The UK's Intellectual Property Enterprise Court recently handed down its judgment in The Sofa Workshop Ltd v Sofaworks Ltd. The case highlights the difficulties that the international nature of Community trade marks (“CTMs”) can cause for brands that are predominantly active in one EU Member State. In particular, the decision demonstrates a strict approach to the requirements to show use of a CTM in the EU with HHJ Hacon holding that it was necessary to show that the CTM was used beyond the boundaries of one Member State. The judgment sits uncomfortably with previous jurisprudence of the Court of Justice of the European Union (“CJEU”).
The Claimant, The Sofa Workshop, and the Defendant, Sofaworks, both retail sofas and other furniture. The Sofa Workshop had registered two CTMs for the word mark SOFA WORKSHOP (the “SOFA WORKSHOP CTMs”) and brought a claim for trade mark infringement against Sofaworks on the basis of these CTMs, as well as a claim for passing off. As part of its defence, Sofaworks challenged the SOFA WORKSHOP CTMs arguing: (i) that they were invalidly registered as they were descriptive, and (ii) that, in any case, the SOFA WORKSHOP CTMs should be revoked as they had not been used to a sufficient extent to maintain the registration.
Invalidity for descriptiveness
Article 7 of the CTM Regulation provides that trade marks shall not be registered as CTMs where they are “devoid of distinctive character”, including where they are descriptive of the goods for which registration is sought. However, if a trade mark has become distinctive through the brand owner’s use of that mark, it shall be registrable as a CTM even if the mark would ordinarily be considered non-distinctive or descriptive.
Prior to considering whether the SOFA WORKSHOP CTMs had acquired distinctiveness through use, the judge considered the inherent qualities of the marks themselves and held that they were indeed descriptive of sofas and sofa beds (among other things).
The judge went on to find that the SOFA WORKSHOP CTMs had acquired distinctiveness in the UK, but that was not enough to save the validity of the SOFA WORKSHOP CTMs. As highlighted in the case of Liz Earle Beauty Co Ltd v OHIM, the proprietor of a word mark must establish acquired distinctiveness in allEU Member States in which the average consumer is liable to recognise its descriptive character. The SOFA WORKSHOP CTMs consisted of words that were descriptive in English, so The Sofa Workshop had to demonstrate that they had acquired distinctiveness in Ireland, Malta, the Scandinavian countries, the Netherlands and Cyprus (being countries where the English language was sufficiently widespread that SOFA WORKSHOP would be considered descriptive by the average consumer). The Sofa Workshop could not demonstrate this and the judge therefore concluded that the SOFA WORKSHOP CTMs were invalidly registered.
Revocation for non-use
If a CTM has not been put to genuine use in the European Community within 5 years of registration or for any continuous period of 5 years after registration, the CTM may be revoked for non-use. Sofaworks conceded that The Sofa Workshop had used the SOFA WORKSHOP CTMs in the UK, but contended that use in the UK alone was insufficient to amount to genuine use within the EU.
In Lena Marken BV v Hagelkruis Beheer BV the CJEU stated that the overarching question to determine whether there has been genuine use of a mark in the EU was whether the mark is “used in accordance with its essential function, which is to guarantee the identity of the origin of the goods or services for which it is registered, in order to create or preserve an outlet for those goods or services”. The CJEU said that all the facts and circumstances relevant to establishing whether there is real commercial exploitation of the mark must be taken into account.
The CJEU in Lena Marken also considered the precise question of whether use in one Member State is sufficient for that use to be genuine use in the EU. In relation to this the CJEU said that the “territorial scope of the use is not a separate condition for genuine use but one of the factors determining genuine use” and that “the territorial borders of Member States should be disregarded in the assessment of ‘genuine use in the Community’”. The CJEU also said that:
“Whilst there was some justification for thinking that a Community trade mark should … be used in a larger area than the territory of a single Member State in order to be regarded as ‘genuine use’, it cannot be ruled out that, in certain circumstances, the market for the goods or services for which a Community trade mark has been registered is in fact restricted to the territory of a single Member State”.
The judge in The Sofa Workshop v Sofaworks inferred from this last statement that in relation to the territorial extent of use, genuine use in the Community will in general require use in more than one Member State. The judge said that an exception to that general requirement arises where the market for the relevant goods or services is restricted to the territory of a single Member State.
The judge found that the SOFA WORKSHOP CTMs had not been used outside of the UK and that no exception to the general rule was present on the facts of this case. The judge therefore concluded that the SOFA WORKSHOP CTMs were liable to be revoked for non-use.
Whilst the trade mark infringement claim failed because of the invalidity of the SOFA WORKSHOP CTMs and the fact that they were liable to be revoked, the passing off claim did not suffer from the same extraterritorial difficulties. The Sofa Workshop had goodwill in the UK and Sofaworks’ use of the SOFAWORKS brand amounted to a misrepresentation leading or likely to lead the public to believe that Sofaworks’ goods were the goods of The Sofa Workshop. This had caused material damage to The Sofa Workshop’s goodwill. Sofa Workshop’s claim for passing off was therefore successful.
Despite The Sofa Workshop’s ultimate success (on the passing off claim) this case serves as a cautionary tale insofar as it relates to CTMs, highlighting circumstances in which a national mark may ultimately offer greater protection than a CTM. Brand owners concerned by the extraterritorial requirements of CTMs should consider protecting their brand through a combination of national marks and CTMs.
The need to show distinctiveness through use in all territories where a CTM is non-distinctive or descriptive is a particular issue for marks that use English words due to the prevalence of English speakers in many EU Member States. This may also cause issues where goods are sold under a mark that incorporates a foreign word. For example, if it had been a Croatian sofa company that operated under the brand SOFA WORKSHOP (which may well be distinctive in Croatia), for its CTM to be validly registered it would have to demonstrate acquired distinctiveness in UK, Ireland, Malta, the Netherlands, Scandinavia and Cyprus.
The judge’s ‘general rule’ that genuine use in the Community requires use in more than one EU Member State sits somewhat uncomfortably with the CJEU’s statement that territorial borders should be disregarded. Practical guidance on how the overarching principles set out by the CJEU are likely to apply is welcome. Should the judge’s ‘general rule’ be upheld in future cases, it may become a useful rule-of-thumb providing increased certainty as to whether a CTM owner’s use constitutes “genuine use in the Community”. That said, a general rule of this kind may be inappropriate in an area that is often heavily dependent on the particular facts of each case.