CJEU: existence of earlier local right sufficient to fend off trade mark claims

Trade marks are very strong rights, on the basis of which a proprietor can bring forward a wide variety of claims. Yet, the rights conferred by a trade mark may be limited, for instance when the proprietor faces an earlier right applying in a particular locality. With respect to such earlier rights, article 14(3) of the Trade Mark Directive (2015/2436) provides that a trade mark proprietor may prohibit the use thereof, if that right is recognized by the laws of the Member State. 

But what if an earlier right in practice cannot be exercised vis-à-vis the proprietor, for instance due to acquiescence or the existence of an even earlier right? In a recent decision, the CJEU sheds light on this question. 

Background of the case

The case relates to names designating a coach transportation company in the Netherlands. In the previous century, two siblings jointly operated the company founded by their father. Thereafter, the siblings went their own way and kept using, as a trade name for their respective companies, parts of the original company name (which included their family name). At some point, the offspring of one sibling registered a Benelux (verbal) trade mark containing that family name. Once registered, the mark was relied upon to prohibit the use of the other trade name. 

The defendants (and users of the trade name) argued that the mark could not be enforced due to the existence of an earlier right (in the sense of article 6(2) of Directive 2008/95, applicable at the time of dispute), being the trade name they had used for decades. The claimants (the holder of the trade mark) argued differently and alleged that due to the co-existence of both trade names over those decades, the rights to the trade name had acquiesced. 

Before the district court of The Hague (Rechtbank Den Haag), the court agreed with the claimants. On appeal, before the Court of Appeal of The Hague (Gerechtshof Den Haag) the judgement was set aside, leading the case to be brought before the Dutch Supreme Court (Hoge Raad). 

The Supreme Court faced the question whether valid earlier rights in the sense of article 6(2) of Directive 2008/95 could exist if they no longer can be invoked due to acquiescence. It was also unsure what the relevance was of an ‘even earlier right’, being a right that existed before the invoked ‘earlier’ right (which the claimants argued they had, as they allegedly started using their trade name earlier). In those circumstances the Supreme Court decided to stay the proceedings and refer two questions to the CJEU for a preliminary ruling. 

Who has the older right?!

The decision by the CJEU

The CJEU firstly recalled that trade names are protected as right of intellectual property, referencing to the TRIPs Agreement and the Paris Convention which both extend protection to trade names. As such, they may constitute an earlier right for the purpose of the application of Article 6(2) of Directive 2008/95. 

With respect to this provision, the CJEU observes that its wording does not require, in order to object to a later mark, that the owner of the earlier right must effectively be able to prohibit to use of that mark. This can inter alia be explained by the fact that article 6(2) does not aim to cancel the mark or prevent its registration, but merely limits the rights conferred by a registered trade mark. Consequently, more ‘flexible’ conditions towards earlier rights can be adopted, whereby it is sufficient that those rights are recognized by the laws of the Member State and that they are used in the course of trade. Should this outcome lead to a disparity to the detriment of the trade mark proprietor, for instance when the use of the earlier right is no longer honest or in good faith, the CJEU remarks that such a situation could be examined on the basis of the rules of unfair competition.

Responding to the first preliminary question, the CJEU concludes: 

“Article 6(2) of Directive 2008/95/EC […] must be interpreted as meaning that, for the purposes of establishing the existence of an ‘earlier right’ within the meaning of that provision, there is no requirement that the proprietor of that right must be able to prohibit the use of the later mark by the proprietor of that mark.”

With respect to the existence of an even earlier right, the CJEU firstly notes that Directive 2008/95/EC does not govern the relationship between various ‘earlier’ rights. Instead, it is primarily governed by the domestic law of the Member State concerned. What matters is that, in relationship to later trade mark, the earlier right is still protected at the time it is relied upon. The fact that the same trade mark proprietor has an even earlier right may have a bearing in the existence of the (first) earlier right, in the sense that the proprietor may counter the claim of an earlier right or limit it. This is for the national courts to assess. 

However, if an earlier (or even earlier) right is no longer protected by the laws of a Member State, it cannot be held that such right constitutes a right recognized by that law in the sense of article 6(2) Directive 2008/95/EC. It is therefore possible that a party may successfully rely on its earlier right, despite the existence of a no longer protected ‘even earlier right’ by the trade mark proprietor, as the CJEU concludes in response to the second preliminary question:

“Article 6(2) of Directive 2008/95 must be interpreted as meaning that an ‘earlier right’ within the meaning of that provision may be granted to a third party in a situation in which the proprietor of the later trade mark has an even earlier right recognised by the laws of the Member State in question over the sign registered as a trade mark to the extent that, under those laws, the proprietor of the trade mark and of the even earlier right may no longer, on the basis of its even earlier right, prohibit the use by the third party of its more recent right.”

Comment

Successfully relying on earlier rights may be a challenge. Especially when both the mark and the earlier right have (unknowingly) co-existed for a longer period, difficulties can arise in proving which right is earlier. 

In this judgement, the CJEU appears to be more lenient towards earlier rights. Provided they still exist and are afforded protection, the question whether they can be also be effectively exercised towards the trade mark proprietor is irrelevant. In doing so, lengthy discussions on acquiescence and estoppel that often occur in relationship to earlier rights may now be of the past. 

Yet, to this GuestKat the outcome of this judgment is not fully satisfactory. When the earlier right no longer can be invoked due to circumstances attributable to the owner thereof, the trade mark proprietor should be able to exercise its rights, instead of relying on other rights or doctrines (such as unfair competition).

Picture is by Mikael Restoux, made available under a GNU Free Documentation License.