Gardens in the Internal Market are big enough for another wolf

A little over a year ago we left Case C-383/12 P Environmental Manufacturing LLP v Office for Harmonisation in the Internal Market, Société Elmar Wolf – reported here in the IPKat – and the Court of Justice making it clear to the General Court that 'what it said explicitly was what it meant'. Today the General Court proved that it has finally understood it.

To recap briefly, the applicant 'Environmental Manufacturing LLP' (already known as ‘EM’) back in 2006 applied for a figurative CTM representing the head of angry wolf, for goods in class 7, namely ‘machines for professional and industrial proceeding of woods and green waste; professional and industrial  wood chippers and shredders’. The intervener - Société Elmar Wolf - opposed to that registration on the basis of its earlier rights, namely two French marks and two International registrations respectively designating Spain and Portugal and Spain, whose reputation was proved before the Board of Appeal in regard to goods of the domestic garden sector.

Finally free to run

The proceedings before the General Court and the Court of Justice focused on the analysis of the existence of the three requirements to afford protection according article 8(5) Regulation 207/2009 . While the goods could be deemed to form part of a homogenous group and the marks were found to be similar – indeed there are several animals whose heads could be used in stylized character to serve as origin identifier, for example cats – problems arouse in relation to the third requirement: the alternative presence of the dilution or the tarnishment or the free-riding of the earlier mark as consequence of the use of a later mark.

As the General Court in its ruling in Case Case T-570/10 concluded that the CTM application could dilute the earlier marks’ capability to identify Elmar Wolf’s goods and could affect their intrinsic economic value, it did not take into consideration whether the case encompassed a free-riding conduct on part of EM.

The Court of Justice recited that in Intel Corporation - Case C-252/07 – it did require that in order to prove the detriment or the serious risk of detriment to an earlier mark's distinctive character [dilution] because of the use of a later mark - article 8(5) Regulation 207/2009 - the trade mark proprietor must file due evidence of a change in the economic behaviour of the average consumer of the goods and services for which the earlier mark was registered.

It followed that the Court of Justice decreed that the General had Court disregarded the mentioned assessment on dilution and, therefore, it erred in law: it decided to set aside the General Court’s judgment and to refer the case back to it for a revised decision which was given today.

The seventh chamber of the General Court confirmed EM’s complaint and aligned with the Court of Justice's argument that in the previous phases of the proceeding no due account was given to establish the risk of dilution of the earlier marks, in that the Elmar Wolf did not mention any change of the consumers’ economic behaviour at the OHIM stage.

Older wolf

That said, this time, the General Court had to consider the applicant’s claim that its CTM application could not cause any free-riding of the Elmar Wolf’s earlier marks either.

The Court said that taking unfair advantage of the distinctive character or the reputation of an earlier mark means free-riding on the coat-tails of the mark or trying to exploit its reputation: there must be a risk that the aura of the mark, or the characteristics and qualities it conveys, can pass to the later mark’s goods so as to facilitate their marketing because of the association with the reputed mark created in the consumers’ minds. The result is that the later mark benefits from the earlier mark’s power of attraction without its proprietor being compensated for the investments in the mark’s prestige.

Of course, the link between the later and the exploited earlier marks must be substantiated with evidence showing the unfair association of the positive qualities of the reputed sign with the later one. This link must be assessed globally considering the strength of the earlier marks’ reputation and the degree of their distinctive character, the degree of similarity between the confronted marks and the nature and the proximity between the goods or services concerned.

Black and white wolf

Thus, referring to previous case-law (VIPS), the Court identified different degrees of reputation within the category of reputed trade marks, in that solely for those marks enjoying an exceptionally high prestige the prospective non-hypothetical risk of free-riding is so obvious that their proprietors do not have to file any other evidence of the unfair advantage.

The Court agreed with the Board of Appeal that Elmar Wolf’s earlier marks were highly reputed in France, Spain and Portugal and that the relevant public could create a link with the CTM application, because of the identity or high similarity of the goods concerned, although the signs were found insufficiently similar to give rise to a likelihood of confusion [this cat thought that the similarity of the marks was the first requirement for granting protection according to the mentioned article 8(5) Regulation 207/2009].

In relation to whether EM rode on the coat-tails of Elmar Wolf’s earlier marks, the General Court diverged from the Board of Appeal’s arguments, in that they were too succinct and only based on the long-standing reputation and highly distinctive character of the opposing marks given the peculiarity of the wolf’s head. These circumstances, said the Court, could not necessarily lead to the passing on of the earlier marks’ image to the CTM application.

This was not a case in which the exceptional reputation of the marks could serve to rely on such a status in order to avoid the burden of proof of the other side’s free-riding conduct. Neither could it be possible to apply by analogy the case-law where presumption of free-riding conduct could be affirmed.

The General Court annulled the Board of Appeal decision and left EM’s wolf mark free to circulate in the Internal Market. All proprietors of reputed marks are warned: duly comply with all evidence they are requested to provide in support of their reputation claims, so as to trigger more in-depth analysis at the OHIM stage.

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