Background

The beer brand wars have resulted in another judgment of the Court of First Instance (Budejovický Budvar, národní podnik -v- Office of Harmonization in the Internal Market (OHIM) - with intervener Anheuser Busch Inc. Joined Cases T-225/06, T-255/06, T-257/06 and T-309/06: Decision of the Court of First Instance - 16 December 2008).

a. Anheuser Busch Inc. (Anheuser) filed three community trade mark applications between 1996 and 2000, which comprised two word marks for "BUD" and a figurative mark incorporating "BUD" all including class 32 (beer) in the specification. The fourth and last application for the word mark "BUD" did not cover class 32 but included class 42 for "restaurant, bar and pub services" and oddly, "operating a database".

b. Budejovický Budvar, národní podnik (Budvar) filed oppositions to all four community trade mark (CTM) applications under Article 42 of Council Regulation 40/94/EEC relying under Article 8(1)(b) on a far earlier figurative international trade mark depicting the stylised word "Bud" and under Article 8(4) with regard to the registration of "BUD" as an appellation of origin subject to protection under the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration 1958 (as amended) (the Lisbon Agreement) and/or the Treaty on the protection of indications of source, appellations of origin and other designations referring to the source of agricultural and industrial products signed 1976 between Austria and Czechoslovakia (the Bilateral Convention).

Previous rulings

The Opposition Division and the perils of insufficient evidence...

The first case to come before the Opposition Division related to the fourth trade mark. Budvar's opposition was upheld only in relation to the "restaurant, bar and pub services" aspect of class 42 as this was sufficiently close to "beer" and covered by the "BUD" appellation of origin and there would be a likelihood of confusion due to the identical signs. The Opposition Division held that Budvar had demonstrated a general right to the appellation of origin "BUD" in France, Italy and Portugal by virtue of the Lisbon Agreement but that Budvar's arguments in relation to Italy and Portugal had not been specific enough to enable the scope of that protection to be determined.

The remaining classes of Anheuser's specification (classes 35, 38 and 41 and "operating a database" under class 42) were allowed as Budvar had failed to demonstrate that the "BUD" appellation would be weakened or undermined under French law where the goods themselves differed.

Following this decision, Budvar might have expected partial success on its remaining three oppositions insofar as they related to classes incorporating "beer" but in fact those oppositions were dismissed. The Opposition Division held that Budvar had failed to provide sufficient evidence under Article 8(4) that BUD is a sign used "in the course of trade of more than mere local significance" and that it had been the subject of 'genuine use'.

Anheuser appealed the first decision regarding the fourth mark and Budvar sought an annulment of the decision in so far as it was restricted to aspects of class 42. Budvar also appealed the decisions in relation to Anheuser's other CTM applications.

The Second Board of Appeal straying beyond its remit?

Budvar's appeals and claims for annulment were dismissed and Anheuser's appeal in relation to the fourth CTM was upheld. In the appeal proceedings Budvar dropped all reference to its international mark which had been cancelled in Austria and Italy and for which it had not proved 'genuine use' in the Benelux.

Significantly, the Board of Appeal took it upon itself to make a qualitative judgment and decide that "BUD" was not an appellation of origin or even an indirect indication of geographical origin. The Board of Appeal said Budvar had put forward insufficient evidence of use of "BUD" in Austria and France and none at all in relation to Italy and Portugal and therefore did not satisfy Article 8(4), here applying the evidential requirements set out in Article 43(2) and (3). Article 8((4)(b) requires the proprietor to show that they not only have an earlier right but can use it to prevent use of a subsequent trade mark. The Board of Appeal considered that Budvar had failed to demonstrate that the registration of "BUD" as an appellation of origin gave it the right to prohibit the use of "BUD" as a trade mark by Anheuser in Austria or France.

Arguments before the Court of First Instance

All oppositions were joined. Budvar relied on "BUD" as an appellation of origin under the Lisbon Agreement and the Bilateral Convention. Budvar asserted that OHIM had misinterpreted the concept of "sign used in the course of trade" as referred to in Article 8(4).

Budvar argued that:

  1. OHIM did not have jurisdiction to assess the substantive validity of the earlier rights relied on and Budvar only needed to establish existence and formal validity of the appellation of origin;
  2. it was not necessary for an appellation of origin to entirely reproduce a geographical name , protection could extend to abbreviations or fanciful expressions provided the place of production corresponded to an identifiable geographical area;
  3. the appellation of origin was still in force in France and the Czech Republic; and
  4. an ongoing dispute in Austria had not yet been resolved.

OHIM contended that its Board's decision was not a ruling on validity of the appellation of origin but on the extent of protection provided by this purported earlier which was a question of law. OHIM drew a distinction between the validity and enforceability of the earlier rights and said that it had to interpret Article 8(4) as a national court would. In OHIM's view, the French court would not allow an abbreviation of a geographical name to form the basis of an opposition whether or not it was protected under the Lisbon Agreement and to satisfy the Austrian court, "BUD" would need to designate the Czech city "Ceske Budejovice" and there was no evidence to support this. OHIM took the position that IP rights have specific functions which in some cases cannot be reconciled such that in these circumstances, where "BUD" was used as a trade mark, it could not also enjoy protection as an appellation of origin.

Anheuser put forward the point that Article 8(4) relates to unregistered rights and as such it must have been intended that the requirement for use on the market should be higher than the bar set for registered trade mark rights and therefore the 'genuine use' requirement should be the absolute minimum.

OHIM also pointed out technical faults within Budvar's pleadings e.g. the request that the court direct OHIM to reject the CTM applications which would be outside the court's remit. All that resulted from such argument was the court gave appropriate directions rather than the specific ones requested by Budvar.

The decision

The Court of First Instance summarised that Budvar was relying on "BUD" as an appellation of origin which satisfies the requirements of Article 8(4) such that it was possible to prevent registration of the Anheuser CTM applications.

The Lisbon Agreement: The court held that an appellation of origin under the agreement would not be generic so long as it remained protected in the country of origin. As the appellation of origin BUD had not been declared invalid in France, OHIM should have looked at Article 8(4) in the context of the relevant national law and registration of "BUD" under the Lisbon Agreement. If there were serious doubts as to the validity of the appellation then the Board should have used its powers to suspend the opposition proceedings pending a final judgment on the point in France.

The Bilateral Convention: The court held that it was not clear if "BUD" had been specifically designated as an appellation of origin or an 'indication' under this convention but in any event, the definition of signs qualifying for protection was wider than the interpretation used by OHIM. Under Article 2 of the Bilateral Convention, indications or appellations need not be purely geographical but could relate directly or indirectly to the source of a product. The court held that OHIM must obtain information on the national law of the Member State concerned if such was required to allow an assessment of the grounds for refusal of registration, the veracity of the facts pleaded and the probative value of the evidence submitted. OHIM could have taken well known or otherwise generally accessible facts into account. Finally, the court found that the convention was still effective in Austria and there was not a final judicial decision stating otherwise.

Had Budvar met the conditions of Article 8(4)? The court broke down the key tenets of Article 8(4) as follows: i) "use in the course of trade of a sign", ii) "of more than mere local significance", iii) where such sign gave Budvar the right to prohibit use of the later Anheuser CTMs.

i. "Use in the course of trade": When considering "use" for the purposes of Article 8(4), the court held that it was not necessary for the opposition party to show 'genuine use' (i.e. more than token/qualitatively sufficient), particularly where the sign was an appellation of origin. It was possible for signs to retain their rights even where no 'genuine use' had been made of them. Imposing an obligation on the opposing party to show 'genuine use' in the context of Article 8(4) would improperly import trade mark specific requirements from Article 43(2) and (3) and apply them to other signs types of earlier right. Furthermore, evidence of use under Article 43 is not mandatory but only 'may' be required. The court pointed out that the opposer still had the burden of showing the right to prohibit later trade marks as set out in Article 8(4)(b). The court held that OHIM had erred in assessing 'genuine use' in each territory and that protection was possible in a territory even if there had been no use there. The documentary evidence submitted by Budvar consisted of press cuttings, invoices and affidavits and the court stated that, if probative, such evidence was enough to establish "use in the course of trade". Budvar's evidence also included labels depicting "BUD" along with descriptors such as "super strong". In this case, the use did not in itself prevent "BUD" from indicating geographical origin. The court held that it was possible for the sign to be both an appellation of origin and a trade mark but in this regard it should be noted that in this case in any event there was no evidence to show that the sign referred more to the commercial origin than the geographical origin.

ii. "More than mere local significance": The court found that OHIM had incorrectly interpreted this aspect of Article 8(4) as referring to the significance of the use when it refers to the significance of the sign, i.e. the geographical extent of the protection afforded to the sign must not be merely local. In this instance, the protection extended beyond the territory of origin due to both the Lisbon Agreement and the Bilateral Convention.

iii. "The right to prohibit use of later marks": It was held that the burden of proof was on the party bringing the opposition. Although there had been unfavourable decisions regarding the ability of Budvar to prevent Anheuser from trading under the CTMs by virtue of the appellations of origin in Austria and France, there had been no final judgment which was res judicata. Accordingly, OHIM could not rely solely on those decisions. The court noted that certain key findings of fact had been overturned in the Austrian case. The fact that Budvar had failed to obtain an injunction in France could not be decisive as the requirement to show a right did not extend to showing that the right had been successfully enforced. Again, the court found that OHIM had failed to take into account all the relevant facts and law.

The court held that OHIM had discretion to consider facts or evidence submitted late. The decisions of the Second Board of Appeal were annulled and accordingly OHIM and Anheuser were ordered to pay two thirds and one third of Budvar's costs respectively.

Commentary

Although it would seem that Budvar has scored a victory, this judgment is likely to merely defer the pain of defeat. Essentially the court has decided that OHIM failed to take all relevant factors into account in making its decision, should have tested the veracity of all evidence and should have considered looking beyond the evidence submitted.

It is now clear that signs may have a dual function denoting both commercial and geographical origin but unless the opposing party has a monopoly on goods from a particular place it may be difficult to keep the sign's commercial or trade mark function from overwhelming its ability to act as an appellation of origin.

On the basis of the decisions to date, it seems likely that the disputes between the parties in France and Austria will eventually resolve in Anheuser's favour so that when OHIM revisits this case it may ultimately, be able to reject all of the oppositions, whilst having to take all the additional aspects flagged by the CFI into account.