Small cars, big trouble – The final chapter!? Court denies claims of Volkswagen against model cars

Volkswagen has been fighting a fierce battle against models of its original cars. The judgments of the Court of Justice of the EU in Adam Opel (IPKat here) and the German Supreme Court in Opel-Blitz II (IPKat here) and DACHSER (IPKat here) promised that this endeavour would be an uphill battle. While the German Supreme Court’s decision in VW Bulli (IPKat here) provided some hope for car manufacturers, the Higher Regional Court of Hamburg seems to have crushed it in a recent decision (5 U 61/21).

Background

Volkswagens owns the three-dimensional German trade mark no. 30627911 for the famous ‘Bulli’ (officially ‘VW T1’):

It was registered in 2006 inter alia for ‘motor vehicles’ in class 12 and ‘model cars’ in class 28. The Bulli was first sold in 1950 and is still present on the streets (at least in Germany).

The defendant manufactured and sold high-priced model cars, in particular for collectors and advertising clients. It used to have a license agreement with Volkswagen to sell model cars such as the following:

Their packaging showed the defendant’s trade mark ‘Premium ClassiXXs’ and the following statement up until the end of 2012, when the defendant terminated the license agreement:

The defendant continued selling, inter alia, the following model cars without a license and without the statement depicted above. 

Volkswagen sued the defendant for trade mark infringement. The defendant requested Volkswagen to furnish evidence of use of its 3D trade mark. The District Court of Hamburg dismissed the action.

The Higher Regional Court of Hamburg granted Volkswagen’s claims. It found that the defendant’s models would create a likelihood of confusion and take unfair advantage of Volkswagen’s 3D trade mark for ‘motor vehicles’. The defendant appealed to the German Supreme Court, which upheld the appeal and referred the case back to the Higher Regional Court (IPKat here).

The Higher Regional Court’s decision

The Court dismissed Volkswagen’s claims.

Genuine use

The judges confirmed that Volkswagen had established genuine use of its 3D trade mark for ‘model cars’ in class 28 because of the defendant’s sale of models under the license agreement until the end of 2012, which fell within the relevant period to establish genuine use.

The decisive question was whether the shape of the model cars were perceived as indications of the commercial origin. The Court referred to consistent case law, according to which consumers are not in the habit of drawing conclusions about the origin of goods based on their shape. They usually serve aesthetic or functional purposes. Further, when a shape is used with other trade marks, it must be paid particular attention to the question whether the shape is perceived as a separate indication of origin.

Since the perception of the relevant public is decisive, the judges determined that the public at large is relevant. Although the model cars cost between EUR 40 and EUR 250 and are directed at collectors and advertising clients, those goods can be purchased by everyone, especially as gifts. The relevant public may not be limited to consumers who are primarily targeted by the goods. Such a marketing strategy can be changed at any time and the relevant public may not be determined on the basis of subjective criteria.

With respect to the question whether consumers perceive the shape of the model cars as an indication of the commercial origin, the judges found that, in the automotive sector, the shape of cars has recognizable features that are typical for a specific manufacturer. It was undisputed that the form of the Bulli is understood as a source indicator by consumers. Considering the statement ‘Officially licensed by Volkswagen’, the judges had no doubt that consumers would attribute the model car’s shape to Volkswagen. The public would perceive the sign ‘Premium ClassiXXs’ as a trade mark of the defendant and the shape as well as the VW logo as trade marks of Volkswagen. Consumers would assume a co-branding since this is normal business practise to which the general public is accustomed.

Likelihood of confusion - No use as a trade mark

The Court denied that consumers understand the shape of the contested model cars as an indication of the commercial origin.

Unlike in the assessment of genuine use, the model cars did not indicate that they were officially licensed by Volkswagen. The judges deemed this to be decisive because the statement indicated a co-branding. Consumers know that model cars are sold with and without licenses from the car manufacturers. Without the indication of a license, consumers do not expect commercial ties between the model car and the original car manufacturer. Rather, the general public is used to replicas of real cars in model form by third parties.

Volkswagen submitted four surveys trying to prove that consumers perceive the shape as a source indicator. Three of the surveys showed Volkswagen’s 3D trade mark or a Bulli without the VW logo to the participants but not the contested models, which is why the surveys were considered to be immaterial. The decisive question was whether consumers perceived the shapes of the contested models as a trade mark.

The subject of the third survey was one of the contested models. It showed that 51.4 % of the public expected a license agreement with Volkswagen. The judges disregarded the survey for three reasons:

(1) The German Supreme Court does not, in general, allow courts to find a ‘split’ perception, meaning that there is one part of the public that perceives a sign as a source indicator and one part that does not;

(2) The survey did not explain on what consumers base the expectation of a license agreement, i.e. whether it is based on the shape of the model or other knowledge about the market;

(3) The percentage of people expecting a license agreement can be explained by the fact that there are model cars sold with and without a license agreement, which is known to the consumers.

Trade mark with a reputation – No unfairness

The Court also denied claims based on a trade mark with a reputation. Any advantage taken of the repute or distinctiveness of Volkswagen’s 3D trade mark would not be unfair.

Replicating a real-life car as a model requires applying the trade marks as used on the actual vehicle. This is not objectionable if the trade mark is not used in a promotional way that goes beyond the mere use as a representation of the original vehicle.

The judges did not see any objectionable use of Volkswagen’s trade marks that went beyond what was necessary to create a replica of the original Bulli.

Double identity

Finally, the judges denied claims based on double identity, which Volkswagen asserted against some of the contested models.

The judges left open whether the signs are identical and found that no trade mark function was affected by the contested models.

Comment

The decision may not be the end of the automobile manufacturer’s fight against model car producers. The survey commissioned by Volkswagen asking about the need of the model car’s manufacturer for a license could have been sufficient had it also asked why the participants believed there to be such a need. If a non-insignificant part responded that it was (also) because of the shape, Volkswagen should have won the case.