The Court of Appeal has ruled on the meaning of “genuine use” for the purposes of Articles 10 and 12 of the Trade Marks Directive EEC/89/104 (which were transposed into English law by Section 46 of the Trade Marks Act 1994).
Articles 10 and 12 of the Trade Marks Directive and Section 46 of the Trade Marks Act 1994 are concerned with the revocation of trade marks on the grounds of non-use. In particular, a mark is liable to revocation if, within 5 years of registration, it has not been “put into genuine use” in the United Kingdom in relation to the products in respect of which it is registered, or if such use has been suspended during an uninterrupted period of five years, and there are no proper reasons for non-use.
The case in hand will be of interest to all trade mark owners wanting to protect their trade mark registrations, and particularly foreign entities holding national registrations in the United Kingdom. In this case, the UK national trade mark registration (LABORATOIRE DE LA MER) of a French company, Laboratoires Goëmar SA, was attacked by a US company, La Mer Technology, Inc., on the grounds that the mark had not been used in the United Kingdom during the past five years. English law places the onus of proof on the registered proprietor and, accordingly, it was for Laboratoires Goëmar SA to show what use it had made of the mark.
Was use ‘genuine’?
The only evidence of use put forward by the French company was importation in the United Kingdom by a locally appointed agent of a small quantity of goods bearing the mark. As things turned out, however, the goods were never sold to the public as the agent ceased trading and was struck off the Register of Companies before the goods could be marketed to the public (although it was accepted that the agent had made preparations to distribute the goods via a “Tupperware” system, i.e. by appointing members of the public as sub-agents who were to sell via private parties).
Earlier cases involving foreign proprietors of UK national trade marks have generally focussed on the question of whether evidence of use of a mark abroad that had incidentally occurred in the United Kingdom could be regarded as evidence of use in the UK (See, for example, Euromarket Designs Inc. v. Peters (High Court; 25 July 2000), where the Courts was asked to determine whether the UK national trade mark registration of a U.S. company had been put into genuine use in the UK. The US company sought, inter alia, to rely on orders placed by American customers for people based in the UK so that the goods were sent to the UK. This, however, was held to be use in the US, not the UK).
In other words, the issue was whether there had, in fact, been use in the United Kingdom. In the present case, however, there was no dispute that there had been use in the United Kingdom, the question being whether the use was sufficient to amount to “genuine use”.
This issue, being an important one, benefited from the guidance of the European Court of Justice (ECJ) in the light of which the Court of Appeal helpfully set out the relevant criteria for assessing whether a mark has been put into “genuine use”.
The proceedings for revocation of the mark LABORATOIRE DE LA MER were heard at first instance by the UK Trade Marks Registry, which dismissed them in relation to cosmetic products in Class 3 on the grounds that the use of the mark in relation to these products was “real” and “not trivial” so as to amount to genuine use. La Mer Technology, Inc. appealed this decision to the High Court of Justice which decided to stay the proceedings and refer a number of questions to the ECJ on the interpretation of Articles 10 and 12 of the Trade Marks Directive.
In essence, the High Court sought guidance as to the factors which should be taken into account when deciding whether a mark has been put into genuine use in the country of registration. In its ruling, the ECJ relied on its earlier judgment in Ansul BV v. Ajax Brandbeveiliging BV, Case C-40-01 (11 March 2003), which was delivered after the reference was made and from which the following principles were distilled.
Genuine use is use that is not merely token, serving solely to preserve the rights conferred by the mark. It follows that genuine use of the mark entails use of the mark on the market for the goods or services protected by that mark and not just internal use by the undertaking concerned. When assessing whether there has been genuine use of the trade mark, regard must be had to all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark is real, in particular whether such use is viewed as warranted in the economic sector concerned to maintain or create a share in the market for the goods or services protected by the mark.
Use of the mark need not always be quantitatively significant for it to be deemed genuine, as that depends on the characteristics of the goods or service concerned on the corresponding market.
The ECJ then went on to say that even minimal use could be sufficient to qualify as genuine, provided that it was regarded as being justified for the purpose of preserving or creating market share for the goods or services protected by the mark. According to the ECJ, the question whether use is sufficient to preserve or create market share for those products or services depends on several factors such as the characteristics of those products and services, the frequency or regularity of the use of the mark, whether the mark is used for the purpose of marketing all the identical products or services of the proprietor or merely some of them, or evidence which the proprietor is able to provide.
The ECJ also said that the characteristics of the market concerned, which directly affect the marketing strategy of the proprietor of the mark, could also be taken into account in assessing genuine use of the mark. In particular, use of the mark by a single client which imports the products for which the mark is registered can be sufficient to demonstrate that such use is “genuine” if it appears that the import operation has a genuine commercial justification for the proprietor of the mark.
Court of Appeal’s decision
Following the ruling of the ECJ, the hearing of the appeal before the High Court was resumed. The High Court found that although use had occurred which was neither “purely token” nor “purely internal”, it nevertheless had all the attributes of internal use in that the goods had never come to the attention of members of the public (as end-users or consumers). The High Court further held that it was not bound by the ECJ’s ruling that “use of the mark by a single client which imports the products for which the mark is registered can be sufficient to demonstrate that such use is genuine” as the ECJ was not ruling on the facts of this case but merely providing guidance on the applicable law.
Laboratoires Goëmar SA appealed to the Court of Appeal, which overturned the judgment of the High Court. The Court of Appeal found that the High Court had placed too much emphasis on the end-user or retail market in order to determine whether use of the mark was genuine. According to the Court of Appeal: “Trade marks are not only used on the market in which goods bearing the mark are sold to consumers and end users. A market exists in which goods bearing the mark are sold by foreign manufacturers to importers in the United Kingdom”.
As a result, the Court of Appeal held that, provided the use was neither token (i.e. done solely to preserve a trade mark registration) nor internal (i.e. done otherwise than at arm’s length), imports by a single importer could qualify as genuine use of the mark on the market.
The Court of Appeal also made it clear that there was no minimum level of use before use of a mark could qualify as being genuine. This does not mean that the amount of use will not assist in establishing that use of the mark is genuine. However, if it can be shown that the use of the mark is not artificial, detailed consideration of the amount of use becomes irrelevant.
Of course, each case will be decided on its own facts and trade mark owners should therefore endeavour put their marks into genuine use as much as possible. However this case should bring some comfort to those foreign-based trade mark owners who are struggling to penetrate the UK consumer and/or retail market.
First published in the September 2005 issue of World Intellectual Property Report.