of the area in which the reputation exists, as defined by factors such as its geographical extent, population and economic significance.

(2) A Community trade mark which has a reputation in an area which is not a substantial part of the Community in that sense does not enjoy, under Article 9(1)(c) of Regulation No 40/94, protection limited to that area. Consequently, a prohibition against infringement limited to that area may not be issued".
Of note is the Advocate General's review of the Court's earlier jurisprudence in General Motors and Nieto Nuño:
"30. It is first necessary to establish whether the trade mark has a ‘reputation’. In order to do so, the national court must identify the public concerned by the trade mark in the context of the Community as a whole, without regard to Member States’ borders. Having identified the relevant public, the national court should proceed to determine whether the reputation exists amongst a significant part of the public concerned by the goods or services covered by the trade mark.

31. The national court must then determine whether the trade mark has a reputation ‘in the Community’. It should begin by accepting that the trade mark proprietor need not demonstrate that the trade mark has a reputation throughout the Community. It is sufficient, for Article 9(1)(c) to apply, if the trade mark has a reputation in a ‘substantial part’ of the Community. General Motors does not provide further guidance as to how a ‘substantial part’ of the relevant territory is to be construed.

32. The Court’s case-law does, however, indicate what is not a ‘substantial part’. In Nieto Nuño it was established in relation to the kindred concept of whether a trade mark is ‘well known’ under Article 4(2)(d) of the Directive that the city of Tarragona and its surrounding area within Spain is not a substantial part of that Member State. Applying the same reasoning by analogy to the concept of a ‘substantial part of the Community’, it follows that where the ‘part’ is, viewed objectively by reference to its size and economic weight, paltry in comparison with the Community as a whole and where the relevant public is more widely spread throughout the Community, that part cannot be deemed to constitute a ‘substantial part’ of the Community. That conclusion follows from the ordinary meaning of the term ‘substantial’. It also accords with common sense.

33. The scenarios that may be envisaged are many and various. At one end of the spectrum, a trade mark covering a generic product marketed to the general public which enjoyed a significant reputation amongst that public would be expected to be known throughout a wide geographical area before it could be said to enjoy a ‘reputation in the Community’. At the other extreme, a trade mark for a particular product marketed to a specialised regional public would be expected to be known over a much smaller area. A product that is marketed to a professional public might well cover a wide area (depending on how widespread membership of that profession was) but would probably be known to a smaller number of people, in absolute terms, than a product marketed to the general public.

34. As with the concept of relevant public, the territorial aspect of ‘reputation’ cannot be defined by reference to an abstract figure or a particular number of Member States. The national court will have to evaluate a number of factors to determine whether a particular trade mark enjoys a reputation in a substantial part of the Community. Such factors will include, but not be limited to, the economic significance of the territory within the Community, the geographical extent of the area where the trade mark has a reputation and the demographics of the public concerned.

35. In order to determine whether an earlier trade mark enjoys a reputation in a substantial part of the Community for the purposes of Article 9(1)(c) of the Regulation, the national court must therefore make an overall assessment of the case in conjunction with establishing the public amongst whom that earlier trade mark is known. Any such test must necessarily be flexible".
The IPKat doesn't feel there's anything hugely controversial here. It's simply a reminder to make overall assessments that don't obviously clash with ECJ case law. Merpel says, this is what I've been waiting for -- an appraisal of "substantial part of the Community" that looks at reality instead of national boundaries. On this basis, Luxembourg on its own stands little chance of being a "substantial part" ...

Early comment here from Fabio Angelini ("Catch Us If You Can !!!") here


Ilanah said...

Hm. Another Art.5(2)/9(1)(c) interpretation saying 'it all depends on the facts'. I can see why one might want to be flexible to respond to the facts of particular cases. However, if the ECJ/AG's interpretation of every clause of Art.5(2)/9(1)(c), as it is shaping up to be after Intel, is 'it depends on the facts' then it doesn't make it any easier to understand what on earth this provision means.

Also, am I alone in thinking it odd that, if your CTM application causes confusion in one member state - whichever one (yes, even Malta or Luxembourg) - it is barred but, following this opinion, if your CTM application causes dilution/unfair advantage in the same member state it won't be barred?

Let's say you succeed in getting your potentially diluting CTM, in the face of opposition from a trade mark with reputation limited to the UK. Can you now use that CTM in the UK? Presumably yes because of s.11(1) (I'm assuming this includes CTMs). Is this the same in other Member States?

Hastings Guise said...

There is another oddity to this AG's opinion which will at least warm the hearts of national IP offices.

If AG Sharpston is right then a national trade mark will potentially give more effective enforcement rights in a given member state than a CTM. The reason is, of course, that the reputation needed to make unfair advantage/dilution available as a ground is easier to show in relation to a substantial part of a single member state than in relation to a substantial part of the EU.

Does this suggest that we should all be resurrecting our portfolios of national trade marks?

You could always convert a CTM into a national right if you found that you could not trigger unfair advantage/dilution with the CTM due to the high reputation threshold. However, unless you are prepared to give up some of the territories covered by the CTM this would mean converting in every country of the EU -- very expensive!

Should this really be necessary? It is tempting to adopt Pago's view that the reputation threshold should be assessed in the light of the territory in which the CTM owner wishes to enforce its right. Given that Infringement proceedings are generally brought in relation to specific member states and before the courts of that member state, this would allow the CTM to function effectively as a stand-in for a national right in that court.

Surely this is more in the spirit of the CTM than an interpretation which requires owners to double up by filing both CTMs (for EU-wide protection against likelihood of confusion) and national TMs (for unfair advantage/dilution protection in specific member states).

It would also avoid a rather invidious two-tier system where brand-owners based in Member States which could be considered in themselves a substantial part of the EU will get more bang for their buck from a CTM (as compared with a national mark) than brand-owners in smaller Member States who will have a greatly reduced chance of ever accessing the unfair advantage/dilution protection provided by the CTM and will have to maintain their national portfolios as well.

It will be interesting to see which way the ECJ goes....

Malte said...

I fully agree with the doubts raised above.

In fact, following the AG's opinion, national TMs would not only be privileged compared with a CTM. If for example a CTM owner claimed seniority and let his national TMs - potentially enjoying reputation - go, he would be deprived of the enhanced protection of his national TMs incorporated in the CTM.

In my view, the error lies in a wrong understanding of the "unitary nature" of the CTM which does not require that any aspect of the CTM has to measured uniformly by EU-wide criteria, in particular not in infringement proceedings.

Anonymous said...

Anyone who thinks national offices will be rubbing their hands in the prospect of all that "dilution" trade coming their way post PAGO, is barking up the wrong tree. Reputation is only one factor in the, um, global assessment. You've still got to establish "link", and then neatly round it off with "change in economic behaviour".Yeah, dead easy, right ? WRONG. "Dilution" is dead in the water (no pun intended but quite funny anyway), let's face it.

Ilanah said...

Malte and Hastings - I agree with you both. The CTM system isn't 100% unitary when it comes to confusion, so why should it be for dilution?

Anonymous - I'm generally puzzled by treatment of dilution by the UK IPO at least. If I've read the examination guidelines together, under the new slimmed-down system, the IPO will only inform potential opponents where confusion is likely. This means that they won't inform earlier trade mark owners where there is a possible dilution case. I can see why it's harder to inform in those circumstances on a practical level, but I can't see why it's shouldn't happen on a principled level.

Anonymous said...

It's hard enough deciding who to notify on a LOC basis let alone a dilution one (which necessarily requires evidence of reputation etc). How would the poor old examiner know what marks have a "reputation" in any field remember, and how far that reputation should extend. The system would grind to a halt....

I always wory when an acedemic uses the word "principled", assuming it invariably means "impracticable". !!

What possible circs (in the UK)could section 5(3) succeed these days ? Possibly against an unused mark for something "unseemly" like condoms, being opposed by the owner of a very unique famous mark such. Any other scenarios ?

Ilanah said...

Well, they could notify whenever a similar mark is applied for, whatever the goods or services and whatever the likely outcome. Just throwing ideas around though (I think that's what us impractical academics are meant to do ;-)). I see the practical problem but am still uncomfortable that s.5(3) gets less protection that ss 5(1) or (2)even though all the provisions are of the same 'weight'.

As for the future of s.5(3) - unfair advantage remains a ticking timebomb (particularly if the AG in L'Oreal is right - which be probably isn't). I'm also not sure whether the ECJ has written blurring off, or is just treading water and will drop a bombshell on us one of these days.

Hastings Guise said...

I shouldn't have mentioned the dreaded D-word!

Actually unfair advantage will, I suspect, remain very much alive. Even if an analogous 'real economic effect' test for u/a emerges as has been set as for dilution in Intel, it will still be perfectly feasible to show (through market research etc) that an infringer obtains a quantifiable positive benefit due to the 'link' with the proprietor's mark. By contrast, for dilution Intel says we need to show the converse -- that is a projected decline in the fortunes of the proprietor. This is a far more nebulous test and may well remain confined to theory.

Incidentally, with questions being raised over where CTMs must have their reputation in order to trigger u/a (i.e. substantive part of the whole EU or just part of relevant member states), another interesting question is which body of consumers must be taken into account for showing the 'link' and consequent unfair advantage.

It would be pretty odd if a CTM holder with reputation in a substantial part of the EU (say, most of Eastern Europe) was able to claim unfair advantage against a trader who is selling exclusively to people in the UK who have not heard of the CTM holder's mark.

But the alternative is also odd and would effectively require that the CTM holder as well as having reputation in a substantial part of the EU (to trigger the section), also has sufficient reputation in the specific member state where he in enforcing for the 'link' to bite. This knocks another little hole in the unity of the CTM right and would undo all of AG Sharpstons efforts!

Any thoughts?

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