The principle of due cause is currently being considered by the Court of Justice of the European Union (CJ) in the case of Leidseplein Beheer BV and Hendrikus Jacobus Marinus De Vries v Red Bull GmbH and Red Bull Nederland BV (C-65/12).
Leidseplein Beheer and Mr De Vries manufacture an energy drink under the name THE BULLDOG. They have been using the sign THE BULLDOG in respect of commercial activities such as coffee shops, cafes and hotels since 1975. On 14 July 1983, Mr De Vries filed a trade mark application for the words THE BULLDOG in conjunction with an image of a bulldog in respect of 'alcohol free drinks' in class 32. In 1997, Leidseplein Beheer and Mr De Vries began using the sign THE BULLDOG for an energy drink.
Red Bull produces energy drinks under the trade mark RED BULL and had obtained a trade mark registration for the words RED BULL KRATING-DAENG in respect of 'alcohol free drinks' in class 32 on 1 July 1983. For some time, Red Bull have been trying to prevent Mr De Vries from selling his THE BULLDOG energy drink.
Referral to the CJ
The Dutch Supreme Court were faced with deciding whether or not use of THE BULLDOG infringed the RED BULL trade mark.
The RED BULL trade mark was filed 14 days before THE BULLDOG trade mark, but Mr De Vries had been using THE BULLDOG sign from a date prior to Red Bull's adoption of the RED BULL trade mark, albeit for goods and services other than those in question. One of the issues for the court to decide therefore, was whether Mr De Vries had due cause to use THE BULLDOG sign for energy drinks. To obtain guidance on this point, the court asked the CJ whether there can be due cause within the meaning of Article 5(2) of Directive 89/104 EEC, where the sign being used that is identical or similar to the trade mark with a reputation, was already being used in good faith by the third party concerned, before the earlier registered trade mark was filed?
Opinion of the Advocate General
The Advocate General suggested that in assessing due cause, the fact that the third party has been using the sign in good faith for other goods and services to those at issue in the current proceedings, prior to the date of the earlier registered trade mark or to that trade mark acquiring its reputation upon which the owner of the earlier registered right relies, is a factor which should be taken into account and favour the third party.
In issuing this opinion, the Advocate General recognised the difficulties with the implementations of Article 5(2) in different languages of the European Union. In her view:
- English, French and German versions of Article 5(2) indicated that due cause may arise if the use of the third party sign equated to a legitimate interest which may outweigh the trade mark holder's interest.
- By contrast, the Dutch version of Article 5(2) refers to due cause as having a valid reason to use the sign.
On consideration, the Advocate General believed the earlier use of a sign could form the basis of a legitimate interest which could outweigh the right of the trade mark holder.
Against that context then, the Advocate General revisited the other elements of Article 5(2) and restated the established principle that the greater the distinctive character of the earlier registered trade mark and its reputation, the easier it will be to make a finding of detriment and unfair advantage arising out of use of the later sign. Furthermore, where identical goods are involved, it is more likely that consumers will make an association with the goods of the earlier registered mark with a reputation.
The Advocate General noted that unfair advantage occurs where the third party attempts to ride on the coat tails of the trade mark with a reputation and to exploit that trade mark holder's marketing efforts (expended to create and maintain the image of the trade mark), without paying any financial compensation or making any efforts of its own.
It was noted that:
- The signs THE BULLDOG and RED BULL are not identical and only coincide in the word BULL.
- THE BULLDOG registration was only filed 14 days after registration of RED BULL, so it would be difficult for Red Bull to claim that RED BULL was well known at the time Mr De Vries filed his trade mark.
The Advocate General wondered whether Mr De Vries could rely on the European Union principle of protected acquired rights in order to justify his use of THE BULLDOG trade mark for energy drinks. However, she felt that the use of the signs by both parties cannot be ignored and the current use could also be a way of establishing the origin of a particular trade mark or sign. Given Red Bull's use, the Advocate General's view was that Dutch consumers would still possibly associate THE BULLDOG with Red Bull, more than they would with De Vries or Leidseplein. Therefore, unfair advantage cannot be ruled out. Further, the fact that Mr De Vries only began using THE BULLDOG for energy drinks after Red Bull had acquired a reputation in RED BULL, did not neutralise Mr De Vries' legitimate interest claim to use the sign.
The opinion provides a helpful guide to the meaning of due cause, a principle which is important to infringement claims, but one which is rarely litigated upon. However, we will need to wait to see whether the CJ follows the Advocate General's opinion and agrees with the assessment provided.