Audi’s S6 and S8 beat NIO’s ES6 and ES8

After NIO lost its trade mark battle with Audi before the Higher Regional Court of Munich regarding its model designations ‘eS6’ and ‘eS8’ (IPKat here), the General Court recently also confirmed a likelihood of confusion between Audi’s ‘S6’ and ‘S8’ trade marks and NIO’s ‘ES6’ and ‘ES8’ marks (cases T-593/23 and T-598/23).

Background

In 2017, NIO obtained registration of EU trade marks ‘ES6‘ and ‘ES8’ covering goods and services in classes 12, 37 and 40, all related to cars and services therefor.

Audi filed applications for invalidity of Nio’s trade marks on the basis of the earlier EU trade marks nos. ‘S6’ and ‘S8’, which were registered for ‘vehicles and constructive parts thereof’ in class 12 and ‘repair and maintenance of vehicles’ in class 37.

The Cancellation Division of the European Union Intellectual Property Office (‘EUIPO’) denied a likelihood of confusion. The EUIPO’s Board of Appeal (‘BoA’) upheld Audi’s appeals for most of the goods in class 12 of Nio’s trade mark. NIO filed actions with the General Court.

The General Court's Decisions

The General Court dismissed the actions.

No violation of Art. 95(2) EUTMR

NIO requested Audi to furnish proof of use of its trade marks before the EUIPO’s Cancellation Division. Audi submitted some evidence, which the EUIPO did not review because it found that, even assuming genuine use, there would be no likelihood of confusion.

Before the BoA, NIO continued to dispute that Audi established genuine use. Audi submitted additional evidence, namely official statistics on car registrations in Germany. The BoA took those into account. NIO argued that the BoA was wrong to do so.

The General Court recalled that, under Art. 95(2) EUTMR, as a general rule, the parties may submit facts and evidence after the expiration of deadlines and the EUIPO has a broad discretion to decide whether or not to take belated evidence into account. Art. 95(2) EUTMR is specified by Art. 27(4) EUTMDR, according to which the BoA may accept facts or evidence submitted for the first time before it only if (1) they are likely to be relevant for the outcome of the case, and (2) they have not been produced in due time for valid reasons, in particular where they are merely supplementing relevant facts and evidence which had already been submitted in due time, or are filed to contest findings made or examined by the first instance of its own motion in the contested decision.

On that basis, the General Court confirmed that the evidence was relevant to the outcome of the proceedings. Further, the documents had the necessary connection with the evidence submitted by Audi at first instance. Audi had filed an affidavit with information on new car registrations and they had also provided links to the website where the official statistics can be accessed.

The fact that the number of new registrations in the belated documents were inconsistent with those in the affidavit was deemed irrelevant for the assessment of the admissibility of the belated evidence.

Genuine use

The General Court also confirmed that Audi had established genuine use of its ‘S6’ and ‘S8’ trade marks by submitting the official statistics on the registration of new cars in Germany. They showed the place, time, extent and nature of use.

The General Court rejected NIO’s argument that the market shares of the S6 and S8 models (0.083 % and 0.011 %) were too insignificant to constitute genuine use. The judges recalled that the purpose of the requirement to show genuine use was to limit trade mark conflicts but not to assess the commercial success, review an undertaking’s business strategy, or to reserve protection only for trade marks that have been used extensively. The sale of several hundred cars per year was deemed sufficient for the use to be genuine.

NIO’s argument that Audi submitted the belated documents to establish enhanced distinctiveness of its trade marks but not to prove genuine use was rejected because the same items of evidence can be used to establish genuine use and enhanced distinctiveness.

Likelihood of confusion

It was undisputed that the goods are identical or similar to an average degree and that the relevant public consists of the public at large as well as professionals, both having a high level of attention, the former because of the high price of cars.

As regards the similarity of the signs, the judges upheld the BoA’s finding that the signs at issue had no elements that were more distinctive or dominant than others.

Visually, the judges referred to consistent case law, according to which the fact that the earlier mark was entirely included in the later mark is an indication of similarity. This case law also applies to short signs. The additional letter ‘E’ does not offset the similarity derived from the common letters ‘S6’ and ‘S8’ because the ‘E’ does not make the signs significantly longer and does not have an independent distinctive role. Thus, the signs were deemed visually similar to an average degree.

Phonetically, the judges took issue with the BoA’s finding that the German public would pronounce ‘ES6’ and ‘ES8’, on the one hand, and ‘S6’ and ‘S8’, on the other, in the same way. NIO submitted YouTube videos in German before the EUIPO, which showed that the letter ‘E’ was pronounced separately from the letter ‘S’. The BoA did not mention this evidence in its decision. The judges found that the BoA made a mistake when not taking this evidence into account and holding that the signs were pronounced identically. Rather, the signs have an average degree of phonetic similarity. 

Considering the average level of visual and phonetic similarity and the identical or averagely similar goods, the Court concluded that a likelihood of confusion existed.

The high level of attention of the public did not prevent this finding. The fact that consumers pay more attention to the differences between the marks does not mean that they examine them in minute detail or compare one mark meticulously with another. Even consumers with a high level of attention must rely on the imperfect image of the marks they retain in their memory.

Even if NIO’s claim of a low degree of distinctiveness of the earlier marks was accepted, the judges confirmed that a likelihood of confusion existed. The distinctiveness of the earlier marks is just one factor in the determination of the likelihood of confusion and does not exclude it. The Court referred to the average degree of similarity of the signs and identity and average similarity of the goods to justify the risk of confusion.

Comment

The judgments are noteworthy at least for two reasons:

1. They do not discuss the case law on short signs in sufficient detail. The General Court has held on several occasions that consumers can more readily distinguish short signs and the difference in one letter may be sufficient to exclude a likelihood of confusion.

2. The judges accepted a likelihood also for goods and services with an average degree of similarity. This means that the equation is: Average degree of similarity of the signs, average degree of similarity of the goods and low degree of distinctiveness of the earlier marks. For a finding of a likelihood of confusion with an earlier mark with a low degree of distinctiveness, the goods and services or the signs must have a higher degree of similarity (e.g. T-593/19 at para. 62). 

 

The picture is by Alex Bargain and used under the licensing terms of pexels.com.