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Thursday, 21 July 2016

Federal Court of Justice greenlights colour mark red

In the ongoing dispute between the Sparkassen Group and Banco Santander, which led to the CJEU's decision in cases C‑217/13 and C‑218/13, the German Federal Court of Justice (BGH) has annulled the decision of the Federal Patent Court which invalidated Sparkassen's contourless colour mark "red" and held that the mark had acquired distinctiveness at the time of the Federal Patent Court's decision in 2015.

Sparkassen Group has been using the colour red in connection with financial services, namely retail banking, in Germany since the 1960s. In 2002, it filed a trade mark application for the contourless colour "red" (HSK 13) for financial services, namely retail banking, which was granted - after an initial rejection - sometime in 2007. Banco Santander and Oberbank, two new entrants to the German retail banking market that also used the colour red in their home markets, filed for invalidity. In 2009, the German IPO (DPMA) dismissed the actions. On appeal, the Federal Patent Court referred several questions to the CJEU, which the CJEU answered in joined cases C-217/13 and C-218/13 in 2014.

Yep, that's also red
The CJEU namely held that it European law precluded an interpretation of national law according to which, in the context of proceedings raising the question whether a contourless colour mark has acquired a distinctive character through use, it is necessary in every case [Merpel's emphasis] that a consumer survey indicate a degree of recognition of at least 70% (see IPKat post here).

Subsequently, the German Federal Patent Court nonetheless sided with Santander and Oberbank and cancelled the registration of the mark at issue because acquired distinctiveness had not been proven, neither at the time of filing (2002) nor at the time of the decision (2015). Acquired distinctiveness at the time of the decision would have been enough because Germany exercised the option under Article 3(3) second sentence Directive 2008/95. Under German law, proof of acquired distinctiveness either at the time of filing or at the time of decision leads to validity of the mark (§ 8(3) German Trade Mark Act).

On appeal, the BGH held that contourless colour marks were generally lacking distinctiveness ab initio, as consumers would perceive colours primarily as decorative and not as indications of source. However,  contourless colour marks - as any other marks - had acquired distinctiveness if a majority ("überwiegender Teil") of the relevant public recognized [or relied upon...?] the mark as indicating a single source for the goods or services for which protection was sought. According to the Federal Court of Justice, the many surveys submitted by the applicant failed to prove acquired distinctiveness at the time of filing in 2002, but supported a finding of acquired distinctiveness in 2015, at the time of the judgment.

Since the full reasoning of the BGH decision is not yet published - I am relying on the press release - it is not yet possible to see what convinced the BGH that the Federal Patent Court got it wrong. It seems the assessment of the survey evidence played an important role, which is interesting because the BGH is in principle bound by the fact finding of the lower court.

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