This month we report on AG Maduro’s opinion on the use of keywords in the Google France case; how the High Court assesses compensation under a cross-undertaking in damages in Lilly Icos v 8PM Chemist Ltd; plus the usual round-up of CFI and ECJ decisions.<top> 

To be taken to your case of interest within the table please click on the below:


Ref no.   CFI
T-471/07
Wella AG v OHIM
(15.09.09)
Application (and where applicable, earlier mark)  

TAME IT
- soaps, perfumeries, essential oils, cosmetics, hair lotions, dentifrices (3)

Comment

The CFI upheld the BoA’s finding that the mark lacked distinctive character in respect of hair lotions, cosmetic and essential oils under Art 7(1)(b).

The BoA was correct to find that the relevant public would understand that the verb ‘to tame’ meant to soften, harness or control. It was irrelevant that the verb had other meanings when considered independently of hair care goods.

The expression TAME IT followed the rules of ordinary English grammar and syntax. The fact that the expression contained a verb in the imperative did not confer distinctive character. TAME IT would be perceived by the relevant public as a purely promotional message as to the desired effect of the hair lotions, cosmetics and essential oils, all of which were capable of being used to tame hair.

The mark did not lack distinctive character in respect of soaps, perfumeries and dentifrices and the CFI allowed the registration to proceed for these goods.

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Ref no.  

CFI
T-221/06
Hipp & Co. KG  v OHIM; Laboratoris Ordesa, SL
(16.09.09)

Application (and where applicable, earlier mark)  

BEBIMIL
- pharmaceutical products, food for babies (5)
- foodstuffs (29)
- beverages, desserts, cereals (30)
- non-alcoholic drinks (32)

BLEMIL
- pharmaceutical products, food for babies (5)
- foodstuffs (29)
(CTM and Spanish registration)

BLEMIL 1
- beverages, preparations for making beverages (32)
(Spanish registration)

Comment  

The CFI upheld the decision of the BoA that there was a likelihood of confusion between the mark applied for and the earlier marks under Art 8(1)(b).

The CFI confirmed the BoA’s finding that the marks were visually and phonetically similar.  The addition of the middle syllable ‘bi’ was not sufficient to distinguish the marks.

The CFI held the visual and phonetic similarities between the marks could not be counteracted by any conceptual difference.  The element ‘mil’ was possibly allusive to the English word ‘milk’ or the German word ‘milch’ but was not descriptive or lacking in distinctive character.  Any allusion would be the same for all of the marks and this reinforced their conceptual similarity.

Having regard to the identity of some of the goods and the similarity of others and to the visual, phonetic and conceptual similarity of the marks, the BoA was correct in finding that there was a likelihood of confusion between the mark applied for and the earlier marks.

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Ref no.  

CFI
T-80/07
JanSport Apparel Corp. v OHIM
(16.09.09)

Application (and where applicable, earlier mark)  

BUILT TO RESIST
- paper, cardboard and goods made from these materials (16)
- leather, imitations of leather, travel articles not included in other classes and saddlery (18)
- clothing, footwear and headgear (25)

Comment  

The CFI upheld the BoA’s finding. The mark was descriptive of the goods applied for under Art 7(1)(c) with the exception of writing paper, newspapers, calendars and a few other goods of the same type in class 16.

The BoA was correct to find that the mark described the durability of the goods. The average English-speaking consumer would understand the mark to mean that the goods had been manufactured to be hardwearing a feature of particular importance in relation to these goods.

The word ‘built’ could apply to any manufactured object and did not apply solely to the construction industry. In addition, the mark was not fanciful, but was grammatically and lexically correct. It was incapable of identifying the commercial origin of the goods.


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Ref no.  

CFI
T-400/06
Zero Industry Srl v OHIM; zero Germany GmbH & Co. KG
(16.09.09)

Application (and where applicable, earlier mark)  


- protective goggles and spectacles, in particular for sports (9)
- bags in particular for sports (18)
- advanced technology sports clothing (25)


- bags (18)
- outer garments (25)
ZERO
- spectacles including sunglasses (9)
(both German registrations)

Comment  

The CFI upheld the decision of the BoA that there was a likelihood of confusion between the mark applied for and the earlier marks under Art 8(1)(b).

The CFI agreed with the BoA that advanced technology sports clothing bore a high level of similarity to outer garments.  Advanced technology sport clothing formed part of a broader category of clothing which included outer garments such as winter sports clothing.

The BoA was also correct to hold that the categories of goods covered by the earlier marks in Classes 9 and 18 were worded in a broad manner and therefore covered any type of spectacles or bags, including those covered by the mark applied for.

Given that the essential element, the word ‘zero’, of the marks was the same, the CFI concluded that the marks were visually, phonetically and conceptually similar.

The BoA was correct to find that there was a likelihood of confusion, particularly since it was common in the clothing sector for the same mark to be configured in different ways according to the type of product or sub-brand which it designates.


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Ref no.  

CFI
T-139/08
The Smiley Company SPRL v OHIM
(29.09.09)

Application (and where applicable, earlier mark)  


- metals, utensils and jewellery made of metal (14)
- leatherwear and luggage (18)
- clothing, footwear and accessories (25)

Comment  

The CFI upheld the BoA’s decision to refuse the application under the Art 7(1)(b).

Although the relevant public (the general public in the community) may pay a relatively high degree of attention when choosing the goods in question, that public cannot be considered to exhibit a particularly high degree of attention.

There was no aspect of the mark which may be easily and instantly memorised by a relatively attentive public which would make it possible for it to be perceived immediately as an indicator of commercial origin.

The BoA was correct to conclude that the mark was a very simple and banal design which would be perceived exclusively as a decorative element.

The fact that the mark could be considered to constitute a part of a mark already registered (i.e. a ‘half smiley mouth’, the smiley itself already having been registered) was irrelevant.  To follow that approach would be tantamount to accepting that every extract from a registered mark (and therefore every extract from a distinctive mark) is, by that fact alone, also distinctive.


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Ref no.  

CFIRef no.
T-409/07
Helge B. Cohausz v OHIM; José Izquierdo Faces
(23.09.09)

Application (and where applicable, earlier mark)  


- management and consultancy services, especially related to  industrial property (35)
- valuations, reports, researches, all related to the industrial and intellectual property (42)
COPAT
- goods and services in classes 9, 35, 41, 42 and 45,  including services of a patent lawyer
(German registrations)

Comment  

The CFI upheld the BoA’s decision to overturn  the Cancellation Division’s declaration of invalidity under Arts 53(1)(a) and 8(1)(b).  The BoA was correct to conclude that Cohausz had failed to prove that the earlier marks, COPAT, had been put to genuine use under Art 57(2) and (3).

The documentary evidence available disclosed only minimal use which could not be regarded as sufficient in the economic sector concerned to create a share in the market for the services protected by the earlier marks.  Therefore Cohausz could not prove that the earlier marks had been put to genuine use in Germany during the relevant period.

The CFI also held that the Cohausz could not rely in the hearing before the CFI on new documents.  The CFI would only review the evidence on which the BoA had based its decision. 


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Ref no.
 

CFI
T-493/07;
T-26/08;
T-27/08
GlaxoSmith- Kline SpA  and ots  v OHIM; Serono Genetics Institute SA
 (23.09.09)

Application (and where applicable, earlier mark)  

FAMOXIN
- pharmaceutical preparations for the treatment of metabolic disorders adapted for administration only by intravenous, intra-muscular or subcutaneous injection (5)
LANOXIN
- various pharmaceutical goods (5)
(various national registrations)

Comment  

The CFI dismissed the appeals from the BoA’s decisions to refuse to make a declaration of invalidity under Arts 53(1)(a) and 8(1)(b).

The CFI upheld the BoA’s finding pursuant to Article 57(2) and (3) that the category of ‘pharmaceutical preparations’ was sufficiently broad for independent sub-categories to be identified therein since it covered goods which differed sufficiently in their intended purpose, end consumers and channels of distribution.

The relevant public were healthcare professionals and end consumers under the supervision of such professionals, both having a higher than average degree of attentiveness.  The goods concerned were of the same type with the purpose of treating human health and aimed at the same consumers though the same distribution channels.  Although the goods had different therapeutic indications there was a certain degree of similarity between them.

The significant visual and aural differences and the low level of conceptual similarity meant that the marks were only very slightly similar. Therefore, on a global assessment there was no likelihood of confusion between the marks.

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CFI DECISIONS NOT YET IN ENGLISH
Ref no.   CFI
T-152/07
Lange Uhren GmbH v OHIM
(14.09.09)
Application (and where applicable, earlier mark)  


 - clocks, clock faces (14)

Comment

The appeal from the decision of the BoA to reject the application was dismissed under Arts 7(1)(b) and Art 7(3).

The CFI held that the mark lacked the requisite distinctive character. The mark had not become distinctive through use.

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Ref no.  

CFI
T 446/07
Royal Appliance International GmbH v OHIM; BSH Bosch und Siemens Hausgeräte GmbH
(15.09.09)

Application (and where applicable, earlier mark)  

CENTRIXX
- various electrical surface cleaning appliances (7)
SENSIXX
- various kitchen appliances, including food processors and dishwashers (7, 9, 11)

Comment  

The appeal from the decision by the BoA to reject the application was dismissed under Art 8(1)(b).

The CFI found there was a degree of visual and phonetic similarity between the two marks and a likelihood of confusion.

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Ref no.  

CFI
T 308/08
Parfums Christian Dior v OHIM; Consolidated Artists BV
(15.09.09)

Application (and where applicable, earlier mark)  


- soap, perfumery, ethereal oils, cosmetics, hair lotions, dentifrices (3)
ADIORABLE
J’ADORE
- cleaning and cosmetic products (3)

Comment  

The CFI dismissed the appeal from the BoA’s decision to allow the registration under Art 8(1)(b).

The CFI did not find sufficient similarity between the marks.


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Ref no.  

CFI
T-180/07
Promomadrid Desarrollo Internacional de Madrid, SA v OHIM
(16.09.09)

Application (and where applicable, earlier mark)  



- publication of magazines, books, papers and other services dedicated to promoting export from Madrid (16, 35, 36, 38, 39, 41, 42)

Comment  

The CFI allowed the appeal from the BoA’s decision to reject the registration under Art 7(1)(c).

The CFI found that the mark was not descriptive of the goods and services for which it was applied.


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Ref no.  

CFI
T-130/08
Gres la Sagra v OHIM; Ceramicalcora, SA
(16.09.09)

Application (and where applicable, earlier mark)  



- building materials (19)
- porcelain and marble for domestic use (21)
- storage services and distribution of building materials (39)
 
- flooring (27)
- building materials (19)
- kitchen utensils, brushes, artwork (21)
- transportation and distribution of goods (39)



- flooring (27)
- building materials (19)
- kitchen utensils, brushes, artwork (21)
- transportation and distribution of goods (39)

Comment  

The appeal from the BoA’s decision to reject the application was dismissed under Art 8(1)(b).

The CFI found a high degree of similarity between the mark applied for and the earlier mark and a certain degree of similarity between the respective goods.


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Ref no.  

CFI
T 305/07 and T 306/07
Offshore Legends v OHIM; Acteon
(16.09.09

Application (and where applicable, earlier mark)  



various goods and services including:
- leather, saddlery, luggage and umbrellas (18)
- clothing, shoes, and headwear (25)



various goods and services including:
- leather, saddlery, luggage and umbrellas (18)
- clothing, shoes, headwear (25)

Comment  

The CFI dismissed the appeal from the BoA’s decision to allow the opposition in respect of the Class 18 and 25 goods.

The CFI found that there was a similarity between the respective marks and concluded that there was a likelihood of confusion under Art 8(1)(b).

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Ref no.  

CFI
T-391/07
Alfons Alber v OHIM
(16.09.09

Application (and where applicable, earlier mark)  


- manual tools for use in agriculture, horticulture and forestry (8)

Comment  

The appeal from the BoA’s decision to reject the application was dismissed under Art 7(1)(b).
The CFI found that the mark lacked distinctive character in respect of the goods it claimed.


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Ref no.  

CFI
T 396/07
France Télécom v OHIM
(23.09.09)

Application (and where applicable, earlier mark)  

UNIQUE
- various goods and services connected to telecommunications (9, 35, 38)

Comment  

The appeal from the decision of the BoA to reject the application was dismissed.

The CFI found that the mark lacked sufficient distinctive character under Art 7(1)(b).

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Ref no.  

CFI
T-291/07
Viñedos y Bodegas Príncipe Alfonso de Hohenlohe, SA v OHIM; González Byass, SA
(23.09.09)

Application (and where applicable, earlier mark)  

S-HE
- various goods and services including perfumes and beauty products (3, 9, 14, 16, 18, 24, 28, 32, 38, 41, 42)
SHE



- various goods including perfumes and beauty products (3, 9, 16, 18, 25)

Comment  

The CFI dismissed the appeal by Arcandor from the decision of the BoA to allow registration of the mark under Art 8(1)(b).

The CFI found that there was a low risk of confusion between the mark applied for (S-HE) and the earlier mark, the earlier mark not having sufficient distinctive character.


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Ref no.  

CFI
T-103/07
Fratex Indústria e Comércio, Ltda v OHIM; USA Track & Field, Inc.
(23.09.09)

Application (and where applicable, earlier mark)  


- clothing, footwear and headgear (25)



- clothing (25)

Comment  

The appeal from the BoA’s decision to allow the registration was rejected under Art 8(1)(b).

The CFI found that the visual and conceptual differences between the marks were more substantial than the phonetic similarities between them.

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Restituto in integrum – Time limits


Evets Corp v OHIM (CFI (First Chamber); Joined Cases T-20/08 and T-21/08; 23.09.09)


The CFI dismissed the appeal from the BoA’s decision not to re-establish two CTMs which had been cancelled for non-payment of renewal fees.


Having not received renewal fees, OHIM notified Evets’ agents that registration of the two CTMs had been cancelled.  Evets was notified of the cancellations by its agent a few days later.  Evets filed an application that the marks be restored under Article 81, stating that the responsibility for renewals had been passed to a third party which did not have Evets correct contact address.  OHIM rejected the application and the BoA refused the appeal on the basis that the application for restoration had not been filed within the two month period (as prescribed in Article 81). 


The CFI concluded that the two month period should run from the date Evets’ agent was notified of the lapsed registrations and not, as Evets submitted, from the date upon which it received notification of the cancellation (in which case it would be in time). The application for restituto in integrum was therefore received after the deadline and would not be considered.


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Decisions of the ECJ


Composite marks


Aceites del Sur-Coosur SA v Koipe Corporación and OHIM (ECJ (First Chamber) C-498/07; 03.09.09)


The ECJ dismissed Aceites’ appeal from the CFI’s decision to refuse registration of its application for the ‘La Española’ CTM (below, right) under Article 8(1)(b) for edible oils and fats in Class 29.  By doing so, the Court did not follow AG Mazák’s recommendation (reported in the CIPA Journal, March 2009) that the ECJ set aside the CFI’s decision and allow the appeal. 


Koipe opposed Aceites’ application on the basis of a likelihood of confusion with a number of earlier national figurative marks and its ‘Carbonell’ CTM (below left) for olive oil in Class 29.  OHIM rejected Koipe’s opposition, a decision that was upheld by the BoA but reversed by the CFI. 


         


 Earlier Mark                 Application


The ECJ first confirmed that Koipe had a number of marks with a date of application for registration prior to the application date of the La Española mark.  Therefore, although the CFI did not expressly exclude a number of Koipe’s later marks in its Judgment, this error did not affect its validity. 


In the principal part of the appeal, the ECJ essentially followed the CFI’s reasoning.  When examining the likelihood of confusion, the assessment of similarity between two composite marks had to be made by examining each of the marks in question as a whole.  The overall impression may be dominated by one or more of a mark’s components but the comparison could only be carried out solely on the basis of the dominant element if all other components were negligible (OHIM v Shaker Case C-334/05).


The goods in question were very common in Spain and often purchased from an establishment where goods were arranged on shelves so the consumer was guided by the visual impact of the mark.  The figurative element of both marks was dominant whilst the word element of the mark applied for had weak distinctive character (the latter was commonly used in Spain and was perceived as being descriptive of the geographical origin of the goods).  However, that did not mean that the CFI took no account of the impact of the word element.  The elements common to the two marks, seen as a whole, gave rise to a likelihood of confusion on the part of the consumer.

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Protected Designation of Origin (“PDO”)/ Protected Geographical Indication (“PGI”)


Alberto Severi, in his own name and representing Cavazzuti e figli SpA, now known as Grandi Salumifici Italiani SpA (“GSI”) v Regione Emilia-Romagna (ECJ (Fourth Chamber); C-446/07; 10.09.09)


The ECJ provided guidance as to the interpretation of Article 2 of Directive 2000/13 relating to the labelling, presentation and advertising of food stuffs (as transposed into national law in Italy), together with Articles 3(1) and 13(3) of Regulation No 2081/92 on PDOs and PGIs for agricultural products and foodstuffs.


GSI was fined for infringing Article 2 of Directive 2000/13 by misleading consumers as to the origin and provenance of its sausages, marketed under the name SALAME TIPO FELINO (in English, ‘Felino-type Salami’). GSI produced its sausages in the province of Modena, situated 50km from Felino, and had done so since approximately 1970. The word ‘tipo’ was not sufficient to exclude all likelihood of confusion as to the place of manufacture of GSI’s sausages.


GSI appealed the penalty to the Tribunale civile di Modena, submitting firstly that SALAME FELINO was generic both within the meaning of Article 3 of Regulation No 2081/92 and because an application for registration of SALAME FELINO as a PGI had been submitted, but no ruling on the application had, at that time, been made.  GSI further submitted that SALAME FELINO had been legitimately used by producers outside Felino uninterruptedly and in good faith for a number of years, including the registration and use of a collective trade mark by traders based outside Felino.


The Tribunale civile stayed proceedings and asked the ECJ for guidance on, inter alia: (i) whether a geographical name that is the subject of an application for registration as a PDO or PGI which has been rejected or blocked must be regarded as generic; and (ii) whether the designation of a foodstuff which is evocative of a place and is not registered as a PDO or PGI may be legitimately used by producers who use it uninterruptedly and in good faith.


In line with AG Sharpston’s opinion (reported in the CIPA Journal, June 2009), the ECJ concluded in response to (i) that there can be no presumption that a designation is generic for as long as no decision has been made as to the registration of the designation. The ECJ concluded that the way in which the name of a product became generic is an objective process, at the end of which the name of the product in question, although referring to the geographical place where such product was made, became the common name of that product.  It was to be noted that the determination that a designation had become generic did not a priori preclude the possibility that the use of such generic designation in the labelling of products may be misleading.  The consideration as to whether a designation was generic was just one of the factors to be taken into account in the assessment as to whether consumers have been misled.


In answering (ii) the ECJ concluded that a designation containing a geographical reference (for which there was no PGI) may legitimately be used, provided that such use did not mislead the average consumer.  In assessing whether such use would be misleading, the courts may consider the duration of such use; however good faith on the part of the manufacturer or retailer is irrelevant because this subjective factor cannot affect the impression given to a consumer by the label in question.

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Budějovický Budvar, národní podnik v Rudolf Ammersin GmbH (ECJ (Grand Chamber); C-478/07; 08.09.09)


Budvar, a brewery established in the town of Ceske Budejovice in the Czech Republic, marketed beer under the name Budějovický Budvar and Budweiser Budvar and exported a beer called Budweiser Budvar to Austria. “Bud” is an abbreviation of the name Budweis, which is the German name for the town of Ceske Budejovice, the place of origin of Budvar’s beer. Ammersin marketed a beer called American Bud. Budvar initiated proceedings in Austria claiming that, under a bilateral agreement between Austria (prior to its accession to the EU) and the former Czechoslovak Socialist Republic which granted protection to certain names, the name “Bud” was reserved in Austria for beer produced in the Czech Republic.


In an earlier preliminary ruling (Case C-216/01), the ECJ held that EC law did not preclude the application of a bilateral agreement between a member state and non-member country under which a ‘simple and indirect’ indication of geographical origin from the non-member country was given protection in the member state, even where there was no risk of consumers being misled and the import of a product lawfully marketed in another member state may be prevented. A ‘simple and indirect’ indication of origin was one which did not have any direct link between a specific quality, reputation or other characteristic of the products and its specific geographical origin (and thus did not fall within the scope of Council Regulation No 2081/92 on the protection of geographical indications and designations of origin), but was capable of identifying the place from which products came. Although the bilateral agreement between the two countries was capable of affecting imports, and thus was prima facie prohibited under Article 28 of the EC Treaty, it fell under the Article 30 exception on the grounds of the protection of industrial or commercial property.


The Austrian Court referred further questions to the ECJ, essentially seeking guidance on the ECJ’s earlier decision.


The ECJ held that in order to determine whether a designation can be considered to constitute a simple and indirect indication capable of protection under Article 30, the national court must ascertain, according to factual circumstances and perceptions prevailing in the Czech Republic:


  • that the designation, even if itself not a geographical name, was capable of informing the consumer that the product originated from a particular region within the member state; and

  • whether, either at the time of bilateral agreement or later, the designation had not become generic in that member state.

To assist in determining this, the national court could commission a consumer survey. It was up to the national court to determine the percentage of consumers that would be sufficiently significant. The ECJ clarified that Article 30 did not lay down specific requirements as to the quality and duration of the use in order to qualify for protection under that Article.


Finally, the ECJ held that the Regulation on the protection of geographical indications and designations of origin (No 510/2006 which had since repealed No 2081/92) was exhaustive, therefore precluding the application of a system of protection between two member states (as opposed to a member state and a non-member state), such as the bilateral agreement at issue.

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Keywords


Google France & Google Inc. v Louis Vuitton Malletier; Google France v Viaticum & Luteciel; Google France v CNRRH & ots (AG Poiares Maduro for the ECJ; Joined Cases C-236/08, C-237/08 and C-238/08; 22.09.09)


The AG advised the ECJ to rule that Google’s auction and subsequent use of trade marks in its ‘AdWords’ system should not constitute trade mark infringement.


Three references from the French Cour de cassation were made concerning Google’s advertisement system, ‘AdWords’.  When an internet user entered a keyword into Google’s search engine, ‘natural’ results were selected and ranked by automated algorithms according to their relevance to the keyword.  Through AdWords, Google also allowed advertisers to bid for keywords so that their ads were displayed in a separate pane alongside the natural results in response to the internet user’s keyword search.


The AG distinguished between the two, linked, uses of a keyword that occur when it was ‘used’ in AdWords.  The first use occurred when Google allowed advertisers to select and bid for the keyword (the “First Use”); the second when Google displayed ads in response to a user’s search (the “Second Use”).


The first question posed was whether Articles 5(1)(a) and (b) of the Directive and Articles 9(1)(a) and (b) of the Regulation could be used by trade mark proprietors to prevent Google, through AdWords, from making available to advertisers keywords that were trade marks.  The AG went through the four Celine conditions (Celine Sarl v Celine SA Case C-17/06) that need to be satisfied for such trade mark infringement to be made out for each of the two uses identified.  The first two conditions, namely that the trade mark be used (i) without the proprietor’s consent and (ii) in the course of trade, were clearly met for each use.


Condition three, that the trade mark use related to goods or services identical or similar to those covered by the trade marks, was not made out for the First Use. This did not correspond to ‘advertising’ in the traditional sense: there were no goods nor services sold to the general public but instead the service was AdWords itself.  The AG went on to confirm that condition four, that the use affected or was liable to affect the essential function of the trade mark by reason of creating a likelihood of confusion on the part of the public, was also not met for the First Use.  As the AdWords service was neither identical nor similar to those for which the trade marks were registered, there was no risk of a likelihood of confusion.


Condition three was met for the Second Use.  Even though the keywords did not feature in the ads themselves, this use fell within the meaning of ‘advertising’ as the sites sold goods (including counterfeit products) that were identical or similar to those covered by the trade marks.  However, after clarifying that the reference concerned the use of keywords that corresponded to trade marks rather than the use of the trade marks in ads or on the products sold via the sites advertised, the AG considered that the fourth condition had not been met.  Although internet users would expect the results of their searches to include the trade mark proprietor’s site, they would not believe this would be the only result (they may even have been looking for related sites, for example sites reviewing those goods) and were aware they would have to sift through the results sites.  Accordingly, there was no likelihood of confusion and the essential function of the trade marks were unaffected. 


The second question referred was an extension of the first question, asking whether AdWords infringed trade marks with a reputation under Article 5(2) of the Directive or Article 9(1)(c) of the Regulation (which do not require there to be risk of confusion for a use to be infringing). The functions of a trade mark other than its essential function, including guaranteeing the quality of goods or services, preventing consumers from being misled and promoting innovation and commercial investment were relevant. 


The protection accorded to a trade mark in relation to these functions was not absolute but had to be balanced against other interests including freedom of expression and freedom of commerce which required competition and open access to ideas, words and signs.  Since Google’s uses of keywords corresponding to trade marks were limited to merely conveying information on the use of the trade mark in the ads displayed and on the sites advertised, Google intruded less than other permitted uses (such as comparative advertising or a purely descriptive use).  Google’s use should therefore take precedence over the interests of the trade mark proprietors in this instance and should be permitted as not infringing.


The trade mark proprietors also sought to extend the scope of trade mark protection by seeking a ruling that Google was liable for contributory infringement by AdWords allowing third parties to commit trade mark infringement.  The AG was of the opinion that contributory infringement was not covered by either the Directive or the Regulation, but was a matter to be decided under national law.


The next question was whether Article 14 of Directive 2000/31 (the hosting exemption) could exempt Google from any liability incurred as a result of AdWords content.  The AG considered that Google’s services of providing hyperlinks and search engines meant that it qualified as an ‘information society service’.  However, although its natural search results could benefit from the hosting exemption as they were based on purely objective criteria, the AdWords system was not a ‘neutral information vehicle’.  Google had a direct pecuniary interest in internet users clicking on the ads’ links, so went further than the hosting required to benefit from Article 14.


The final question was whether trade mark proprietors could prevent the use by advertisers, in AdWords, of keywords corresponding to their trade marks.  In the AG’s opinion, the second condition, that use be in the course of trade, was not satisfied.  When purchasing keywords that corresponded to trade marks, advertisers were acting as consumers and such use was private (their subsequent use of displaying ads in response to such keyword was commercial, but was a separate and different use).  Moreover, it would be contradictory to find such purchases to be infringing when the AG had considered that such sale by Google was not an infringement.  Advertisers had many legitimate reasons for selecting keywords that corresponded to trade marks (e.g. comparative advertising and product reviews), and such purchases left trade mark proprietors able to take action against sites that did in fact infringe.

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Decisions of the High Court

Construction of an indemnity clause in a licence agreement


The Codemasters Software Co. Ltd v Automobile Club De L’Ouest (“ACO”) (Arnold J; [2009] EWHC 2361 (Ch); 17.09.09)


Arnold J granted summary judgment on the issue of construction of an indemnity clause of a licence agreement between the parties, holding that the clause was to be construed in the manner contended for by Codemasters.


Codemasters designed and sold a computer game under the title “Race Driver: Grid” (“the Game”). ACO was the organiser of the French motor race known as “Le Mans” and the series of shorter races at various circuits around the world known under the collective title “Le Mans Series”. Codemasters wanted to incorporate a reproduction of these races into the Game. It therefore entered into a licence agreement with ACO (“the Agreement”) under which ACO granted Codemasters a licence to use and reproduce the car manufacturer names, marks and car designs for all participants in the races.


Subsequently, claims were made against Codemasters by the manufacturers of the Ferrari, Lamborghini and Porsche cars featured in the Game and a promotional video. As a result, Codemasters entered into separate licence agreements with Ferrari and Lamborghini and entered into settlement negotiations with Porsche. Codemasters sought to claim under the indemnity in the Agreement for the claims made by the manufacturers.


The Judge noted that, up until the hearing, it was going to be a substantial part of ACO’s case that Codemasters’ construction would have the effect of exposing ACO to unreasonable claims. The wind was taken out of ACO’s sails, however, by the Biggin v Permanite ([1951] 2 KB 314) line of authority. The effect of these judgments was that, assuming that the loss attributable to a payment in settlement was not too remote, the claimant must prove that the fact and the amount of the settlement were reasonable. Thus, in order to recover the amounts sought in respect of the claims made by Lamborghini, Ferrari and Porsche, Codemasters must prove that any settlements with those parties were reasonable. It followed that clause 10.3, whatever its true construction, did not mean Codemasters could claim an indemnity in respect of unreasonable settlements.


The Judge held that that, despite some ambiguity in the wording, the commercial purpose of clause 10.3 was reasonably clear. It provided an indemnity against claims arising out of Codemasters’ exploitation of the rights granted under the Agreement. If it was given the interpretation asserted by ACO, in that it was an indemnity only in respect of claims made in relation to separate agreements not the Agreement itself, it was difficult to think of situations to which it would apply. The examples given by ACO were distinctly unimpressive.


Codemasters accepted that a determination of the issue of construction in its favour would not prevent ACO, at a subsequent stage, from submitting that the losses suffered by Codemasters were contributed to or caused by breaches of the Agreement by Codemasters and therefore unrecoverable.


The Judge therefore gave summary judgment in favour of Codemasters.


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Compensation under a cross-undertaking in damages


Lilly Icos LLC & anr; Pfizer Enterprises Sarl & ots; Merck & Co Inc & ots; AstraZenica AB & ots v 8PM Chemist Ltd & ots* (Arnold J; [2009] EWHC 1905 (Ch); 31.07.09)


Arnold J gave judgment on various issues in the first part of an enquiry as to damages following the lifting of interim injunctions granted to the Claimants.


The facts were as follows.  Customs in Birmingham seized a consignment of goods containing the products of four pharmaceutical companies.  In the Lilly action, an injunction requiring HM Revenue and Customs to deliver up the seized products was granted and a Norwich Pharmacal order requiring Customs to disclose the identity of the consignor was made.  The consignor, 8PM, was later held by the Court of Appeal not to have infringed Lilly’s trade marks ([2008] EWCA Civ 24 reported in CIPA March 2008).  The goods, in large boxes, were sent from Turkey to 8PM in the UK where, under a procedure known as “inward processing”, they were broken into smaller packages (each of which had been already labelled with the name and address of the ultimate recipient in the USA) and posted.  The Court of Appeal held that 8PM had not “used the marks in the course of trade” nor had they imported or exported the trade marked goods.  Consequently, the injunctions granted to the four pharmaceutical companies were lifted and 8PM claimed compensation under the cross undertakings which the four had given. 


Arnold J set out the general principles to be applied to the enquiry:


  • The remedy was to give equitable compensation and not common law damages (Les Laboratoires Servier v Apotex Inc [2008] EWHC 2347 (Pat)).

  • Equity’s approach to causation (the “but for” test) was little different to that of the common law.  The loss claimed had to be caused by the injunction, but the injunction only had to be a cause and not the sole cause of the loss. 

  • The general contractual rule that damages are to be assessed at the date of the breach does not apply to a claim under a cross-undertaking.  The loss will usually be sustained after the date of the notional breach ie, the date of the injunction. 

Arnold J held that the four injunctions together caused 8PM to lose its Turkish fulfilment business as its customers went elsewhere.  The “but for” test was satisfied.  Arnold J did not accept that the injunctions granted to Pfizer, AstraZenica and Merck could not cause loss before they had been granted; a defendant might take steps in anticipation of the injunction being granted which would cause loss once the injunction was granted.  The Claimants’ best point on causation was to point out that 8PM’s biggest customer did not go back to 8PM.  But it seemed to the Judge that once the customer had established new arrangements, it did not want to undergo the further disruption of going back to 8PM and found it could operate satisfactorily without doing so.  Since all four injunctions had caused the loss, all the Claimants were jointly liable.


Arnold J held that 8PM had to be compensated for its lost profits sustained by the loss of the Turkish fulfilment business, calculated by taking into consideration the following:  


  • Arnold J did not accept the choice of either the Claimants’ or the Defendants’ expert in identifying the base period from which lost future profits could be calculated.  He found that the Birmingham detention was exceptional and the effects manifested themselves almost immediately.  Therefore, he took the base period to be the year to 23 September 2007 and not the year to 23 November 2007 (the date of the Lilly injunction) or indeed any other period.

  • The Judge accepted 8PM’s expert’s calculations on profit margins, future growth rate and discount rate to make allowance for accelerated receipt.

  • A risk factor for the future of 20% per annum was appropriate, not 10% as submitted by 8PM.  8PM’s business had not been established for a long time; it was not operating in a well established market sector; it was dependent upon one customer for 88% of its business and the relationship was a fragile one in the sense that the customer could go elsewhere at any time; and finally even if the business continued, there was a risk that profitability would decline.

  • However, for the period from the date of the Lilly injunction to his judgment, Arnold J held that a risk factor of 10% was appropriate, thus rejecting both the Claimants’ and the Defendants’ submissions.  He held that it was appropriate to use hindsight in looking back over this period and noted that some of the contingent risks had not materialised.

Arnold J held that 8PM could also claim loss on unsold stock, redundancy costs and interest.  He criticised the Claimants for having two experts, an issue which arose out of a conflict.  They should have found one expert who could have acted for all of them.

Arnold J held that there were no issues of public policy which rendered 8PM’s loss irrecoverable.  The basis of the Claimants’ contention was that the importation of pharmaceutical products, such as those traded by 8PM, into the USA is illegal under US law.  Arnold J held that the court would not award compensation under a cross undertaking for the loss sustained by an unlawful business or where the beneficiary of the cross undertaking had to rely to a substantial extent upon his own illegality in order to establish the loss, whether the activity was illegal under English or foreign law (applying the Latin maxim, ex turpi causa non oritur actio, no action can arise for an illegal or immoral act).  However, the principle did not apply to 8PM’s claim for the following reasons:


  • 8PM’s business was not an unlawful one.  It was lawful under English law and the Claimants did not contend that US law has extra-territorial effect so as to make 8PM’s acts in England illegal.  In the Judge’s view, the fact that 8PM’s business resulted in illegal acts being committed by others in the USA was not sufficient to make that business itself unlawful.

  • 8PM did not have to rely upon any illegal acts in order to establish their loss. 

  • Even if 8PM’s business was regarded as having depended upon the commission of illegal acts by others in the USA, by the date of the Lilly injunction it was an established business with a valuable goodwill which could have been sold to a third party.  8PM’s claim was for the loss of that business.

Finally, Arnold J held that the principle that it is not possible to “approbate and reprobate” applied to give 8PM an affirmative defence to the Claimants’ public policy submission.  In other words, the Claimants could not adopt two inconsistent positions.  Lilly, having persuaded Norris J to grant an interim injunction on the basis that the damage to 8PM’s business could be adequately compensated by an award of damages under the cross undertaking (even though they maintained that the importation into the USA was illegal), could not turn around after the injunction had been discharged and say that compensation was irrecoverable as a matter of law by virtue of that illegality.


 
 Katharine Stephens, Zoe Fuller and Alice Sculthorpe

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Reporter’s note: We are grateful to our colleagues at Bird & Bird LLP for their assistance with the preparation of this report: Amy Williams, Clare Wilson, Jack Jones, Nadia Hussein, Nick Boydell, Oceane Millon de La Verteville, Tim Harris and Victoria Evans


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ECJ and CFI decisions can be found at http://curia.europa.eu/jcms/jcms/j_6/home  and the reported cases marked * can be found at http://www.bailii.org/databases.html#ew