The European Court of Justice ("ECJ") has confirmed that under Article 5(1) of the First Directive 89/104/EEC ("Trade Mark Directive") infringement can only be proved if the third party uses their sign to distinguish their goods or services. In other words, there will be no infringement under Article 5(1) Trade Mark Directive unless the use of the sign is to indicate the origin of the goods or services.

Background

Celine SA have sold clothing and fashion accessories in France since 1928. The company registered the trade mark "Celine" in 1948 for clothes and shoes. Celine SARL traded in France as "Celine" since 1950 and in 1992 registered the company name Celine. The company sold clothing but did not affix Celine to the goods themselves. 

In 2003 Celine SA sued Celine SARL for trade mark infringement under Article 5(1)(a) Trade Mark Directive and sought to obtain an order that Celine SARL be prohibited from using Celine as either a company or trading name.

At first instance, Celine SA was successful. However, on appeal the French Cour d’Appel referred a question to the ECJ, relating to Article 5(1)(a) and 6(1)(a) Trade Mark Directive. The key issue was whether the use of a trade or company name amounted to use in relation to the goods or services in question under Article 5(1)(a) Trade Mark Directive.

Outcome 

Article 5(1)(a) Trade Mark Directive states that it is an infringement if a third party uses in the course of trade an identical sign to the registered trade mark in relation to goods or services which are identical to the goods or services for which the trade mark is registered. The ECJ set out the criteria which must to be shown for a claim under Article 5(1)(a) Trade Mark Directive to succeed:

  1. The use must be in the course of trade;
  2. It must be without the consent of the proprietor of the mark;
  3. It must be in respect of goods or services which are identical to those for which the mark is registered; and
  4. It must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services

The ECJ held that under both Article 5(1) and 5(2) Trade Mark Directive the use of a sign in relation to goods or services is use for the purposes of distinguishing the goods or services in question from those of third parties. This language together with the ECJ’s citation of a paragraph within its prior BMW judgment concerning use to indicate origin, suggests that the ECJ means that unless the offending sign is being used to indicate the origin of the goods or services (which is the essential function of the trade mark) a trade mark owner cannot successfully use Article 5(1) and 5(2) Trade Mark Directive. Instead the trade mark owner would need to rely on any relevant national provisions (if any), the application of which Article 5(5) Trade Mark Directive permits where a sign is being used without due cause and it takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark. The ECJ further held that the purpose of a company, trade or shop name is not, of itself, used to distinguish goods or services. Rather it is used to identify the company or business. If a company or trade name is being used no more widely than this, then there can be no infringement under Article 5(1) Trade Mark Directive. This is because the sign is not being used to distinguish the actual goods or services to which the trade mark is registered (in this case clothes and/or shoes). Of course, if the company or trade name is actually affixed to the goods or services in question then there would probably be trade mark use under Article 5(1) Trade Mark Directive.

However, the ECJ did identify a grey area where even if the company or trade name was not affixed to the goods or services in question, Article 5(1) Trade Mark Directive may succeed if the third party uses the sign in such a way that some form of link is established between the company or trade name and the goods marketed within and this link affects the functions of the registered trade mark. This situation depended on the individual facts of the case and was for the national courts to decide.

The ECJ also considered Article 6(1)(a) Trade Mark Directive which concerns the defence to trade mark infringement of using your own name (which includes a company or trade name) if it is used in accordance with honest practices. For Celine SARL to have such a defence they must have acted fairly in relation to the legitimate interests of the trade mark proprietor. It is for the national courts to consider the facts as to whether the defendant has acted fairly, but they should consider the following

  1. the extent to which the use of the third party’s name is understood by the relevant public as indicating a link between the third party’s goods or services and the trade mark owner
  2. the extent to which the third party ought to have been aware of the link
  3. the extent of the reputation enjoyed by the trade mark owner and the degree to which the third party may benefit in marketing the goods or services.

Comment

The language used by the ECJ seems to have settled the law in relation to the need for trade mark use by a defendant to establish infringement under the Trade Mark Directive. Unless a defendant is using their sign to distinguish their goods/services then there will not be infringement under Article 5(1) and 5(2) Trade Mark Directive. If the defendant is shown to be using their sign as an indicator of origin (i.e. in a distinguishing manner) then the national courts must go on to consider if such use affects or is liable to affect the functions of the registered trade mark in question, the main function (but not the only one) being as an indicator of origin. In certain circumstances the use of a company or trade name can amount to such use. Thereafter, Article 6(1)(a) Trade Mark Directive may still operate as a defence to infringement as long as the use is in accordance with honest practices.