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Thursday, 5 July 2012

The A-G opines on ONEL: genuine use of a CTM

The Advocate-General's Opinion has just issued in Case C-149/11 Leno Merken v Hagelkruis Beheer B.V., better known as the ONEL/OMEL case. This is a case which has the potential to cause a sea-change in the criteria for validity of Community Trade Marks (CTMs), and so the A-G's Opinion will be pored over by colleagues across Europe. Given that the Opinion is very fresh off the presses this morning, the IPKat will limit himself in this post to setting out the most relevant passages of the Opinion.

The case is about the requirement for "genuine use" of a Community Trade Mark. A CTM which has not been put "to genuine use in the Community in connection with the goods or services in respect of which it is registered"  within five years following registration, is subject to sanctions, the gravest of which are that the registration is subject to revocation and it cannot be relied on as an earlier trade mark right when opposing a later filed CTM.

So what constitutes "genuine use in the Community"? In particular, what of a trade mark which was only put to use in one of the twenty-seven EU member countries - is this genuine use? Those are the issues, albeit not framed in precisely this way, which have been put to the Court and upon which the Advocate General has now opined.

The text of questions posed to the CJEU are not always noted for their zippines. Referring courts mysteriously seem to favour legal certainty and lack of ambiguity over the needs of blog writers and their time-pressed audiences. On behalf of those who fail to see the sheer fun involved in deciphering triple negatives and mentally discarding the full names of Community Regulations and Directives to get to the heart of the questions, the IPKat has unashamedly borrowed (Merpel says, you mean "copied") an admirably simple restatement of the four questions in this case:
1. Is use in one country always enough?
2. If not, is it never enough?
3. If it is never enough, what is needed?
4. Should the assessment of genuine use in the Community be done in the abstract, without reference to the borders of the territory of the individual Member States?
The pithy paraphrasing comes from Pieter Veeze. Pieter was the Rapporteur of the Benelux Opposition Division in the original ONEL/OMEL dispute. If you want to understand why his division decided to throw a spanner into the smoothly purring engine that is European trade mark law, this link provides a transcript of a speech by Pieter giving a very informative explanation of the thinking behind the original controversial decision. For CJEU diehards, the full text of the questions can be found here.

The Benelux opposition which Pieter decided was between two parties who appear to have co-operated to create a set of facts which would give rise to an ECJ reference. This follows a trend of artificial cases noted in the Shield Mark, Sieckmann, and IP Translator cases.

Whether phoney or not, a fight took place between two competing trade marks and their owners. In the red corner, the doughty champ was a long-standing CTM registration for ONEL. In the blue corner, the plucky challenger was a new Benelux TM application for OMEL. The owner of ONEL opposed the OMEL application. The marks were similar and the services identical (legal services). However as the opposition was based on the ONEL registration, and this was more than five years old, the ONEL CTM required a showing of "genuine use in the Community" to provide a valid prior right.

The parties agreed that ONEL had been used in the Netherlands and that the degree of use would have been sufficient for a valid (national) Netherlands registration. When pushed to provide evidence of use in EU countries other than the Netherlands, ONEL's owner declined to give any such proof, arguing that use in one country was sufficient under the CTM Regulation.

The Advocate-General's answers
Advocate-General Sharpston notes firstly that "whether a Community trade mark has been put to genuine use depends on the assessment of the relevant criteria in a geographical dimension that transcends that of the context in which genuine use of a national trade mark is established." Use outside the EU, unsurprisingly, is not relevant. 


Because the Court previously decided (Sunrider) that geography is only one of the factors to be taken into account, the A-G finds that "use of a Community trade mark within the borders of a single Member State is not, of itself, necessarily sufficient to constitute genuine use of that trade mark, because the territorial scope of the use is merely one of the factors to take into account in the assessment."

The Pago decision, which required that a mark must have acquired a reputation in a substantial part of the territory of the Community to avail of protection against dissimilar goods and services, was not relevant to the condition of genuine use.

Instead the A-G adopts a market-based approach, where the Community is treated as a single market:
48.      To determine whether the condition of genuine use in the Community is satisfied, I consider that the national court must examine all forms of use of the mark within the internal market. In that context, the geographical definition of the relevant market is the entire territory of the 27 Member States. The borders between Member States and the respective sizes of their territories are not pertinent to this inquiry. What matters is the commercial presence of that mark, and consequently that of the goods or services covered by the mark, in the internal market.
49.      In the present case, I consider that the use made of the mark in the Netherlands market forms part of that assessment and may contribute to establishing whether the mark has penetrated the internal market for the services covered by the mark. Use (or non-use) outside the Netherlands is however equally relevant.

50.      In that regard, there is a difference between national and Community trade marks. For the purpose of determining genuine use of a national trade mark, only instances of use within the territory of the Member State where the mark is registered are relevant, even if the proprietor uses it elsewhere. Use of a Community trade mark within the meaning of Article 15(1) of the Regulation, on the other hand, must be assessed taking into account instances of use in the entire internal market. Whether a Community trade mark has been used in one Member State or several is irrelevant. What matters is the impact of the use in the internal market: more specifically, whether it is sufficient to maintain or create market share in that market for the goods and services covered by the mark and whether it contributes to a commercially relevant presence of the goods and services in that market. Whether that use results in actual commercial success is not relevant.
 [...]
52.      In my opinion, the case-by-case assessment of what constitutes genuine use involves determining the characteristics of the internal market for the particular goods and services involved. It also requires taking account of the fact that those features may change over time.
53.      Demand or supply in, or access to, parts of the internal market may be limited depending on, for example, language obstacles, transportation or investment costs, or consumer tastes and habits. Use of a trade mark in an area where the market is particularly concentrated may thus play a more significant role in the assessment than use of the same mark in a part of the market where sources of supply and demand for these goods or services hardly exist or arise.
54.      It is also conceivable that local use of a Community trade mark none the less produces effects on the internal market by, for example, ensuring that the goods are known – in a commercially relevant manner – by participants in a market that is larger than that corresponding to the territory where the mark is used.


55.      I therefore do not consider that use in a territory corresponding to that of only one Member State necessarily precludes the use from being characterised as genuine in the Community. At the same time, I do not consider that, for example, use of a mark on a website that is accessible in all of the 27 Member States is by definition genuine use in the Community.
Turning to the dispute which gave rise to the reference (and no doubt having suspicions over the reticence of Leno Merken to disclose use outside the Netherlands, in circumstances where, as a mark used by trade mark attorneys the mark may well be known and used in many other countries), she commented:

[T]he decision of the national court ... cannot be based on an assessment solely of instances of use of ‘ONEL’ in the Netherlands. Instead, the national court must consider all instances of use in the internal market, which obviously include those in the Netherlands, and give weight to each use against the background of the particular characteristics of the market and the market share of the proprietor in that market. If the national court finds, for example, that the internal market for the services covered by ‘ONEL’ is particularly concentrated in the Netherlands and possibly in surrounding areas, use of the mark in only the Netherlands may be given particular weight. At the same time, the national court must widen its examination so as to include forms of use that may not be relevant in assessing genuine use of a Netherlands national trade mark such as, for example, uses of the Community trade mark that make the services known in a commercially meaningful manner to potential customers outside the Netherlands.
Finally, she addressed the argument that Art 112 imposed a particular distinction between national and supra-national use of a mark:
62.      Article 112 describes the circumstances in which a Community trade mark may be converted into a national trade mark. Conversion is excluded where ‘the rights of the proprietor of the Community trade mark have been revoked on the grounds of non-use’. Article 112(2)(a) provides an exception to this rule if ‘in the Member State for which conversion is requested the Community trade mark has been put to use which would be considered to be genuine use under the laws of that Member State’.

63.      Non-use is thus contrasted with, on the one hand, genuine use in the Community and, on the other hand, genuine use of a national trade mark under the laws of a Member State. If use within a single Member State can, when account is taken of all other facts, constitute genuine use in the Community, there will be no basis for revoking the mark and the circumstances in which conversion is excluded do not arise. In certain circumstances, the same use of a mark will satisfy the conditions both for genuine use of a Community trade mark and for genuine use of a national trade mark. In that event, Article 112 will not apply. By contrast, if a national court finds that, when account is taken of all the facts of the case, use in a Member State was insufficient to constitute genuine use in the Community, it may still be possible to convert the Community trade mark into a national trade mark, applying the Article 112(2)(a) exception.

Conclusion
64.      In the light of the foregoing considerations, I am of the opinion that the Court should answer the questions raised by the Gerechtshof ’s‑Gravenhage to the following effect:
Article 15(1) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark must be interpreted as meaning that (i) use of a Community trade mark within the borders of a single Member State is not, of itself, necessarily sufficient to constitute genuine use of that trade mark, but (ii) it is possible that, when account is taken of all relevant facts, use of a Community trade mark within an area corresponding with the territory of a single Member State will constitute genuine use in the Community.
Genuine use in the Community within the meaning of Article 15(1) of Regulation No 207/2009 is use that, when account is taken of the particular characteristics of the relevant market, is sufficient to maintain or create market share in that market for the goods and services covered by the Community trade mark.

At which the IPKat steps gingerly back to allow readers to share their views. Has the A-G dodged the question, or is her proposed answer the pragmatic solution needed by CTM owners and their advisors? ...

4 comments:

Ben Mooneapillay said...

So, genuine use in one, two or more Member States may not be sufficient to maintain a CTM if that use does not "contribute to a commercially relevant presence for the goods and services" concerned. It appears that proprietors of marks covering universally used, everyday goods may have more difficulty than a trader in more obscure goods or services that are perhaps pecualiar to a particular part of the Community.

Jakob Balling said...

Think the AG opinion is good - IP Community has to understand that any legislation leaves room for interpretation. The market of a CTM is and has always been ONE market, not 27 countries. In my mind the AG opinion simply says that use has to be genuine and with a commercial purpose - doesn´t matter if succesful or not - AND that it is up to the Courts to decide case by case when use is genuine, but geography is only one in many elements in deciding this.
To even consider that use in one specific country by definition would suffice, OR that use limited to one specific country would lead to no genuine use, is obscure.

Anonymous said...

The most telling part of the Opinion is, I believe, a footnote - number 31 - in which ES does something very interesting with a deep-fried Mars bar.

David Brophy said...

The post has been corrected to reflect the reality that Advocate-General Sharpston is a "she" and not a "he". My apologies for not having checked this rather basic fact in my haste to post the news.

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