The Court of Justice of the European Union, for the first time, deals with a case where the defendant claims to have acted with “due cause” when using a mark similar to a mark with reputation, relying on use prior to the mark having acquired its reputation.

Since July 11, 1983, Red Bull is proprietor of the word and figurative Benelux mark RED BULL Krating-Daeng (Krating-Daeng is the name of the Thai drink on which RED BULL is based). Leidseplein is proprietor of the following Benelux registrations:

  • the word and figurative mark “The Bulldog”, registered on July 14, 1983;
  • the word mark “The Bulldog”, registered on December 23, 1999; and
  • the word and figurative mark “The Bulldog Energy Drink”, registered on June 15, 2000.

Leidseplein has also been using “The Bulldog” as a trade name for hotel, restaurant and café services involving the sale of drinks.

Red Bull claimed trademark infringement, and Leidseplein defended its use, inter alia, by relying on “due cause” because of its prior use as a trade name. The first instance dismissed all claims, the second instance essentially found in favour of Red Bull. The Hoge Raad – the Dutch Supreme Court – referred the following question to the ECJ:

Is Article 5 (2) Directive 89/104/EEC (Trademark Directive) to be interpreted as meaning that there can be due cause within the meaning of that provision also where the sign that is identical or similar to the trademark with a reputation was already being used in good faith by the third party/parties concerned before that trademark was filed?

The Court gave the following answer:

Article 5 (2) Directive 89/104/EEC must be interpreted as meaning that the proprietor of a trademark with a reputation may be obliged, pursuant to the concept of “due cause” within the meaning of that provision, to tolerate the use by a third party of a sign similar to that mark in relation to a product which is identical to that for which that mark was registered, if it is demonstrated that that sign was being used before that mark was filed and that the use of that sign in relation to the identical product is in good faith. In order to determine whether that is so, the national court must take account, in particular, of:

  • how that sign has been accepted by, and what its reputation is with, the relevant public;
  • the degree of proximity between the goods and services for which that sign was originally used and the product for which the mark with a reputation was registered; and
  • the economic and commercial significance of the use for that product of the sign which is similar to that mark.

Remarks

Prior use has been the subject of an earlier case of the Court of Justice of the European Union in the well-known Chocoladefabriken Lindt & Sprüngli (Golden Bunny; Case C-529/07; cf. BARDEHLE PAGENBERG IP Report 2009/ III) where the point was made that knowledge of a prior user may be an element in determining whether there was bad faith when seeking registration of a trademark.

In the present case, prior use (not: prior registration) again raises its head, and that in a jurisdiction where prior use of a mark does not have any legal effect, unless it is a well-known mark. What Leidseplein relied on actually was not use of a mark, but use as trade name for its restaurant and hotel where also drinks were served. Leidseplein could not defend with absence of reputation, or – apparently – absence of similarity or link or detriment, and thus the referring court asked the question whether prior use could amount to due cause.

The two sides in the case took entirely contradictory positions as regards due cause, the one (Red Bull) arguing for a kind of objective “compulsion”, the other for a more case-by-case analysis. The Court held in favour of the more flexible approach:

[44] Where the proprietor of the mark with a reputation has demonstrated the existence of one of the forms of injury referred to in Article 5 (2) Directive 89/104/EEC and, in particular, has shown that unfair advantage has been taken of the distinctive character or the repute of that mark, the onus is on the third party using a sign similar to the mark with a reputation to establish that he has due cause for using such a sign (cf., by analogy, Case C-252/07 Intel Corporation [2008] ECR I 8823, paragraph 39).

[45] It follows that the concept of “due cause” may not only include objectively overriding reasons but may also relate to the subjective interests of a third party using a sign which is identical or similar to the mark with a reputation.

[46] Thus, the concept of “due cause” is intended, not to resolve a conflict between a mark with a reputation and a similar sign which was being used before that trademark was filed or to restrict the rights which the proprietor of that mark is recognised as having, but to strike a balance between the interests in question by taking account, in the specific context of Article 5 (2) Directive 89/104/EEC and in the light of the enhanced protection enjoyed by that mark, of the interests of the third party using that sign. In so doing, the claim by a third party that there is due cause for using a sign which is similar to a mark with a reputation cannot lead to the recognition, for the benefit of that third party, of the rights connected with a registered mark, but rather obliges the proprietor of the mark with a reputation to tolerate the use of the similar sign.

The Court then turned to the specific question of whether prior use could be a relevant circumstance and concluded with the answer reproduced above.

We thus have another of the by now numerous cases were the Court sets out some general criteria but leaves it to the national court to decide the specific case (we refer, e.g., to the question of genuine use, the question of likelihood of confusion, the “link” in reputation cases, etc.). In the present case, it will be for the Dutch courts to decide whether the facts established justify applying the “due cause” exception to the protection of the by now certainly very famous RED BULL mark.

In the current proposals for amending the Community Trademark Regulation and the Trademark Directive we find proposals for a comparable situation: Where a mark was acquired at a point in time when a mark with reputation did not yet possess that reputation and thus could not have successfully opposed the registration of the later mark, the result will be co-existence of both marks. It appears that so far this proposal has survived the scrutiny of the European Parliament, which adopted its position on February 25, 2014, and of the Council of Ministers, which still has to arrive at a common position.