Advocate General vs. German Supreme Court – Does the use of four rings on a car grille infringe Audi’s trademark?

Not too long ago, the German Supreme Court held in Kühlergrill (I ZR 61/18, discussed here) that the sale of the following radiator grille for an Audi A6 infringed Audi’s rights to its figurative trade mark consisting of four interlocking rings.

The ring-shaped device is for mounting the original Audi logo. The Supreme Court found that the shape of the mounting device created a likelihood of confusion. The use affected the origin function because the relevant public would not just believe that the mounting device has a technical function but also that it indicates the commercial origin of the goods.

A similar case has been brought before a Polish court, which had doubts whether Audi’s trade mark is infringed. The court referred several questions to the Court of Justice of the EU (‘CJEU’). Advocate General (‘AG’) Laila Medina recently published her Opinion and – without mentioning the German Supreme Court’s judgment – arrived at a different conclusion (C-334/22).

Background

Audi owns EU trade mark no. 000018762 covering ‘land, air and water vehicles and parts thereof (not included in other classes), including engines for vehicles’ in class 12 protecting the following sign:

The defendant is a natural person, who sold between 1986 and 2017 radiator grilles customised and designed for old Audi models from the 1980s and 1990s. The radiator grilles included, like the originals, a carved space for inserting and mounting Audi’s logo, corresponding to the outline of the applicant’s EU trade mark. Neither AG Medina’s opinion nor the national court’s request for a preliminary ruling contain a picture of the grille.

Audi sued the defendant before the Sąd Okręgowy w Warszawie (Regional Court of Warsaw) for trade mark infringement. The court was unsure whether the shape of the mounting device affected the origin function of Audi’s trade mark and, if so, whether the defendant could rely on Art. 14(1)(c) EUTMR. This provision states:

An EU trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade [...] the EU trade mark for the purpose of identifying or referring to goods or services as those of the proprietor of that trade mark, in particular, where the use of that trade mark is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts.

The court referred the following (partly shortened and paraphrased) questions to the CJEU:

(a) Does Art. 14(1)(c) EUTMR allow the use of a sign which is identical or confusingly similar to an EU trade mark, in relation to automotive spare parts (radiator grilles) where that sign constitutes a mounting element for an automotive accessory (an emblem reflecting the EU trade mark), and:

(i) where the form of the mounting element is not technically required to affix the original emblem;

or

(ii) where the form of the mounting element is technically required to affix the original emblem?

If the answer to any of the questions in (a) is in the affirmative:

(b) What criteria should be used in this case to determine whether the use of an EU trade mark is consistent with honest practices in industrial and commercial matters?

(c) Does a trade mark, which is part of the shape of a car part, fulfil a designation function?

(d) Does the shape of the mounting element fulfil a designation function in this case?

The AG’s Opinion

Questions (c) and (d)

The AG responded to questions (c) and (d) first and together.

The AG referred to settled CJEU case law, according to which a trade mark infringement requires that one of the trade mark functions is affected or liable to be affected. She found that an essential condition of a ‘sign’ is its distinct and autonomous character in relation to the product it designates. It must be perceived as being independent and distinct from the product itself. Referring to the Libertel judgment and the AG Opinion in the Dyson case (discussed here), AG Medina found that a sign may not be a mere property of the product concerned. It may not be equated with the components of the product, especially those, which fulfil only a specific function and which, despite having an impact on the overall appearance of the product, are not perceived as a sign.

In the present case, the element on the radiator grille constitutes the support for Audi’s emblem. It is only used for inserting and mounting the emblem and, according to the AG, must necessarily adapt to the contours of the emblem. Thus, the mounting device forms part of the product itself and fulfils a mere technical function.

The AG also considered that the purpose of spare parts is to replace original parts, which requires them to look indeed like original parts. Non-identical parts could be considered tuning. Only a radiator grille that enables the insertion and mounting of the car manufacturer’s emblem, as conceived in the original radiator grille, makes it possible to replicate the vehicle’s original appearance.

The AG mentioned that the relevant public, whose perception is decisive, are professional distributors because the defendant only sold the goods to them. In order to support her finding, she mentioned that “a recent empirical study, published in a specialised academic journal and replicating the main premises of the present case, has been conducted in order to determine how the presence of the original manufacturer’s trade mark on a spare part affects the perception of the commercial origin of the spare part and the quality expectations of consumers, in particular in the Polish market.” This study was published on 10 January 2023 in the IIC - International Review of Intellectual Property and Competition Law and is accessible here. It concluded, said the AG, “that professionals appear to perceive the EU trade mark of the original manufacturer in the context of the sale of independently sourced spare parts as a description of the characteristics of the product – as an element which fulfils a technical purpose – rather than an as an indication of origin” (at para. 36).

AG Medina found that this conclusion is in line with the CJEU judgment Adam Opel, which has been cited in legal literature as an example where the use of a car manufacturer’s logo is not perceived as an indication of origin.

Just for the sake of completeness, the AG mentioned that the lack of a ‘repair clause’ in EU trade mark law similar to Art. 110 Community Design Regulation (‘CDR’) is irrelevant to the outcome of the present case. As the CJEU held in Ford Motor Company, Art. 110 CDR does not limit trade mark rights. Nevertheless, due to the overlap of trade marks and other domains of IP, the AG considered it appropriate to interpret IP laws so as “to avoid the neutralisation of the common objectives of those domains and to ensure that they are satisfied in full, especially with a view to protect a system of undistorted competition in the market”. The AG referred in particular to the Lego Juris case concerning the distinction between trade mark and patent law.

The AG concluded that 

a broad interpretation of the term ‘sign’ […] would […] favour the creation of a monopoly over the repair of radiator grilles for restoring the original appearance of vehicles, benefiting car manufacturers.

For these reasons, the AG recommended the CJEU to respond to questions (c) and (d) that the shape of Audi’s logo on the defendant’s radiator grille does not constitute a use of a sign in the course of trade within the meaning of Art. 9(2) and (3) EUTMR.

Question (a)

AG Medina responded to this question should the CJEU disagree with her response to questions (c) and (d).

The AG found that the mounting element in the grille does not amount to referential use in the meaning of Art. 14(1)(c) EUTMR because it is used only for inserting and mounting Audi’s logo.

For similar reasons, the mounting element is also not found to be an indication of the intended purpose of the grille.

The AG concluded that the conditions of Art. 14(1)(c) EUTMR are not met.

Question (b)

The AG also responded to question (b) in the event that the CJEU does not agree with her opinion on the other questions and suggested that use in accordance with honest practices in industrial or commercial matters requires

first, that the use of the EU trade mark does not entail a discredit or denigration of [Audi’s] mark; second, that the user has taken the necessary steps to indicate that the products were manufactured by it and to ensure that they will not be regarded as imitations or reproductions of the original part, and, third, that the manufacturer or seller of spare parts is subject to a duty of diligence as regards compliance with the conditions required to ensure that downstream users comply with honest practices in industrial or commercial matters.

Comment

Some initial thoughts on AG Medina’s Opinion:

1. The purpose of proceedings for preliminary rulings is for the CJEU to interpret EU law but not to apply it to the individual case. Likewise, it is not the task of the CJEU to find and assess facts. This is up to the national court:

In that regard, it should be borne in mind that, in accordance with the Court’s settled case-law, in the preliminary ruling procedure under Article 267 TFEU, based on a clear separation of functions between the national courts and the Court of Justice, the national court alone has jurisdiction to find and assess the facts in the dispute in the main proceedings. In that context, the Court is empowered to rule solely on the interpretation or validity of EU law in the light of the factual and legal situation as described by the referring court, in order to provide that court with such guidance as will assist it in resolving the dispute before it […].

(C-291/16 at para. 21)

The determination how the relevant public perceives the mounting device is a factual question, which is up to the national court to decide. The CJEU can give guidance on this issue but not decide it. Therefore, questions (c) and (d) could be considered inadmissible because they do not ask the CJEU to give guidance on the interpretation of EU law but to apply EU law to a particular situation. The German Supreme Court did not ask for a preliminary ruling in the Kühlergrill case because it considered all questions posed by the case to be settled by the CJEU.

2. The AG seems to have done some research on her own and found the study on the perception of trade marks on car parts in Poland. Since it is from January 2023 and the request for a preliminary ruling was made in February 2022, the parties could not have relied on the study before the Polish court.

The role of the Advocate General is to make, in open court, acting with complete impartiality and independence, reasoned submissions on cases which, in accordance with the Statute of the Court of Justice of the European Union, require the Advocate General’s involvement in order to assist the Court in the performance of the task assigned to it, which is to ensure that in the interpretation and application of the Treaties, the law is observed.

(C‑421/20 at para. 27, emphasis added)

How impartial is an AG that does the work of one of the parties and puts forth evidence in its favour?

3. Further, relying on a study without assessing its evidential value is a questionable endeavour. In any event, 21.6 % of professionals, who were shown the following third party grille believed that it comes from Audi:

Picture from the IIC article

"Spare Parts, Repairs, Trade Marks and Consumer Understanding"

by Anna Tischner and Katarzyna Stasiuk

Is misleading more than 20 % of the relevant public about the commercial origin not sufficient for trade mark infringement? Is this really de minimis?

What is also unexplored in the study is why some professionals believed that the trade mark does not come from Audi. This is important because a trade mark infringement is not excluded just because consumers understand that the product is not genuine. If you bought a new ‘Gucci’ handbag from a ‘street vendor’ for EUR 50, you would know that it is a fake and does not come from Gucci. Does it mean that there is no trade mark infringement? The answer is clearly ‘no’. Likewise, if the professionals understood that the grille was not genuine, e.g., because Audi sells its grilles with the four ring emblem attached to the grille, would the situation not be the same as for an obviously fake Gucci handbag?

4. The AG Opinion seems to be based on the premise that the Audi logo cannot be attached to the Grille if the mounting devices does not take its shape. However, as the alternatives (i) and (ii) of question (a) show, the national court has not decided yet whether the shape of the mounting device is technically necessary in order to mount the Audi logo on the grille.

5. Audi can most certainly invoke Art. 9(2)(c) EUTMR, i.e. rely on a trade mark with a reputation. An infringement of such a trade mark does not require a trade mark function to be affected. Instead, it is sufficient if the relevant public establishes a link between the reputed trade mark and its use by the defendant. Therefore, questions (c) and (d) do not seem to be decisive.

6. Finally, the AG’s recommended response to the national court’s questions appears to introduce a spare part exception in trade mark law through the backdoor. As mentioned above, the CJEU rejected the application of Art. 110 CDR to limit trade mark rights in Ford Motor Company. The Lego Juris decision mentioned by the AG concerned the interpretation of Art. 7(1)(e)(ii) EUTMR, specifically dealing with the overlap between trade marks and technical solutions. This particular provision is not an expression of a general principle that cases concerning overlaps of IP rights must be resolved in a uniform way.