TRADE MARKS AND THE FREE MOVEMENT OF GOODS IN EUROPE: IN SEARCH OF AN EVER CLOSER ACCOMMODATION

Lionel Bently (University of Cambridge)

Outline

The traditional reconciliation of FMGs and national trade marks

The goals of harmonization and the retention of national rights

The problem of retaining national rights – the example of descriptiveness

4 possible approaches: (i) Community Standards for national rights (ii) Interpretation of directive (iii) mutual recognition and (iv) proportionality

The “Traditional” Approach: Territorial TM Rights as Trumps

TFEU Art 34 prohibition; Art 36 derogation Case 119/75 Terrapin v. Terranova [1976] ECR 1039 “in the present state of Community law an industrial

and commercial property right legally acquired in a MS may legally be used to prevent … the import of products marketed under a name giving rise to confusion where the rights in question have been acquired by different and independent proprietors under different national laws. If in such a case the principle of the free movement…were to prevail…the specific objective of industrial and commercial property rights would be undermined.”

Harmonization

Directive No 89/104/EEC (now 2008/95), and Regulation No 40/94 (now 207/2009).

Harmonization removes divergences in rules and interpretation of those.

But leaves harmonized rights as national rights operating in territorially restricted manner, so their application may differ territorially

‘Cultural, linguistic, historic and social differences’

Whether descriptive in Country A, or likely to cause confusion in Country A, still depends on circumstances in Country A

Implicit in legislative scheme that application of Directive is assessed from the perspective of each MS, whereas Regulation examines issues from the perspective of the ‘Community’

Case C-421/04, Matratzen Concord AG v. Hukla Germany SA [2006] ECR I-2322

H had registered ‘matratzen’ in Spanish TM registry (where names borrowed from foreign languages are considered arbitrary); M sought invalidation. Audiencia Provincial de Barcelona referred.

ECJ. Assessment from perspective of average consumers ‘in the territory in respect of which registration is applied for’: [24].

Recognised potential for linguistic, cultural, social and economic differences: [25].

Registration not precluded because borrowed from MS where it would be devoid or descriptive (‘unless the relevant parties in the MS in which registration is sought are capable of identifying the meaning of the term.’).

Case C-421/04, Matratzen Concord AG v. Hukla Germany SA [2006] ECR I-2322, [AG64] “it is imperative…that national courts

should ensure…that Article 6(1)(b) may be properly invoked by third parties…According, ..its owner will not be entitled to prevent the word Matratzen being used in contexts falling …within Article 6(1)(b), such as, for example, in a catalogue written in German to refer to mattresses.”

The Need to Re-consider Deference:Language rights and FMG, peoples etc

Movement of peoples: intra-European migration. 2011 survey, 1 in 10 EU citizens had worked in another EU country.

Movement of goods: Movement of services: LIDL has 10,000

stores across Europe; ALDI (Nord and SUD), 9000 stores; TESCO has stores in Czech Republic, Hungary, Poland, Ireland, Slovakia.

Case C-100/02 Gerolsteiner Brunnen GmbH v. Putsch GmbH [2004] ECR I-710, [25] “In a Community of 15 Member States,

with great linguistic diversity, the chance that there exists some phonetic similarity between a trade mark registered in one Member State and an indication of geographical origin from another Member State is already substantial and will be even greater after the impending enlargement.”

Proposal I: Commission Proposal to Apply Community Standards to Absolute Grounds

So, as under CTM, a sign which is descriptive in any MS should not be registered; equally if immoral in one MS

EP rejected: “It would be disproportionate and practically unworkable to require national offices to examine absolute grounds for refusal in all national jurisdictions and languages of the Union. It would further be contrary to the principle of territoriality of rights…”

Other, better reasons.

Proposal ii: Interpret Directive more strictly

Bristol Myers Squibb, [27]: ‘the [Trade Marks] directive must be interpreted in the light of the rules on the free movement of goods and in particular Article 36’

Implications for: ‘average consumer’, ‘descriptiveness’, ‘confusion’, ‘due cause’?

But in practice ECJ has rarely focussed on FMG Case C-63/97 BMW [1999] ECR I-905, [62]:

Article 6 of the Directive ‘seeks to reconcile the fundamental interests of trade-mark protection with those of free movement of goods.’

Proposal iii: The “Country of Origin” rule

if A’s acts are non-infringing in any country of the EU, they should circulate freely

Adopted in relation to eg Orphan Works Directive, Directive 2012/28/EU, Art 4 Application of Directive by MS gives rise to ‘measures having equivalent effect’

Case C-100/02 Gerolsteiner Brunnen GmbH v. Putsch GmbH [2004] ECR I-710

GERRI/KERRY SPRING manufactured and bottled in County Kerry, Ireland, using water from a spring called ‘Kerry Spring’

BGH – likelihood of aural confusion; referred on Art 6(1)(b)

ECJ, referring to Case C-63/97 BMW [1999], [62], highlighted role of Art 6 in ensuring FMG and services. (That statement was in context of art 6(1)(c), but was made in relation to Art 6 as a whole.)

Assumed to be an indication of geographical origin. Did not ask whether would be perceived as such in Germany.

Interpreting Gerolsteiner

Supports proposition that if descriptive in Member State of Origin, then descriptive?

Limited to GIs Limited to GIs recognised at an EU level: [21]

‘Kerry Spring’ listed for purposes of Council Directive 80/777/EEC; OJ 2002 C41/1

Accepted that understood as geographical reference even in Germany?

A bad decision to be limited to facts? 5th Chamber; rapporteur David Edward (with Jann and Timmermans), and opinion from A-G Stix-Hackl

Advantages of country of origin rule

Encourages FMG Renders CTM attractive Penalises TM holders who select marks that only

function well in part of the EU. Should a trader who registers MATRATZEN in Germany really expect to obtain full protection?

In Gerolsteiner AG Stix-Hackl, at [AG67], said ‘the trade mark proprietor appears less worthy if hew must assume at least some of the responsibility for the likelihood of confusion, such as where the registered mark consists of a descriptive indications which have become distinctive only through use.’

Problems with the ‘Country of Origin’ Rule

A return to Hag I? How to deal with serious cases of

confusion in the country of reception.

Proposal iv: proportionality

Case C-317/91 Deutsche Renault AG v. Audi AG [1993] ECR I-6260, AG Tesauro, [AG8] – on the other matters in Art 36 (helath, morality, public policy and public security) “the Court… has always reserved to itself the right to consider the proportionality of the measures adopted by comparison with the objectives pursued, judging in particular whether such objectives could not have been attained by measures which would restrict intra-Community trade to a lesser extent”.

Proportionality

Outside the Article 36 derogations, the ECJ applies a proportionality analysis to so-called “mandatory/imperative requirements/public interest objectives” such as consumer protection or fair trading: Case 120/78, [1979], [8] (Cassis de Dijon); Case C-238/89 Pall [1990], [12]: Case C-313/94 Fratelli Graffione [1996], [17], [23] (Cotonelle); Case C-368/95 [1997], [27] (magazine competitions)

Application of necessary and proportionate analysis in MEE case-law

Risk must be “sufficiently serious”: Case C-313/94 [1996], [22] (Cotonelle)

Assessment contextual: Case C-313/94 [1996], [22] (Cotonelle)

It may be relevant that a term does not mislead consumers in other countries: Case C-315/92, [1994], [21] (Clinique). But cf AG Gulmann and ECJ in Case C-313/94 [1996], [22] (Cotonelle)

In this context, the ECJ has looked at alternatives to outright prohibitions e.g. involving “labelling” to dissipate confusion: Case 16/83, Prantl [1984], 29] (Bocksbeutel) (if “fair and traditional practice in State of origin”); Case C-313/94, [AG15]

Even in cases of harmonization? Case C-469/00 Ravil [2003] ECR I-5053,

[86] (considering Regulation No 1107/96 registering as a PDO of GRANO PADANO with a condition that it be grated and packaged in the region of production was a measure equivalent to a quantitative restriction on exports but was justified to protect the reputation and quality of the product, and thus to protect the specific subject matter of the right)

What might proportionality mean? If goods are legitimately marketed

elsewhere in the EEA, trade mark rights may not be used to stop circulation in state where mark is registered if disproportionate to do so.

Requires close analysis of specifics of marks and how they are being used

Further circulation cannot be prohibited if real damage can be avoided by packaging, labelling, context of use