ECJ increases likelihood of brand erosion?
The dispute in the UK between Intel Corporation and CPM United Kingdom Ltd over CPM's registered trade mark INTELMARK has led to the European Court of Justice (ECJ) clarifying the extent of protection given by the registration of a well known trade mark (such as INTEL). The ECJ's response today in
Case C-252/07 to questions posed by the UK Court of Appeal better defines in what circumstances a brand owner may prevent the value and reputation of its brand in Europe being "diluted" by others using a similar brand name or logo.
The most notable aspect of this judgment is the requirement for a brand owner to produce evidence of a real prospect of its own customers' economic behaviour being affected by use of another mark. In other words, will the brand owner's sales of its own products be affected by use of the later mark? This may cause problems for brand owners in proving how this has happened, given the real difficulty of showing why sales have been or may be affected. However, if they cannot it raises the possibility that the reputation and value of a brand could be eroded over time, little by little, until several years later the brand may be worth a lot less than it was.
Introduction
The EU Trade Mark Directive (and, therefore, UK trade mark law) gives the owner of a trade mark registered for certain goods or services the right to prevent the registration or use of an identical mark for identical goods and, if consumers are likely to be confused about the goods' trade origin, the use of an identical or similar mark on identical or similar goods. But the Directive (in Articles 4(4)(a) and 5(2)) gives marks "with a reputation" wider protection - against an identical or similar mark if its use without due cause takes or would take unfair advantage of, or is or would be detrimental to, the distinctive character or the repute of the earlier mark. This includes situations when the mark is used for goods not similar to those covered by the registered trade mark, and also when consumers are not likely to be confused. The ECJ had already given (in Adidas C-408/01) some guidance on interpretation of this provision, but today's judgment goes much further.
The need for a link As established in Adidas, the two marks must be similar to the degree that the relevant public makes the connection (that is, establishes a "link") between them. Without such a link, there is not likely to be detriment to, or unfair advantage taken of, the distinctive character or repute of the earlier registered mark. However, the mere existence of a link without one of these consequences is not sufficient.
A link will exist if:
- the mark calls the registered mark to the mind of the relevant public; or
- there is a likelihood of confusion, that is the relevant public believes or might believe that the goods/services marketed under the two marks come from the same, or economically-linked, undertakings.
Otherwise, whether the relevant public would establish a link must be assessed globally, taking into account all factors relevant to the circumstances of the case including:
- the degree of similarity between the marks and also the nature and degree of similarity between the goods/services. Even if the marks are identical, there may not be a link - for example, they may be used for completely different goods/services targeted at different consumers in which case the registered mark (even though well known enough to have a reputation) is not known to the consumers targeted by the other mark.
- the strength of the registered mark's reputation; if the reputation reaches beyond the section of the public targeted by the registered mark then other consumers seeing the other mark are more likely to make a link.
- the strength of the registered mark's distinctive character (whether inherent or acquired through use). The more distinctive it is, the more likely it will come to mind when consumers see the other mark. If a word mark is "unique" (that is, like INTEL, the word has not been used by anyone other than the owner of the registered trade mark) its distinctive character is stronger.
Unfair advantage or detriment
The likelihood of the mark taking unfair advantage of, or being detrimental to, the registered mark's distinctive character or repute must also be assessed globally, taking into account all factors relevant to the circumstances of the case, and the criteria include those listed above. The more immediately and strongly the later mark brings the registered mark to mind, the more likely its use is taking unfair advantage or is detrimental to the earlier one.
Some of the Court of Appeal's questions to the ECJ focused particularly on the meaning and assessment of "detriment to the distinctive character" of the mark with the reputation (known as "dilution" or "blurring"), rather than on the meaning of taking unfair advantage of its distinctive character or repute (known as "free riding"). The ECJ made the following points:
- The mark does not have to be unique in order for use of another mark to be detrimental to its distinctive character; although the more unique the mark appears, the greater the likelihood of such detriment occurring.
- A first use of another mark may, in some circumstances, cause or be seriously likely to cause detriment to the mark's distinctive character.
- Detriment to a mark's distinctive character is caused when the mark's ability to identify the goods and services of the mark's owner is weakened. Therefore, to prove detriment requires evidence of a change in the economic behaviour of the average consumer of the relevant goods or services resulting from the use of the similar mark, or a serious likelihood that such a change will occur in the future. However, it is immaterial whether or not the owner of the mark draws real commercial benefit from the other mark's distinctive character.
Caveats
There are two particular caveats to the effect of the judgment. One is that the ECJ did not expressly state that its answers applied to the infringement provision (in Article 5(2)) that allows the brand owner to prevent use of another mark, as well as to the ground (in Article 4(4)(a)) for refusing to register a mark or claiming invalidity of a registered mark (as was the case in Intel v CPM). However, from the ECJ's reasoning, the same is likely to apply. The second is that the ECJ did not (and, as mentioned above, was not asked) to consider specifically the "unfair advantage" (free-riding) aspect of the provision. For more guidance on this we will have to wait for the ECJ's response to questions from the UK Court of Appeal in the L'Oréal v Bellure case relating to lookalikes. This is likely to come out late next year.