Chanel is reminded: trademark territoriality still matters

Even a mark that has been on the International Registry for 40 years does not assure registration of a subsequent national designation. Kat friend Marijus Dingilevskis reminds us of this in reporting on a recent decision by the Lithuanian Supreme Court.

On 12 January 2022, the Lithuanian Supreme Court upheld the rejection of the Lithuanian designation of Chanel SARL’s two-dimensional trademark (see below) in Class 3 for perfumery products. The trademark depicts the shape of the Chanel No. 5 perfume bottle. The international registration of the given trademark is valid as of 1980; the Lithuanian designation was made in early 2014.

The application had been rejected by the Patent Bureau, and by three instances of the Lithuanian courts. From this, Chanel filed the appeal to the Supreme Court, which considered registrability both in terms of (1) ab initio distinctiveness, and (2) acquired distinctiveness. (Interestingly, unlike in Lithuania, protection for this trademark was granted successfully in other jurisdictions, such as Latvia and Poland, in which the request on designation was also submitted in 2014.)

Ab initio distinctiveness

The Court concluded that the trademark is not distinctive ab initio because there are numerous similar perfume bottles on the market. So the Court considered that Chanel’s perfume bottle is commonplace within the perfume market.

The Court also considered the mark on a three-dimensional basis, since, in its view, the two-dimensional depiction of a perfume bottle is identical to the perfume model bearing the mark. Consumers perceive the registered depiction of a perfume bottle as the packaging of the perfume, which is usually sold in a liquid form, rather than as a mark designating the origin of such perfume.

In principle, Chanel as the applicant had to prove registrability based on the mark covered by the application. That said, the CJEU has ruled that perception of the average consumer might differ in the case of a three-dimensional, as compared to a two-dimensional, trademark (e.g., T 862/19). This is because consumers do not usually associate the shape of packaging with the origin of a product, which leads to a higher bar of proof that the three-dimensional mark must meet in establishing that the bottle serves a source indication function (see, e.g. Guerlain’s Rouge G lipstick (T-488/20)).

However, the Court decided that the shape of the perfume bottle in the instant case does not diverge from what is customary in the perfume sector. Since there are numerous examples of different shape bottles within the sector, consumers are accustomed to this variety and do not tend to view any certain shape as a source indicator, unless there is something special, trademark-wise, about the shape of the bottle.

Here, considering the simplicity of the shape of the perfume bottle and the number of perfume bottles on the market, the Court concluded that Chanel did not prove ab initio distinctiveness of the trademark.

Acquired distinctiveness

Alternatively, Chanel submitted arguments and evidence concerning the acquired distinctiveness of their trademark. This claim, too, was unsuccessful. The Court acknowledged the possibility that packaging could serve as a source indicator in the eyes of consumers and therefore acquire distinctiveness through use. But the Court concluded that it was not so for the instant mark.

The main reason for this result were the shortcomings of the evidence adduced to support acquired distinctiveness. A consumer survey submitted by Chanel had addressed only French consumers, while evidence concerning Lithuanian consumers (in particular, Chanel’s marketing materials and market share data for the perfumes in question) were deemed insufficient.

Notably, Chanel did not submit any direct evidence related to consumer perception of their trademark. The only direct evidence related to consumer perception of their trademark was taken from French consumers. Unsurprisingly, this consumer survey was considered insufficient to prove acquired distinctiveness in Lithuania.

As mentioned, Chanel had also submitted marketing materials and market share data. But the Court concluded that they were insufficient as well. The Court prioritized consumer surveys over marketing materials or market share data in proving acquired distinctiveness, but Chanel had not submitted the former regarding Lithuanian consumers.

Moreover, Chanel did not provide evidence relating to the market share of this particular product (Chanel No. 5 perfume) within the entire perfume market (similar to C-25/05 P). As well, the general market share data were not adequate to prove acquired distinctiveness.

Comment

While arguably Chanel faced an uphill battle in establishing ab initio distinctiveness, query whether more evidence relating to the perception of Lithuanian consumers regarding the mark might have led a different result.

In any event, the decision underscores that the principle of territoriality cannot be avoided even by the most iconic world-wide brands. The decision also reminds that each jurisdiction fashions its own requirements regarding proof of acquired distinctiveness, especially consumer perception. In an age in which regional trademark arrangements, such as the EUTM, may provide enhanced geographic scope for trademark registration, this decision is an excellent reminder—national jurisdictions still matter.

Did Chanel fail to secure registration for its perfume bottle within Lithuania? In terms of trademark law, yes. However, in a fight against counterfeit products, Chanel can still turn to unfair competition laws in Lithuania, which grant protection against copying the appearance of a competitor’s product.

Picture on upper right is by Виктор В (talk) and is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Picture on lower left is by Eric Gaba (Sting - fr:Sting) and is licensed under the Creative Commons Attribution-Share Alike 4.0 International, 3.0 Unported, 2.5 Generic, 2.0 Generic and 1.0 Generic license.