Beef in veggieland: Hague court rules that INCREDIBLE BURGER infringes IMPOSSIBLE BURGER trade mark

One of this Kat's favourite journalistic pieces of the last year was a foray, by Tad Friend for The New Yorker, into the world of vegetarian burgers [here]. In particular, it chronicles Pat Brown's mission to "save the planet from environmental catastrophe". His strategy? The Impossible Burger, a 100% plant-based burger. 

As suggested by Elon Musk, the way to change the world is to start a business. And so, Pat Brown took on the beef industry, which he considers the greatest contributor to climate change. The piece describes the ascent of vegetarian burgers [and the painstaking opposition they face from various quarters] and raises thought-provoking questions about what, exactly, makes us love our favourite foods.

It was therefore nice to see that Impossible Burger has become so successful that it faces competition from a major player in the food industry – Nestlé – which recently introduced the "Incredible Burger". Given his mission, Pat Brown was probably happy, too, but less so about the name. Hence, Impossible Foods brought suit against Nestlé for infringement of its European Union Trade Mark IMPOSSIBLE BURGER before the district court of the Hague [Dutch decision here, courtesy of IE-forum]. In it's decision yesterday, the Hague court forbid Nestlé to further infringe Impossible Foods' trade mark in the entire EU.

The case

Impossible Burger is currently awaiting market approval for entry on the EU market. But it is very successful in the U.S., and when Nestlé announced, in late 2018, that it would launch its own vegetarian burger under the name Incredible Burger, Impossible Foods warned that this name would infringe its trade mark. Consequently, Nestlé changed its burger's name to Awesome Burger in the U.S.

In the EU, Nestlé filed a cancellation action before the European Union Intellectual Property Office (EUIPO) against the IMPOSSIBLE BURGER trade mark, alleging that it would be descriptive and devoid of distinctive character. Consequently, it entered the market with its Incredible Burger.

Impossible Foods filed suit before the district court of the Hague, requesting a pan-European injunction against the use of the Incredible Burger sign.

Vegetarian meals are both incredible and impossible for these two carnivores

The decision

Stay of proceedings pending cancellation proceedings

Nestlé argued the court should stay the proceedings pursuant to Article 132(1) of Regulation 2017/1001 (the European Union Trade Mark Regulation, EUTMR). According to this provision, a European Union trade mark court "shall" stay infringement and validity actions if a declaration of invalidity has already been filed before the EUIPO.

Impossible Foods argued that the stay should nonetheless be denied – Art. 132(1) EUTMR allows this if "there are special grounds for continuing the hearing" – because it considered Nestlé’s cancellation action "evidently baseless" and started for no other reason than to slow down inevitable infringement proceedings. It argued that Nestlé had already filed third-party observations during the grant proceedings before the EUIPO but, despite these, the trade mark was granted, and its cancellation grounds contain no new arguments.

According to the court, Art. 132(1) EUTMR seeks to prevent diverging decisions and therefore make a stay mandatory. The exception of special reasons must be interpreted strictly, and the mere fact that Nestlé's third party observations had not resulted in refusal of the trade mark did not make its cancellation action evidently baseless. In addition, other invalidity proceedings are pending against the trade mark as well.

Consequently, the court stayed the proceedings. In this respect, it pointed out that Impossible Foods' interests were sufficiently safeguarded by the possibility to order provisional measures for the duration of the stay as per Art. 132(3) EUTMR. Despite Nestlé's objections, the court proceeded to do so.

Jurisdiction

Impossible Foods had filed suit against a Dutch Nestlé company, Nestlé BV, as well as its Swiss parent companies and sister companies in various EU Member States. Nestlé argued that the court lacked jurisdiction to rule on the claims against all those other companies insofar as it concerned infringement outside of the Netherlands.

The court disagreed. It held that it had cross-border jurisdiction as against Nestlé BV on the basis of Art. 125(1) EUTMR, which provision also declares applicable the general rules of Regulation 1215/2012 (the Brussels I-Reg). Interestingly, although the parties had not argued this, the court suggested it had jurisdiction to hear the case against Nestlé BV's parent company on the basis of the CJEU's decision in C-617/15 Nike v. Hummel. In that case, the EU court laid down conditions under which a subsidiary may be considered an 'establishment' of a non-EU based parent company.

Regardless, the court held that it had jurisdiction to hear the case against all defendants because (1) there was a Dutch defendant – Nestlé BV – and (2) the claims against all defendants are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments [as per Art. 8(1) Brussels II-Reg]. This latter condition was satisfied, according to the court, because all defendants were alleged to have infringed the same trade mark (IMPOSSIBLE BURGER) with the same infringing sign (INCREDIBLE BRUGER) for the same product (vegetarian burgers).

Validity of the IMPOSSIBLE BURGER trade mark

Having decided that it was appropriate to hear Impossible Foods' claims for provisional relief, the court had to anticipate the success of Nestlé invalidity attack against the IMPOSSIBLE BURGER trade mark. According to Nestlé, this mark is devoid of any distinctive character and consists exclusively of signs that may serve to designate characteristics of the goods, as per Arts. 7(1)(b) and 7(1)(c) EUTMR.

Nestlé argued that "impossible" (i) suggests that it is a vegetarian burger that is 'impossibly' alike a real burger and (ii) is generally a laudatory term. The court declined to follow this argument.

The court found that "impossible" can be considered "anti-descriptive" for a product that is physically real. It also considered that the mere use of this word does not connote the plant-based nature of the burger. Furthermore, it did not accept that "impossible" will always be perceived as a laudatory term: it may even be considered a negative term.

Likelihood of confusion

According to the court, IMPOSSIBLE and INCREDIBLE have a substantial degree of visual similarity. They share the same number of letters, and in particular many of the letters appear in the same place. The fact that "burger" is wholly descriptive was not considered relevant by the court. Furthermore, the court held that there was also a fair degree of phonetic similarity.

Conceptually, the trade mark and sign were considered further apart. Whereas the relevant public would understand IMPOSSIBLE BURGER to mean a burger that cannot exist, it would understand INCREDIBLE BURGER to mean a burger that is exceptional. There was only a small degree of conceptual similarity because both the trade mark and the sign raise the question what it is that is so impossible or incredible about the burger.

The court considered the relevant goods identical and ascribed to the trade mark an average degree of distinctiveness. Taken together, this sufficed to conclude there was a likelihood of confusion. In particular, the fact that there had already been cases of actual confusion – with the Incredible Burger generally being considered of lower quality – and the fact that Nestlé had approached Impossible Foods for a possible licensing deal, but launched its own burger following the disclosure of confidential information by Impossible Foods, contributed to this finding. The latter circumstance made the court suspicious that the marketing of the Incredible Burger was part of a conscious strategy on the part of Nestlé to frustrate the European launch of the Impossible Burger and to claim its market share for itself.

Merely descriptive use

Lastly, Nestlé had argued that it used the designation 'Incredible Burger' purely descriptively within the meaning of Art. 14(1)(b) EUTMR, i.e. to indicate that the burger has an exceptional quality. Nestlé claimed that because it used the term together with the trade mark GOURMET GARDEN, Incredible Burger was merely intended to convey to the public information about the product.

This argument, too, was rejected. According to the court, 'Incredible Burger' differs from such designations as 'Lentil burger' or 'Cheese burger' in that it conveys no actual information about the product itself. Furthermore, it considered relevant that Nestlé used the designation on the front and back of the packaging in all Member States, suggesting use to designate the origin of the goods.

Balance of interests

In light of the above analysis, the court concluded Nestlé infringed the IMPOSSIBLE BURGER trade mark and proceeded to order provisional measures. Nestlé argued that a provisional injunction for the duration of the stay would effectively come down to an order to rebrand and thus a final measure: on a balance of interests, the injunction should not issue.

The court, however, found it particularly relevant in this respect that Nestlé had been fully aware of the IMPOSSIBLE BURGER trade mark and, in that sense, had launched 'at risk'. In fact, it chose a different sign in the US. In these circumstances, Nestlé exposed itself to the risk of legal measures with severe financial consequences.