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IP Cases & Commentary – Details

1 July 2012

Changes in Consumer Economic Behaviour - General Court Rules Not Necessary to Prove Detriment to Distinctive Character

On 22 May 2012, the General Court of the European Union (GC) concluded that the proprietor of an earlier trade mark was not required to produce evidence of a change in economic behaviour of the average consumer in order to show detriment to the distinctive character of such mark for the purpose of Article 8(5) of Council Regulation 207/2009 (the CTMR).

Environmental Manufacturing LLP (the applicant) filed a CTM application for the registration of a device mark for goods in Class 7 (figure 1). Société Elmar Wolf (the opponent) filed an opposition relying on a number of earlier French registrations, including the device mark (figure 2) registered for goods including Class 7.

The grounds relied on by the opponent were Articles 8(1) - likelihood of confusion - and 8(5) - unfair advantage or detriment to the distinctive character or repute - of the CTM Regulation. The Opposition Division rejected the opposition on both grounds. The opponent appealed and OHIM’s Second Board of Appeal allowed the appeal and annulled the decision of the Opposition Division. The applicant appealed to the GC on two pleas in law.

Proof of use

The applicant’s first plea related to the opponent’s proof of use of the earlier marks pursuant to Article 42(2) and (3) of the CTM Regulation. The applicant argued that the opponent had showed use of the earlier marks only in respect of garden machinery and tools intended for the general public, but not for machinery and tools for professional gardening. The applicant argued that OHIM’s Board of Appeal had failed to appreciate the distinction between the two categories when assessing genuine use, and that it should have done so and applied the so-called principle of partial use (ie, narrowed down protection to the particular sub-category for which the earlier marks had been put to genuine use).

The GC rejected the applicant’s contention and held that the principle of partial use should not be used to strip an earlier trade mark of “all protection for goods which, although not strictly identical to those in respect of which the mark is registered, are not in essence different from them and belong to a single group which cannot be divided other than in an arbitrary manner”. Therefore, the proprietor of a mark cannot be expected to prove use of all possible ‘commercial variations of similar goods and services’ and the principle should only be applied where the goods/services are ‘sufficiently distinct to constitute coherent categories or sub-categories’.

Evidence of detriment to the distinctive character of the earlier mark

The applicant also argued that the Board of Appeal in its assessment of the ‘risk of dilution’ pursuant to Article 8(5) of the CTM Regulation had failed to consider the economic effects of a connection between the marks at issue.

In particular, the Court of Justice of the European Union (CJEU) had expressly stated that “proof that the use of the later mark is or would be detrimental to the distinctive character of the earlier mark requires evidence of a change in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered consequent on the use of the later mark, or a serious likelihood that such a change will occur in the future” (Intel case, C-252/07, para. 77).

The GC held that the proprietor of an earlier mark, in order to adduce evidence that use of the later mark would be detrimental to the distinctive character of its mark, must show evidence of a future risk of detriment, without being required to demonstrate actual and present harm to its mark. This can be established:

  1. On the basis of logical deductions made from an analysis of the probabilities; and
  2. By taking account of the normal practice in the relevant commercial sector as well as all the other circumstances of the case.

The GC concluded that neither Article 8(5) nor the Intel case introduce the additional requirement to show a change in the economic behaviour of the average consumer of the relevant goods and services. Accordingly, the GC interpreted the Intel case as saying that a change in the economic behaviour of the consumer is established if the proprietor of the earlier mark has shown that its mark’s ability to identify the goods or services for which it is registered and use is weakened, since use of the later mark leads to dispersion of the identity and hold upon the public mind of the earlier mark.

On the facts, the GC observed that the Board of Appeal had correctly considered inter alia (1) the highly distinctive character of the earlier mark, (2) the fact that the goods in question were identical or similar in character, and (3) that the devices were somewhat visually similar. In light of the above factors, the Board of Appeal was ‘fully entitled’ to find that the later mark was likely to be detrimental to the distinctive character of the earlier marks without having to show the economic effects of the connection between the marks at issue.

The GC’s interpretation of this point of law will no doubt please brand owners, as the Intel case had introduced a considerably high hurdle to adduce evidence of detriment to the distinctive character of the earlier mark. It remains to be seen whether its conclusions will be followed in the future, especially by the CJEU. Also, we query the potentially circular nature of the GC’s interpretation of the Intel case:

  1. Detriment to the distinctive character of the earlier mark occurs where the earlier mark is no longer capable of arousing immediate association with the goods for which it is registered and used (ie, risk of dilution);
  2. Risk of dilution must be evidenced by a change in the economic behaviour of the relevant consumer;
  3. ‘Change in economic behaviour’ is established if one shows that the ability of a mark to identify goods/services is weakened.

‘Inability to arouse immediate association with the goods/services’ (1) appears to be the equivalent of ‘a weakened ability to identify goods/services’ (3). How can the latter be evidence of the former? Should the proprietor of the earlier mark be required to adduce evidence of (3) and, if so, what type of evidence? We look forward to future decisions of the European courts on this point of law.

Useful links

Decision T-570/10 Environmental Manufacturing LLP v OHIM
Decision C-0252/07 Intel Corporation Inc v CPM UK Ltd

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