The Court of Justice of the European Union (CJEU) recently issued its decision in the case of Leno Merken BV v Hagelkruis Beheer BV Case C-149/11. The questions put to the court in this case, which began its life in the Benelux Office for Intellectual Property (BOIP), focus on the issue of the territorial extent of use European Union required for there to be genuine use of a Community trademark. This long awaited judgment, no longer just about a trade mark battle of ONEL v OMEL, does provide some guidance on the issue but the result does not entirely clear the murky waters of the required territorial extent of use for businesses and trade mark practitioners.
Background to the case
Under Article 15(1) of the Community Regulation No 207/2009, a Community trade mark (CTM) can be revoked by a third party if it has not been put to genuine use in the Community during the five years following registration of the CTM or for any consecutive period of five years.
In 2009, Hagelkruis applied for registration of the word mark OMEL at the BOIP. Leno, being the proprietor of an earlier Community trademark registration for ONEL, opposed Hagelkruis’ application and, in response, Hagelkruis put Leno to proof of use of their earlier trade mark. A national trademark in a country of the European Union can be opposed by the proprietor of an earlier Community trademark. In early 2010, the BOIP rejected the opposition on the basis that the opponent had not proved genuine use of its earlier trade mark in the five years prior to the publication of the opposed trade mark. The BOIP’s rejection was on the basis that, while Leno had shown genuine use of the ONEL trade mark throughout the relevant period, this use was territorially limited to the Netherlands and therefore deemed insufficient to show use of Community trademark in the European Union as a whole. Leno appealed the ruling that use in only one country cannot constitute “genuine use”.
Questions to the CJEU
On Leno’s appeal, the BOIP put several issues to the CJEU for preliminary ruling which can be summarised as follows:
- whether use of a Community Trademark in one country always constitute “genuine use” of the mark;
- whether use of a Community Trademark in one country never be regarded as sufficient to show “genuine use”;
- when use in one country can never be regarded as “genuine use”, determining the requirements in relation to territorial scope when making an assessment on “genuine use” in the European Union; and
- alternatively, whether “genuine use” be determined in the abstract with no reference to national borders.
One of the reasons the issue of “genuine use” is so divisive is the Joint Statement, which formed part of the minutes of the Council of the European Union prior to the adoption of the Community trade mark system. This stated that,
“[t]he Council and the Commission consider that use which is genuine within the meaning of Article 15 in one country constitutes genuine use in the Community”.
In its judgment, however, the CJEU made a point of clarifying that, in line with settled case law, where a statement is recorded in the minutes of a Council meeting but is then omitted from the wording of legislation, it cannot be used by way of interpretation of that legislation.
The CJEU then went on to provide more in the way of guidance on what might be considered “genuine use” rather than a particular decision on the facts of the original case. The CJEU specifically noted that national territorial borders should be disregarded when assessing genuine use in the European Union. A Community trademark is put to genuine use for the purposes of Article 15(1) when it is “used in accordance with its essential function and for the purpose of maintaining or creating market share within the Community for the goods or services covered by it”. The CJEU noted that, in assessing whether the above test for genuine use is met, a national court should consider the following factors: the characteristics of the market concerned, the nature of the goods or services protected by the trade mark, the territorial extent and scale of use, and the frequency and regularity of use. The CJEU expressly refrained from creating any de minimis rule for the level of territorial scope needed to constitute genuine use on the basis that this would hinder any national court trying to assess the various factors outlined above. The CJEU also rejected the observations submitted by third parties that, even if national territorial borders of Member States are disregarded, the Community trademark needs to be used in a “substantial part of the Community” (the European Union). The CJEU’s reasoning was that there may be cases related to trade marks which may have extended protection by virtue of having a reputation or being well-known marks within the Community.
While some are contending that this judgment will make little to no real difference to trademark proceedings and the interpretation of Article 15, it does prevent any trade mark owner from being subject to the automatic pitfall of territorial scope. For those unsure of where their trade marks will stand on “genuine use” as a result of this judgment, there will inevitably be far more discussion and emphasis placed on the other factors highlighted by the court.
The Community trademark as part of the European single market, was intended to create a unitary right throughout the Community. The CJEU clearly want to avoid providing an unfair monopoly to CTM owners by maintaining the concepts of use of a trademark and sufficient territorial scope of that use. What constitutes the requisite territorial scope will be a matter of fact and degree in each case. The CJEU specifically refrained from setting a de minimis standard.