General Court upholds OHIM refusal of CTM application for shape of loudspeaker

In Bang & Olufsen A/S v OHIM T-508/08 6 October 2011 (unreported), the General Court upheld a decision by the Office of Harmonization for the Internal Market (OHIM) refusing Bang & Olufsen’s Community trade mark (CTM) application for the shape of a loudspeaker, on the grounds that the mark consisted exclusively of the shape, which gave substantial value to the goods.

BACKGROUND

In September 2003, Bang & Olufsen applied to register the following shape as a CTM, in respect of goods and services in Classes 9 and 20:

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In 2005, OHIM rejected the application for lack of distinctive character, pursuant to Article 7(1)(b) of the CTM Regulation (40/94/EC, now replaced by 207/2009/EC), also ruling that it had not acquired distinctiveness through use under Article 7(3). The First Board of Appeal upheld that decision. The General Court allowed Bang & Olufsen’s appeal. In 2006, the Board corrected its decision, stating that it had made an obvious mistake in failing to examine the application of that Article, but nevertheless refused the application as insufficient evidence had been produced to demonstrate acquired distinctiveness through use.  

The Court again overturned the Board’s decision on appeal, finding the shape to be “truly specific” and uncommon. Since the shape was not customary of the goods in the sector, it created a striking design that served both an aesthetic purpose and a trade mark function, as the relevant public would easily remember it. Following this judgment, the Board annulled the examiner’s decision and reexamined the application on the basis of new absolute grounds for refusal (Article 7(1)(e)(iii)). The Board consequently rejected the application, stating that the mark consisted exclusively of the shape, which gave substantial value to the goods. Bang & Olufsen again appealed to the General Court.  

ALLEGED PROCEDURAL ERROR

Bang & Olufsen argued that in their assessments, the examiner and the Board had impliedly ruled out the application of Article 7(1)(e)(iii) and that the General Court had also found that the aesthetic considerations were irrelevant to the distinctiveness of the mark. They also claimed that OHIM had maintained consistently that the mark comprised a shape essentially inspired by aesthetic considerations, but which did not give substantial value to the goods within the meaning of Article 7(1)(e)(iii). Accordingly, the Board should not have re-examined the application under that Article, as it had not been raised at the beginning of the proceedings.  

The Court held that OHIM had jurisdiction to examine of its own motion the relevant facts that may have led it to apply a particular absolute ground for refusal. Since each ground was independent of the others and called for a separate examination, OHIM did not err in separately examining the application in light of Article 7(1)(e)(iii).

The Court also noted that in previous cases, Article 7(1)(e) was found to be a “preliminary obstacle”, precluding from registration a mark consisting exclusively of the shape of goods, and that a mark offending any one of the criteria in that provision could never acquire distinctiveness through use for the purposes of Article 7(3). Although there was a possibility of registering a mark that offended Article 7(1)(b) but acquired distinctiveness pursuant to Article 7(3), the Court said the Board had no obligation to examine the application under Article 7(3) as Article 7(1)(e) was already offended.  

ALLEGED ERROR IN SUBSTANTIVE LAW

Bang & Olufsen submitted that the word “exclusively” in Article 7(1)(e)(iii) should have been interpreted strictly to mean that the substantial value of the goods must result from all elements of the shape. Elements other than the shape to which the consumer would be attracted and which contributed to the value of the goods should have been considered. Such elements included the functional features of the goods, their branding, and how they were promoted.  

The Court dismissed as erroneous Bang & Olufsen’s assertion that the shape did not fall within the scope of Article 7(1)(e)(iii), stating that the mark consisted exclusively of the shape of the goods as it represented the body of the loudspeaker, so much so that it created a striking design that was easily remembered by the relevant consumer.

Bang & Olufsen’s argument that the Board should have considered other elements besides the shape was rejected. Although the perception of the relevant consumer in assessing the value of the goods was relevant in applying other absolute grounds, it was not a decisive element in the application of Article 7(1)(e)(iii) but, at most, only in the assessment of the essential characteristics of the mark.

The Court noted that the design of the loudspeaker was an essential element of Bang & Olufsen’s branding and would be important in the consumer’s choice, even with the consideration of the other technical qualities of the goods.

The evidence submitted, including extracts from distributors’ websites and on-line auction or second-hand websites, showed that distributors emphasised aesthetic characteristics as a selling point and that the shape of the goods increased their value. Accordingly, OHIM did not err in finding that, independently of the other characteristics of the goods, the shape gave substantial value to the goods.