In Leno v Hagelkruis (C-149/11) (ONEL/OMEL) the Court of Justice of the European Union (the "CJ") was asked to decide whether it is sufficient to use a Community trademark 'genuinely' in the territory of a single Member State only to satisfy the ‘genuine use’ condition in article 15(1) of the Community Trademark Regulation (the "CTMR"). On 19 December 2012 the CJ ruled that "the territorial borders of the Member States should be disregarded in the assessment of whether a trade mark has been put to ‘genuine use in the Community’". Territorial scope is just one of the factors to determine genuine use. It is for national courts to assess whether use of a Community mark is genuine (i.e. no token use) "taking account of all the relevant facts and circumstances, including:
- the characteristics of the market concerned;
- the nature of the goods or services protected by the trade mark;
- the territorial extent;
- the scale of the use as well as
- its frequency and regularity".
A Community trademark is effective throughout the Community, that is in all (currently 27) EU Member States. Third parties, usually those interested in registering a similar trademark, can ask for a Community trademark to be revoked when it has not been used genuinely (commercially) for five years or more (under article 15(1) CTMR). The question is whether such use should take place in the whole Community, or whether use in part of the territory, even in one country, is enough to maintain the trademark right. In Leno v Hagelkruis Leno had genuinely used its Community trademark ONEL for over 40 years, but only in the Netherlands. Hagelkruis applied for registration of OMEL as a Benelux trademark for identical services and Leno challenged this registration in opposition proceedings before the Benelux Office of Intellectual Property ("BOIP") in view of its older Community right. In the opposition proceedings Hagelkruis argued that the ONEL trademark should be revoked for non-use because use limited to the Netherlands is insufficient for genuine use within the meaning of Article 15 CTMR. The BOIP accepted this argument, Leno appealed and the Court of Appeal referred questions regarding the interpretation to the CJ.
Is a Community-wide monopoly based on national use still desirable?
At the introduction of the CTMR, in 1994, the situation regarding the extent of the territory necessary to meet the genuine use requirement was clear, as follows from the Joint Statement[i]: ‘The Council and the Commission consider that use which is genuine within the meaning of Article 15 in one country constitutes genuine use in the Community’. At that time there were only ten Member States and the statement was uncontroversial. Now, with 27 Member States, more often the question comes up whether it is desirable that genuine use in one Member State can block a trademark for the whole Community. Those against accepting use in one Member State as being sufficient argue that national trademarks are more suitable to secure such signs and that the CTMR contains article 112(2)(a) especially for this situation: a Community trademark that is used in one country only can be converted into a national trademark. On the other side, the arguments are that the use of a Community trademark for export to outside the EU only is considered sufficient genuine use (article 15(2)(b) CTMR), that territorial scope of the use is only one aspect to be taken into account, that in earlier case law the CJ prescribed a very low threshold for genuine use, and lastly that genuine commercial use in the Netherlands only is also genuine commercial use within the single market of the European Community.
The CJ's decision
The CJ first acknowledged the coexistence of national and Community trademark rights. It then confirmed that genuine use in article 15(1) CTMR means use in accordance with the essential function of the trademark, i.e. use to guarantee the identity of the origin of the goods or services for which it is registered in order to create or preserve an outlet for those goods or services. Token use is not enough for genuine use. The CJ then considered that the territorial scope is not a separate condition for genuine use but one of the factors to be included in an overall analysis. It also recalled that genuine use is meant to prevent congestion of the trademark register as non-use of a Community trade mark risks restricting the free movement of goods and services by limiting the range of signs that can be used.
Subsequently, the CJ made the crucial consideration that the (entire) Community should be the reference point to determine genuine use. Although the CJ sees a certain justification in the argument that a Community trademark should be used in a larger area than the territory of a single Member State for it to be regarded as ‘genuine use’ because it enjoys more extensive territorial protection than a national trademark, it cannot be ruled out that in certain circumstances, the market for the goods or services for which a Community trademark has been registered is in fact restricted to the territory of a single Member State. It is not necessary that the mark be used in an extensive geographic area for the use to be deemed genuine.
The CJ then ruled that that it is for the referring court to determine whether genuine use takes place, taking into account all factors mentioned in the introduction above.
The CJ opted for a Community approach in assessing the territory where genuine use of a Community trademark takes place. It is not required that the Community mark is used in a substantial part thereof. Rather the CJ seems to stress that the use should be genuine, i.e. in accordance with its essential function to create a market share for the goods and services. The territorial extent of the use is no crucial factor in determining this. National courts should determine whether the use is 'genuine' taking into account several factors, including the characteristics of the (larger, EU) market concerned. This threshold seems rather low and is therefore good news for Community trademark owners. In earlier CJ case law the threshold for use to be considered 'genuine', was also considered to be very low. It remains to be seen how the Dutch referring court will assess the situation for Leno (ONEL).