Reported Trade Mark Cases July 2006

14 August 2006

Katharine Stephens

Relative grounds



















Ref no. 

CFI
T-153/03
Inex SA v OHIM; Robert Wiseman & Sons Ltd

(13.6.06) 

Application (and where applicable, earlier mark) 


- milk and dairy products (29)

 

Halfvolle Melk carton

The mark consists of a black and white cowhide covering the packaging, stylised grass, a farm and red barn and the words ‘inex’, ‘halfvolle melk’ and ‘UKT - e 1L’

- milk and dairy products (29) (Benelux registered mark) 

Comment The OHIM rejected the opposition under Art. 8(1)(b) and the CFI rejected the appeal from that decision. In considering the visual similarities between the marks, the CFI noted that, although the cowhide design constituted an essential element of the earlier mark, the design only had weak distinctive character because the cowhide element was strongly allusive of the goods. The CFI further noted that if, as alleged by the opponent, the earlier mark was the only one in the Benelux to bear the cowhide design as the dominant element, this was not, of itself, capable of conferring on that element a particularly distinctive character. Consequently, although the marks were conceptually similar, that did not outweigh the significant visual differences and the weak distinctive character of the design when considering the overall likelihood of confusion.
   

Deutsche Telekom AG v E! Entertainment Television Inc (Smith J; [2006] EWHC 33 (Ch); 25.01.06)

E! Entertainment applied to register the marks E! Online and E! ONLINE in classes 9, 16 and 41 for downloadable publications, printed matter and provision of entertainment and celebrity news respectively. Deutsche Telekom, proprietor of a number of registrations for the mark T-ONLINE, unsuccessfully opposed the application under sections 5(2)(b) and 5(3) of the Trade Marks Act. Deutsche Telekom subsequently appealed and Smith J. dismissed the appeal.

With regard to section 5(2)(b) the Hearing Officer, when considering the similarity of the marks, took a global approach noting that the average consumer ‘does not embark on a forensic analysis of trade marks’. Following this approach the Hearing Officer found some similarities between the marks but overall he found that they were dissimilar. The Hearing Officer also considered that Deutsche Telekom had failed, through the evidence they provided, to establish a reputation or goodwill in the UK for their mark T-ONLINE.

In their appeal Deutsche Telekom raised three criticisms of the Hearing Officer’s decision. In the first, Deutsche Telekom submitted that the Hearing Officer was incorrect in his conclusion that they had failed to establish a reputation in the UK and that he wrongly concluded that in order to establish a reputation in the UK they must demonstrate trading activity in the UK. Smith J dismissed this submission, accepting E! Entertainment Television’s submission that, with regard to reputation, it is natural to first look for trading activity in the UK. No evidence of trading in the UK was provided by Deutsche Telekom. Smith J also distinguished the cases Nasa Trade Mark (US Government v Higgins) (Pumfrey J; unreported 15.12.01) and Cutty Sark Trade Mark (Imperial Tobacco Ltd v Berry Brothers and Rudd Ltd) (Jacob J; unreported 31.10.01) which establish that it is possible to obtain a reputation in a jurisdiction without carrying out business there. He indicated that in these previous cases it was obvious why a reputation abroad would be known to people within the UK whereas in the present case this inference was not obvious and could not be drawn from the evidence provided by Deutsche Telekom.

Deutsche Telekom’s second and third criticisms related to the Hearing Officer’s comparison and dissection of the marks respectively. Deutsche Telekom submitted that the Hearing Officer failed to give sufficient significance to the similarities between the marks and that he wrongly dissected the marks. Smith J rejected these submissions.

The Hearing Officer was of the opinion that his decision on section 5(2)(b) effectively decided the matter and that he need not further consider their opposition under section 5(3) as Deutsche Telekom had no prospects under this section. Smith J upheld this decision.

Distinctiveness – 3-D CTM application

August Storck KG v OHIM (ECJ (First Chamber); Case C-24/05; 22.06.06)

August Storck AG (“Storck”), the manufacturer of Werther’s Original sweets, applied to register as a CTM a 3-D mark in the form of a light-brown sweet. The application was rejected on the grounds that it was devoid of distinctive character and had not acquired distinctiveness through use. Both the BoA and the CFI upheld this decision (reported in CIPA December 2004).

Storck appealed to the ECJ. The ECJ dismissed the appeal on all four grounds pleaded by Storck.

In the first ground, Storck claimed that the CFI infringed Article 7(1)(b) of Regulation 40/94. Storck argued that the CFI imposed stricter requirements to demonstrate distinctiveness for 3-D marks than for word or figurative marks. The ECJ held that, for the purpose of assessing distinctiveness, the relevant public’s perception is not necessarily the same in the case of a 3-D mark which consists of the appearance of the product itself, as it is in the case of a word or figurative mark which consists of a sign unrelated to the product it denotes. Therefore, although the criteria for assessing the distinctive character of a 3-D mark consisting of the appearance of the product is no different than for other types of trade marks, average consumers do not make assumptions about the origin of the products on the basis of their shapes and therefore it could prove more difficult to establish distinctiveness for such a 3-D mark. The CFI was correct in finding that the mark was devoid of any distinctive character since it did not depart significantly from other shapes commonly used for sweets.

In the second and third grounds of appeal, Storck claimed that the CFI infringed Articles 74(1) and 73 respectively of the Regulation by not producing any sweets which were allegedly identical in appearance to the mark applied for. Since these grounds were adduced for the first time on appeal, they were declared inadmissible. The grounds were also held to be unfounded since Storck was in a position to challenge before the CFI the BoA’s assertion that the shape of the sweet was not significantly different from numerous other shapes commonly used in the confectionary market. In any event, proceedings before the CFI are not governed by the Articles complained of by Storck.

In the fourth ground of appeal, Storck claimed that the CFI infringed Article 7(3) of the Regulation by making the evidence that the mark applied for had become distinctive through use subject to false requirements. Storck argued that the CFI incorrectly found that evidence relating to the use of a 3-D mark cannot be furnished by documents, such as the packaging of the goods or advertising material, where word or figurative marks appear alongside that mark. The ECJ held that a 3-D mark may in certain circumstance acquire distinctive character through use even if it is used in conjunction with a work mark or figurative mark. However, a 3-D mark is different from its 2-D graphic representation and in this case consumers could not actually see the mark itself. When assessing whether a mark has acquired distinctive character through use, the assessment had to be as a result of the use of the mark as a trade mark and therefore not every use of the mark, a fortiori use of a 2-D representation of a 3-D mark, amounts necessarily to use as a mark. In any event, the way the sweets were represented on the packaging did not show the shape of the sweet and therefore did not amount to a reproduction of the mark.

Storck further argued that the CFI wrongly took into consideration the perception of the average consumer only at the time of the decision to purchase. The ECJ held that, although all circumstances in which the relevant public may see the mark (including as a result of advertising) must be borne in mind when assessing acquired distinctiveness, the consumer exhibits the highest level of attention when making his choice between different products in the category. Therefore the question of whether the consumer sees the mark at the time of purchase is of particular importance for determining acquired distinctiveness through use.

Distinctiveness – 2-D CTM application

August Storck KG v OHIM (ECJ (First Chamber); Case C-25/05; 22.06.06)

Storck applied to register as a CTM a figurative mark consisting of a 2-D representation of a sweet in a gold-coloured wrapper with twisted ends. As with C-24/05, the application was rejected on the grounds that it was devoid of distinctive character and had not acquired distinctiveness through use. This decision was upheld by both the BoA and the CFI.

Storck appealed to the ECJ on the same four grounds as C-24/05. Again, all four grounds were dismissed by the ECJ.

In the first ground, Storck complained that the CFI had imposed stricter requirements for establishing distinctive character in the mark, by subjecting the mark to the condition that it be fundamentally different from other forms of sweet wrappers commonly used in the trade. The ECJ held that case law on inherent distinctiveness which was developed in relation to 3-D trade marks consisting of the appearance of the product applied equally to figurative trade marks consisting of the 2-D representative of that product. The CFI rightly took into consideration the shapes and colours of sweet wrappers commonly used in trade. Had the CFI required a fundamental or substantial difference, rather than a mere significant departure, from the sweet wrappers commonly used in trade, it would have erred in law. However, the CFI found that the mark did not depart significantly from the norm or customs of the confectionery sector and therefore had not erred in law in finding that the mark was devoid of distinctive character.

In the second ground, Storck called into question the interpretation of Article 74 (1) adopted by the CFI to dismiss the allegation concerning the lack of concrete examples capable of substantiating the BoA’s assertions regarding the customary nature of the wrappers. The ECJ held that the CFI did not err in law in find that the BoA could legitimately have based its finding on practical experience generally acquired in the marketing of confectionary and likely to be known by anyone, without that Board being required to provide concrete examples.

As Storck only submitted before the CFI that the BoA had not shown the accuracy of its findings in relation to the customary nature of the wrapper for the purposes of establishing infringement of Article 74(1) and not Article 73, the ECJ rejected the third ground for the same reasons as the second and third grounds in C-24/05.

In the fourth ground, Storck argued that the CFI erred in law in requiring information relating to the share of the confectionery market and the share of the amount of publicity for the market for establishing acquired distinctiveness. The ECJ held that both these factors are of particular relevance in assessing whether a mark has acquired distinctiveness in situations where a mark consisting of the appearance of the product is devoid of any distinctive character because it does not depart significantly from the norm or customs. The ECJ further held that it was probable that such a mark can only acquire distinctive character if the products which bear the mark have more than a negligible share of the relevant market.

Storck finally argued that the CFI erred in law in finding that the evidence that the mark acquired distinctive character through use should be provided for all EU Member States. The ECJ emphasised that a mark must be refused registration if it is devoid of any distinctive character in part of the Community, which could comprise of a single Member State.

Summary judgment granted in face of Eurodefence

Microsoft Corporation v William Ling & Ors* (Judge Richard Havery Q.C.; EWHC 1619 (Ch); 03.07.06)

Microsoft was granted summary judgment and additional damages against a distributor of Microsoft products, two of its directors and a sales representative.

Limited licences to distribute Microsoft software are granted by Microsoft to original equipment manufacturer (OEM) system builders or PC manufacturers such as Dell. A Microsoft certificate of authenticity (COA) must be attached to the outside of any computer running Microsoft software. Under the licence agreements, COAs can be transferred only as part of a bundle with the software, media and documentation. The defendants were dealing in COAs outside the terms of their licence and were also dealing in counterfeit products and COAs.

Microsoft claimed that the defendants were passing off by trading in instruments of deception, following the judgment of Aldous, L.J. in British Telecommunications Plc v. One in a Million Ltd. [1999] 1 WLR 903. The defendants had offered for sale and sold COAs which could only be used to allow the purchaser to pass off an unlicensed copy of a Microsoft product as a licensed product. The judge held that there was no reasonable prospect of defending against this claim.

Microsoft also claimed trade mark infringement. Microsoft’s trade marks, including ‘Microsoft’ and ‘Windows’, are contained in its materials. The defendants’ unauthorised use of these materials, whether counterfeit or genuine, in the course of trade, was a clear breach of section 10(1) of the Trade Marks Act 1994 (TMA).

The only defence to trade mark infringement in relation to the genuine software was that Microsoft had exhausted its rights by putting the goods on the market. The judge rejected this argument, as the proprietor had legitimate reasons for imposing conditions on the further dealings in the goods, namely to prevent proliferation of royalty-free copying of its software, under section 12(2) of the TMA.

The defendants had also infringed Microsoft’s copyright under section 16 of the Copyright Designs and Patents Act 1988 (CDPA). By trading in COAs separate from software, media and documentation (loose COAs), whether genuine or otherwise, the defendants were authorising infringement of Microsoft’s copyright. Further, by trading in counterfeit COAs, the defendants infringed Microsoft’s copyright under section 23 of the CDPA.

The judge rejected the defendants’ argument that Microsoft’s licensing system was unlawfully restrictive and contravened Articles 81 or 82 of the EC Treaty. Granting of such limited licences to protect copyright did not contravene Articles 81 or 82. Further, the defence did not put forward any reason why the licences were restrictive except for the double-royalty point, which argued that multiple licence fees were extracted from the same licence. The judge considered that there was no real prospect of success for this point at the trial. Further, the judge considered that the existence of section 56(1) and (2) of the CDPA strongly suggested that agreements of this kind did not fall foul of competition law. It was also clear that use of merchandise bought from administrators in distress sales would be unlicensed.

Additional damages were granted under section 97(2) of the CDPA.

Reporter’s note: I am grateful to Zoe Fuller of Bird & Bird for her assistance with the preparation of this report.

ECJ and CFI decisions can be found at http://curia.eu.int/en/content/juris/index_form.htm and the reported cases marked * from the High Court can be found at http://www.bailii.org/databases.html#ew.