When one country is not enough: the re-definition of genuine use

Lucy Walker, trade mark attorney partner and Rosanne Farmer, trade mark attorney associate discuss recent decisions made by the CTM Office and Courts of the EU member states which could have far-reaching implications for trade mark owners wishing to register an EU-wide trade mark and what measures they must take to protect their intellectual property.

The previous standpoint of the EU courts has always been that the use of a registered trade mark in one member state of the EU is sufficient to maintain the registration, defining borders between EU countries as invisible. However, three recent decisions intimate that this view is rapidly changing and the ‘use’ of a mark in one country may no longer be enough.

The current position

A community trade mark affords protection for a trade mark throughout the entirety of the EU. The main advantage of a CTM is the cost saving in that it is only necessary to file one application to obtain EU-wide protection, as opposed to filing national applications via the local trade mark offices in each of the 28 EU member states.

Previous decisions from the CTM Office and the Courts of the EU member states have found that use of a CTM in one EU member state should be enough to maintain a CTM registration and defeat a non-use cancellation action. However, there now seems to be a shift in how the law is being interpreted in this area.

The key case which sets out what level of use is required to support a CTM registration is ONEL v OMEL: Case C-149/11 (reported here http://barkerbrettell.co.uk/what-constitutes-genuine-use-of-a-community-trade-mark/). In this case, the Court of Justice at the European Union (CJEU) answered questions as to what level of use of a mark constitutes genuine use finding that:

  1. territorial borders between EU member states should be disregarded and therefore, whether there has been ‘genuine use in the Community’ is not to be approached from the perspective there has been use of the mark in more than one, two or any other particular number of EU member states;
  2. a CTM registration is put to genuine use where it is used in accordance with its essential function, that is, the trade mark acts as a guarantee as to the origin of the goods or services for which it is registered and the mark is being used to create or maintain the trade mark proprietor’s position within the market for the goods or services covered by the registration;
  3. whether the trade mark has been put to genuine use will be decided on a case by case basis and will depend on all relevant circumstances, including the characteristics of the market, the nature of the relevant goods and services, the territorial extent and scale of use and the frequency and regularity of use;
  4. purely in relation to the territorial extent of use, genuine use in the Community will in general require use in more than one EU Member State, although where the market for the relevant goods or services is restricted to one EU member state, use in one country should be sufficient to maintain the registration, subject to the other requirements as discussed above.

Therefore, without coming out and saying it categorically, the CJEU was moving towards a position whereby use of a CTM registration in one member state of the EU is not necessarily sufficient to constitute genuine use of the mark.

November 2014 – Opposition No. 400331 by Intermar Simanto Nahmias to UK trade mark application no. 2652113 JUMPMAN by Nike International Ltd

Nike International Ltd (Nike) filed a CTM application for the trade mark JUMPMAN which was successfully opposed by Intermar Simanto Nahmias (Intermar) on the basis of their earlier Spanish mark JUMP.

Nike responded by filing an application to convert its refused CTM application into national trade mark applications in a number of EU member states, including the UK. Subsequently, Intermar opposed the UK application on the basis of its earlier CTM registration for JUMP.

As part of the proceedings, because Intermar’s CTM registration had been registered for more than five years at the date of publication of Nike’s application, they had to file evidence of use of their mark in order to substantiate their opposition. In doing this, Intermar provided evidence to show that they had sold 55,000 pairs of shoes to one customer in Bulgaria and subsequently, 170 pairs of shoes were then sold by the Bulgarian customer to a Romanian company, equating to $476,000. In effect, they showed sales of their products into Bulgaria and Romania.

The UK Intellectual Property Office (UK IPO) held that Intermar had not demonstrated it had put its mark to genuine use in the European Community and so rejected the opposition.

Intermar has filed an appeal against the decision and the outcome will be eagerly awaited.

July 2015 – The Sofa Workshop Ltd v Sofaworks Ltd [2015] EWHC 1773 (IPEC)

Sofa Workshop Ltd (SW) is a UK business which manufactures and sells handmade furniture, in the UK and trades under the name Sofa Workshop. In order to protect its trade mark SOFA WORKSHOP, SW had registered two CTMs.

SW commenced a trade mark infringement action against Sofaworks Ltd (Works) on the basis of their CTM registrations in relation to their use of the name SOFAWORKS, as well as a Passing Off action.

Works filed a counter challenge against SW’s CTM registrations on a number of grounds, particularly, that they should be revoked for non-use as they had not been put to genuine use in the European Community.

The evidence of use field by SW showed that although the CTM registrations had been put to extensive use in the UK, there was no evidence that SW advertised or targeted consumers outside of the UK. Even though consumers outside of the UK could purchase products from SW’s website, there was only evidence of one non-UK sale of products branded SOFA WORKSHOP.

In this instance, the UK’s Intellectual Property Enterprise Court (IPEC) held that SW’s use of their mark in the UK only, despite being extensive, was not sufficient to constitute “genuine use” for the purposes of maintaining their registrations and therefore, their marks were cancelled from the CTM register.

Nevertheless, SW’s claim against Works for Passing Off was successful, thereby bringing an end to their use of the name SOFAWORKS.

September 2015 – Iron & Smith Kft v Unilever NV (C-125/14)

Iron & Smith Kft (IS) filed a Hungarian national trade mark application for the figurative mark BE IMPULSIVE for a range of feminine hygiene products. Unilever NV (Unilever), the owner of the IMPULSE brand which is used in respect of a range of perfumed body sprays, filed opposition on the basis of their earlier CTM registration IMPULSE.

The opposition was based on the ground that IS’ mark would take unfair advantage of, or be detrimental to, the distinctive character or the repute of Unilever’s CTM registration. In support of their opposition, Unilever filed evidence to demonstrate sales of large quantities of their product in the UK and Italy. Sales of their products meant they had a 5% market share in the UK and a 0.2% market share in Italy.

The Hungarian Intellectual Property Office found in favour of Unilever, holding that although Unilever did not have a reputation in their mark in Hungary, they had a substantial reputation in other parts of the EU and this was sufficient to defeat IS’ application.

IS appealed to the Fővárosi Törvényszék (Municipal Court of Budapest) on the basis that Unilever’s reputation in their CTM registration did not extend to Hungary and therefore, they should not be entitled to prevent a Hungarian national application on the basis of the same.

The Budapest court referred to the CJEU as to whether a CTM registration has to have a reputation within the relevant EU member state in order to oppose an application in that same country. In response, the CJEU held that if the owner of a CTM registration can prove they have a reputation in a substantial territory of the EU, this will be sufficient, even if the reputation is not in the EU country where the application was filed. Therefore, the Hungarian Intellectual Property Office was correct in its decision.

What is interesting to take from this decision is that use of Unilever’s mark in only two EU countries was sufficient to prove that the mark has a reputation in a substantial part of the EU.

What should trade mark owners do?

A large number of companies file CTM applications as a cost effective way of obtaining trade mark protection for their mark. The cost of filing a CTM application amounts to roughly the same cost as filing two national applications in EU member states. This means that even if a trade mark owner is only commercially interested in operating in one EU country, it may still be preferable to file a CTM application over a national trade mark application so that they can stake their claim, just in case they should ever expand into other EU territories at a later date. In addition, the CTM registration may act as a tool to block other potentially later filed conflicting applications in countries where you would not seek trade mark protection via the national filing system.

However, even if there is substantial use of that CTM registration in one particular EU country, based on the recent decisions discussed above, such use is likely to no longer be sufficient to support the CTM registration meaning any challenge on the basis of non-use is likely to be successful or if you need to prove use of your mark to support a challenge to a third party’s mark, use in one EU country is unlikely to be enough.

As set out above, no guidance has been given by the CJEU as to what level of use constitutes genuine use of a trade mark; the position has always been that each case turns on its facts and so no specific amounts of what constitutes use can be defined. But with uncertainty in the law, our advice has to be that it is vital for trade mark owners who have protected their brand using the CTM system, but only use their mark in one EU country, to consider fortifying their trade mark protection by filing a national application in the territory where they are using their mark.