Trade marks: damages for infringement of trade marks revoked for non-use

By Audrey Horton

05-2020

The European Court of Justice (ECJ) has ruled on the availability of damages for trade mark infringement where a trade mark has been revoked for non-use during the five years following its registration.

Background

Article 5(1)(a) of the Trade Marks Directive (2008/95/EC) (2008 Directive) (Article 5(1)(a)) provides that the owner of a registered trade mark may prevent third parties from using in the course of trade any sign which is identical to its mark in respect of goods or services which are identical to those for which the mark is registered. A claim under Article 5(1)(a) can only succeed if the use affects, or is liable to affect, the functions of the trade mark, which include its origin, advertising, investment and communication functions.

Article 5(1)(b) of the 2008 Directive (Article 5(1)(b)) provides that a trade mark owner has the right to prevent unauthorised third parties from using, in the course of trade, an identical or similar sign for identical or similar goods or services to those for which the mark is registered, where there exists a likelihood of confusion or association on the part of the public.

An EU trade mark (EUTM) owner's rights will be revoked if the EUTM has not been put to genuine use in the EU within a period of five years following registration in connection with the goods or services in respect of which it is registered, or if such use has been suspended for a continuous period of five years, and there are no proper reasons for its non-use (Article 18(1), EU Trade Marks Regulation 2017/1001/EU) (EUTM Regulation).

However, Article 58(1)(a) of the EUTM Regulation (Article 58(1)(a)) provides that an EUTM cannot be revoked where, during the interval between expiry of the five-year period and filing of the application for revocation or counterclaim, genuine use of the EUTM has been started or resumed. Commencement or resumption of use within a period of three months preceding the filing of the application or counterclaim is disregarded where preparations for the commencement or resumption occurred only after the owner became aware of the application or counterclaim.

Article 58(1)(a) confers on a trade mark owner a grace period within which to begin to make genuine use of the mark, during which they might rely on the exclusive rights which the mark conferred in respect of all the goods or services for which the mark was registered, without having to demonstrate the use (Länsförsäkringar AB v Matek A/S (C-654/15).

Article 13(1) of the Intellectual Property Enforcement Directive (2004/48/EC) (2004 Directive) provides that damages must be appropriate to the actual prejudice suffered by the proprietor of the intellectual property right.

In the UK, section 11A of the Trade Marks Act 1994 (section 11A TMA) provides that a trade mark owner cannot seek to prevent use of a sign if their mark is liable to revocation for lack of genuine use.

Facts

A brought trade mark infringement proceedings in France against C in respect of a EUTM that it had never used and which was revoked for lack of use during the five-year period following registration of the mark.

The French Court referred to the ECJ the question whether Article 5(1)(b) and Articles 10 and 12 of the Trade Marks Directive (2008/95/EC) meant that an owner, who had never used its EUTM and whose rights in it were revoked for five years' non-use following publication of the registration, could get compensation for infringement on the basis of a likelihood of confusion before the date on which the revocation took effect.

Decision

The ECJ held that EU member states had the option of allowing a trade mark owner, whose rights in the mark had been revoked following five years' non-use from its registration in connection with the goods or services for which it was registered, to retain the right to claim compensation for the injury sustained as a result of the use by a third party, before the date on which the revocation took effect, of a confusingly similar sign in connection with identical or similar goods or services.

In determining whether the goods or services of the alleged infringer were identical or similar to the goods or services covered by the EUTM at issue, the extent of the exclusive right should be assessed, during the five-year period following registration of the mark, by considering the goods and services covered by the mark's registration, and not in relation to the use that the owner had been able to make of the mark during the period.

The ECJ also held that, from the time when the five-year period following registration of the mark expired, the extent of the exclusive right might be affected by the finding, made following a counterclaim, or a defence by the third party in infringement proceedings, that the owner had at that time not yet begun to make genuine use of their mark in respect of some or all of the goods and services for which it had been registered. However, the present case was distinguished from Länsförsäkringar on the basis that it concerned the question of the scope of the exclusive right on expiry of the grace period where the trade mark had already been revoked.

As member states remained free to determine the effects of revocation or invalidity of trade marks, the Directive left national legislatures free to determine the date on which revocation of a trade mark took effect. Member states also remained free to decide whether they wished to provide that, where a counterclaim for revocation was made, a trade mark might not be successfully invoked in infringement proceedings if it was shown that the trade mark could be revoked for non-use.

Although the fact that a trade mark had not been used did not in itself preclude compensation for acts of infringement that had been committed, it remained an important factor to be taken into account in determining the existence and the extent of any injury sustained by the owner and accordingly the amount of damages that they might claim.

Comment

This decision follows logically from the fact that member states, in implementing the Directive, are allowed the flexibility of permitting the owners of trade marks that have been revoked for non-use during the five years following registration to claim damages for any infringement that took place before revocation. It also appears to be consistent with the 2004 Directive.

Since January 2019, when section 11A TMA came into effect, trade mark owners in the UK will be deterred from seeking to rely on unused rights, at least those registered for at least five years previously, in infringement cases, and the need for use to be challenged by way of separate revocation proceedings has also been removed. A similar provision applies to EUTMs under Article 127(3) of the EUTM Regulation.

Case: AR v Cooper International Spirits LLC (C 622/18).

First published in the May issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.