In Indo European Foods Ltd v EUIPO,(1) the EU General Court gave the EU Intellectual Property Office (EUIPO) a lesson in the UK law of "extended passing off" and annulled a Board of Appeal ruling that a UK trader of basmati rice had no case in its opposition under article 8(4) of the EU Trademark Regulation(2) against the applicant for a figurative sign featuring the phrase "Abresham Super Basmati Selaa Grade One World's Best Rice", for various rice-based goods in classes 30 and 31. The Board's decision was based on a number of errors, including that the goodwill in the name "basmati" was confined to a particular type of rice and did not extend to products of a different nature containing rice.
In June 2017, Hamid Ahmad Chakari applied to register as an EU trademark the figurative sign shown in Figure 1 for "Flour of rice; rice-based snack food; rice cakes; rice pulp for culinary purposes; extruded food products made of rice" in class 30 and "Rice meal for forage" in Class 31.
Figure 1: applied-for EU trademark
Indo European Foods Ltd filed a notice of opposition based on the earlier non-registered word mark in the UK, BASMATI, used to refer to rice.(3) The ground relied on, under article 8(4) of the EU Trademark Regulation, was that it was entitled under UK law to prevent by means of the "extended" form of passing off, the use of the mark applied for.
The EUIPO's opposition division rejected the opposition in its entirety. The Fourth Board of Appeal upheld that decision. The Board accepted that "basmati" denoted a clearly defined class of goods, that the name had a reputation giving rise to goodwill among a significant section of the UK public and that Indo European Foods was one of many traders entitled to rely upon the goodwill associated with that name. However, it found that the company had failed to demonstrate that the use of the sign could result in a misrepresentation. It also took the view that the use of the mark applied for could not cause a direct loss of sales for the company, since the contested goods were goods other than rice and Indo European Foods sold only rice. Likewise, the Board found that there was no argument to explain how the use of the mark applied for could affect the distinctiveness of the name "basmati", taking into account that "super basmati" was a recognised variety of basmati rice.
Indo European Foods applied to the General Court to annul the Board's decision.
The General Court began by noting that Chakari had applied to register the mark in June 2017 at a time when the United Kingdom was still part of the European Union. In the absence of provisions to the contrary in the Withdrawal Agreement, the EU Trademark Regulation continued to apply to UK trademarks and to earlier non-registered marks in the United Kingdom used in the course of trade. Therefore, the earlier mark in this case continued to receive the same protection as it would have received had the United Kingdom not withdrawn from the European Union, until the end of the transition period. In any event, for the Court to find, as the EUIPO had argued, that the litigation had become devoid of purpose, would amount to taking into account matters arising after the adoption of the Board's decision.
Extended form of passing off
The Court noted that in the "extended" form of the tort of passing off, the defendant in an action for passing off deceives as to the origin or nature of its goods by misrepresenting that they are the product of a particular region or that they have a particular character or composition. That misrepresentation may be through the use of a descriptive or generic term that misdescribes the defendant's goods, inducing the belief that they possess a characteristic or quality which they do not (see Alfonso Egüed v EUIPO (BYRON)).(4)
As regards misrepresentation, the Court held that the Board of Appeal had erred in finding that there was nothing in the evidence to support the conclusion that the reputation of the word "basmati" and the goodwill arising from that reputation extended beyond the clearly defined class of goods – namely, a particular type of rice – to cover products of a different nature but containing rice as an ingredient. The Court acknowledged that it was clear from UK case law that, where the goodwill in a name has been established for some goods and services and that name is then used for other goods or services, the existence of a likelihood of misrepresentation will be all the more difficult to prove. However, the case law was also clear that the existence of a common field of activity was still a factor to be taken into account (see DEEP PURPLE).(5)
As regards, more specifically, the extended form of passing off, it was clear that a misrepresentation could arise even in the case of goods of a different nature (see Taittinger SA v ALLBEV LTD).(6) In Taittinger, the Court of Appeal held that it was plausible that a non-negligible part of the public might believe that the product in question, named "Elderflower Champagne", was not champagne but was associated with it in a certain way. The part of the public which would be aware that it was a non-alcoholic beverage might believe that a non-alcoholic champagne had been created by champagne producers in the same way as with respect to non-alcoholic wine or non-alcoholic beer.
It followed that, even if the goodwill attaching to the name "basmati" related only to basmati rice, as a variety or class of goods, a non-negligible part of the relevant public might believe that goods such as flour of rice, rice-based snack food, rice pulp or rice meal for forage, labelled "Abresham Super Basmati Selaa Grade One World's Best Rice", were in some way associated with basmati rice.
The Court also held that the Board had been wrong to find, with regard to certain foods, such as flour rice, rice-based snack food, rice pulp or rice meal for forage, that there was no evidence to indicate that the type of rice used in the manufacture of those goods was relevant to consumers and, therefore, capable of influencing their purchasing decisions. On the contrary, it was clear from the UK Intellectual Property Office's (IPO's) decision in Basmati Bus(7) that the condition of a likelihood of misrepresentation is met when the relevant public may be deceived into believing that the contested goods are made from or contain basmati rice, where that is not the case:
A substantial number of consumers will expect basmati rice to be provided rather than any other type of rice. If the services do not provide basmati rice, which the existing specification currently allows, there is a likelihood of misrepresentation.
Finally, as regards the Board's finding that Indo European Foods had not claimed, let alone proved, that the mark applied for was used in the United Kingdom and that such use occurred for goods not made from genuine basmati rice, the Court noted that the actual use of the mark applied for was not one of the conditions for an action for passing off. It was clear from the Court of Appeal's decision in Maier v ASOS plc(8) that a notional and fair use of the trademark applied for must be presumed. The same applied to the extended form of passing off, as confirmed by Basmati Bus, in which the UK IPO did not require evidence that the mark in issue had actually been used for a standard range rice, but merely stated that "if the services [at issue did] not provide basmati rice, which the existing specification [allowed], there is a likelihood of misrepresentation".
Furthermore, the General Court noted that the actual use of the mark applied for was not a condition laid down by article 8(4) of the EU Trademark Regulation. It followed that Indo European Foods had been correct to claim that the likelihood of misrepresentation stemmed from notional and fair use of the mark applied for in the light of the general description of the goods in question – namely, goods made from rice.
It was common ground that, irrespective of the likelihood of a direct loss of sales for Indo European Foods, the damage arose from the loss of distinctiveness of the basmati sign or the "very singularity and exclusiveness" of genuine basmati rice. According to Taittinger, damage may arise, among other things, through erosion of the distinctiveness of the sign. Furthermore, in that case, it was held that, even in the absence of a likelihood of significant or direct loss of sales, any product that is not champagne but that is allowed to describe itself as such must inevitably erode the singularity and exclusiveness of the description "champagne" and so cause damage of an insidious but serious kind.
Furthermore, the General Court considered that since the Board had noted that there was no argument to explain how the use of the mark applied for could affect the distinctiveness of the word "basmati", given that the "super basmati" variety was a recognised variety of basmati rice, that finding proceeded on the false premise that the use of that mark was related to goods made from basmati rice or super basmati rice. Rather, the likelihood of misrepresentation stemmed from a notional and fair use of that mark in light of the general description of the contested goods – namely, goods based on a wide range of rice varieties.
Accordingly, the Board of Appeal's decision was annulled. However, the General Court was not in a position to substitute its ruling and uphold the opposition. This was because the Board had focused solely on the issue of misrepresentation and had considered it unnecessary to examine whether use of the earlier mark in the course of trade had been demonstrated. Since the Board had carried out an incomplete analysis of the conditions under article 8(4), the Court was prevented from exercising its power to alter the Board's decision. As a consequence, the case is remitted to the EUIPO.
More interestingly, however, not only did the EUIPO argue in this case that Brexit had rendered the dispute devoid of purpose but it also suggested that Chakari no longer had any interest in the proceedings since, even if his trademark application was rejected, he could convert it into national trademark applications in all EU member states, conserving the priority of the rejected EU mark. That would mean him obtaining trademark protection in the same territories as if the opposition proceedings had been dismissed. The Court rejected that argument for similar reasons – namely, that Chakari's interest in bringing the proceedings had to be determined to exist at the time he lodged the action and continued until final judgment. In any event, the EUIPO's argument was flawed since those considerations applied, in principle, to any opposition proceedings. The concern remains, however, that unregistered marks whose goodwill in the United Kingdom is shared by a number of traders are more vulnerable to exploitation by applicants for EU trademarks which, before Brexit, could be blocked under article 8(4).
For further information on this topic please contact Désirée Fields at Pinsent Masons by telephone (+44 20 7418 8250) or email ([email protected]). The Pinsent Masons website can be accessed at www.pinsentmasons.com.
(1) Case T-342/20, EU:T:2021:651 (6 October 2021).
(3) With effect from 26 February 2019, BASMATI is registered as certification mark in respect of "rice" in class 30 under UK trademark registration No. UK00003378653 owned by the Agricultural and Processed Food Products Export Development Authority.
(4) Case T-45/16, EU:T:2017:518.
(5) Case T-328/16, EU:T:2018:649.