In Eurohypo AG v OHIM (C-304/06) [2008], Eurohypo’s gallant (and expensive) campaign to register its name as a Community trade mark (CTM) for financial services, has failed. Whilst the European Court of Justice (ECJ) set aside the Court of First Instance (CFI) decision rejecting the mark on the basis that the CFI had assessed distinctiveness solely by reference to descriptiveness, the ECJ ultimately held that the mark EUROHYPO did indeed lack distinctive character under Article 7(1)(b) of the Community Trade Mark Regulation (40/94/EC).

BACKGROUND

Eurohypo applied to register the word sign EUROHYPO as a CTM for various financial services in Class 36. The Office for Harmonization in the Internal Market (OHIM) rejected the application on the basis that the mark was devoid of distinctive character and descriptive under Article 7(1)(b) and (c) respectively.

The Fourth Board of Appeal of OHIM annulled the examiner’s decision as regards “financial analysis; investment affairs; insurance affairs” but upheld it as regards “financial affairs; monetary affairs; real estate affairs; provision of financial services; financing”. Essentially, the Board held that the components “euro” and “hypo” contained a clearly understandable indication of the characteristics of these services (“hypo” would be understood by the average consumer as an abbreviation of the German word for mortgage, hypothek ) and that the combination of those two components in one word did not render the mark less descriptive. On this basis, it held that the word sign EUROHYPO was descriptive and that it was, therefore, devoid of any distinctive character within the meaning of Article 7(1)(b), at least in German-speaking countries, and that that ground was sufficient, under Article 7(2), to justify a refusal of protection.

The CFI upheld the Board’s decision. The Court accepted that a word mark that is descriptive of the characteristics of the goods or services concerned for the purposes of Article 7(1)(c) is, on that account, necessarily devoid of any distinctive character in relation to those goods or services.

The CFI considered EUROHYPO to be a straightforward combination of two descriptive elements, which did not create an impression sufficiently far removed from that produced by the mere combination of the elements of which it was composed to amount to more than the sum of its parts. EUROHYPO was not “a lexical invention which had an unusual structure” as per BABY-DRY [2001] ECR I-6251.

Additionally, the claim based on the widespread use of the mark EUROHYPO was rejected, as this was the first time it had been raised. Consequently, the Court dismissed the action in its entirety.

On appeal, Eurohypo criticised the CFI for failing to take into account the overall impression produced by the EUROHYPO mark. Eurohypo also claimed that the CFI incorrectly interpreted the criteria for refusal of registration set out in Article 7(1)(b) and (c). Finally, Eurohypo maintained that the Court incorrectly applied the principles identified in BABYDRY. The ECJ set aside the CFI judgment on the basis that it was vitiated by an error in law in the interpretation of Article 7(1)(b). The ECJ nevertheless refused registration on the basis that EUROHYPO did indeed lack distinctive character.

COMPOUND MARKS

As regards compound marks, the ECJ noted that the assessment of distinctive character cannot be limited to an evaluation of each of the mark’s words or components, considered in isolation, but must be based on the overall perception of that mark by the relevant public and not on the presumption that elements individually devoid of distinctive character cannot, on being combined, have a distinctive character (see SAT.1 v OHIM (C-329/02 P) [2004] ECR I-8317). The mere fact that each of those elements, considered separately, is devoid of any distinctive character does not mean that their combination cannot present such character (BioID v OHIM (C-37/03 P) [2005] ECR I-7975). However, the Court did not accept that, as Eurohypo argued, the CFI had failed to apply these principles by assessing the overall impression produced by the mark merely as a secondary issue.

ERROR OF LAW

The ECJ did accept, however, that the CFI had erred in law in applying Article 7(1)(b). The ECJ stressed that, while the CFI has had occasion to find a degree of overlap between the respective scope of the absolute grounds for refusal to register a trade mark set out in Article 7(1)(b) to (d), each of the grounds for refusal to register listed in Article 7(1) is independent of the others and requires separate examination (see Henkel v OHIM (C-456/01 P and C-457/01 P) [2004] ECR I-5089).

The CFI had assessed the distinctive character of EUROHYPO by carrying out solely an analysis of its descriptive character within the meaning of Article 7(1)(c). Consequently, its judgment contained no separate examination, as required, of the ground for refusal laid down in Article 7(1)(b). The CFI assessed the mark EUROHYPO without, in particular, taking into account the public interest that Article 7(1)(b) aims specifically to protect, i.e., to guarantee the identity of the origin of the designated product or service.

Moreover, the CFI found that a mark composed of descriptive elements could meet the conditions for registration where the word has become a part of everyday language and has acquired a meaning of its own. While that criterion was relevant in the context of Article 7(1)(c), it could not form a basis for the interpretation of Article 7(1)(b). Thus the CFI’s judgment was vitiated by an error in law in the interpretation of Article 7(1)(b).

DISTINCTIVE CHARACTER

Having quashed the CFI decision, the ECJ was free to give final judgment. On the basis that the relevant services were aimed at all consumers and the absolute ground for refusal was invoked only in relation to one of the languages spoken in the European Union, namely German, the relevant public against which the distinctive character of the mark must be measured is the average German-speaking consumer: reasonably well informed and reasonably observant and circumspect.

In the ECJ’s view, the relevant public would understand the word sign EUROHYPO as referring, as a whole and in general, to financial services requiring real securities and, in particular, to mortgage loans paid in Euros. Furthermore, there was no additional element that would allow the view to be reached that the combination, created by the current and usual components EURO and HYPO, was unusual, or might have its own meaning which, in the perception of the relevant public, distinguished the services offered by the appellant from those of a different commercial origin. Therefore, the relevant public would perceived the mark as providing details of the type of services which it designated and not as indicating the origin of those services. As such, the mark lacked distinctive character for the purposes of Article 7(1)(b).

COMMENT

It is becoming increasingly difficult to register a term with the word “Euro” in it. The BABY-DRY test of “lexical invention which has an unusual structure” is less likely to be met by compound marks featuring “Euro” as a prefix as use of that word in that way becomes increasingly conventional. In that sense, the word “Euro” is of neutral, if not negative, value in an assessment of distinctive character and is almost by default descriptive to a degree for most services. Unless the other elements of the mark are particularly distinctive, “Euro” marks are bound to struggle for registration. Apart from that, the case is valuable for the ECJ’s clarification of the relationship between Article 7(1)(b) and (c).