On 6 March 2014 the CJEU rendered a decision in a tasty case concerning bread. In Backaldrin Osterreich The Kornspitz Company v Pfahnl Backmittel GmbH (C-409/12) the CJEU assessed the validity of the trade mark 'KORNSPITZ' for bakery goods in Class 30 and provided guidance on the circumstances under which a trade mark may become generic.
Backaldrin was the owner of the Austrian word mark KORNSPITZ registered for goods in Class 30. Those goods included: ‘flour and preparations made from cereals; bakery goods; baking agents, pastry confectionery, also prepared for baking; pre-formed dough … for the manufacture of pastry confectionery’. Under the trade mark KORNSPITZ, Backaldrin produces a baking mix which it supplies primarily to bakers. They turn that mix into bread rolls. Backaldrin consented to the use of that trade mark by the bakers and the foodstuffs distributors supplied by them in the sale of the bread roll.
One of Backaldrin's competitors, Pfahnl, claimed that the sign KORNSPITZ was perceived by end users as the common name for a bakery product, namely for bread rolls which are oblong in shape and have a point at both ends. That perception was explained, inter alia, by the fact that the bakers using the baking mix provided by Backaldrin do not generally inform their customers either that the sign KORNSPITZ has been registered as a trade mark nor that the bread rolls are produced using that mix.
The Austrian Court sought clarification in the form of a preliminary ruling from the CJEU. In particular, asked whether a trade mark was liable to revocation if that mark was perceived as the common name by the consumers buying the product even if the bakers selling the of the finished product made using the material supplied by the proprietor of that mark did not have that perception.
The CJEU ruled that Article 12(2)(a) of the Directive 2008/95/EC must be interpreted as follows:
- A trade mark is liable to revocation in respect of a product for which it is registered if, in consequence of acts or inactivity of the proprietor, that trade mark has become the common name for that product from the point of view solely of end users of the product.
- It may be classified as ‘inactivity’ within the meaning of that provision if the proprietor of a trade mark does not encourage sellers to make more use of that mark in marketing a product in respect of which the mark is registered.
- The revocation of a trade mark does not presuppose that it must be ascertained whether there are other names for a product for which that trade mark has become the common name in the trade.
The CJEU confirmed that that whether a trade mark has become the common name in the trade for a product or service in respect of which it is registered must be assessed not only in the light of the perception of consumers or end users but also, on the features of the market concerned, in the light of the perception of those in the trade, such as sellers. However, as the Court pointed out earlier in the Björnekulla Fruktindustrier decision (Case C-371/02), in general, the perception of consumers or end users will play a decisive role.
In this particular case, the fact that the sellers of the product did not generally inform their customers that the sign KORNSPITZ had been registered as a trade mark for the bread rolls was classified as inactivity on the part of the trade mark owner.
In view of the above, the CJEU held that if end users perceive KORNSPITZ as a common name for bread rolls, then KORNSPITZ does not fulfil its essential function as an indication of origin. The loss of this distinctive character may result in the revocation of the trade mark KORNSPITZ either in whole or in part (excluding the baking mix).
This decision underlines the importance of entering into commercial agreements in which the trade mark proprietor provides guidance and specific requirements as to the use of its trade mark by its licensees. This is especially the case for companies that own a trade mark for end products but supply raw materials only and/or intermediate products who should be aware of the vulnerability of their trade mark if specific use requirements are not agreed upon and adhered to.