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European IP Bulletin, Issue 28, January - Trade Mark
Trade Mark
9. When is a Descriptive Mark Not a Descriptive Mark?
The Advocate-General (AG) has handed down some valuable guidance in respect of the examination of potentially descriptive foreign language trade marks by national trade mark authorities. If the AG’s Opinion is adopted by the full Court, then national examiners will not be allowed to take into account the possible restrictions on inter-state trade.
The Opinion dated 24 November 2005 is in the case Matratzen Concord v Hukla SA Case C-421/04. It came from a reference from the Spanish court of trade mark appeal Audiencia Provincial, Barcelona in cancellation proceedings. A related appeal from an Opposition to Matratzen’s Community trade mark applications was heard by the Courts in Case T-6/01 Matratzen Concord v OHIM [2002] ECR II-4335 and Case T-105/02 and referred to by the Advocate-General. It refers to principles of law governed by Council Directive 89/104/EEC approximating EC laws relating to trade marks (the “Trade Marks Directive”).
MATRATZEN is the German word for mattress. In Spain, Hukla SA had obtained registration of the mark for various goods including mattresses and similar types of furniture. Matratzen Concord sought cancellation of the Spanish registration on the basis that the mark was generic. It appealed a decision against it on the basis that the mark constituted a restriction on the free movement of goods between Member States since the mark would restrict the import of such goods from German-speaking countries or regions.
The AG considered the validity of the registration under Article 3(1)(c) of the Trade Mark Directive, prohibiting the protection of descriptive marks, separately from the issue of whether there was a disguised restriction on trade.
On descriptiveness, the AG’s analysis followed well-trodden case law of the Court on the relevant class of persons to be considered for the purposes of judging descriptiveness. Accordingly, the assessment of whether a mark is descriptive must take into account only the perception of those relevant consumers in the territory within which protection is sought and not the perception of consumers in the Member State or region where the language is spoken. Nonetheless, where the meaning of a foreign language word is understood in the territory where protection is sought, this factor must be taken into account. Thus if a Spanish court was to find that the German word Matratzen was understood by Spanish consumers to mean mattresses then protection should not be given.
The AG says that this would be the case where “a significant proportion of relevant traders in and consumers of that product” would understand the meaning of the word. In support of this, the AG cites “similar” case law both in other European countries such as Belgium, the Netherlands and Germany, and, outside Europe, in Australia, Canada and the United States.
On whether such a registration would restrict imports, the Advocate-General noted that under the Trade Marks Directive a registered trade mark cannot be used to prevent use of a word when used in a purely descriptive manner and not as an indicator of the origin of goods. Secondly, third parties can use registered marks of others provided such use is “in accordance with honest practices in industrial or commercial matters”. Thus, the answer is not to strike down the valid registration but to apply properly the terms of the Trade Marks Directive.
This guidance will be very useful for trade marks owners where brandings in an increasingly sophisticated consumer markets uses cultural signs taken from other markets. The approach is consistent with that of previous decisions on the Trade Marks Directive in that the rules on protection are assessed as far as possible as a self-contained code, unaffected by other public policy considerations beyond those presented in the code itself (see for example Windsurfing Chimesee v Boots Case C-108,109/97) providing certainty for users of the code.
It is regrettable that the Opinion provides limited guidance on the test to be applied by national courts. It will be difficult to establish what should be meant by “significant” and so the application of this test may well come down to a matter of practice and therefore liable variation between Member States.10. Starbucks Regains the Right to Use its Brand in Russia
On 17 November 2005, Russia’s intellectual property agency, Rospatent, announced that Starbucks Corporation had regained the right to use its brand for coffee houses in Russia. The decision followed a legal battle with a trade mark squatter who was asking $600,000 for the logo.
Starbucks registered its trade mark in Russia in 1997, but did not open any coffee shops then. In 2002, Mr Sergei Zuykov filed to cancel the chain’s trade mark arguing that it had not been used in commerce. After the trade mark was cancelled for non-use, he registered it in the name of a Moscow company and asked for $600,000 to sell the Starbucks name back to Starbucks. He claimed the sum came from the potential benefit he could get five years after opening the café under that name. On 30 August 2005, Starbucks sued and won a lower-court ruling in Moscow, but Zuykov asked and received a temporary injunction pending appeal However, the court has now decided in favour of Starbucks and Zuykov is considering appealing the decision, despite the fact that the Commission on Corporate Ethics under the Union of Russian Industrialists and Entrepreneurs has openly disapproved of his actions.
In addition to Starbucks, Zuykov claims he owns roughly 300 brand names. In many cases, he acquired the trade marks to different brand names of companies, rather than the company names themselves. Examples include Kodak, Forbes and Audi. Zuykov says he usually asks for $30,000 to $60,000 to sell a brand name. He claims that in 2001, he sold five brand names to Audi for $25,000. A dozen or so other individuals and companies like him are also active in the business of appropriating brand names in Russia and selling them to large Western companies that have failed to register their trade marks quickly enough.
While Zuykov admits that this kind of attitude is not fair, he refers to the Russian civil code and argues that it is legal. However, although it is necessary that a trade mark be “used” in order to retain registration, abuse of this requirement can allow third parties to take advantage of unused famous marks and register them in bad faith, without having a real intention to use them.
At a time when Russia is on the threshold of entering the World Trade Organisation, the problems of trade mark piracy and intellectual property enforcement are still a barrier to the approval of its membership. Although Starbucks is only one of many Western companies being held back by Russian brand squatters, it is hoped that this decision will pave the way for better control of brand squatting in Russia.
11. Federal Republic of Germany and Kingdom of Denmark v Commission of the European Communities
On 25 October 2005, the European Court of Justice (ECJ) delivered its judgment in the case of Federal Republic of Germany & Kingdom of Denmark v Commission of the European Communities (Joined Cases C-465/02 and C-466/02).
The case was brought by Germany and Denmark, who were supported by France and the United Kingdom, against the Commission, which in turn was supported by the Hellenic Republic. It sought the annulment of the Commission’s decision to register “Feta” as a protectable designation of origin (PDO) for Greece, on the basis that Feta had become a generic name. However, the ECJ ruled that Feta is a PDO under the European Geographical Indication registration regime.
In 1994, Greece had applied to register the word Feta as a PDO whose use is restricted to a particular type of cheese produced in certain areas of Greece using traditional methods. Feta was listed as a PDO in 1996, but was removed in 1999 and then reinstated in 2002. In the present case, the ECJ has effectively upheld the 2002 decision to reinstate the protection of Feta as a PDO.
The Court held that Feta fulfilled the requirements of a designation of origin under European law because the name refers to an agricultural or food product from a defined geographical area in Greece and reflects characteristics specific to that area as well as the production, processing and preparation methods used there.
The Court relied on a number of factors in concluding that the term Feta is not generic in nature. It noted the Commission’s acknowledgment that although the production of Feta in countries such as France, Germany and Denmark has been relatively large and of substantial duration (it was submitted that cheeses marketed as Feta have been produced in these countries since the 1930s), the production of Feta has remained concentrated in Greece. It noted the Commission’s finding that the consumption of Feta is also concentrated in Greece, as more than 85% of consumption of Feta, per capita and per year, takes place in Greece. Furthermore, the Court accepted that evidence adduced to it showing that Feta not produced in Greece is commonly marketed with labels and connotations referring to Greek cultural traditions.
This case demonstrates how protection for geographical indications is expanding in Europe.
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