The European Court of Justice has today ruled that despite its reputation in respect of computer products, Intel may not automatically prevent third parties applying identical or similar trade marks to dissimilar goods – in this case INTELMARK applied to marketing services – on the grounds that such use inevitably takes unfair advantage of or causes detriment to the distinctive character or repute of the famous INTEL trade mark. Intel would need to provide evidence of injury to its mark.

Business Impact

  • Intel had sought to prevent the use of INTEL and similar marks by third parties on all types of goods on the basis of its undoubted reputation and public recognition in the name.
  • It failed – the ECJ ruled that there should be no automatic protection against the use of other trade marks applied by third parties to dissimilar goods purely on the basis of a huge reputation and 'uniqueness' of the mark.
  • The ECJ has not ruled out the possibility that some famous marks can achieve a monopoly over use on all good and services – but first a trade mark proprietor with a reputation must additionally provide evidence that by its use the third party is causing, or that there is a serious risk of it causing, injury to the proprietor's mark. Injury includes the third party taking unfair advantage of the mark or causing detriment to the distinctive character of the mark – also known as "dilution".
  • With regards to dilution, the ECJ held that the evidence must show a change or serious likelihood of a change in the economic behaviour of the consumers of the relevant goods or services. This imposes a significant burden on brand owners looking to protect the distinctiveness of their trade marks.
  • The outcome is a blow for brand owners hoping to secure extended protection for famous brands.  

Background and facts

In Intel v CPM Case C-252/07, Intel, the world famous computer chipset manufacturer, owns UK and Community trade marks for the word INTEL and related marks in respect of computer and computer-linked products. Intel sought the revocation of the trade mark INTELMARK, owned by CPM, a marketing services company. Intel argued that CPM's mark was so similar to Intel's mark that CPM's use took, without due cause, unfair advantage of, or caused detriment to, the distinctive character or the repute of Intel's mark.

Intel relied upon the ground for invalidity under section 5(3) of the Trade Marks Act 1994 (the "Act"), which implements Article 4(4)(a) of Directive 89/104 (the "Directive"), which corresponds to provisions on infringement under the Act and the Directive.

Having failed to have CPM's mark invalidated in the lower courts, the case came to the Court of Appeal, which in May 2007 referred a number of questions to the European Court of Justice for clarification.

Free-riding, dilution and tarnishment

Intel satisfied the pre-condition for relying on Article 4(4)(a) of the Directive of having a trade mark with a "reputation"; the lower courts having found that Intel's mark had a "huge" reputation. The Court of Appeal also held that INTEL was unique in the sense that it had not been used by anyone for any goods or services other than those of Intel.

With no suggestion that CPM's use took unfair advantage of Intel's mark's distinctive character or repute (known as unfair free-riding) or was detrimental to Intel's mark's repute (often referred to as tarnishment), it fell to be determined whether the use was detrimental to Intel's mark's distinctive character. This cause of action is often referred to "blurring" or "dilution".

Intel took the position that where a mark – like its own – has a "huge" reputation and is unique, a Court should accept that use by third parties on virtually any goods or services would cause detriment to the mark. If Intel were right, this would have led to an effective monopoly by Intel over the use of the mark INTEL and similar marks, Jacob LJ noting that Intel's arguments would apply as much to "nuclear power stations or bananas" as they did to marketing services. It follows that similar arguments could be made by other 'superbrand' owners and unique household names.

The ECJ has previously ruled (in Adidas-Salomon AG v. Fitnessworld, Case C-408/01) that in order to take action for infringement under Article 5(2) of the Directive (worded the same as Article 4(4)(a)), consumer confusion, or a likelihood of it, was not required. Instead the offending sign must be sufficiently similar to the mark with a reputation so as to cause a "link" to be created in the mind of the consumer between the two. Intel argued that the "link" requirement was satisfied by a mere "bringing to mind" of the earlier mark.

The ECJ's judgment

No automatic monopoly for very well known brands – evidence of injury required

Although the ECJ agreed with Intel that the "bringing to mind" of the mark with a reputation was "tantamount" to establishing the required "link", it did not agree that once that link is established, a proprietor will automatically succeed in its claim. Instead, in order to benefit from the extended protection provided by Article 4(4)(a), the proprietor of the earlier mark must adduce proof that the use of the later mark or sign would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark. It would not be necessary to demonstrate actual or present injury, but the proprietor must at least prove that there is a serious risk that such an injury will occur in the near future.

The result of this decision is that no marks, howsoever famous and well known, will automatically be able to be used to prevent their use by third parties on goods or services where those goods or services are dissimilar. The trade mark owner must instead provide evidence of injury to the trade mark or a serious risk of such injury occurring.

Assessing the required injury

The ECJ stresses that there must be a global assessment by the Court, taking into account all the relevant facts when assessing injury (unfair free riding, dilution or tarnishment), much as their must be a global appreciation of all the facts when determining whether or not there is a "link".

Despite broad questions referred by the Court of Appeal, the ECJ provide no guidance on tarnishment, and very little on unfair advantage, describing it as the "drawing of benefit from [the] mark". Brand owners hoping to get a greater understanding of what constitutes unfair advantage will have to await the forthcoming ECJ decision in L'Oreal v Bellure, case C-487/07.

Dilution requires a change in the economic behaviour of the proprietor's customers

The most significant part of the ECJ's judgment relates to dilution, also described by the ECJ as "whittling away" or "blurring". While it holds that the stronger or more 'unique' a mark is, the easier it will be to show dilution, it states that what must be shown to succeed is evidence of a change (or a serious likelihood of such a change) in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered. This means that, in order for Intel to show that CPM's use of INTELMARK is or is seriously likely to dilute its mark, Intel has to show that its consumers are buying less of its goods. This is because, as the ECJ puts it, dilution of a mark requires the "dispersion of the identity and hold upon the public mind" of the mark. The ECJ's view appears to be that if customers keep buying Intel as much as they did before, there is no dilution.

This is perhaps the most controversial aspect of the ECJ's judgment, as it may make dilution very hard to prove in practice. Intel argued that dilution should be actionable on the first use of a relevant later mark, rather than once the impact is clear months or years later, to avoid a "death by a thousand cuts". The ECJ agreed that a first use may be enough – there was no need to wait for multiple uses across a range of dissimilar goods and services – but it is likely to be difficult to provide convincing evidence of a change or serious likelihood of a change in the economic behaviour of the average consumer until dilution has already taken place, in which case it is arguably too late. In practice, evidence from consumer opinion surveys may help, though they are found by the UK courts to be notoriously unreliable.

The outcome is a blow for brand owners hoping to secure extended protection for famous brands.