Publications
European IP Bulletin, Issue 3, July -
Trade Mark
Trade Mark
16. The Court of First Instance dismiss the appeal over the 'NU-TRIDE' mark
Durferrit GMBH v. Office of Harmonisation in the Internal Market (Trade mark and Designs) ("OHIM") and Kolene Corporation] ECFI, T-224/01, 2003
The Court of First Instance dismissed the appeal brought by Durferrit GmbH against the decision of the First Board of Appeal of the OHIM, relating to trade mark opposition proceedings between Duferrit and Kolene Corporation, holding word marks ‘NU-TRIDE’ and ‘TUFFTRIDE’ not to be confusingly similar.
Kolene applied for Community trade mark registration under Regulation No. 40/94 "the Regulation" for the word mark ‘NU-TRIDE’ under categories relating to chemical products for use in metal treatment. On publication of the mark, Duferrit, who owned the mark ‘TUFFTRIDE’ in Germany for the same category of products, objected to the mark on the following grounds:
- There was a likelihood of confusion and/or association between both the marks under Art. 8(1) (b); and
- Kolene’s trade mark was contrary to public policy or to accepted principles of morality under Art. 7(1) (f) of the Regulation.
Likelihood of confusion and/or association under Art. 8(1) (b):
Since, the earlier mark was registered in Germany, the Court held that the public who could potentially be confused would be in Germany. The Court also took into account the fact that the public for these chemicals comprised of a limited number of highly specialised undertakings in industrial chemical sector who are likely to take great care in the selection of the goods. Though the Court agreed to that there was similarity between the goods covered by the earlier mark and the requested mark, that the mark owners were competitors in the market and that there was a previous commercial link between Duferrit and Kolene which could potentially lead to the public to believe there was some connection between the mark holders, the Court, relying on case jurisprudence [Lloyd Schuhfabrik Meyer (C-342/97), Sabel (C-251/95)] held that for global assessment of the likelihood of confusion, the Court must examine whether visual, aural or conceptual similarity of the marks is sufficiently high. The Court took the view that ‘NU’ and ‘TUFF’ were not similar and that since several other marks had suffix ‘tride’, which were descriptive of its character, the similarity between the marks was not sufficient. On reputation, the Court held that Duferrit, merely by referring to the fact that their word mark was registered as a national mark in several countries was not enough to claim greater protection under Art. 8(5) of the Regulation. The Court held that there was no likelihood of association as Duferrit was not using a series of marks ending with ‘tride’ and the commercial links between Duferrit and Kolene never existed in Germany.
Contrary to public policy or accepted principles of morality under Art 7(1) (f):
The Court held that absolute grounds for refusal contained in Art. 7 do not fall to be examined as part of opposition procedure under Art. 42 and 43; third parties can only submit observations to OHIM under Art. 41 of the Regulation. Also, the Court held that Duferrit had no right to seek review of the legality of OHIM’s decision relating to Art. 7. Furthermore, the Court held that Art. 7(1) of the Regulation dealt with the intrinsic qualities of the mark claimed, and not to circumstances relating to the conduct of the person applying for the mark, and thus denied Duferrit’s contention of ‘bad faith’ as a ground for refusal to register.
17. Burden of proof in parallel import cases
In Van Doren + Q.GmbH v Lifestyle sports and sportswear Handelsgesellschaft mbH and Michael Orth, Case C-244/00, the ECJ ruled on the burden of proof to be applied by Member States’ courts when hearing exhaustion cases. While it is permissible in principle for a Member State to require the defendant to prove that the claimant’s trade mark rights have been exhausted, in some cases the need to preserve the free movement of goods may mean that this rule has to be qualified.
Stussy Inc., an American company that owned the STÜSSY trade mark appointed one exclusive distributor of its clothing in each country of the EEA. The claimant was the exclusive distributor of STÜSSY-branded clothing in Germany. The distributors were not meant to sell the goods to intermediaries for resale outside their exclusive territories. However, the defendant was selling STÜSSY products in Germany that it had not obtained from the claimant. This meant that the defendant had either obtained the goods from outside the EEA, as the claimant claimed, in which case the claimant’s trade mark right would not be exhausted (trade mark rights are only exhausted where the trade marked goods are put on the market in the EEA by the mark proprietor or with his consent, and not when they are put on the market outside the EEA – see Silhouette International Schmied v Hartlauer Case C-355/96) or had obtained the goods from a distributor within the EEA who had breached the exclusive distribution agreement, or obtained the goods from an intermediary, in which case, because the goods had been put on the market within the EEA, the trade mark rights would be exhausted. In the light of this problem, the Bundesgerichtshof (German Federal Court of Justice) wished to know if the claimant had to prove that the defendant had obtained the goods from outside the EEA or if the defendant had to prove that it had obtained them from within the EEA. In other words, the question was whether the burden of proving that a trade mark right is exhausted lies on the defendant.
The German Court argued that because exhaustion of rights is a defence to trade mark infringement, in line with normal German tort law principles, it should be for the defendant to prove that the claimant’s trade mark rights are exhausted under Article 7(1) of Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, either because the mark proprietor has put the goods on the market in the EEA or has consented to their being put on the EEA market. The ECJ agreed that in principle, such a rule of evidence is consistent with EU law. However, in some situations, the need to protect the free movement of goods, as set out in Articles 28 and 30 of the EC Treaty, may require the rule to be qualified. This would be the case where there is a real risk that placing the burden of proof on the defendant would allow the trade mark owner to partition national markets, thereby maintaining price differentials between the Member States.
Specifically, requiring a defendant to prove that the goods originated from within the EEA could lead to market partitioning where the goods are marketed in the EEA through an exclusive distributor system, because in order for the defendant to prove the origin of his goods, he would need to identify the member of the exclusive distribution system who has supplied him with the good in contravention of the distributor’s agreement with the trade mark proprietor. This could cause the defendant’s supply of exhausted goods to dry up, because the mark owner would be able to obstruct the marketing of the goods purchased and prevent the defendant from getting supplies from that member of the exclusive distribution system. However, in cases where the claimant has shown that the goods were put on the market outside the EEA, the defendant must prove that the trade mark proprietor consented to the subsequent marketing of the goods in the EEA for the trade mark rights to be exhausted (see Zino Davidoff and Levi Strauss Joined Cases C-414/99 to C-416/99).
18. ECJ rules on registrability of shapes
In Linde AG, Winward Industries Inc. and Rado Uhren AG (Joint Cases C-53/01 to C-55/01) the ECJ considered how Articles 3(1)(b) to (d) of Directive 89/104/EEC of 21 December 1988 to Approximate the Laws of the Member States Relating to Trade Marks should apply to applications to register shape marks. In doing so, the Court employed two of the central concepts behind the absolute grounds for the refusal of registration of trade marks: the capability of the sign in question to distinguish the applicant’s goods from the goods of other undertakings and the need to keep certain signs free for competitors to use.
Linde sought to register the shape of "motorised trucks and other mobile works vehicles, particularly fork-lift trucks" as a trade mark, while Windward applied to register the shape of a torch and Rado applied for a three-dimensional trade mark consisting of a graphic representation of a wrist watch. All three applications were turned down by the German authorities because they were said to lack distinctiveness, and in Rado’s case because the shape was descriptive of the product and had to be kept free for the applicant’s rivals to use in the interests of free competition. However, the Bundespatentgericht (German Federal court for intellectual property matters) referred two questions to the ECJ on the registrability of shapes:
When determining whether a three-dimensional shape mark is distinctive under Article 3(1)(b), should the authorities apply a stricter test than they would for other types of trade marks?Should the registrability of specific shape mark applications be considered under Article 3(1)(c) (which bars the registration of descriptive marks) or do shape marks only need to be assessed under Article 3(1)(e) (which broadly prevents the registration of functional shapes)? Whichever of those provisions is relevant to assessing shape marks, in making the assessment, should the interest of the trade in having the shape available for competitors to use be taken into account?
On the first question the Court held that authorities should not apply a stricter test then they would for other types of marks when assessing the registrability of shape marks. Under Article 2 of the Directive, any sign can be a trade mark as long as it is (1) capable of being represented graphically and (2) capable of distinguishing the goods or services of one undertaking from those of other undertakings. Thus, shape marks can be registered, as long as they meet these criteria. Article 3(1)(b) prevents the registration of marks that are devoid of distinctive character. However, neither the scheme nor the wording of Article 3(1)(b) single shape marks out for special treatment when assessing their distinctiveness. Only Article 3(1)(e), which prevents the registration of certain functional shapes as trade marks, sets out a test that only applies to shapes. Once this preliminary obstacle is passed, the tests set out in Articles 3(1)(b) – (d) must still be met, but under Article 3(1)(b) the test of distinctiveness for shapes is the same as it is for all other marks: is the mark capable of identifying the product as originating from a particular undertaking and thus distinguishing it from those of other undertakings? Nevertheless, in practice it may be more difficult to show that the public consider a shape to be distinctive of the product’s origin, but even in that situation the shape may acquire distinctiveness through use.
In answering the second question the Court held that Article 3(1)(e) of the Directive is a preliminary obstacle that must be overcome when a shape mark is to be applied for. However, there is nothing in the wording of Article 3(1) or the scheme of the Directive to suggest that successfully overcoming Article 3(1)(e) immunises a shape from being assessed under the other absolute grounds for the refusal of registration, including Article 3(1)(c). Instead, each of the grounds for refusal under Article 3(1) is independent of the others and must be examined separately. When it comes to carrying out this assessment, the public interest underlying each paragraph should be borne in mind. In the case of Article 3(1)(c) this is the need to keep marks that exclusively consist of a sign that may serve to designate the characteristics of goods or a service within the meaning of that provision freely available for all. This should be assessed in the light of the concrete consideration of all of the relevant aspects of the particular application rather than in the abstract, and shape marks, cannot be refused registration on public interest grounds as a matter of principle without examining the public interest in the specific shape applied for. A different public interest underlies Article 3(1)(e), namely preventing undertakings from monopolising technical solutions or functional characteristics that consumers are likely to seek in the products of competitors.
19. Registration of band name by ex-members in bad faith
Byford v Oliver & Dawson, [2003] EWHC 295 (Ch) (Unreported)
This was an appeal by one of the members of 80's rock band SAXON, who was claiming that the registration of the band's name as a trade mark by other former members of the band constituted bad faith. At first instance, the Trade Mark Registry had disagreed, believing the other members to have just as much right to the name as the appellant. However, Laddie J disagreed, believing that the goodwill in the name vested in the band as a partnership, and that by registering the trade mark as individuals, rather than as the band, the respondents were indeed acting in bad faith.
Byford sought a declaration of invalidity from the Trade Mark Registry, which dismissed his application, expressing the view that all parties had at least a residual interest in the name and it was Byford’s misfortune that the others had registered first. Byford appealed to the High Court. His case rested upon s.3(6) of the Trade Marks Act 1994, bad faith as a ground for refusal of registration and hence invalidity, and on the basis that the proprietors’ use of SAXON would constitute passing off, contrary to s.4.
Laddie J allowed the appeal. On bad faith, he emphasised the fact that the proprietors had applied for registration in their own names. At no stage prior to these proceedings had they asserted that they were applying on behalf of a partnership. He referred to Growmax Plasticulture v Don & Low Nonwovens Ltd [1999] RPC 367. On the question of passing off, Laddie J made analogy with cases where conflicting trade mark users were separated in space and time. He pointed out that, in recent years, the only bands performing under the name SAXON alone were Byford’s, not Oliver’s and Dawson’s.
Laddie J considered cases on the dissolution of a partnership and its effect on goodwill and rights to use the partnership name. Citing "The Law of Passing Off" by Wadlow, he considered cases on this topic, including Burchell v Wilde [1900] 1 Ch551 and Dent v Turpin (1861)2 J&H 139. Significantly, he observed:-
"On dissolution of the original partnership, which is what happened when Dawson departed in 1985, he and all the other partners were entitled to ask for the partnership assets to be realised and divided between them in accordance with their respective partnership shares. But none of them "owned" the partnership assets. In particular, none of them owned the name SAXON or the goodwill built up under it."
The bands were characterised as a series of partnerships at will. Under English law, such partnerships are not regarded as having a distinct legal personality. However, partnerships and other unincorporated associations [as in Artistic Upholstery Ltd v. Art Forma (Furniture Ltd) [2000] F.S.R. 311], generate goodwill by their activities and build up rights in trading names and other marks. This can cause problems when members leave. As Laddie J pointed out, it is advisable to make explicit provision for this.
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