Federal Supreme Court decision
The Federal Supreme Court recently had to decide whether the use of stars to classify hotels belongs to the public domain, or whether such use may be subject to trademark protection.
Since 1979 the Swiss Hotel Association has used a classification system whereby hotels which are affiliated to its association are given a rating of between one and five stars. Since 2004 the association has also offered non-members the opportunity to be classified under its star system in return for payment. For that purpose, the association registered several guarantee trademarks (differing from each other only in the number of stars) pursuant to Article 21 of the Trademarks Act:
GastroSuisse, which is also an inter-trade organisation for the hotel and restaurant industry, began negotiating with the association in 2003 regarding the method of classifying those hotels in Switzerland that had not already been classified (which was around 60% of all hotels in Switzerland). However, the two parties failed to reach an agreement and in 2005 GastroSuisse filed several trademark applications with the intention of establishing its own classification system. The trademarks in question also contain between one and five stars:
In response, the association filed a request for provisional measures and an action in order to prevent the use and registration of GastroSuisse's trademarks. The request for provisional measures was granted by the competent court. On January 12 2011 the Federal Supreme Court reached a decision on the principal proceedings.
Federal Supreme Court decision
The court found no risk of confusion between the trademarks in question and therefore dismissed the association's action. The court based its decision on a number of arguments.
The court pointed out that stars were the only corresponding elements contained in the contentious trademarks. Therefore, only the stars as such were capable of creating a risk of confusion between the trademarks. According to the court, the average customer is likely to associate the use of stars in connection with accommodation services with the quality of the respective hotel. The stars as such are not inherently distinctive, but purely descriptive for the registered purpose, and make no reference to a particular company or group of companies. Therefore, stars belong to the public domain in relation to hotels and cannot be monopolised, particularly as there is no reasonable alternative open to the association's competitors for the classification of hotels. The slightly lower requirements for distinctiveness that apply, according to established practice, to guarantee marks could not change the court's position.
Furthermore, the court found that the association's stars had not acquired distinctiveness. The court ruled that acquired distinctiveness will not be considered by the courts where there is an absolute requirement to keep a sign free for all to use, as in the case at hand.
The court then evaluated the marks' scope of protection based on its decision that the stars are in the public domain. Considering that the other elements of the association's trademarks – in particular, the cross element and the word 'hotel' – are of a descriptive character, the court found the scope of protection of these trademarks to be very limited. Accordingly, the court found no risk of confusion between the contentious trademarks, despite the offered services being identical.
Finally, the association raised arguments based on unfair competition law. However, the court did not judge GastroSuisse's actions to be contrary to the rules of good faith and so found that they did not constitute unfair competition. Due to the fact that GastroSuisse had created a different logo, the court considered that it had taken all reasonable steps to distinguish its marks from the association's trademarks.
According to the Federal Supreme Court, stars should be free for all parties to use for the purpose of the classification of hotels or the like. In this light, it will be interesting to observe whether additional competitors will now enter the Swiss market and establish their own star-based systems of hotel classification.
For further information on this topic please contact Silvana Schweri or Roger Staub at Froriep Renggli by telephone (+41 44 386 6000) or by fax (+41 44 383 6050) or by email ([email protected] or [email protected]).