21 February 2018

Infringement and the unitary nature of a EU trade mark: has the English Court got it wrong?

The approach and understanding to trade mark harmonization and also the unitary nature of a EU trade mark (‘EUTM’) has certainly changed since OHIM (now EUIPO) opened its doors on 1st April 1996. The perception was that use in one Member State was sufficient to fulfil many things including constituting “genuine use”. Over time more Member States have joined; the smallest of which has a population of less than 500,000. That, in itself, has required the consideration of whether the use in a single Member State concept is still sufficient.

The decision in Burgerista Operations v Burgista Bros [2017] EWHC 35 (IPEC) has highlighted a number of problems associated with these issues, and raised more questions than it answers.

Plus ça change…

Within any legal system there are invariably tensions and considerations as to whether the wording used in one part of an Act (or Regulation/Directive) should have the same meaning in another part. So where identical wording is used in order to prevent the registration of a trade mark by reason of an earlier trade mark, the same meaning (and so ‘test’) should also apply to infringement. So wording in Article 4 (1)(a) and (b), and (3) Trade Marks Directive2008/95/EC (now in Article 5 of Directive 2015/2436), relating to opposition/invalidity should be read the same as for Article 5 (1)(a) –(b) and(2) relating to infringement. Likewise respectively in Regulation 207/2009 for EUTMs, Article 8 (1)(a) – (b) and (5) (also same numbering in Regulation 2017/1001) should be the same for Article 9 (1)(a)-(c) (now Article 9 (2)(a)-(c) Regulation 2017/1001).  This, so the theory goes, ensures the harmonization of EU trade mark law as well as the unitary nature of the EUTM. But this is stated also to apply where the opposition is to a national mark, or infringement is in only one jurisdiction. Is that both reasonable and fair?

The problem of Unitarianism is no more starkly outlined than where a EUTM has never been used (as it is within the non-use 5 year period) or used only in a limited way. Where this is the case in opposition proceedings, there is, perhaps, a more ‘theoretical’ approach to be taken. In fact, it harks back to the old fashioned approach of comparing the marks side by side, considering the goods, and asking oneself are they identical, but if not, is there a ‘likelihood of confusion’? Similarly for infringement where the English Courts adopt the approach that the proprietor is considered to have used the mark in a “notional and fair” manner: the comparison is that use with the actual alleged infringement and whether there is a likelihood of confusion.

The problem stems from the approach of the ECJ/CJEU to ‘reputation’ in relation to likelihood of confusion (where it is not referred to in the Directive or Regulation) and marks ‘with a reputation’ for so called ‘dilution’. In the original Canon v MGM decision (relating to a trade mark opposition), after considering the SABEL v Puma case (which related to Article 4 (1)(b) of the Directive – likelihood of confusion) the court specifically stated:-

 “In the light of the forgoing, the answer to be given to the first part of the question must be that, on a proper construction of Article 4 (1)(b) of the Directive, the distinctive character of the earlier trade mark, and in particular its reputation, must be taken into account when determine whether the similarity between the goods or services covered by the two trade marks is sufficient to give rise to this likelihood of confusion.” (emphasis added).

From this case was created the ‘global appreciation’ test, which the English Courts have taken and evolved. There was, however, actual use by the proprietor in relation to both Canon and SABEL v Puma cases, hence why ‘reputation’ was to be considered.

In the context of EUTM trade mark infringement how does this actually work, particularly when there is limited or no reputation?

Alles ist in Ordnung (nicht)…

The approach to the role of reputation in opposition and infringement proceedings illustrates where the problem lies. In Iron & Smith kft v Unilever NV (C-125/14) Unilever opposed the registration of a Hungarian national mark (“be impulsive”) on the basis of Unilever’s “Impulse” mark, registered internationally and as a (then) CTM. The particular provision relied on by Unilever was the Hungarian law equivalent of Article 4 (3) of The Trade Marks Directive 2008/95 (ie a mark with a reputation). That is because the goods were not identical or even similar. Unilever’s evidence of that reputation was that they had a market share of 5% in the United Kingdom and 0.2% in Italy. The Hungarian trade mark office accepted this showed Unilever’s mark had a reputation in the EU.

The CJEU had earlier held that the reputation must be in a substantial part of the territory, but as in the PAGO International (C-301/07) and Leno Merken (C-149/11) decisions that reputation could coincide with just a single Member State. In Iron & Smith the Court concluded that the reputation did not even have to be in the Member State where the application for registration was sought. However, that was simply the reputational issue point and the CJEU did go on to point out that the relevant public (or at least a commercially significant part of that public) in the Member State where registration was sought had to make a connection (i.e. link) between the earlier mark and the mark for which registration was sought if there was to be damage caused by one of the three types of injury which could happen to the earlier trade mark/proprietor with a reputation.

The second case concerned the EUTM “COMBIT” and use of “COMMIT” both in relation to software (C-223/15). The referring German court concluded that while the average German might confuse the two marks, the average English-speaking consumer would not confuse the two marks. The CJEU therefore concluded that the national court must find infringement of the exclusive right conferred by the EUTM, but that the order prohibiting use was to be “for the entire area of the European Union with the exception of the part in respect of which there has been found to be no likelihood of confusion.” Perhaps this is just an alternative way of saying the mark is meant to be unitary but it is not.

The third case concerned the Spanish importer of margarines from Ireland under the mark KERRYMAID (C-93/16). Infringement proceedings were brought by the Irish Dairy Board Co-operative (now known as Ornua) which owned a EUTM for KERRYGOLD also in relation to margarines. However, in the UK and Ireland there had been peaceful co-existence between these two marks for many years, and there was no likelihood of confusion in those Member States. Nevertheless, the CJEU held that peaceful co-existence in one part of the EU did not lead to the conclusion that there could not be confusion in another part. In so far as Article 9 (1)(b) Regulation 207/2009 was concerned (ie likelihood of confusion), in assessing whether there was infringement in one jurisdiction other circumstances outside of that jurisdiction could be taken into account but only if the market conditions and the “sociocultural circumstances” are not significantly different. For the purposes of Article 9 (2)(c) (ie marks with a reputation) the issue of the existence of a “reputation” in another part of the EU was not questioned: here the issue was whether the peaceful co-existence in other Member States could be taken into account in deciding whether the defendant’s use was excusable, and so was not ‘without due cause” (answer: no it could not).

Life of π

In Burgerista the EUTM owner was an Austrian company, which started in the small city of Linz in October 2012. By July 2015 there were two restaurants in Linz, one in Pasching, two in Vienna, one in Salzberg and the first restaurant had opened in Germany the month before. They operated under the trade mark BURGERISTA. The EUTM was applied for on 1st October 2014 for “provisions of food and drink; restaurants, canteens and bars” in class 43. The defendants opened their first branch in Shepherd’s Bush, London, in September 2015 under the mark BURGISTA BROS, although the court considered that “Burgista” was the dominant part of the defendants’ mark.

The proprietor sued under both Article 9 (2)(b) and (c) (respectively likelihood of confusion, and mark with a reputation). In terms of likelihood of confusion, the only evidence was the Claimant’s CEO’s witness statement, which identified instances of “wrong way round confusion”, trawled off the internet. These consisted of journalists (the main example stemming from a Mr Dimitar Popov) misusing the defendants’ name and referring to them as “Burgerista” because in the words of Mr Popov we are all “Londonistas”.The defendants’ barrister accepted that there was “muddling” of the names by the journalists.

Based entirely on that evidence the judge concluded there was a likelihood of confusion. The issue of reputation was never considered. The judge accepted that if the proprietor was to trade in the same locality as the defendants then a significant portion of the average consumer would be likely to confuse the two names. In other words, the judge applied the notional and fair use approach given that the mark was still in its initial five year period. He did not, in fact, state that this was the approach he was taking but this seems to be the logical conclusion of what he did.

However, it is the issue of the extent of reputation under Article 9 (2)(c) where the problems surfaced. The judge accepted that there would be a reputation by reason of some use arising from the restaurants in Austria. However, he concluded it did not have a reputation “within the meaning of Article 9 (2)(c)”, but without saying what the extent of that had to be. His point seems to rest on the fact that the CEO confirmed the proprietor wanted a ‘local’ feel to the restaurants, and there were no figures relating to marketing. The judge went on to hold that if he had been wrong, he considered there would be a finding that the proprietor would suffer injury of ‘dilution’: This is because he was satisfied that the proprietor had a genuine intention to open restaurants in London in the foreseeable future. He considered this is what the Iron & Smith decision taught him, despite it being an opposition case, not infringement. Nowhere in the judgement is the specific injury spelled out, other than as ‘dilution’, which as any trade mark practitioner knows is the catch-all: The actual injuries being ‘blurring’, ‘tarnishing’ and ‘free-riding’.

Bara döda fiskar följer strömmen

That Swedish proverb translates to mean “only dead fish follow the stream”, in other words sometimes people just go with the flow: So too with judicial decisions. Some time ago, the English Courts sought to collate all the CJEU decisions together into a manageable test. This test has been slavishly followed ever after. However, by referring only to the ‘global appreciation’ test, the original approach taken in the SABEL v Puma and Canon decisions to ‘likelihood of confusion’ and the importance of “reputation”, appears to have been lost. The way it has been set out (there are 12 criteria, the first being the ‘global appreciation’ test) is almost as if that is the global appreciation test.

Of course, in the case of “notion and fair use” it may be that the issue of “reputation” does not apply. However, that is for the court to decide, and more importantly, specifically to say so, yet Burgerista is silent on this.

In so far as Article 9 (2)(c) is concerned, in following the stream of consciousness the judge perceived arising from the Iron & Smith decision, the judge omitted to consider whether the average consumer in the jurisdiction where infringement was alleged would have made the necessary link between the registered mark and the later alleged infringing use.

This case highlights all the problems associated with EUTMs and in particular the issue with infringement when the registration is still within the five year non-use period. On the one hand there seems something of an injustice when after three years (i.e. three fifths of the period in which a   proprietor has to use its mark) the reputation of the proprietor (apparently) is restricted only to a few streets in Austria (and possibly Germany), the marks are quasi-descriptive, and yet a trader in the jurisdiction where the proprietor’s mark and reputation is wholly unknown, has to stop trading. On the other, the remaining two fifths of the period is precisely to give the proprietor the opportunity to open restaurants under its mark in the UK.

Hopefully, these issues will be looked at in a future case and the arguments and issues clearly resolved. One for Mr Justice Arnold, me thinks!