Golden Bunny III: No retroactive application of EU Trade Mark Directive

The Golden Bunny trade mark litigation continues to hop along. Former Guest Kat Peter Ling reports on the recent decision of the German Federal Court of Justice regarding retroactive application of the EU Trade Marks Directive.

In addition to being known as a source for great chocolate, Swiss chocolate producer Lindt may be known to Kat readers as a source of interesting developments of trade mark law, especially in the field of non-traditional trade marks (see Katposts on Lindt's 3D golden bunny marks here, here and here). Last week, the German Federal Court of Justice published the reasons of its decision "Golden Bunny III", holding that Lindt owns an unregistered trade mark in the abstract colour gold, claiming the product "chocolate bunnies". 

                                                                                       Lindt's bunny

 

The case related to a trade mark dispute between Lindt and Heilmann, a German confectionery company. Heilemann was selling chocolate bunnies wrapped in golden aluminium foil. Lindt claims that Heilemann's bunnies infringe Lindt's rights in an unregistered colour mark related to the color gold. In addition to registered trade marks, German trade mark law also affords protection to unregistered signs upon a showing that the sign has acquired recognition as a trade mark within the relevant public.

Lindt had filed survey evidence showing that more than 75% of respondents thought the colour gold in relation to chocolate bunnies refers to a single company, and 72% of them were able to identify Lindt as the specific company to which the colour refers.

                                                                                      Heilemann's Bunny

However, before reaching the stage of analysing the survey evidence, Lindt needed to clear a more fundamental hurdle. It transpires that after Lindt's survey evidence was collected, the German Trade Mark Act was amended to exclude from trade mark protection any signs that consist exclusively of characteristic features that: (1) result from the nature of the claimed goods; (2) are necessary to obtain a technical result; or (3) give substantial value to the goods.

This amendment was the result of the transposition of Art. 4(1)(e) of the EU Trade Mark Directive into German law. Heilemann claimed that the new provision was applicable in the case at hand and that the abstract colour gold is a "characteristic feature" within the meaning of this provision.

The Federal Court of Justice agreed that a colour might indeed constitute a characteristic feature of a sign within the meaning of this provision, but it considered that this provision was not applicable to Lindt's trade mark. The Court reasoned that if trade mark protection was validly acquired under the previous law, an amendment to the Trade Mark Act cannot strip the trade mark owner of its valid right. This would breach the owner's property rights and lead to unacceptable legal uncertainty.

Heilemann argued that while the German Act had not yet been amended at the time of Lindt's survey, the EU Trade Mark Directive had already been enacted. The rule in Art. 4(1)(e) of the Directive, to be transposed into national law, was already known and its enactment was only a matter of time. In addition, Art. 4(1)(e) of the Directive was ultimately transposed almost verbatim into German law.

The Court disagreed. It considered that retroactive application of EU directives is allowed only if the retroactivity unequivocally emerges from the directive itself. In addition, EU directives cannot be directly applied before the transposition period has lapsed. Therefore, at the time of Lindt's survey, the only applicable rules to the acquisition of unregistered trade marks were those set out in the former version of the German Trade Mark Act. Under those rules, abstract colours were not excluded from trade mark protection for being "characteristic features" that result from the nature of the goods, or that give substantial value to the goods.

Turning to the survey evidence, the Federal Court of Justice considered that it constituted sufficient proof of Lindt's ownership of an unregistered trade mark based on acquired recognition. First, the Court argued that given the limited choice of basic colours, the threshold of acquired recognition for abstract colour marks needs to be higher in comparison with "averagely distinctive signs".

Nonetheless, the high degree of recognition from Lindt's survey evidence cleared this higher hurdle. In fact, the Federal Court of Justice reckoned that a degree of recognition of 50% is sufficient to register an abstract colour mark. Against this background, recognition 70% is clearly sufficient to support the existence of an unregistered abstract colour mark.

Finally, the Federal Court of Justice was of the view that there was no need for Lindt to show that the colour gold is a typical colour for all products of the company. Acquired recognition needs to be proven for the specifically claimed product only, not for the company itself, nor for all its products. Hence, the Court considered that Lindt is the owner of the unregistered mark, despite that it distributes many products (including a few types of chocolate bunnies) that do not make use of this colour.

Comment

The reasoning of the Federal Court of Justice on the non-retroactivity of EU directives follows established case law of the CJEU (see in particular C-4/10 and C-27/10 – Bureau national interprofessionnel du Cognac). In addition, it is hard to argue with the Federal Court of Justice, when it reasoned that stripping the owner from a valid trade mark on the grounds of a legislative change would amount to nothing less than expropriation.

Finally, it should be underscored that acquiring a degree of recognition of over 70% of an abstract colour is no small feat. If this result had not been considered "acquired recognition" under the relevant German law, this former GuestKat would be hard pressed to think of a case that would meet the necessary threshold.

Picture in the lower middle is by Fruitpunchli and is licensed under the Creative Commons Attribution-Share Alike 4.0 International license.