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Thursday, 14 July 2011

The trigonometry of trade mark law: Sign, Kosan and Tangent

Following all the excitement this week over the high-tech aspects of European trade mark law where brand owners tussle with internet service providers over the extent to which hosted sales can and should be controlled by the latter, the Court of Justice of the European Union (ECJ) returned today to a very much less exalted and non-digital product -- refillable gas bottles.  This return to earth, as it were, manifested itself in a short ruling of just 43 paragraphs inclusive of the recitation of the relevant legal provisions, the summary of facts and the costs order.  The Case is C-46/10 Viking Gas A/S v Kosan Gas A/S, formerly BP Gas A/S, a reference for a preliminary ruling under from the Danish Højesteret [the IPKat interjects to add that, since the Danes are so good at speaking other languages, it is easy to forget that they speak Danish too: Højesteret is the Danish for 'Supreme Court' and is not, as Merpel mischievously tells people, a tasty dessert].

Kosan made and sold bottled gas to private and commercial customers, using 'composite’ lightweight bottles the shape of which is both a three-dimensional Community trade mark and a three-dimensional Danish trade mark for "gaseous fuels and containers used for liquid fuels". In accordance with a sole distribution agreement which it made with the Norwegian producer of the bottle, Kosan enjoyed an exclusive licence to use those bottles as a shape trade mark in Denmark as well as the right to take legal proceedings against infringements of the mark.  When it used the bottles, Kosan fixed its name and logo (both of which were registered as Community word and figurative marks for gas) on to them. Consumers paying for a composite bottle filled with gas from one of Kosan’s dealers became owners of the bottle as well as the gas.

Another aspect of Kosan's business was the refilling of empty composite bottles for consumers who came back for more gas. A consumer thus had a choice when going to any Kosan dealer: he could either buy a new bottle of gas or swap his empty one for a refilled one, paying only the price of the gas.

Viking, which sold but didn't produce gas, had a filling station in Denmark from which composite bottles were dispatched, after being filled with gas, to independent dealers. Viking's bottles bore a sticky label containing its name and the filling station number, plus another sticky label with all the legal rubric on it. They also, by the purest of coincidences, featured Kosan's word and figurative marks which were neither removed nor covered. As with Kosan, a consumer could either buy a new bottle or exchange his old one for a refill.

Kosan used to sell its gas in the same yellow steel canisters as were used by most other gas suppliers, which were not registered as shape trade marks but which, like the composite bottles, bore Kosan's marks and which, Viking asserted, were refilled by others without Kosan ever objecting.

In December 2005 Kosan sued Viking and got injunctive relief which was confirmed a year late; Kosan was also awarded damages.  Viking's appeal to the Højesteret was stayed so that the court could get a preliminary ruling from the ECJ on the following questions:
‘(1) Is Article 5, in conjunction with Article 7, of [Trade Mark Directive 89/104, long-repealed now by Directive 2008/95 but still religiously cited wherever possible] to be interpreted in such a way that company B is guilty of an infringement of a trade mark if it fills gas bottles which originate from company A with gas which it then sells, where the following circumstances apply: 
(a) Company A sells gas in so-called ‘composite’ bottles with a special shape, which is registered as such, that is to say, as a shape trade mark, under a Danish trade mark and a Community trade mark. Company A is not the proprietor of those shape trade marks but has an exclusive licence to use them in Denmark and has the right to take legal proceedings in respect of infringements in Denmark; 
(b) On first purchase of a composite bottle filled with gas from one of company A’s dealers the consumer also pays for the bottle, which thus becomes the consumer’s property; 
(c) Company A refills the composite bottles by a procedure under which the consumer goes to one of company A’s dealers and, on payment for the gas, has an empty composite bottle exchanged for a similar one filled by company A; 
(d) Company B’s business consists in filling gas into bottles, including composite bottles covered by the shape trade mark referred to in point (a), by a procedure under which consumers go to a dealer associated with company B and, on payment for the gas, can have an empty composite bottle exchanged for a similar one filled by company B; 
(e) When the composite bottles in question are filled with gas by company B, adhesive labels are attached to the bottles indicating that the filling was undertaken by company B? 
(2) If it may be assumed that consumers will generally receive the impression that there is an association between companies A and B, is this to be regarded as significant for the purpose of answering Question 1? 
(3) If Question 1 is answered in the negative, may the outcome be different if the composite bottles – apart from being covered by the shape trade mark referred to – also feature (are imprinted with) the registered figurative and/or word mark of company A, which is still visible irrespective of any adhesive labels affixed by company B? 
(4) If either Question 1 or Question 3 is answered in the affirmative, may the outcome be different if it is assumed that, with regard to other types of bottle which are not covered by the shape trade mark referred to but which feature company A’s word and/or figurative mark, company A has for many years accepted, and continues to accept, the refilling of the bottles by other companies? 
(5) If either Question 1 or Question 3 is answered in the affirmative, may the outcome be different if the consumer himself goes to company B directly and there: 
(a) on payment for the gas, obtains, in exchange for an empty composite bottle, a similar one filled by company B, or 
(b) on payment, has a composite bottle which he has brought filled with gas?’
The Court this morning ruled as follows:
" Articles 5 and 7 ... must be interpreted as meaning that the holder of an exclusive licence for the use of composite gas bottles intended for re-use, the shape of which is protected as a three-dimensional mark and to which the holder has affixed its own name and logo that are registered as word and figurative marks, may not prevent those bottles, after consumers have purchased them and consumed the gas initially contained in them, from being exchanged by a third party, on payment, for composite bottles filled with gas which does not come from the holder of that licence, unless that holder is able to rely on a proper reason for the purposes of Article 7(2) of Directive 89/104".
The IPKat feels that there's nothing radical or surprising in this ruling and he is pleased that the time between it being received by the ECJ and the questions being answered was only 18 months, inclusive of a hearing the Advocate General's Opinion. He is however disappointed that the Opinion remains untranslated into English and five other official languages of the European Union more than three months after it was issued.

"It's definitely gas", thought
Henry, "... but whose?"
Says Merpel: this may be simplified as follows: "A person who has right to control the use of a trade mark which he fixes to a reusable container can't stop them being commercially refilled by a competitor because of exhaustion of rights -- unless he has a legitimate reason for doing so" -- which is surely what the parties must have known pretty well before they even started litigating back in 2005, no? Is it really worth referring cases like this to the ECJ where the real issue is whether the facts support or detract from exhaustion of rights and any utterance by the court is, at best, tangential to the resolution of the dispute before the referring court?

Sine, cosine and tangent: teach yourself trigonometry here
A gas gas gas here

2 comments:

Anonymous said...

This decision does not seem to lie too well with the recent UK Schutz case concerning caged bulk carriers.

Jeremy said...

I don't think there's a problem or a contradiction: the key is the factual issue -- what will the relevant consumer understand when he sees the refilled product. That's what the referring court is going to have to decide when determining whether to apply Article 7(2) criteria for overriding exhaustion or not.

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