Anheuser Busch Inc v Budejovicky Budvar

04 January 2005

Jacqueline Irvine


The ECJ has recently handed down its judgment in this case. The reference to the ECJ was made from the Finnish Supreme Court.

Anheuser-Busch, Inc (“Anheuser”) owned a number of registered trade marks in Finland including BUDWEISER and BUDWEISER KING OF BEERS for beer. It commenced legal proceedings in Finland on 11 October 1996, to prevent Budĕjovický Budvar (“Budvar”) using various trade marks and also trade names such as “Budweiser Budvar”, arguing that the use would give rise to confusion with its trade marks.

Budvar argued that it had the right to use the sign “Budweiser Budvar”, based on its earlier registrations of its trade name in the Czechoslovakian commercial register in, Czech, French and English on 1 February 1967. It argued the name was protected as a trade name by virtue of Article 8 of the Paris Convention for the protection of Industrial Property of 20 March 1883 (as revised on 14 July 1967) (“the Convention”) which provides that atrade name shall be protected without the obligation of filing or registration, whether or not it forms part of a trade mark.

The Convention had been incorporated into the WTO Agreement, of which the TRIPS Agreement (“TRIPs”) is an integral part. Anheuser sought to rely on Article 16(1) of TRIPs which provides that the owner of a registered trademark has the exclusive right to prevent all third parties without licence from using, in the course of trade, identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. The third sentence of Article 16(1) provides that the rights shall not prejudice any existing prior rights.

The Finnish national Court had interpreted Article 8 as protecting foreign trade names registered in other contracting states to the Convention, provided the “effective” element of the trade name is, at least to some extent, well known in the relevant Finnish trade circles. Hence, at first instance, the sign “Brewed and bottled by the brewery Budweiser Budvar” on Budvar’s labelling was held to merely indicate a trade name and was permitted under Article 8 since the Court found that evidence showed that, at least to a certain extent, the name was well known in the relevant trading circles. This was overturned on appeal and on a further appeal, the Supreme Court referred various questions to the ECJ.

The ECJ’s decision

The ECJ held that TRIPs applied to the facts in this case because, although the conflict between Anheuser’s trade marks and Budvar’s sign started before TRIPs came into force on 1 January 1996, it continued after this date, and proceedings commenced after this date. The ECJ also held that national law had to be interpreted in the light of both Directive 89/104 and TRIPs. Although TRIPs did not have direct effect, national courts should apply national rules to protect rights in a field to which TRIPs applied and the Community had already legislated in the light of TRIPs as far as possible.

The first substantive trade mark law question asked of the ECJ was whether a trade name could constitute a sign for goods or services within Article 16(1). The ECJ noted that Article 16(1) of TRIPs corresponded to Article 5(1) of the Directive. The exclusive rights of a trade mark owner were to prevent a third party from using a sign if the use in question prejudices or is liable to prejudice the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods (Arsenal Football Club (Case C‑206/01)). A trade name could constitute such a sign.

However, if the national Court found that the trade name did constitute such a sign, Article 17 would be relevant. It provides that Member States may provide limited exceptions to trade mark rights such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trademark and of third parties. Provision was made for this in Article 6(1)(a) of the Directive which provides that a trade mark owner cannot prevent a third party from using, in the course of trade his own name or address provided such use is in accordance with honest practice in industrial or commercial matters.

The ECJ noted that the Council of the European Union and the Commission of the EC had issued a joint declaration, recorded in the minutes of the Council when the Directive was adopted, that Article 6(1)(a) only covered natural person’s names. However, it regarded the declaration as having no legal effect since it was not recorded in the wording of the provision. Therefore, the ECJ held that a third party could rely on Article 6(1) to permit use of a sign which is identical or similar to a trade mark for the purpose of indicating his trade name, so long as this use was made in accordance with honest practices in industrial or commercial matter. The relevant factors to consider in assessing whether use was in accordance with honest practices were:

  • the extent to which the use of the third party’s trade name is understood by a significant proportion of the relevant public, as indicating a link with the trade mark proprietor;
  • the extent to which the third party ought to have been aware of that;
  • whether the relevant trade mark enjoys a certain reputation in the Member State in which it is registered and protection sought, from which the third party might profit in selling his goods.

The second substantive trade mark law question asked of the ECJ was whether, and under what conditions, a trade name which was not registered or established by use in the member state in which the trade mark was registered and in which protection against the trade name in question was sought could still be regarded as an existing prior right within the meaning of Article 16(1) of TRIPs. The ECJ held that a trade name could be regarded as an existing prior right in such circumstances if it fell within the substantive and temporal scope of TRIPs. The trade name had to be existing, that it to say it had to fall within the temporal scope of TRIPs and still be protected at the time when it was relied upon by its proprietor to counter the claims of the trade mark owner. It also had to be a prior right in that the basis of the right must have arisen at a time prior to the grant of the trade mark. The Finnish Court would have to consider the facts and decide if the trade name satisfied this criteria.

The Finnish Court also suggested various factors which it thought might be relevant in assessing whether the trade name was an existing prior right – for example, whether the trade name was well known to at least some extent among the relevant trade circles before the trade mark was applied for. The ECJ left it open to the Finnish Courts to apply conditions regarding minimum use or awareness, stating that neither Article 8 nor Article 16(1) precluded them.

Also published in the January 2005 issue of WIPR.