This month we report on the Advocate General Mengozzi's opinion on the registration of shape marks in Lego Juris A/S v OHIM and MEGA Brands, Inc and his recommendation to dismiss Lego's appeal from the decision of the GC (formerly CFI) and look at the case Burrows v Smith & Ots and the claims of copyright infringement and breach of confidence in relation to a document recording an idea for a computer game.
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Please note following the entry into force of the Treaty of Lisbon on 1 December 2009, the CFI has been renamed the General Court (GC).
|Application (and where applicable, earlier mark)
- pharmaceutical preparations, pharmaceutical preparations for use in the files of immunology and oncology (5)
- dietetic preparations for medical use (5)
The GC dismissed the appeal by Trubion, finding that there was a likelihood of confusion between the marks under Art 8(1)(b).
It was not disputed that (i) the relevant public consisted of end consumers and health professionals from the entire EC; and (ii) the goods covered by the application were similar to those covered by the earlier mark.
The word element ‘TriBion’ was held to be the dominant element of the mark applied for; ‘Harmonis’ would likely be perceived as a laudatory term indicating a specific product line within the ‘TriBion’ range. Visually, TRUBION was almost identical to ‘TriBion’. Although the figurative element and word ‘Harmonis’ of the earlier mark created a visual difference between the marks, they played only a secondary role. The phonetic difference created by the word ‘Harmonis’ could not counteract the virtual phonetic identity of ‘TriBion’ and TRUBION.
The BoA was correct to conclude that the overall impression of the mark applied for was similar to the earlier mark and that there was a likelihood of confusion.
|Application (and where applicable, earlier mark)
- various goods and services (9, 38, 41)
- various goods and services (1, 7 to 11, 16, 21, 28, 37, 38, 41 and 42)
(German national mark)
The GC dismissed Nokia’s appeal from the BoA’s decision that there was a likelihood of confusion between the two marks under Art 8(1)b).
Visually, the marks were similar because the earlier mark constituted the first component of the mark applied for. There was also a degree of phonetic similarity as both marks contained the word LIFE.
Conceptually the word LIFE was an everyday English word, which would be easily understood by the relevant German-speaking public, and that in the context of the goods and services covered by the two marks, it referred to the concept of life rather than to a specific life-span of those goods/services. The same conceptual content was present in the mark applied for. The additional element BLOG in the mark applied for, was not strong enough to counteract this similarity.
The GC noted that neither of the two elements of the mark applied for, LIFE or BLOG, emerged clearly as the distinctive element. Even if BLOG had displayed a greater degree of inherent distinctiveness, it would have been somewhat offset by the fact that LIFE was at the beginning of the sign, on the basis that the public’s attention is usually concentrated on the beginning of the sign applied for.
The GC held that, when considered cumulatively, the degree of similarity between the marks in question and between the goods and services covered by them was sufficiently high to establish the existence of a likelihood of confusion between the signs at issue.
|Application (and where applicable, earlier mark)
- data processing equipment and computers (9)
- various clothing and eyewear (9, 25)
G-STAR RAW DENIM
- various eyewear (9)
- office functions relating to franchise agreements (35)
(CTMs and Benelux mark)
The GC dismissed the appeal, concurring with the BoA that the conditions for the application of Art 8(5) had not been satisfied.
The reputation of the earlier marks within the community was not in dispute and thus the first condition of Art 8(5) was satisfied. However, the GC held that the second condition, namely the identity or similarity of the marks at issue to the extent that a link may be established, was not satisfied. Although there was a close phonetic similarity between the marks at issue, visually and conceptually the marks were different. The conceptual differences (due to STAR having clear meaning and STOR not) were sufficient to counteract the phonetic similarities. The visual differences reinforced this. These differences prevented any assumption of a possible link between the relevant marks. There was no need to assess the remaining conditions of Art 8(5).
The appeal against the BoA’s decision to reject the opposition was therefore dismissed.
|Application (and where applicable, earlier mark)
- milk, chocolate drinks, cream, desserts (29)
- sauces, coffee, tea, cocoa, chocolate, chocolate goods, confectionery, flour, wheat bran, wheat germ, cornflour, pizzas; other snacks (30)
- beers; mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices, vegetable juices; syrups and other preparations for making beverages (32)
- aerated drinks and other non-alcoholic drinks; syrups for making beverages; fruit juices; syrups (32)
(CTM and Spanish national mark)|
The GC overturned the BoA’s decision that there was a likelihood of confusion under Art 8(1)(b) between the marks in respect of certain of the goods applied for (in general terms, beverages).
The GC held that the BoA inappropriately stated that a simple inversion of two identical elements is generally insufficient to make marks different. On the contrary, in certain circumstances and in certain languages, inversion of a composite word’s two constituent elements can significantly change the overall visual perception of that word. The GC found the marks only very weakly visually similar. It found that the marks displayed significant phonetic differences and that the residual similarity between them was weak.
Conceptually, the GC found that the marks were weakly similar in Member States where the elements ‘sol’ and ‘frut’ are recognisable as referring to ‘sun’ and ‘fruit’ respectively, and even more weakly similar in Member States where those elements have no close equivalent in their national languages. Accordingly, the GC found that the BoA had made a significant error in finding that the two marks were highly similar, which undermined its assessment of likelihood of confusion. It followed that the decision of the BoA had to be annulled.
||DECISIONS NOT YET IN ENGLISH
Karen Goncharov v OHIM; DSB
|Application (and where applicable, earlier mark)
- services relating to travel and transport (39)
- services relating to conference, sports and entertainment events (41)
- services relating to guest accommodation (43)
- services relating to transport and travel (39)
- services relating to education and events (41)
- services relating to guest accommodation (43)
The GC dismissed Karen Goncharov’s appeal from the decision of the BoA to reject the application under Art 8(1)(b).
The GC upheld the BoA’s finding that there was a likelihood of confusion between the marks.
AG’s opinion on the registration of shape marks
Lego Juris A/S v OHIM and MEGA Brands, Inc. (AG Mengozzi for the ECJ; C 48/09; 26.01.10)
AG Mengozzi recommended that the ECJ dismiss Lego’s appeal from the decision of the GC (formerly the CFI). The GC had held that Lego’s registration for a red three-dimensional toy brick for “games and playthings” in Class 28 be cancelled on the grounds that it was invalid under Article 7(1)(e)(ii).
The AG provided an opinion which went beyond the limits imposed by the grounds of appeal put forward by Lego, on the basis that this was only the second opportunity in 10 years for the Court to look at this provision.
The AG stated that he did not propose a change in the case-law and principles laid down in Philips (C 299/99) but rather a more methodological procedure for applying Article 7(1)(e)(ii). The case-law was, he considered, too focussed on the signs which must be precluded from registration. He proposed a new three stage test.
The examiner must identify the most important elements of the shape which has been submitted to it for registration; at this stage it was generally not necessary to take into account the overall impression, and the opinion of the consumer is irrelevant. The essential characteristics of the shape must be compared with the technical result in order to assess whether there is a necessary connection between those characteristics and that technical result. Finally, it is necessary to determine the functionality of each of the essential characteristics that has been identified. This may require expert evidence.
At the end of this stage, either:
1) all the defining characteristics of the shape for which registration is sought perform a technical function, therefore the shape itself is functional and registration must be refused or, if registration has already been granted, it must be cancelled; or
2) not all of those characteristics are functional, in which case the examiner proceeds to the second stage of assessment.
At this stage, the examiner would be looking at a shape mark only some of whose essential characteristics are in part functional. The AG envisaged two alternative approaches:
1) restrict a trade mark right to the essential and distinctive non-functional elements, however, this would require OHIM to adopt a more flexible registration practice, facilitating the use of disclaimers; or
2) since the purpose of the provision was to protect competition, compare the sign to other compatible alternative shapes, taking into account interoperability and the requirement of availability.
The third stage was to determine whether the shape mark had distinctive character. At this point, the overall impression conveyed by the sign, the point of view of the consumer, and the goods or services in respect of which registration had been applied for were relevant.
Consequences for Lego’s appeal
The AG found that the GC had correctly applied the principles in Philips. Then applying his three stage methodology, the AG recommended rejecting each of Lego’s three grounds of appeal. The GC had concluded that all the elements of the shape fulfilled technical functions; this corresponded to the first stage of the AG’s methodology and, when assessed on this basis, he found that the registration should be cancelled. As a result, the AG rejected Lego’s submissions that 1) the essential characteristics of the 3-D mark were inadequately defined; and 2) the GC had used incorrect functionality criteria because, following his methodology, those analyses would only have taken place at the third stage and second stage respectively (had those stages been reached).
Advertising slogans – distinctive character
Audi AG v OHIM (ECJ (First Chamber); C-398/08; 21.01.10)
Audi applied to register the word mark VORSPRUNG DURCH TECHNIK for a wide range of goods and services including ‘vehicles and apparatus for locomotion by land’ in Class 12. The BoA refused registration on the basis that the mark lacked distinctive character under Article 7(1)(b) for all goods and services except the goods in Class 12, as the mark had acquired distinctive character in respect of these goods. The GC (then the CFI) dismissed Audi’s appeal. Audi appealed to the ECJ which annulled the decision of the GC.
The GC had held that, although the mark could have a number of meanings, constituting a play on words or be perceived as imaginative, surprising and unexpected and thus could, in that way, be easily remembered, this did not make the mark distinctive. It held that these elements could make the mark distinctive only if it was perceived immediately by the relevant public as an indication of the commercial origin of the goods and services covered by it. Since the relevant public perceived the mark, first and foremost, as a promotional message, the GC refused registration of the mark for lack of distinctive character.
The ECJ noted that the public’s perception of different categories of marks was not necessarily the same and that it could therefore be more difficult to establish distinctiveness in relation to marks of certain categories (such as advertising slogans), when compared with marks of other categories. However, it held that any difficulties in establishing distinctiveness in relation to advertising slogans did not justify laying down specific criteria which were stricter than those applicable to other types of mark.
The ECJ held that the presence of the characteristics of the mark highlighted by the GC were likely to endow the mark with distinctive character. The GCs finding that the mark did not contain elements which, beyond the obvious promotional message of the mark, could enable the relevant public to perceive the mark as an indication of the commercial origin of the goods and services covered by it, was incorrect.
In any event, the ECJ held that the mark could be perceived by the relevant public both as an advertising slogan and as an indication of origin of the goods or services. The fact that the mark was primarily understood as an advertising slogan had no bearing on its distinctive character.
Vodkat passing off Vodka
Diageo North America, Inc & Ots (“Diageo”) v Intercontinental Brands (ICB) Limted (“ICB”)* (Arnold J;  EWHC 17 (Ch); 19.01.10)
The Judge held that “vodka” was a distinctive term and denoted a class of goods with a reputation and hence protectable goodwill. Therefore, ICB had passed off as vodka, a drink comprising vodka and fermented alcohol, sold under the name VODKAT.
Diageo market SMIRNOFF vodka, the best selling brand of vodka in the UK. From April 2005, ICB marketed VODKAT, a clear, colourless, tasteless drink with an alcoholic strength of 22% ABV made from a mixture of vodka and neutral fermented alcohol.
The Judge followed Erven Warnink BV v J. Townend & Sons Ltd ( AC 731) and held that vodka was protected by the extended form of passing off as it denoted a clearly defined class of goods which the public perceived as having a distinctive quality. It was not necessary for vodka to have a cachet but that it denoted a drink of “recognisable qualities”. Annex II of EC Regulation 110/2008/EC (the “Regulation”) defined a number of characteristics of vodka including a minimum alcoholic strength by volume of 37.5%. The Judge held that the majority of vodka sales complied with the definition set out in the Regulation and as such vodka was a drink with recognisable qualities of appearance, taste, strength and satisfaction. It was irrelevant that the public are not precise as to what vodka is made from, where it is made or its alcoholic strength only that they use the term vodka to distinguish this class of drinks from other similar products.
The Judge held that at the date at which ICB commenced selling VODKAT, there was goodwill in the name vodka.
The Judge held that the various forms of get-up used by ICB in marketing VODKAT which included use of the name VODKAT in white letters on a red background, use of the word “imperial” and description of the product as a “vodka blend” were calculated to deceive the public into believing that VODKAT was vodka or a weaker version of vodka. The Judge held that ICB had been reckless as to the possibility of confusion and had failed to instruct the trade to differentiate VODKAT from vodka. This resulted in substantial confusion as VODKAT was sold among genuine vodkas in supermarkets and convenience stores. Although by the time of trial the get-up had been radically changed to remove all references to “vodka” and with “schnapps” displayed prominently on the bottle, the Judge held that this was too little too late. It would not prevent customers who were already confused from continuing to be deceived.
The Judge held that VODKAT had caused damage to Diageo due to lost sales of SMIRNOFF due to confusion and as it had eroded the distinctiveness of the term “vodka”.
No copyright infringement in document containing concept for computer game
Burrows v Smith & Ots* (Norris J;  EWHC 22 (Ch); 20.01.10)
The Judge dismissed the claims of copyright infringement and breach of confidence in relation to a document recording an idea for a computer game. It was held that Burrows had impliedly assigned his pre-employment copyright work on voluntarily incorporating it into a design document developed by a team in the course of his employment and without the knowledge or consent of his employer.
Burrows produced a document at the end of 2004 recording ideas for a computer game (the “Original Document”). In January 2005 Burrows was employed as a Senior Games Designer by Circle. His contract of employment provided that Circle would own all copyright in material developed during his employment. In the course of his employment Burrows put forward a proposal for a game called ‘TrakTrix’ which was developed by the team at Circle and set out in a design document (the “2006 Document”). Burrows had included aspects of the Original Document in the 2006 Document but without Circle’s knowledge. Following feedback from a software publisher, Circle developed ‘TrainTrax’. It was common ground that TrainTrax was recognisably different from Traktrix which had been abandoned.
Circle entered into creditor’s voluntary liquidation and Crush Media acquired certain intellectual property rights from the liquidators including TrainTrax. Smith was one of two directors of Crush Media.
The Judge dismissed the claims of copyright infringement and breach of confidence against Smith holding that Smith was no more a ‘guiding mind’ of Crush than his co-director. The Judge held that the voluntary incorporation by Burrows of any aspect of the Original Document into the 2006 Document without the knowledge or consent of Circle amounted to an assignment of the copyright in those aspects. Following IBCOS Computers Ltd v Barclays Mercantile Highland Finance Ltd  FSR 275 it was held that no term needed to be implied into Burrows’ contract of employment to provide an ‘own time’ exception for copyright.
Indemnity costs awarded on discontinuance
Far Out Productions Inc (“FOP”) v Unilever UK & CN Holdings Ltd & Ots (“Unilever”)* (Mr N. Strauss QC sitting as a Deputy High Court Judge;  EWHC 3484 (Ch); 16.12.09)
The Deputy Judge held that as a consequence of FOP discontinuing its claim against Water Music Productions Ltd (“Water Music”), it was liable for the costs incurred by Water Music. The fact that FOP had settled the action with the other Defendants was not a reason for the Court to exercise the power provided by CPR 38.6 and make any other order as to costs. Costs were awarded on an indemnity basis.
FOP owned rights in a sound recording of a composition entitled “Low Rider”. It brought a claim against Unilever for copyright infringement in relation to the use of part of Low Rider as the soundtrack for television commercials for Marmite. Water Music was a sub-contractor of the advertising agency which Unilever had engaged to develop the commercials. FOP reached a settlement with Unilever and discontinued the claim against Water Music.
The Deputy Judge held that it was “extremely unlikely” that FOP had a valid and subsisting claim for deliberate infringement when it issued proceedings. Although innocent infringement was conceded, any claim based on this was statute barred. The Deputy Judge held that the fact that FOP had reached settlement with Unilever and that there was no pragmatic reason to continue the claim against Water Music, was not a reason to depart from the position under CPR 38.6 where FOP should pay Warner Music’s costs on discontinuance. The Deputy Judged ordered FOP to pay Water Music’s costs on an indemnity basis due to its considerable delays resulting in the proceedings extending over a 4 year period and as it was unlikely that FOP had a valid claim on issuing proceedings.
UK stay refused pending italian proceedings
The Trademark Licensing Company Ltd & Anr (“Lonsdale”) v Leofelis SA (“Leofelis”)* (Sir William Blackburne;  EWHC 3285 (Ch); 11.12.09)
The Judge refused a stay of UK proceedings pending the outcome of proceedings in Italy and held that the two sets of proceedings were not “related actions” in accordance with Article 28(3) of Council Regulation 44/2001/EC (on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) (the “Regulation”).
The facts of the case were complex, however, in summary Lonsdale issued proceedings on 10 February 2009 claiming damages for breach of a trade mark licence agreement (the “Licence”). The Licence provided Leofelis an exclusive right to use the LONSDALE brand on clothes and other goods and to grant sub-licences with Lonsdale’s prior consent in specified European territories. Consent for certain sub-licences was provided in the Licence which included a non-exclusive licence between Leofelis and Leeside SRL (“Leeside”) limited to Italy.
This action was brought following an earlier action between the parties which related to the validity of an extension to Leeside’s sub-licence. Lonsdale had obtained an injunction restraining Leeside from selling goods under the LONSDALE marks in Germany. In reliance on a First Instance decision, Leofelis requested that Lonsdale withdraw the German injunction or Leofelis would terminate the Licence for repudiatory breach. The injunction remained in force and Leofelis gave notice of immediate termination. Lonsdale disputed that there had been a repudiatory breach as the Leeside sub-licence was invalid. Lonsdale then served notice of termination for breach as Leofelis had failed to pay a royalty instalment. The parties disputed the date of termination of the Licence.
It was held that under Article 30 of the Regulation, the Milan Court had been seised in relation to the termination of the Licence when Leofelis filed its defence on 26 February 2009 claiming an indemnity from Lonsdale for loss of its sub-licences. It was not seised on issue of the Italian proceedings on 23 June 2008 as this issue had not been raised and as such proceedings had already been issued in the UK.
The Judge, followed the ECJ’s approach in Owens Bank Ltd v Bracco (Case C-129/92  QB 509) in exercising his discretion and held that the UK proceedings should not be stayed under Article 28 of the Regulation. The date of termination of the Licence was a matter of English law and accordingly, the English court was in a better position to determine the issue and on this basis and due to the pace of the respective proceedings the Judge refused a stay.
No infringement of deprivation principle by licence
Butters & Ots (“Woolworths”) v BBC Worldwide Ltd & Ots (“BBCW”)* (Neuberger, Longmore and Patten LJJ;  EWCA Civ 1160; 6.11.09)
The Court of Appeal (Neuberger LJ giving the lead Judgment) upheld the appeal of BBCW from the decision of the High Court ( EWHC 1954 (Ch) reported in the CIPA Journal, December 2009) that a clause in an intellectual property licence (the “Licence”) which provided for automatic termination on an insolvency event and a clause in a joint venture agreement (“JVA”) which provided an option to acquire shares on an insolvency did not infringe the deprivation principle.
The Court held that a provision in an intellectual property licence which entitled a licensor to terminate the licence on the insolvency of the licensee was a standard term and did not infringe the deprivation principle as no property of the insolvent became vested in a third party. The Court held that the Licence did not infringe the deprivation principle even though the insolvency event triggering termination was that of a group member of BBCW’s joint venture partner and not that of the licensee.
The Court also held that the provision in the JVA which enabled BBCW to purchase the shares of its joint venture partner at fair market value did not infringe the deprivation principle. It was not relevant that the fair market value would be depressed by termination of the Licence. It was held that as neither the provisions in the Licence nor in the JVA infringed the deprivation principle individually, the cross reference between them would not mean that the clauses were infringing.
Katharine Stephens, Zoe Fuller and Emily Peters
Reporters’ note: We are grateful to our colleagues at Bird & Bird LLP for their assistance with the preparation of this report: Claire Barker, Nick Boydell, Nathan Capone, Victoria Evans, Emily Forsyth and Clare Wilson.
The reported cases marked * can be found at http://www.bailii.org/databases.htmland ECJ and CFI decisions can be found at http://curia.europa.eu/jcms/jcms/j_6/home.