A drop in the ocean? SMART WATER appeal runs dry

This morning the General Court of the European Union (Seventh Chamber) gave its ruling in Case T‑250/13 Naazneen Investments Ltd v OHIM, Energy Brands, Inc. intervening. This decision concerns the fate of a Community trade mark for the SMART WATER brand of soft drinks.  Never heard of it?  That's not surprising. This is its story.

In June 1999 Water Concepts obtained the registration of the Community word mark SMART WATER in respect of ‘beverages, namely water with dietary supplements’ in Class 32.  In February 2002 this mark was assigned to Gondwana which in June 2007 assigned the mark to Naazneen. In March 2008, registration of the mark was renewed for a further 10 years.

In 2009 Energy Brands [trading as Glacéau but actually is a privately-owned subsidiary of The Coca-Cola Company; Glacéau's own smartwater brand can be viewed here] applied to revoke the mark, pointing to non-use for a period of five years. The OHIM Cancellation Division revoked the registration in a decision that was subsequently upheld by the Second Board of Appeal in February 2013, the Board concluding that the evidence provided by Naazneen did not make it possible to establish that the mark had been put to genuine use; nor were there any proper reasons for non-use. Naazneen then applied to the General Court to annul the Board of Appeal's decision on numerous grounds, including failure to state reasons, failure to grasp the fact that that there had been genuine use and that there were good reasons for its non-use, or minimal use.

This morning the General Court dismissed Naazneen's application.  In the court's view:

*  A Board of Appeal doesn't have to state its reasons in its own words: nothing precludes it from reproducing reasoning set out in an earlier decision (in this case the decision of the Cancellation Division) that is relevant to the case before it. By confirming the Cancellation Division's analysis, according to which proof of genuine use of the mark had not been adduced, the Board had implicitly rejected Naazneen’s arguments.

* Naazneen relied, for evidence of use, on affidavits from the Chief Executive Officer of Gondwana, and an external consultant to Gondwana who had a contractual link with that company. Their evidential value was lower than affidavits coming from third parties. In any event, the Board of Appeal took them into account and took the view that they did not serve to prove genuine use of the mark at issue.

* There was evidence of the test sales of 12 pallets of bottles, representing 15,552 bottles. Since the goods in question were beverages in Class 32 -- mass-consumption goods aimed at the general public -- and that the market for those goods was of a significant size, a quantity of 15,552 bottles could only be regarded so modest that it did not constitute genuine use. In any event, the existence of those sales had not been proved.

* The Cancellation Division’s finding that use of the mark on a website that merely included the message "site is under construction, please visit us again later!", and which did not show any actual commercial activity, was not genuine use, could not be challenged.

* The total value of transactions involving the mark over the relevant period, an amount of 800 euros, was so token as to suggest, in the absence of supporting documents or convincing explanations to demonstrate otherwise, that use of the mark could not be regarded as sufficient, in the economic sector concerned, for the purposes of maintaining or creating market shares for the goods covered by that mark.

* It was no excuse that Naazneen had relaunched the marketing of its SMART WATER products since a period of almost three years had elapsed between the attempt to launch the brand and the end of the relevant period in which genuine use had to be proved.

* Nor did Naazneen have an excuse that, since its beverages were produced by a third party, the interruption to the marketing of them under the mark was independent of the will of the mark's proprietor (at that stage, Gondwana) and that, since the goods were defective, it had the choice either to stop using the mark at issue or to put consumers’ health in danger: it was for Gondwana to supervise and control the manufacture of the goods in question even though they were being manufactured by a third party, so any interruption to the marketing of those goods could not be regarded as independent of Gondwana's will. In any event, replacement products could have been manufactured and placed on the market within a reasonable period. The additional economic investments necessary for the manufacture of further products form part of the risks that an undertaking must face.

* The fact that revocation proceedings have been brought against a trade mark does not prevent the proprietor of that mark from using it.

This Kat thinks that this is an unsurprising outcome, but one that should serve as a reminder to everyone that genuine use is not just a state of mind but something that has to be proved on the basis of credible evidence. The case law is quite clear on this: there has to be evidence, it must relate to actual commercial use and it must relate to the five-year period in which non-use is alleged -- even if it dates from outside that period itself. Nothing else will do.

Smart (water) cat

Says Merpel, while an outsider, merely viewing a dispute from the standpoint of the judgment itself and without having seen the evidence and heard the arguments, can only ever get an imperfect impression of the legal dispute that led to it, there doesn't seem any reason why any part of this application should have come even remotely close to succeeding. She wonders whether the application was as much motivated by the hope that Energy Brands would be willing to pay for the claim to be quickly and discreetly dropped as by an assessment that it was really and truly likely to succeed.  Does anyone know?