Five years after a trade mark is registered in the European Union it becomes subject to use requirements: the trade mark owner can only rely on the mark in litigation or trade mark opposition proceedings to the extent the mark has been put to "genuine use". For the Community Trade Mark, the trade mark that applies in all 27 Member States of the European Union, the "genuine use" must extend to "the Community".
A key adviser to the Court of Justice of the European Union has held that "genuine use in the Community" of a Community Trade Mark can, in the right circumstances, include use in a single Member State only.
Advocate General Sharpston's key recommendation in Leno Merken BV v. Hagelkruis Beheer BV Case C-149/11 is that when the CJEU must determine whether a CTM has been put to genuine use in the European Community, it should ignore national borders and instead focus on the market within the entire Community for the goods and services covered by the CTM registration.
Applications to register trade marks in Europe can be opposed, and ultimately blocked, by holders of a variety of earlier rights. One such right is a Community Trade Mark ("CTM") which is a unitary trade mark that applies equally in all 27 Member States of the European Union. Where a CTM which has been registered for more than five years is relied upon by an opponent, an applicant can (and invariably will) require the opponent to demonstrate that the mark has been put to "genuine use in the Community in connection with the goods or services in respect of which it has been registered". Without such evidence, the CTM cannot be relied upon.
In the present case, Hagelkruis Beheer BV ("Hagelkruis") applied to register the word mark "OMEL" in Benelux. Leno Merken BV ("Leno") opposed Hagelkruis' application on the basis of its earlier CTM registration for "ONEL", for similar goods and services. Hagelkruis requested proof that Leno's ONEL CTM had been put to genuine use in the Community and, when Leno produced evidence of use within the Netherlands alone, argued that there was no evidence of genuine use in the Community. The Benelux Office for Intellectual Property agreed with Hagelkruis and rejected Leno's opposition. Leno appealed to the Gerechtshof's-Gravenhage (Regional Court of Appeal, The Hague), who in turn referred four questions to the CJEU. In essence, these questions asked under what conditions, if at all, genuine use of a CTM within a single Member State could amount to genuine use in the Community.
AG Sharpston's Opinion
AG Sharpston has advised the CJEU that national borders should be ignored when determining whether there has been genuine use of a CTM, since the European Community comprises "the entire territory of the 27 Member States". In the words of the Treaty on the Functioning of the European Union, the Community is "an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured". As a result, "the borders between Member States and the respective sizes of their territories are not pertinent to [the genuine use] inquiry".
Instead, AG Sharpston has advised the Court to adopt a market-based approach that identifies geography as only one of several factors to be considered. The use of a CTM within a single Member State "is not, of itself, necessarily sufficient to constitute genuine use of a trade mark" but, equally, it does not "necessarily preclude" that finding:
"What matters is the impact of the use in the internal market: more specifically, whether it is sufficient to maintain or create market share in that market for the goods and services covered by the mark and whether it contributes to a commercially relevant presence of the goods and services in that market. Whether that use results in actual commercial success is not relevant."
As a result, the fact that a CTM "has been used in one Member State or several is irrelevant".
Finally, the Advocate General states that using a CTM on a website does not, by itself, mean that the mark is being put to genuine use in the Community.
By treating the European Community as a single market, AG Sharpston has avoided introducing a cross-border requirement to the Community Trade Mark regime. Such a concept is of course well-known (there is an interstate requirement in US federal trade mark registration), and it would therefore be surprising if AG Sharpston had sought to impose on Europe a requirement that the legislature appears to have intentionally rejected.
The focus of the Opinion on a CTM's impact on the relevant market also means that participants in niche or highly-localised markets may be able to prove genuine use with less extensive use of their CTMs than purveyors of mass-marketed goods. The example given by AG Sharpston is that the use of a CTM for deep-fried-chocolate-bars in Scotland alone might be "genuine use in the Community" if the proprietor can show that there is no market for those goods outside that region. What is unclear, however, is how many uses of a trade mark can be "sufficient to maintain or create market share" without being "commercially successful".
AG Sharpston's comment that online use of a mark is not sufficient to prove its genuine use in the Community is a necessary consequence of the test already described. Its inclusion in the Opinion is welcome, nonetheless, for its consistency with the Court's earlier ruling in Wintersteiger v. Products 4U Case C-523/10, which we have covered here. That case held that the mere accessibility of a website in a Member State did not give the courts of that Member State jurisdiction over alleged trade mark infringements occurring on the site.
Many will be disappointed that this Opinion does not set out thresholds for what is, and what is not, genuine use. Others will welcome it for that very same reason. The Opinion accords with our previous understanding of the issues and it is expected that the CJEU will not depart radically from the AG's Opinion when it rules on the case in the coming months. In the meantime, businesses should be confirming that the use of their CTMs is "commercially relevant" in the markets for their goods and services. If these marks are not being used to create or maintain market share in their markets, they may be ineffective in preventing the registration of confusingly similar marks or, at worst, be susceptible to revocation.
The Advocate General's Opinion in Leno Merken BV v. Hagelkruis Beheer BV Case C-149/11 can be read in full here.