In Environmental Manufacturing LLP v OHIM  C- 383/12 P, the Court of Justice of the European Union (CJEU) confirmed that evidence of change in the economic behaviour of the average consumer is required in order to prove trade mark dilution under Article 8(5) of Community Trade Mark (CTM) Regulation (207/2009/EC).
Environmental Manufacturing LLP’s predecessor applied to register a figurative Community trade mark (CTM) for a sign depicting a wolf’s head for professional wood and green waste processing machines in Class 7. Société Elmar Wolf opposed the registration relying on Articles 8(1)(b) and 8(5) of the CTM Regulation, based on earlier French and international word and figurative trade marks incorporating a wolf’s head, registered in respect of gardening products in Class 7.
The Opposition Division of the Office of Harmonization for the Internal Market (OHIM) dismissed the opposition based on Article 8(1)(b), holding that there was no likelihood of confusion between the marks. It also dismissed the Article 8(5) opposition, finding that Elmar Wolf had not adduced evidence of any detriment to the repute of the earlier marks or any unfair advantage gained from them.
OHIM’s Board of Appeal overruled the Opposition Division decision under Article 8(5), finding that:
- The earlier marks were highly reputed in three Member States
- There were some similarities between the marks and the goods covered
- The mark applied for might dilute the unique image of the earlier marks and take unfair advantage of their distinctive character or reputation
EU GENERAL COURT DECISION
The EU General Court agreed with the OHIM Board of Appeal’s finding that the use of the mark applied for was likely to be detrimental to the distinctive character of the earlier marks. The General Court dismissed Environmental Manufacturing’s argument that it was necessary to show the economic effects of the connection between the marks, holding that it was sufficient for the owner to show that the ability of its mark to identify the source of goods or services for which it was registered and used had been weakened.
On further appeal, the CJEU agreed with Environmental Manufacturing’s argument. The judgment in Intel Corporation C-252/07 was explicit: in order to show dilution of an earlier mark, evidence of change in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered was required to prove that the use of the later mark would be detrimental to the distinctive character of the earlier mark.
The CJEU held that the change in economic behaviour of the average consumer was an objective condition; it could not be deduced solely from subjective elements such as consumer perceptions. The mere fact that consumers noted the presence of a new sign similar to the earlier mark was not sufficient of itself to establish the existence of detriment or a risk of detriment to the distinctive character of the earlier mark, inasmuch as that similarity did not cause any confusion in their minds.
The CJEU accepted that the General Court had erred in law in dismissing the assessment of the condition laid down by Intel Corporation. It was necessary to demand a higher standard of proof in order to find detriment, or the risk of detriment, to the distinctive character of the earlier mark within the meaning of Article 8(5). The CJEU accepted that “the Court’s case-law does not require evidence to be adduced of actual detriment, but does admit the serious risk of such detriment, allowing the use of logical deduction”. Nonetheless, such deductions cannot be the result of “mere suppositions” but have to be founded on “an analysis of the probabilities and by taking account of the normal practice in the relevant commercial sector as well as all the other circumstances of the case”. Accordingly, the CJEU allowed the appeal, and referred the case back to the General Court.
The CJEU decision is not unexpected as the General Court decision did not sit well with the judgment in Intel Corporation. Had the General Court’s approach been adopted, it may have been easier for trade mark owners to establish dilution. In the CJEU’s view, however, it would have led to a situation in which the test for dilution would unduly favour trade mark holders, which could damage competition.