Genuine use of a Community Trade Mark (“CTM”) has long been a contentious issue. A CTM proprietor who has only used the CTM in one Member State has been able to block use of that mark elsewhere in the Community, when arguably he should only be afforded national trade mark protection. This state of affairs has now been thrown into doubt.
The Advocate General of the Court of Justice of the European Union (“CJEU”), Eleanor Sharpston, issued her opinion on the case of Leno Merken BV v Hagelkruis Beheer BV C 149/11 in July this year. She considered what would constitute ‘genuine use’ of a Community Trade Mark under the Community Trade Mark Regulation 207/2009 (“CTM Regulation”) and has arguably raised the bar for CTM proprietors seeking to establish such use.
In particular, the use of a CTM within the borders of a single Member State may no longer be sufficient to constitute 'genuine use' of that CTM, while the use of a CTM in every EU Member State might equally be insufficient. The Advocate General stressed that the assessment of whether a CTM has been put to ‘genuine use’ within the Community should be considered on a case-by-case basis, taking into account the commercial presence of the mark in question.
While the CJEU is not obliged to follow the same reasoning as its Advocate General, in recent years it has often taken a similar or identical approach.
Background of CTMs
CTMs enable businesses to benefit from pan-European trade mark protection through a single registration process. The EU has expanded significantly since the introduction of CTMs, and protection is now afforded across all 27 current Member States. Article 15 of the CTM Regulation provides that within 5 years of registration, a proprietor must ‘put the Community trade mark to genuine use in the Community in connection with the goods or services in respect of which it is registered’. If this cannot be shown, the mark may be revoked on the grounds of non-use. Under the traditional interpretation, 'genuine use' of a CTM in just one Member State was sufficient to demonstrate 'genuine use' under Article 15. The Advocate General’s opinion provides a significant challenge to this interpretation at the Member State level.
Leno Merken v Hagelkruis
On 27 July 2009, Hagelkruis Beheer BV (“Hagelkruis”) applied for registration of the word sign ‘OMEL’ as a Benelux trade mark in respect of certain services. The registration was opposed by Leno Merken BV (“Leno”), arguing that it was the proprietor of the CTM ‘ONEL’, registered in 2003 for services in near identical classes. As the ONEL CTM was more than 5 years old, Hagelkruis asked Leno to prove genuine use of the CTM. The Benelux Office for Intellectual Property rejected Leno’s opposition and concluded that Hagelkruis should be permitted to register ‘OMEL’ at the local level.
Leno appealed to the regional court of appeal. The disagreement between Leno and Hagelkruis centred on whether Leno was required to demonstrate genuine use of ‘ONEL’ in more than a single Member State (here, beyond the Netherlands) in order to oppose Hagelkruis’s registration of ‘OMEL’. The court referred a number of questions to the CJEU for a preliminary ruling.
The Advocate General set out the following principles to be applied to the application of Article 15:
- ‘Genuine use in the Community’ is an indivisible concept and must be determined by reference to all the facts and circumstances of the case, including the characteristics of the economic sector and the market in question, the nature of the goods and services covered by the CTM, and the scale and frequency of the use.
- Territorial scope of the use is only one of several factors to be taken into account when considering whether such use is genuine or not. The place of use is neither an independent condition that applies together with the requirement of genuine use, nor is it the sole or dominant factor determining what constitutes genuine use in the Community.
- 'Genuine use in the Community’ is use that, when considering the particular characteristics of the internal market for the goods and services covered by the CTM, is sufficient to maintain or create market share in that market for those goods and services. Such use must contribute to the commercial presence of the goods and services in that market.
- Use of a CTM within the borders of a single Member State is not, of itself, sufficient to constitute genuine use of that CTM. However, it is possible for genuine use to be established where local use of a CTM produces effects on the wider market such that goods or services are known in a commercially meaningful manner to potential customers outside of the local territory.
- A national court must examine all forms of use of the CTM within the entire territory of the 27 Member States. The borders between Member States and the respective sizes of their territories are not pertinent to this inquiry.
- Use of a CTM in an area where the market is particularly concentrated may play a more significant role than use of the same mark in a part of the market where sources of supply and demand for the goods and services hardly exist. The Advocate General used the example of the Scottish deep fried Mars Bar to demonstrate that if a registered holder of a CTM in a particular territory can demonstrate that there is no market for that particular good elsewhere, then it will be easier to demonstrate genuine use purely in that highly localised market.
- Use of a website that is accessible in all 27 Member States would not necessarily constitute 'genuine use'.
Impact and Conclusion
If the CJEU follows the Advocate General’s opinion, it would appear that in many situations, a business will need to demonstrate the use of a CTM beyond a single Member State in order to establish ‘genuine use in the Community’.
Businesses using CTMs within a narrow territorial scope (such as within the borders of one Member State) may struggle to block competitors seeking to trade under similar or identical marks within the Community, although this will not always be the case. Proprietors of such CTMs may face an increasing number of challenges to their CTMs in the form of applications for revocation under Article 15.
It is possible that this opinion may bring new opportunities for businesses that have historically been prevented from exploiting a particular mark due to the use of a similar or identical CTM within a small localised area of the Community. What businesses need to ensure going forwards is that their use of a CTM is ‘commercially relevant’ in the particular market for their product or service. Indeed, the decision by the Advocate General not to clearly set out what will and will not constitute genuine use in the Community, and to avoid the introduction of a cross-border requirement, has relieved some just as it has frustrated others.
Businesses should consider the possibility of registering national trade marks as an alternative to, or in parallel with, their CTM counterparts. This is especially advisable given that Article 112(2) of the CTM Regulation precludes conversion of CTMs into national applications in the event that a CTM has been revoked on the grounds of non-use. Conversion will still be possible where the CTM has been put to 'genuine use' under the laws of the Member State for which the conversion is requested.