The opinion of Advocate General Sharpston in Leno Merken BV v Hagelkruis Beheer BV (C 149/11) In theory the Community Trade Mark is a unitary right granted under the directly effective Council Regulation (EC) No 207/2009 ("the CTM Regulation") and is intended to provide protection across the 27 Member States of the European Union. However, how this works in practice is sometimes a vexed question.
For example, in the Pago case the Court of Justice of the European Union (CJEU) was asked to consider whether a mark is to be regarded as having a reputation in the Community if it has a reputation in a single Member State. The CJEU decided that, for a Community Trade Mark to have a reputation in the Community (for the purposes of obtaining additional protection under Article 9(1)(c) of the CTM Regulation) it must have acquired a reputation in a substantial part of the territory of the Community (as an undivided whole). That substantial part may consist of the territory of a Member State or even a part of it.
The CJEU was more recently asked by the Hague (the Netherlands Regional Court of Appeal) to determine the extent of the territorial area in which a Community Trade Mark must be used to satisfy the 'genuine use' condition it must fulfil so as to be invulnerable to revocation five years after its registration (see below). In particular it was asked whether it is sufficient to use the mark in the territory of a single Member State. Advocate General Sharpston has now given her opinion on how the CJEU should answer this question.
Article 15(1) of the CTM Regulation provides that a Community Trade Mark is to be subject to revocation if, within a period of five years after registration, it has not been put to "genuine use in the Community in connection with the goods or services in respect of which it is registered" (unless proper reasons for non-use exist).
This article, in the Advocate General's view "aims to ensure that the register does not contain marks that obstruct, rather than improve, competition in the market place because they limit the range of signs which can be registered as trade marks by others, serve no commercial purpose and do not actually help to distinguish between goods or services in the relevant market and associate them with the proprietor of the mark".
The Benelux Office for Intellectual Property rejected Leno's opposition (based on its prior ONEL Community Trade Mark) and concluded that Hagelkruis should be permitted to register 'OMEL' as a Benelux trade mark. Leno appealed that decision to the Hague.
It was common ground between the parties before the Hague that:
- There is a likelihood of confusion on the part of the public between 'OMEL' and 'ONEL' and
- Leno had put 'ONEL' to genuine use in the Netherlands.
The only disagreement concerned whether or not Leno was required to demonstrate genuine use of 'ONEL' in more than a single Member State (i.e. the Netherlands) in order to be able to rely on its Community Trade Mark to oppose Hagelkruis's registration of 'OMEL'. The Hague stayed the proceedings and referred several questions to the CJEU, the essence of which was 'is use in one Member State enough for genuine use to have been made of a Community Trade Mark?'.
The Advocate General's suggested answer is not terribly helpful or illuminating since it can be paraphrased as 'it might not be, but it might be; it all depends on the facts'.
So on what does it depend?
Firstly, it is clear that use of a Community Trade Mark outside the territory of the 27 Member States cannot contribute to establishing that the mark has been put to genuine use in order to avoid the sanctions in the Regulation.
Secondly, the CJEU has already accepted in the Sunrider case (which was decided under the Trade Mark Directive which harmonizes national trade mark law, rather than the CTM Regulation) that "'the territorial scope of the use is only one of the several factors to be taken into account in the determination of whether [such use] is genuine or not".
The Advocate General was clear that:
- "Whether a Community Trade Mark has been used in one Member State or several is irrelevant";
- "The borders between Member States and the respective sizes of their territories are not pertinent"; and
- "Whether [the use made] results in actual commercial success is not relevant".
What matters is the impact of the use in the EU's internal market. Is it sufficient to maintain or create market share in that market for the goods and services covered by the mark? Does it contribute to a commercially relevant presence of the goods and services in that market? If the answer is yes "genuine use" has been made. If no, it hasn't.
To answer these questions the national court must consider and assess:
- the characteristics of the EU internal market (as a whole) for the particular goods and services involved (taking into account the fact that those features may change over time);
- whether demand or supply in, or access to, parts of the EU internal market may be limited (for example due to language obstacles, transportation or investment costs, or consumer tastes and habits); and
- whether use of the mark is made in a territory where the market is particularly concentrated.
Although the Advocate General was careful to make it clear that the assessment described above was for the national court to make on a "case-by-case" basis, it is difficult not to detect an assumption that use in one Member State alone (however large) will very rarely amount to genuine use.
For example, the Advocate General notes "it is also conceivable that local use of a Community trade mark nonetheless produces effects on the internal market by, for example, ensuring that the goods are known – in a commercially relevant manner – by participants in a market that is larger than that corresponding to the territory where the mark is used".
She also goes out of her way to stress that the Community Trade Mark "was established for undertakings which want to deploy or continue activities on a Community level and wish to do so immediately or soon" and points out that if "use in a Member State was [found by a court to be] insufficient to constitute genuine use in the Community, it may still be possible to convert the Community Trade Mark into a national trade mark...".
So perhaps the underlying answer to the core question 'is use in one Member State enough for genuine use to have been made of a Community Trade Mark?' is 'probably not'. The reason for this view appears to be that by the end of five years you should normally be able to demonstrate evidence of your intention (when filing) to trade "on a Community level". If you only intended to trade on a national level you should only have applied for a national mark. We hope the CJEU will be a little less opaque.