The Court of Justice of the European Union (“CJEU”) clarified in a landmark judgment that if reputation of an earlier CTM is established in one EU country, image transfer and extended protection are possible in another, provided that a commercially significant part of the relevant public there is familiar with the trade mark.

OHIM gave account of the judgment in its October newsletter, refraining from making any comment or evaluation on the same. However, trade mark practitioners have unanimously marked it as very favourable for proprietors of reputed CTMs, some also pointing out that it provides more certainty and clear guidance in complex scenarios, like the one at issue in this case.

In the case Iron & Smith v Unilever (case C-125/14) of 3 September 2015 the CJEU dealt with the territorial scope of reputation of a CTM in the context of Article 4 (3) of the Trademark Directive (Directive 2008/95).

The factual background of the case is the following: Unilever NV opposed a national Hungarian trade mark application filed by Iron & Smith kft for the figurative sign ‘be impulsive’, on the basis of its earlier CTM ‘IMPULSE’. The Hungarian IP Office found that the reputation of the CTM had been proved in the United Kingdom and Italy, which represent a substantial part of the EU. It also found that a risk of the later mark taking unfair advantage could be established.

Upon hearing the appeal, the Budapest Municipal Court referred a set of questions to the CJEU about the applicability of Article 4 (3). In particular, since no reputation could be established for Hungary, the referring Court entertained doubts whether the use of the later mark would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier CTM, where such mark is unknown the Member State concerned.

In its judgment the CJEU first reiterated that a CTM should be considered to enjoy a reputation if it is known in a “substantial part” of the EU and such part may correspond to the territory of a single Member State (Pago judgment, case C-301/07). Then the Court added that the CTM owner is not required to produce evidence of reputation in relation to the Member State in which the application of the later national mark, which is the subject of an opposition, has been filed. In such circumstances CTM owners may benefit from the extended protection introduced by Article 4 (3) of the Directive where it is shown that a commercially significant part of the relevant public in the Member State concerned is familiar with the earlier CTM and makes a connection between that mark and the later national mark.

Therefore, if a mark is reputed in one member state but a significant part of the consumers in another member state know that trade mark, e.g. because of sponsoring activities on a European level in the UEFA Champions League, Euronews or by other means, this can eventually result in the possibilities of using the protection granted to reputed marks even in countries where the relevant mark is not reputed as such.

The judgment represents a positive development for brand owners having CTM registrations in their portfolios, in particular when it comes to oppositions on a national level. From now on, if an earlier CTM has acquired a reputation in any of the 28 Member States, its enforcement against later national marks taking unfair advantage of, or being detrimental to, the distinctive character or the repute of the same in the EU will be available.

However, it will be interesting to see how the requirement set by the Court that a commercially significant part of the relevant public is familiar with the mark will be interpreted by national authorities. So watch this space!