|Application (and where applicable, earlier mark)|| |
- doughnuts and other baked confectionary products, drinks, restaurant, cafeteria, and catering services (30, 32, 42)
and three other DONUT word marks.
- doughnuts and other baked confectionary products, drinks, restaurant, cafeteria, and catering services (30, 32, 42) (Spanish marks)
The CFI rejected the House of Donuts International’s (HoD) appeal, and found that there was a likelihood of confusion between the respective marks under Article 8(1)(b).
HoD submitted that the BoA had been wrong to conclude that the earlier trade marks were distinctive. According to HoD, the relevant public (the average Spanish consumer) considered the word “donut” to be a generic reference to pastries, beverages and other relevant services, and that in the absence of distinctiveness, the likelihood of confusion was not sustainable.
The CFI held that HoD failed to establish that the BoA was incorrect in finding that the word “donuts” in the earlier marks had a certain distinctiveness. The evidence submitted by HoD (the presence of the word “donut” in two bilingual dictionaries, the use of the term on the internet and in a trading name certificate issued by the Spanish authorities) was circumstantial and was neither admissible, relevant nor probative.
The CFI further held that “donuts” was the central and dominant characteristic of the marks, and that all the other elements of the marks were peripheral.
OHIM v Celltech (ECJ (First Chamber); C-273/05 P; 19.04.07)
Celltech filed an application to register the work mark CELLTECH as a CTM for various goods and services in classes 5, 10 and 42. OHIM rejected the application and Celltech’s appeal was dismissed by the BoA. Celltech then brought an action before the CFI which annulled the BoA’s decision. OHIM appealed to the ECJ.
The ECJ rejected all of OHIM’s grounds of appeal.
OHIM submitted that the CFI wrongly required the BoA to explain the meaning of the expression ‘cell technology’ in scientific terms. Although the BoA must state the reasons why it considers a word mark to be descriptive, OHIM considered that it was not required to provide a scientific definition of the expression.
The ECJ held that the CFI did not annul the contested decision for failure to state reasons, but on the ground that OHIM had not established that CELLTECH, understood as meaning “cell technology”, was descriptive of the goods and services referred to in the application. The BoA’s decision was based on facts which it examined of its own motion and it was for the BoA to establish the correctness of its findings in that regard. The CFI did not err in deciding that the BoA had not established descriptiveness by not identifying the scientific meaning of the expression “cell technology”. The CFI had provided reasons to the required legal standing that the BoA did not show that CELLTECH was descriptive of the goods and services applied for.
OHIM further submitted that the CFI had wrongly held that, as a matter of principle, an area of use of goods or services does not fall within the characteristics of the goods and services whose description is prohibited under Article 7(1)(c). The ECJ held that this was a hypothesis which was stated by the CFI purely for the sake of completeness. Even on the assumption that the ground of appeal was well founded, it could not lead to the judgment being set aside.
Contrary to OHIM’s submission, the CFI did not hold that an expression designating a scientific method for obtaining the relevant goods and services is not descriptive of those goods and services under Article 7(1)(c). The CFI had annulled the BoA’s decision as it had not established that “cell technology” is a method of production of the goods and services applied for.
OHIM finally submitted that the CFI should have ascertained whether the terms “cell” and “tech” were, individually, descriptive of the goods and services concerned and if it concluded that they were, why the combination of those two words introduced an unusual variation as regards the syntax or meaning which enabled the combination not to be descriptive. The ECJ held that the BoA and CFI are required to assess the descriptiveness of the mark as a whole and it is not necessary for a prior analysis of the individual elements. The CFI properly assessed the descriptive nature of the mark as a whole and concluded that it was not descriptive of the goods and services in question.
Alcon Inc. v OHIM; Biofarma SA (ECJ (Third Chamber); C-412/05 P; 26.04.07)
Alcon applied to register as a CTM the word mark TRAVATAN for various pharmaceutical and veterinary goods. Biofarma opposed the registration on the basis of an earlier Italian word mark, TRIVASTAN. The Opposition Division allowed the opposition and this decision was upheld by the BoA and the CFI. Alcon then appealed to the ECJ which dismissed the appeal.
The ECJ rejected Alcon’s submission that the CFI erred in law by including end-users, rather than solely healthcare professionals, in the relevant public for the purposes of Article 8(1)(b). The fact that healthcare professionals are liable to influence or determine the choice made by the end-users is not, by itself, capable of excluding all likelihood of confusion on the part of those consumers as regards the origin of the goods. As the products at issue were sold in pharmacies, end-users were likely to be faced with both products even if those products were purchased separately and at different times.
Alcon further submitted that, by failing to include healthcare professionals in its analysis, the CFI had not examined the likelihood of confusion in the eyes of the relevant public as accepted by the judgment under appeal. The ECJ held that the assessment must be carried out in relation to the eyes of the relevant public as defined and it was not clear whether the CFI included healthcare professionals in its analysis. However, this failure by the CFI was not sufficient to invalidate the judgment. The CFI had concluded that there was significant similarity between the goods as well as visual and phonetic similarity of the marks through the eyes of end-users and it was therefore entitled to deduce that there was a likelihood of confusion for the purpose of Article 8(1)(b).
In its pleading before the BoA, Alcon confirmed that it was willing to limit the specification of goods in the application in the event that the opposition was upheld. Alcon submitted that the CFI had erred by not criticising the BoA for failing to hold that this constituted an express proposal for amendment. The ECJ rejected this and held that, as the request to amend did not comply with the rules of Regulation 2868/95 (it was not made unconditionally), there was no obligation on the BoA to take the request into account.
Comparative advertising and designations of origin
De Landtsheer Emmanuel SA v Comité Interprofessionel du Vin de Champagne, Veuve Clicquot Ponsardin SA (ECJ (First Chamber); Case C-381/05; 19.04.07)
The ECJ has answered several questions concerning the interpretation of the Comparative Advertising Directive and its relation with designations of origin. The referral from the Brussels Court of Appeal (BCA) followed an appeal of the decision in which the beer manufacturer De Landtsheer was permitted to use the word ‘brut’ in relation to its beer brewed using the same process as that for sparkling wine, but was not permitted to use the word, and designation of origin, ‘Champagne’.
The BCA asked whether Article 2(2a) (which defines comparative advertising as “any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor”) means that an advertisement which makes reference to a type of product, but which does not identify any actual undertaking or product, falls within the scope of comparative advertising under the Directive. The ECJ held that the Directive should cover instances where there is a statement referring, even by implication, to a competitor or to a competitor’s products or services. This is the case even where several competitors could claim that they have been referred to by implication. However, it was for the national court to decide whether consumers would identify the competitor or product through any such implication. An advert which does not refer explicitly or implicitly to a competitor is not covered by the Directive and therefore other provisions of EC and national law would be applicable.
The BCA queried whether a business, which could be identified within a particular advert, should be regarded as a competitor under Article 2(2a) regardless of the business’ goods or services. The ECJ held that it should not. Whether undertakings are competitors depends on the nature of the goods, and whether those goods could be considered as being substitutable and meeting the same needs. In order to determine whether there is a competitive relationship between undertakings it is necessary to consider the current state of the market and consumer habits, and how they might evolve. In so doing the court would look at the market in which the advert appeared, but might also look at consumer habits in other countries that might have an impact on local behaviour.
The criteria for determining whether someone is a competitor under Article 2(2a) are different to those to be applied under Article 3a(1)(b) in determining whether goods and services meet the same needs, or are intended to serve the same purpose. Article 2(2a) required a general assessment of whether an undertaking was a competitor, and whether their goods or services could display a certain degree of substitutability. In contrast, Article 3a(1)(b) required a specific assessment of the goods and services in order to conclude that there was a real possibility of substitution.
The BCA’s final question was whether Article 3a(1)(f)
(which requires that for products with designations of origin, the advertisement relates in each case to products with the same designation) preclude advertisers comparing products with a designation of origin with products that have no such designation. The ECJ held that the provision should be interpreted so as to be favourable to the advertiser and concluded that such comparisons are permitted under Article 3a(1)(f). Article 3a(1)(g) already provided that advertisers could not take advantage of designations of origin.
Parallel imports within the EEA; repackaging and overstickering
Boehringer Ingelheim KG & Anr v Swingward Ltd; Boehringer Ingelheim KG & Anr v Dowelhurst Ltd and other combined actions (ECJ (Second Chamber); 26.04.07; C-348/04)
These conjoined cases have been running for some 8 years and concern the circumstances in which owners of trade marks covering medicinal products may enforce their rights to prevent the parallel importation of products placed by them on the market in the EEA which have been repackaged by parallel importers for sale in the country of importation.
The ECJ has over the years dealt with many such repackaging cases, one of the key judgments being that in Bristol-Myers Squibb v Paranova ( ECR I-3457) in which the so-called “BMSconditions” laid down when a trade mark owner may legitimately enforce his rights under Article 7(2) of Trade Marks Directive 89/104 notwithstanding the principle of exhaustion of rights under Article 7(1) of the Directive and Article 28 of the EC Treaty. In short (as summarised by Lord Justice Jacob in this case) “the importer who repackages and re-applies the mark will infringe unless he satisfies all five of the BMS conditions…:
1. Necessary to repackage to market the product
2. No effect on original condition and proper instructions
3. Clear identification of manufacturer and importer
4. Non-damaging presentation
5. Notice [to trade mark owner]
When the Dowelhurst cases first went before Mr Justice Laddie, following his judgment of 28 February 2000, he referred a number of questions to the ECJ in relation to the “necessity” and “specific subject matter” (non-damaging to the trade mark) tests. The ECJ in its judgment of 23 April 2002 held that a parallel importer must fulfil all the BMS conditions even if the repackaging causes no harm to the specific subject matter of a trade mark; and that repackaging is necessary where effective access to the market is hindered as a result of strong resistance from a significant proportion of consumers to relabelled products. Following the ECJ judgment the cases went back before Mr Justice Laddie who gave his second judgment, on 6 February 2003.
The parties appealed both the judgments of Mr Justice Laddie and with its order of 17 June 2004 the Court of Appeal referred questions to the ECJ concerning the following areas of continued uncertainty (1) where the burden of proof should lie in relation to the BMS conditions (2) whether the necessity test applies merely to the fact of repackaging or also to the manner of repackaging (3) whether damage to the reputation of a trade mark encompasses anything, not just defective, poor quality or untidy repackaging or re-labelling (4) whether the BMS conditions apply to a product which has simply been overstickered (5) whether de-branding or co-branding are to be regarded as damaging (6) whether failure by the parallel trader to give notice to the trade mark owner per se means that all products subsequently imported are infringing and if so what relief should be available.
In its judgment the ECJ held that (1) all the BMS conditions apply to overstickering (2) the requirement of necessity only applies to the fact of repackaging, not the manner of repackaging (3) the requirement that the repackaging should not be damaging is not limited to cases where the repackaging is defective, of poor quality or untidy (4) whether de-branding, co-branding or failure to identify the owner of the trade mark are damaging is a question of fact for the national courts (5) the onus of proving that the repackaging complies with the BMS conditions lies with the parallel importer (who must supply a sample if requested) although the burden of proof can be reversed by providing evidence that “leads to the reasonable presumption that the condition has been fulfilled” (6) it follows from the failure by the parallel trader to give notice of the repackaged product that the trade mark is infringed on any subsequent importation of the product (7) it is for the national courts to address the sanctions for failure to give notice but they must not only be proportionate but also sufficiently effective and deterrent to ensure that Directive 89/104 is fully effective.
Infringement: trade marks and copyright
Gary Fearns t/a Autopaint International v Anglo-Dutch Paint and Chemical Co Ltd, De Beer Lakfabrieken BV & Ors (“de Beer”) (Floyd QC sitting as a deputy judge of the Chancery Division; 2.05.07;  EWHC 955 (Ch))
The claimant sold high quality paint for spray painting cars under the mark AUTOPAINT and the logo shown below. Both marks were registered in classes 2, 3 and 17.
De Beer supplied the paint to Autopaint. Due to Autopaint running up debts with De Beer, the parties agreed at the end of May 2004 that De Beer could sell directly to franchisees where the paint could not be sold by Autopaint. However, De Beer went further than the agreement permitted them to do.
As a consequence, Autopaint’s action for trade mark infringement succeeded. The consent which De Beer proved did not go far enough to protect all their actions, for example, the selling of ancillary products under the name AUTOPAINT was an infringement. Similarly, there was no defence to the standard case of passing off. The deputy judge also held that there was passing off because there was switch selling to the trade and to the public. In relation to the latter, the key question was not what the franchisees did or did not believe, but what the public believed. They believed that the contents of the paint tin were authorised by Autopaint and did not expect the tin to contain other De Beer paint.
In relation to a claim to copyright infringement in the logo, the deputy judge held that Section 52 of the Copyright Designs and Patents Act 1988 applied to cut down copyright protection and reduce it to 15 years. The exception relating to “printed matter primarily of a literary or artistic character” did not apply to the labels stuck on the tins of paint because what was marketed was a tin, not just printed matter.
The other pleaded causes of action are nor reported in detail, but were: malicious falsehood (unsuccessful); breach of various agreements (successful in part); and a claim for intentionally inflicting economic harm by unlawful means and conspiracy to do so (unsuccessful).
Breach of trade mark licence; defence of exhaustion of rights
Leofelis SA & Anr v Lonsdale Sports & Ots* (Evans-Lombe J; 8.03.07;  EWHC 451 (Ch))
This is a long judgment and the facts are complex and therefore this summary does not deal with all the issues. The action arose from an exclusive licence agreement between Leofelis, Lonsdale Sports and the latter’s licensee, Trade Mark Licensing Co (TMLC), for the use of certain Lonsdale trade marks in the Territory (defined as the EU and Switzerland, but excluding the UK and Ireland) on sports and casual clothing (the Products). Leofelis was successful in almost all its heads of claim.
The judge dealt first with the defendants’ counterclaims that the licence agreement had been terminated because of various breaches by Leofelis. The judge held that both in relation to the “one off” breaches, such as the of change of control, and in relation to the more difficult question of the claim to continuing breaches, the breaches were waived by TMLC on the company’s subsequent demand for royalties which, when Leofelis paid them, were accepted. Other points arising included:
1. The claim to unauthorised sale of footwear by Leofelis outside the Territory failed because the sales were made with the full knowledge and consent of the defendants pending a formal agreement allowing for the sales being signed.
2. The agreement contained a standard clause requiring “the licensee to use its best endeavours at all times … to create, promote and retain goodwill in the business utilising the Goods under the Trade Marks”. The judge held that the clause was far too uncertain to be enforceable. In any event, since Leofelis was paying a fix royalty and would accordingly take the full benefit of any increase in turnover from exploitation, it was unlikely that it would not be doing its best to exploit the trade marks.
3. Although there was a breach of the provision that Leofelis provide TMLC with samples, the ability to terminate for breach had been waived.
4. Similarly, the failure to obtain and supply a copy of an insurance policy was a breach, but since the defendants had to be treated as not wanting to terminate the agreement, Leofelis was given a reasonable time after judgment to comply with the obligation.
On Leofelis’ claim, the judge held that there had been breach of the clause relating to disclosure of existing licences. The agreement provided that the licence granted was subject to any existing licences, but that Lonsdale and TMLC were “not aware of any other licences or rights having been granted in respect of any of the Trade Marks”. Not only was there a breach of this clause, but statements made by the defendants’ representatives to the contrary amounted to misrepresentation. Following this finding, the judge set the parameters for the subsequent assessment of damages.
Leofelis also claimed breach of contract for the loss of exclusivity due to the sale in Belgium of Products bearing the trade marks by Sports World Belgium (SWB). SWB obtained the Products from the third defendant, Sports World International Ltd (SWIL), who was a licensee of TMLC and its UK distributor. SWB and SWIL were related companies. In the amended defence there was a clear admission that SWIL sold the Products to SWB in Belgium. If this were correct, it was an admission of breach of Leofelis’ exclusive licence within the Territory. However, the defendants, during the course of the proceedings, sought to change their case to state that the Products sold in Belgium were sold by SWIL to SWB in the UK and then exported by SWB to Belgium. They therefore claimed that the Products were first put on the market in the UK and the trade mark rights were exhausted. The judge held that the defendants had failed to discharge the burden placed upon them of proving the facts which supported their changed case and consequently their defence failed.
The judge went on to find that, even had the defendants been able to substantiate their changed case on the facts, their defence would have failed as a matter of law. Assuming, contrary to the judge’s findings, that the sales had been made by SWIL to SWB in the UK, the defence turned upon the question of whether, as a matter of fact, SWIL was in a position “to oppose further commercialisation of the goods” at any time up to their onward sale by SWB to third parties (quoting from Article 7(2) of the Trade Marks Directive). The judge referred to the ECJ’s judgment in Peak Holding v Axolin-Elinor (Case C-16/03). The judgment of the Court did not deal with the question of whether a transfer of ownership between related companies for value constituted a putting of the goods transferred on the market, however, it did adopt the “economic” approach of the Advocate General. It therefore followed that for the rights of a trade mark proprietor to be exhausted, he must have realised the economic value of the mark and put the goods beyond his control by a sale to an objectively independent third party. This also accords with what is said at paragraph 16.095 of Kerly, 14th edition, to which the judge referred.
In the judge’s judgment, the sales by SWIL to SWB were not to an objectively independent third party whose effect was to realise the economic value of the trade mark in the goods in question. The transfers were transfers at cost with an additional 10% on top to cover the costs of packaging etc incurred by SWIL. They were not transfers for a consideration which represented the market value of the goods transferred. Thus, even if SWIL supplied SWB with Products in theUK, the relevant Products were not put on the market in the Community for the purpose of Article 7 so as to exhaust Leofelis trade mark rights. Finally, the defendants had not discharged the burden of proof on them to show that Leofelis had consented to or waived their rights in relation to the sales in Belgium.
Reporter’s note: We are grateful to our colleagues at Bird & Bird for their assistance with the preparation of this report: Gerry Kamstra, Tom Snaith and James Leeson.
ECJ and CFI decisions can be found at http://curia.eu.int/en/content/juris/index_form.htm and the reported cases marked * can be found at http://www.bailii.org/databases.html#ew