ECJ LAYS DOWN GUIDELINES FOR DETERMINING “AMERICAN BUD” DISPUTE

In Budejovicky Budvar NP v Rudolf Ammersin GmbH, Case C-216/01, the European Court of Justice handed down a long, complex decision on the legal basis upon which a Czech brewer can prevent the sale in Austria of AMERICAN BUD brand beer. Budvar, a Czech brewer, exported BUDWEISER BUDVAR beer to Austria. Austrian company Ammersin sold Anheuser-Busch's AMERICAN BUD beer. In 1999 Budvar sought an order that Ammersin stop using the word "Bud", or similar designations likely to cause confusion, for beer. Budvar claimed that (i) AMERICAN BUD was confusingly similar to its own prior Austrian trade marks; (ii) the use of AMERICAN BUD for a beer from anywhere but the Czech Republic breached a bilateral convention concluded between Austria and the former Czechoslovakia which listed "Bud" as a protected designation reserved exclusively for Czech products. The Austrian court stayed the proceedings and referred a number of questions to the ECJ concerning the interpretation of Arts 28, 30 and 307 of the EC Treaty as well as Council Regulation 2081/92 on geographical indications.

The ECJ ruled as follows:

(a) Regulation 2081/92 did not say that simple indications of geographical source could not be protected under the law of a Member State. Its aim was to ensure uniform pan-EU protection of geographical designations. However, the national protection of geographical designations which did not meet the requirement of registration under the Regulation was governed by national law and was confined to that territory.

(b) Since the Austrian national system of protection of geographical indications provided for absolute protection, it was irrelevant whether there was any risk of consumers being misled. The scope of Regulation 2081/92 however depended on the nature of the designation, since it covered only designations of products where there was a specific link between their characteristics and their geographic origin. "American Bud" was not a designation falling within the scope of the Regulation. Its protection under the bilateral agreement was therefore limited to Austrian territory.

(c) Arts 28 EC (which prohibited barriers to intra-EU trade) and 30 (which justified limited exceptions to that prohibition) applied without distinction to products originating in the EU and to those admitted into free circulation in any of the Member States, whatever the real origin of such products.

(d) The prohibition on marketing "Bud" beer from countries other than the Czech Republic in Austria, under the bilateral convention, could affect imports of "Bud" beer from other Member States and thus of constituting a barrier to intra-EU trade. Such a rule was therefore a measure having an effect equivalent to a quantitative restriction within the meaning of Art.28. The courts thus had to consider whether such a restriction was justified under Art.30. Since the aim of the bilateral agreement was to ensure fair competition, such an objective could fall within the sphere of the protection of industrial and commercial property within Art.30 as long as "Bud" had not, either at the time of the entry into force of the agreement or subsequently, become generic in the country of origin. If the national court found that "Bud" designated a region or a place and its protection was justified under Art.30, its protection could be extended to Austria.

(e) If the national court found that "Bud" did not identify any region or place, the question then arose whether the absolute protection of that name, as provided for by the bilateral convention, constituted an obstacle to the free movement of goods. If so, without prejudice to any protection under specific rights such as trade mark rights, the protection of "Bud" could not be justified on the grounds of protection of industrial and commercial property under Art.30. If it were established that "Bud" contained no reference to the geographical source of the products it designated, Art.28 would preclude its protection by means of a bilateral agreement between a Member State and a non-member country.

(f) Rights and obligations under an agreement concluded between a Member State and a non-member country before the date of accession of that Member State were not affected by the EC Treaty and the purpose of Art.307(1) was to make clear, in accordance with the principles of international law, that application of the EC Treaty did not affect the duty of the Member State concerned to respect the rights of non-member countries under an earlier agreement and to perform its obligations.

(g) It was for the national court to ascertain whether, after the break-up of Czechoslovakia in 1993, both Austria and the Czech Republic intended to apply the principle of continuity of treaties to the bilateral instruments at issue.

(h) EU Member States had to take all appropriate steps to eliminate the incompatibilities between a pre-EU accession agreements and the EC Treaty. The national court had to ascertain whether a possible incompatibility between the EC Treaty and the bilateral convention could be avoided by interpreting that convention in such a way that it was consistent with Community law. If that proved impracticable, that State should take appropriate steps. Until incompatibilities were resolved, Art.307(1) permitted that State to continue to apply such an agreement in so far as it contained obligations which remained binding on that State under international law.

The IPKat marvels at the complex legal knots that must be untied before an Austrian innkeeper can get an answer to the simple question "can I sell this can of AMERICAN BUD in my bar?"

American Buds here, here and here
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