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European IP Bulletin, Issue 32, June - Trade Marks

TRADEMARKS

4. Shifting Test in Likelihood of Confusion

In Ruiz-Picasso & Ors v Office for the Harmonization in the Internal Market (C361/04 P), the European Court of Justice (ECJ) rejected the opposition filed by the Picasso estate against the application for the mark PICARO by Daimler Chrysler.  In this case, the ECJ was asked to annul a Court of First Instance (CFI) and to explain the concept of confusion as defined in the case of Arsenal v Reed (C-206/01).

In Arsenal v Reed,  the seller of scarves displaying the Arsenal club logo, the contested trade mark, sold the goods under a sign indicating that the seller was not the proprietor of the trade mark nor connected with that proprietor.  The ECJ overcame this problem by concluding that post-sale confusion could be taken into account, presumably as this might affect repeat purchases.  The decision clearly ignored the strictly factual scenario that telling consumers that the goods did not originate from the trade mark proprietor would negate confusion.  This replaced a factual test of confusion at the point of purchase with an extended legal test for finding confusion. The trade mark right was turned into a continuing right rather than a protection at the point of purchase.  Economically, the court replaced consumers’ searching costs into increases in the cost of branded goods.

In Picasso, the proprietor argued that the CFI did not have regard to the rule formulated in  Arsenal v Reed  and thus had failed to assess confusion in the post-sale situation especially where the trade mark was of such a highly distinctive character.  From an economic point of view, the Court was asked to reduce the search costs of the purchasers of cars and to transfer the fame of the PICASSO name onto motor vehicles. The ECJ rejected this submission. It concluded that where the goods in question might demand a high degree of consumer attention in their purchase that the post-sale situation need not be considered as tribunals “cannot reasonably be required to establish…the consumer’s average amount of attention…in different situations”. The Court held that the extended legal test of confusion already established in Arsenal v Reed did not express a general rule from which it could be inferred that there was no need to refer to the high level of attention consumers show when purchasing a certain category of goods when assessing the likelihood of confusion.  The ECJ thus appears on the one hand, to allow tribunals to apply a factual test for confusion at the point of purchase, whilst on the other hand it re-emphasises the law protecting brands consisting of famous trade marks.

The ECJ further held that the CFI had not erred in law by deciding that in the present case part of the process in making an assessment of the likelihood of confusion between the two marks was whether the meaning of at least one of the marks was clear and specific so that it could be grasped immediately by the relevant public so that the conceptual differences between the signs could counteract the visual and phonetic similarities between them. Furthermore, the CFI had not erred in considering that the fame of the painter Picasso would clearly be the overriding concept to consumers and be devoid of distinctiveness for motor vehicles.  The result being that for identical marks, such as in Arsenal v Reed, football fame alone must be protected post-sale, whilst in the case of similar marks, the fame of a painter will be protected only at the point of sale.

5. Doncaster Pharmaceutical V Bolton Pharmaceutical

Doncaster Pharmaceutical v Bolton Pharmaceutical [2006] EWCA Civ 661  was an appeal against summary judgment granted to Bolton for an injunction restraining trade mark infringement in connection with the re-packaging and re-labelling of pharmaceutical products imported by Doncaster into the UK. On 26 May 2006, Lord Justice Mummery of the Court of Appeal allowed the appeal

AstraZeneca was the proprietor of the mark “KALTEN” throughout Europe before it assigned the mark in Spain to Teofarma in 2001 and in the UK to Bolton in 2004.  In 2001, parallel imports of KALTEN constituted up to around 70% of the UK market and therefore AZ may well have been unable to assert their rights against parallel importers by virtue of the doctrine of exhaustion of rights under Article 30 of the EC Treaty. Bolton had relied on IHT Internationale Heiztechnik v Ideal Standard [1994] ECR 1-2789 (the Ideal Standard Case) in which the compatibility with Article 30 of the EC Treaty was considered when different parties own the same trade mark in different member states.  That case confirmed that in such cases, provided there is no economic link and no possibility of control, exhaustion of rights principles are not breached and the essential function of the trade mark is protected.

The issue in the appeal therefore became whether AZ retained an economic link and/or the possibility of control over the trade mark following the assignment of the UK and Spanish marks.  The Court of Appeal found that the factual circumstances of the assignments warranted further examination and full proof at trial, as there was a possibility that an economic link and/or control remained.  This may be through quality controls, use of technical information or further information may come to light in relation to an economic link or artificial partitioning of markets.  The Court of Appeal also noted the fact that AZ itself could not object to parallel imports in 2001 and therefore if the judge at first instance were correct, the act of assignment of the mark to separate entities would have given rise to additional rights not exercisable by the assignor.  This developing area of law may be an issue that requires a reference to the European Court of Justice following trial.

This case follows the decision by the Court of Appeal in Sportswear v Stonestyle [2006] EWCA Civ 380 in which an Article 81 defence to a trade mark infringement action was re-instated after having been struck out at first instance.  The two cases when taken together may mark a renewed acceptance of euro-defences to trade mark infringement actions, at least to the extent that such defences are considered to have a real prospect of success and are unsuitable for summary determination.

6. Are Sausages All the Same?

On 13 February 2003 Wim De Waele filed an application with the Office for the Harmonization in the Internal Market (OHIM) for a Community trademark pursuant to EC Regulation 40/94.  The registration sought concerned a three-dimensional sign in the shape of a sausage with "diamond-shaped" grooves for different classes of products including gut for making sausages, meat, fish and milk products (including cheese).

On 15 July 2004, the examiner rejected the application in part according to Article 7(1)(b) of EC Regulation 40/94 holding that the mark applied for was devoid of any distinctive character as regards most of the designated products. On 14 September 2004, the applicant brought an appeal. The decision of 16 November 2004 varied in part the examiner’s decision stating that the mark had distinctive character for some other products, that is, milk products including cheese. For the outstanding claimed products the Board of Appeal held that the shape of the mark sought was not sufficiently specific to enable consumers to perceive it as an indication of origin of the goods in question.

Wim De Waele then brought an action (T-15805) before the EU Court of first instance seeking to vary and annul in part  the decision of the First Board of Appeal of OHIM alleging the breach of Article 7(1)(b) of EC Regulation 40/94 in so far as it concerned “gut for making sausages” or, at least, “gut for making sausages intended for professional buyers”, since:

• the relevant public were those in the business (as these were the purchasers of gut for making sausages) and this should be considered when assessing the distinctiveness of the mark sought as they are usually more knowledgeable and attentive than the general public;
• the relevant public, which in this case is made up of manufacturers of sausages, pays a lot of attention to the packaging;
• the shape of the gut for making sausages is unique and therefore easily identifiable and distinguishable;
• alternatively, even if the relevant public were made up of average consumers, the shape in question has distinctive character as consumers are capable of perceiving the shape of the packaging of certain goods when there are some characteristics able to attract their attention. Actually, 99 per cent. of the existing sausages are sold in cylindrical form or in coils and the shape in question departs significantly from those currently existing; and
• OHIM and the Benelux Trademarks Office have allowed the registration of three-dimensional marks in the food sector.

OHIM contended that the assessment as to the distinctiveness of the mark has to refer to end consumers since manufacturers buy the packaging of their goods taking into account the end consumer, and that the shape in question is only a variation of the usual one and requires a close examination to distinguish the charcuterie packaged in the shape claimed from that of other undertakings.

The Court, after having considered the arguments of the parties, held that:

• the distinctiveness of the mark sought, should be assessed by reference to the goods or services claimed and to the perception of the relevant public;
• there is no need to make a distinction between “gut for making sausages” or “gut for making sausages intended for professional buyers”, since the buyer of this kind of product has some knowledge of the sector;
• the relevant public has to be made up of both those in the charcuterie business and end consumers in general since the applicant could decide to package on his own or decide to sell the packaging only to one undertaking, and, in that case, the mark could serve as an indication of origin both of the packaged product and of the packaging;
• the shape could be eligible for trademark protection only if it was perceived right away as an indication of the origin of the products concerned;
• the registrability of a sign as a community trademark must be assessed solely on the basis of the relevant Regulation as interpreted by the Community Courts, and the Community trade mark regime is an autonomous system independent from any national system; and
• to assess whether the shape in question could be perceived as an indication of origin, the overall impression produced by the appearance of the gut has to be analysed. In this case the oblong twisted shape of the gut differed very slightly from the usual ones and therefore was a mere variant of the basic shape for charcuterie.

For all the foregoing reasons, the Court found that there was no infringement of Article 7(1)(b) of the EC Regulation 40/94 and the appeal was dismissed.

7. Compare with Care

On 23 February 2006, European Court of Justice (ECJ) made its judgment in Siemens AG v VIPA Gesellschaft für Visualisierung und Prozeßautomatisierung mbH (C-59/05), a reference for a preliminary ruling brought by the German Federal Court of Justice concerning the interpretation of Article 3a(1)(g) of the Directive on Misleading Comparative Advertising (84/450/EC). This is one of the 8 conditions under which comparative advertising will be permitted, stating that it must not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing mark of a competitor, or of the designation of origin of the competing products.

The facts of this case were that in 1983, Siemens had introduced an identification system of order numbers for one of its products and that product's parts, which consisted of a combination of several capital letters and numbers. Since 1988, VIPA, a manufacturer of compatible add-on parts, used an identification system identical to that of Siemens. The first group of characters of Siemen's order numbers was replaced by the acronym ‘VIPA’, followed by the core elements of the order number of the original Siemens product add-on component.  Further, the VIPA products and catalogue also stated, "The order numbers correspond to those of Siemens programme modules".

Siemens alleged that VIPA was taking unfair advantage of the reputation of its products and its distinguishing mark, i.e. the system of order numbers for its products. The first instance court in Germany ruled in favour of Siemens but on appeal that was overturned.  Siemens then appealed to the German Federal Court of Justice, which referred to the ECJ the question as to whether a competing supplier takes unfair advantage of the reputation of a distinguishing mark under Art 3a(1)(g), if it uses the core elements of a manufacturer’s distinguishing mark, namely a system of order numbers for its products in its own advertising.   In addition, the Court asked whether the benefit to the comparative advertiser and consumer was a relevant fact.

The ECJ previously ruled that when assessing whether unfair advantage had been taken, it must be remembered that the use of another’s trade mark, name or other distinguishing mark is permitted if that use complies with the 8 conditions of the Directive, and if the sole intention of the use is to distinguish between the products and services of the advertiser and those of its competitor in order to highlight differences objectively.  (Toshiba Europe, C-112/99).

The ECJ applied the same considerations, and held that VIPA's use was permitted.  By adopting the core element of the Siemens order number system, VIPA was informing the public that the two products in question have equivalent technical features’ which was a permitted comparison of the material, relevant, verifiable and representative features of the goods’ under Art 3a(1)(c) of the Directive.

The ECJ also ruled out the possibility of association between the products of Siemens with those of VIPA on three grounds.  First, the target consumers were a ‘specialist public’ and hence less likely to make such association.  Second, VIPA distinguished between its own and Siemens products by using its own acronym and clarifying in its catalogue that those numbers correspond to those of the Siemens modules, thereby taking care not to give a false impression as to the origin of VIPA products or of any association between those two companies.  Third, because the numbers had to be programmed into the products for the system as a whole to work, those numbers were indispensable.  In addition, if use of the numbers was not permitted, then the users would need to research the relevant corresponding number, which would be disadvantageous and contradict the stated aim of comparative advertising, i.e. that consumers can make the best possible use of the internal market.

The Court pointed out that consumer’s advantage arising from increased competition between suppliers as a result of comparative advertising also needs to be taken into consideration. Hence if VIPA used a different core element for the order numbers of goods distributed by it for use with Simatic as add-ons it would have been disadvantageous for consumers to look in comparative listings for the order numbers corresponding with the goods sold by Siemens which was likely to cause a restrictive effect on the competition in the market for add-on components to the Simatic. 

In this judgment, the ECJ has helpfully confirmed that comparative advertising can include the use of third party distinguishing marks, such as order numbers.  This will further help to stimulate competition in the internal market to the benefit of consumers.

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