The Great Kornspitz Bakeoff: the AG's opinion on trade mark genericism

Yum, yum!

In a time where baking shows dominate "prime time telly", a trade mark case referring to specific type of bread roll appears oddly appealing.  This Kat has been alerted to AG's opinion in a case referred to CJEU by the Austrian Patent and Trade Mark Office Appeal Board, Case C-409-12, Backaldrin Osterreich The Kornspitz Company.  This Kat had to use her sometimes slightly rusty linguistic skills to write this post. So, if the official English language translation (once - if ever - available) uses different expressions, you will know why.  The below is based on the German version of the AG's opinion.

Background

Article 12(2)(a) Directive 2008/95 provides that a trade mark can be revoked when it has become the common name for a product or service. This is the case in particular under Article 12(2)(a) "...  if, after the date on which it was registered: (a) in consequence of acts or inactivity of the proprietor, it has become the common name in the trade for a product or service in respect of which it is registered."  Now, whose view is decisive in this context: that of the end consumer or that of the trade?

What had happened?  Backaldrin Österreich The Kornspitz Company is the proprietor of the Austrian trade mark "Kornspitz" covering a wide range foodstuff in class 30. Kornspitz produces baking mixture which these use to make a certain type of bread rolls: Kornspitz, a bread roll made of a certain type dough which has an interesting moon-like shape with pointy ends. 

A competitor, Pfahnl Backmittel, applied for revocation of the Kornspitz mark at the Austrian Patent Office, arguing that the sign Kornspitz had become the common name for a specific type of bread roll made of a certain type of dough shaped in a certain way and that the word Kornspitz thus no longer functioned as a trade mark, i.e. indication of origin.  Pfahnl based this on Article Article 12(2)(a) ("consequence of acts or inactivity of the proprietor").  The Austrian Patent Office agreed and revoked the mark, stating that Austrian end-consumers perceived the sign Kornspitz as a type of bread roll but not as a trade mark of one identifiable company. This was due to the fact that Austrian bakers did not inform their consumers that the Kornspitz bread rolls were made from a ready made baking mixture rather than mixed from scratch in their bakeries. The Austrian Patent Office found that the sign had become generic at least partly due to the acts or inactivity of Kornspitz Company.

Kornspitz Company was not amused and appealed to the Austrian Oberster Patent- und Markensenat, the Austrian Patent Office's Appeal Board which, looking at the wording of Article 12(2)(a), decided that it was the traders' view that was decisive -- and they did perceive the sign as a trade indicator, not that of the end consumers -- mostly basing this on the CJEU's decision in Bostongurka (C-371/02, Björnekulla Fruktindustrier).  The Appeal Board accepted that the sign Kornspitz had become generic to the end consumer but was clearly functioning as a trade mark within the baking trade. Bostongurka emphasises that a mark denotes origin, which means that the perception of intermediaries would only be relevant, where they influence the purchasing decision of the end-user, for example by providing a sale consultation. The Austrian Appeal Board however took a real life approach and found that it was not necessarily in the bakers' interest to tell their consumers that they used prefabricated dough.  It just did not sit too well with the idea of wholesome bread and the romantic idea of artisan bakeries.

The Questions referred to the CJEU by the very thorough Austrian Appeal Board, (Article 267 TFEU):

"1. Has a trade mark become ‘the common name ... for a product or service’ within the meaning of Article 12(2)(a) of Directive 2008/95/EC, where (a) although traders know that the mark constitutes an indication of origin they do not generally disclose this to end consumers, and
(b) (inter alia) on those grounds, end consumers no longer understand the trade mark as an indication of origin but as the common name for goods or services, inrespect of which the trade mark is registered? 

2. Can the conduct of a proprietor be regarded as ‘inactivity’ for the purposes of Article 12(2)(a) of Directive 2008/95/EC simply if the proprietor of the trade mark remains inactive notwithstanding the fact that traders do not inform customers that the name is a registered trade mark? 

3. If, as a consequence of acts or inactivity of the proprietor, a trade mark has become a common name for end consumers, but not in the trade, is that trade mark liable to be revoked if, and only if, end consumers have to use this name because there are no equivalent alternatives?"

That's not a Kornspitz, is it now?

The AG's Opinion

The AG, Pedro Cruz Villalon, initially explained that, due to today's economic realities the origin function, which he regarded as the crucial trade mark function in this context, did not refer to the physical origin of a product but to the question as to who was controlling the production, i.e. via a licensee.  Given that revocation of a trade mark affects the proprietor's property rights, it was necessary to show that the mark had objectively become generic; subjectively, this had to have happened through action or inaction on the part of the proprietor. 

Regarding question 1, Mr Villalon took the view that Article 12(2)(a) must be interpreted to mean that the relevant public for assessing whether a trade mark has become the common name of the goods, for which it is registered will mainly be consumers and end users.  This will even be the case where the sign functions as a trade mark for "intermediaries", in this case the bakers who use the trade mark owner's product to produce the bread roll but who do not reveal this fact to the Kornspitz-purchasing public.

Referring to Bostongurka, the AG stressed that, depending on the characteristics of the respective market, traders involved in the marketing of the product must be taken into account, for example where the traders have a degree of influence on the purchase decision of the consumer. This was not the case when it comes to bread rolls sold in a bakery, where the trader had little influence on the purchasing decision.   Mr Villalon expressly disagreed with the Austrian Supreme Court's case law on genericism, which "even after Bostongurka", conducted a comprehensive investigation of the understanding of the trade mark facing consumers, including end consumers, manufacturers and distributors, arguing that that consumers tend to use trade marks as generic terms. 

Regarding question 3, the AG found that neither the wording nor the purpose of Article 12(2)(a) required that there were equivalent linguistic alternatives for the sign Kornspitz.

While questions 1 and 3 looked at the objective side of Article 12(2)(a), question 2 looked at its subjective side, according to Mr. Villalon. So should it be regarded as inactivity if the proprietor of the trade mark remains inactive, notwithstanding the fact that traders do not inform customers that the name Kornspitz is a registered trade mark?  Whether there was inactivity must be decided by the national courts which had to look at whether the proprietor had taken reasonable measures to protect its trade mark from becoming generic. According to the AG this included controlling and influencing its licensees.   

This Kat is not so sure how this influencing of the licensees would work in the reality of an old fashioned bakery where consumers do indeed expect that the baker gets up at 4am and prepares everything from scratch: a warning sign stating we did not make this dough?  So while the AG's opinion makes a lot of sense in theory, this Kat prefers the Austrian approach of conducting a comprehensive investigation of the understanding of the trade mark facing consumers, including end consumers, manufacturers and distributors. Let's see what the CJEU says.