In a decision of October 6, 2009 (file no. C-301/07), the European Court of Justice had to decide on the interpretation of Article 9 (1) c of the Community Trademark Regulation. This provision extends the scope of protection of Community trademarks having a reputation in the Community. The owner of such a Community trademark with reputation can prevent the use of identical or similar marks even for goods or services that are not similar to those for which the Community trademark is registered, if such use takes unfair advantage of or is detrimental to the distinctive character or the repute of the Community trademark.

The case to be decided by the European Court of Justice was a reference from the Austrian Supreme Court in litigation between Pago and Tirol Milch. Pago owns the following figurative Community trademark, protected, among others, for fruit drinks and fruit juices:

Tirol Milch marketed a drink, among others in bottles, some of which are similar to the one shown in the mark by Pago.

The Pago mark has a reputation only in Austria. The Austrian Supreme Court therefore asked the European Court of Justice whether a Community trademark that has a reputation only in Austria qualifies as a Community trademark with a reputation in the Community for purposes of Article 9 (1) c of the Community trademark regulation.

The European Court of Justice answered in the affirmative. In earlier case law the court had decided that for purposes of the EU Trademark Directive it was sufficient for a domestic Benelux trademark to have a reputation in a substantial part of the Benelux territory—which may be a part of one of the Benelux countries only. In the recent case the court took the view that in order for a Community trademark to have a reputation in the Community, it is sufficient if it is known by a significant part of the public in a substantial part of the territory of the European Community, and that the territory of Austria may be considered to constitute a substantial part of the territory of the Community for these purposes.

This is good news for owners of Community trademarks making heavy use of their marks in one or few member states only, and who still want to benefit from the extended scope of protection afforded by Article 9 (1) c in all 27 member states of the Community.

In another recent decision dated October 15, 2009 (file no. C-324/08), the European Court of Justice had to decide on a referral by the Dutch Supreme Court concerning the interpretation of Article 7 (1) of EU Trademark Directive 89/104/EEC. In the case pending in the Netherlands, Diesel sued Makro and other parties for selling certain products in the Netherlands carrying the Diesel mark. Diesel had previously granted a license for certain Diesel products for Spain, Portugal, and Andorra. The licensee had granted an exclusive sublicense with respect to certain goods, whereupon the sublicensee had granted a further license to another entity concerning the manufacture of footwear, bags and belts with the Diesel mark. The sale of these goods was not covered by any express consent or agreement either by Diesel or its licensee. Some of these goods were ultimately sold in the Netherlands by Makro. Makro tried to defend itself by claiming that with respect to these goods, the trademark rights of Diesel had been exhausted, which is why Diesel could not enjoin Makro from selling the goods within the European Economic Area.

In this context, the Dutch Court asked the European Court of Justice about the criteria to be applied in determining whether a sale of goods not covered by the express consent of the trademark owner may nevertheless have taken place with the implied consent of the owner under Article 7 (1) of the EU Trademark Directive. The ECJ took the view that a consent of the trademark owner with respect to marketing goods bearing the mark within the European Economic Area by a third party may be implied if this can be inferred from facts and circumstances prior to, simultaneous with, or subsequent to the placing of the goods on the market within the EEA that, as determined by the national court, would clearly show that the trademark owner has renounced his exclusive rights.

While it is still uncertain how the case will ultimately be decided by the Dutch Supreme Court, this case indicates the danger to trademark owners stemming from complex multi-level distribution arrangements if the scope of the rights of each licensee/distributor is not sufficiently specified and spelled out in the agreement. The lesson to be learned from this case for trademark owners, therefore, is to make absolutely sure in their license agreements what the exact scope of rights granted to the licensee, and the possible scope of sublicenses to be granted by the licensee, is. A lack of diligence in this respect may ultimately lead to a de facto partial loss of enforcement rights to the trademark owner contrary to his original intention.