Community Trade Marks and Genuine Use – Is Use in One Member State Sufficient? The CJEU Says Internal Borders are Irrelevant
On 19 December 2012 the Court of Justice of the European Union (CJEU) issued its decision on Case C-149/11 Leno Merken v Hagelkruis Beheer B.V. The CJEU has ruled that the territorial borders of the individual member states of the European Union (EU) should be disregarded in the assessment of whether a trade mark has been put to genuine use in the EU so as to avoid revocation proceedings for non-use. Use must be sufficient to maintain or create market share in the EU for the goods and services covered by the Community Trade Mark (CTM).
It is for the referring court to assess, on a case by case basis, whether these conditions are met, taking into account all of the relevant facts and circumstances, including the characteristics of the relevant market, the nature of the goods/services and the territorial extent and scale of use as well as its frequency and regularity. The CJEU said that it would be inappropriate to set a de minimis rule on the territorial scope of use which would be considered sufficient, since this was only one of the factors to be taken into consideration in an assessment of genuine use.
As we reported in our circulars dated 9 February 2010 and 6 July 2012, in what was a test case, Hagelkruis Beheer B.V. (Hagelkruis) applied to the Benelux Intellectual Property Office (BIPO) to register the mark OMEL as a Benelux national trade mark in Classes 31, 41 and 45. This application was opposed by Leno Merken B.V. (Leno) on the basis of its earlier CTM ONEL, registered in Classes 35, 41 and 42. Since Leno’s earlier CTM was over five years old at the date of publication of Hagelkruis’ application, Hagelkruis were entitled to ask Leno for evidence of its use in the preceding five years. Leno were only able to provide evidence of use of the mark in the Netherlands. Hagelkruis argued that this scope of use was insufficient to validate the CTM on which Leno’s opposition had been based.
In its ruling, handed down on 15 January 2010, the BIPO stated that the EU had expanded to 27 member states, with a population in excess of 500 million, and was expected to grow further. Given this situation, it considered that the use of a CTM in just one member state would not justify the wide scope of protection which a CTM conferred. The BIPO therefore rejected Leno’s opposition and allowed Hagelkruis’ mark for registration.
Leno appealed this decision to Benelux’s regional Court of Appeal in the Hague, which referred the following four questions to the ECJ for clarification:
- Is use of a CTM in a single member state of the EU sufficient to constitute “genuine use” which is sufficient to validate a CTM under Article 15(1) of the CTM Regulation?
- If not, can the use of a CTM within a single member state never be regarded as constituting genuine use of the CTM in the EU?
- If the use of a CTM within a single member state can never be regarded as constituting genuine use of a CTM within the EU, what other requirements apply in order to assess the territorial scope of the use of a CTM which is necessary to constitute genuine use?
- In the alternative, is an assessment of whether use is genuine to be conducted without reference to the borders of individual member states and instead on the basis of e.g. market share?
The Court stressed that the CTM Regulation “seeks to remove the barrier of territoriality of the rights conferred on proprietors of trade marks by the laws of the Member States by enabling undertakings to adapt their activities to the scale of the Community and carry them on without restriction.” In this context, it was inappropriate to determine whether use has been genuine if it has only been made in one Member State, since for the purposes of the assessment, the relevant territory is the whole of the EU, not individual Member States. Whether use is genuine should be assessed by reference to all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark serves to create or maintain a market share for the goods or services for which it was registered and contributes to a commercially relevant presence of the goods and services in that market. That assessment must have regard the characteristics of the market concerned, the nature of the goods/services and the territorial extent and scale of use as well as its frequency and regularity.
This opinion confirms the Advocate General’s view that whether use is genuine depends on multiple factors and should be assessed on a case-by-case basis by the national court. The factors which need to be taken into consideration will include the nature of the relevant market, demand and supply, transport, language, investment costs and consumer tastes and habits.
Given the size of the EU, which currently comprises 27 member states, with Croatia due to join in 2013 and 5 other countries in accession negotiations, it is difficult to believe that use of a CTM in just one member state would suffice to constitute evidence of genuine use. The CJEU commented that “it cannot be ruled out that, in certain circumstances” use of a CTM in one member state would be sufficient and this form of wording suggests that this would be a rarity.
The decision imposes a significant burden on trade mark proprietors and national courts to file and consider significant evidence of the nature of the relevant market and of the nature of use of a CTM within that market. Such an exercise is likely to require considerable resource on the part of brand owners. The more cost-effective option, where there is uncertainty over whether the scope of use has been sufficient, would be to re-file a CTM, which would have the effect of restarting the five year “grace period” during which use does not need to be proven. Re-filing will also provide brand owners with the opportunity to amend their goods/services specifications if the scope of their use has changed in the intervening period. If it has become clear that a brand will only be used in one or two territories of the EU, trade mark owners might also consider refilling nationally.
For more information on the contents of this circular or if you need to seek specific legal advice please contact James Fish (email@example.com), Rosalind Miller (firstname.lastname@example.org) or your usual J A Kemp advisor, all of whom can be contacted on +44 (0)20 3077 8600.
20 December 2012