SCHHH ... it's not a single brand

The IPKat is very grateful to David Pellisé and Juan Carlos Quero of Pellisé Abogados in Barcelona, for telling him about a new reference that is fizzing its way to the Court of Justice of the European Union. 

Interested in the limits of parallel importation? Then pour yourself a stiff G&T and read on. The Barcelona Commercial Court (nº 8) in Spain has essentially asked the CJEU to rule on what happens when the owner of a trademark right has caused uncertainty as to the function of origin.

The famous SCHWEPPES trade mark: it looks
the same worldwide, but ownership varies
from one EEA country to another

The dispute relates to parallel imports of soft drinks bearing the famous SCHWEPPES trademark. The defendant, Red Paralela SL (for whom Pellisé Abogados acted), imported SCHWEPPES drinks into Spain from other European Economic Area (EEA) countries, most notably from the UK. The plaintiff, Schweppes SL, took action as the exclusive licensee of its sister company, Schweppes International Limited, which owns the Spanish trademark registration for SCHWEPPES.

The imported products were genuine UK-branded SCHWEPPES drinks, but the trademark rights are divided across the EEA, and not (Red Paralela would argue) in the most transparent way. Apparently, in 1999, Schweppes International sold the trademark rights in many EEA countries, the UK among them, to the Coca-Cola Group. However, for some countries, such as Spain, the trademark rights were retained by Schweppes International and licensed within the group, while in yet other countries such as the Netherlands, Schweppes International retained ownership but licensed the rights to Coca-Cola.

The IPKat understands this to mean that in any given EEA country, one can buy genuine SCHWEPPES tonic water, but this might have been produced:

• by a Schweppes International subsidiary such as Schweppes SL in Spain

• by Coca-Cola as the trademark owner, as in the UK, with no involvement of Schweppes International or any associated company, or

• by Coca-Cola as the licensee of Schweppes International, as in the Netherlands

Presumably, Schweppes International can only object to parallel importation in the second of these cases, but the question now raised is whether it should even be able to object in the second case, particularly in view of the "global brand image" issue. Schweppes International promotes a “global brand image” (as the Barcelona Court puts it) which is associated with the United Kingdom, from where the brand originates. The IPKat understands this as referring to the fact that both Schweppes International and Coca-Cola promote the SCHWEPPES-branded products as being in a direct lineage from the invention of the soft drink in 1783 by Jacob Schweppe. 

Confused yet? The IPKat suggests you have a G&T.

The Spanish subsidiary, Schweppes SL, has apparently been pretty successful until now in enforcing this market division between different EEA countries, having successfully brought many infringement actions on the basis of the Spanish registration, obtaining more than forty injunctions and favourable decisions of first instance from different Spanish Courts.

However, in view of the arguments raised by the defendant Red Paralela SL, the Barcelona Commercial Court (nº 8) has decided to refer four questions to the EU Court of Justice. Two of these four questions deal specifically with the limits of the trademark function of origin.

The first question asks:

• Is it incompatible with Article 36 of the Treaty on the Functioning of the European Union and Article 7.1 of Directive 2008/95/EC and Article 15.1 of the Directive (EU) 2015/2436 for the holder of a trademark in one or more Member States to prevent parallel importation or marketing of products, bearing a virtually identical trademark owned by a third party, from another Member State, when the holder has promoted a global brand image associated to the Member State from which the products intended to be prohibited came?

The second question asks:

• Is it incompatible with Article 36 of the Treaty on the Functioning of the European Union and Article 7.1 of Directive 2008/95/EC and Article 15.1 of the Directive (EU) 2015/2436 for the holder of a well-known trademark to use it in a manner that generates confusion in the average consumer regarding the corporate origin of the product?

As David & Juan Carlos observe, the answers of the EU Court of Justice to these questions may impose additional burdens on trademark owners with regard to the correct use of a trade mark to fulfil the function of origin. 

The IPKat thinks that Schweppes and Coca-Cola have done a pretty good job in marketing SCHWEPPES as a single global brand ... so much so that until hearing of this case he had no idea that the tonic water sold in Spain was from a different corporate stable than that sold in the UK. Looking at the respective websites would not have cured the IPKat of this misconception, referring as they both do to the same genesis story from 1783. So should a brand owner who sells off the brand rights in some countries be treated differently according to whether the brand continues to be marketed seamlessly to consumers as a single global brand? Is the function of origin of a trade mark fulfilled in these circumstances, and if not, what are the consequences for enforcing the trade mark rights?