In the latest episode in this long-running trade mark battle, Advocate General Trstenjak's opinion addresses the nature of acquiescence, the time periods required for acquiescence and the interplay between the UK doctrine of honest concurrent use and acquiescence under EU trade mark law. She also gives her view that it would not be an abuse for the holder of an earlier trade mark intentionally to wait until the last day of the five-year period for acquiescence before claiming invalidity of a later mark.

BudÄ›jovický Budvar, národní podnik v Anheuser-Busch, Inc., Case C-482/09, 3 February 2011.

Business Impact

  • If the Advocate General's ("AG") Opinion is followed by the ECJ, then it clarifies the position that the owner of an earlier mark (which includes earlier pending applications) will always have the benefit of the full five-year acquiescence period within which to challenge a later mark, starting from the date of its registration.
  • This is regardless of whether the owner of the earlier mark knew of the later mark prior to its registration and regardless of the date of registration of the earlier mark.
  • The period of acquiescence can start running at the earliest from the date of registration of the later mark, if (1) the later mark has been used from that date and (2) the proprietor of the earlier mark became aware of such use at that time.
  • Where the Trade Marks Directive applies, defendants to invalidity actions will not be able to rely on the UK doctrine of honest concurrent use which is incompatible in principle with EU trade mark law.
  • The AG is also of the view that waiting until the final day of the five-year period to challenge the later mark cannot constitute an abuse of rights. Therefore, trade mark owners should be prepared for tactical validity challenges right up to the final day of the five-year period.

Background facts

This Opinion represents the latest development in the long-running global dispute over the "Budweiser" and "Bud" trademarks between the Czech state-owned brewer Budejovicky Budvar ("BB") and the American brewer Anheuser-Busch Inc. ("AB"), now part of Belgian brewing giant Anheuser-Busch InBev.

BB and AB first became active in the British market in 1973 and 1974 respectively, both distributing beer under a trade mark that consists of, or includes, the word ‘Budweiser’.

In November 1976 BB applied for the trade mark ‘Bud’, which AB opposed. AB then sued BB for passing off, to which BB counterclaimed for passing off. However, both claim and counterclaim failed since the Court of Appeal ruled that neither side had made a false representation, as a dual reputation had been established.

On 11 December 1979, AB applied to register the word ‘Budweiser’, which BB opposed, and, in turn, on 28 June 1989, BB made a cross-application to register ‘Budweiser’, which AB opposed. In February 2000 the Court of Appeal dismissed both oppositions, so that both sides were able to register ‘Budweiser’. The decision was made under the Trade Marks Act 1938, which expressly allowed the simultaneous registration of identical or confusingly similar marks in cases of honest concurrent use or other special circumstances. Following that decision, each party was entered in the register of trade marks on 19 May 2000 as proprietor of the word mark ‘Budweiser’. The consequence was that BB had two registrations, one for ‘Bud’ (application date November 1976) and one for ‘Budweiser’ (application date July 1989). AB had one registration for ‘Budweiser’ (application date December 1979).

On 18 May 2005, in other words four years and 364 days after the registration of the parties’ ‘Budweiser’ marks, AB applied to the Trade Marks Registry for a declaration of the invalidity of the ‘Budweiser’ mark registered for BB. This was premised on the fact that AB's mark was an ‘earlier trade mark’ by virtue of the fact that its date of application was earlier, albeit the dates of registration were the same. Therefore, AB said, as the marks and the goods were identical, BB’s mark was liable to be declared invalid.

The timing of the application was such that, although it was issued within the five-year period for acquiescence, it was not served on BB until after the five-year period had expired. This denied BB the opportunity to respond with a cross-application to have AB's 1979 trade mark registration declared invalid on the basis of BB's ownership of its 1976 registration.

The High Court upheld the decision of the UK IPO granting a declaration of invalidity of BB's 1989 registration, on the ground that BB's mark was identical with the earlier trade mark owned by AB, and was registered in respect of identical goods.

BB thereupon appealed to the Court of Appeal, who, through Jacob LJ, referred a number of questions to the ECJ as to the legal nature of acquiescence, the time periods involved and the relevance of honest concurrent use when considering questions of acquiescence.

Background law

Article 4 of Directive 89/104/EC (The "Directive"), provides:

"1. A trade mark shall not be registered or, if registered, shall be liable to be declared invalid:

(a) if it is identical with an earlier trade mark, and the goods or services for which the trade mark is applied for or is registered are identical with the goods or services for which the earlier trade mark is protected; ...

“Earlier trade marks” within the meaning of paragraph 1 means:

(a) trade marks … with a date of application for registration which is earlier than the date of application for registration of the trade mark…"

Article 9 of the Directive provides:

" 1. Where, in a Member State, the proprietor of an earlier trade mark as referred to in Article 4(2) has acquiesced, for a period of five successive years, in the use of a later trade mark registered in that Member State while being aware of such use, he shall no longer be entitled on the basis of the earlier trade mark either to apply for a declaration that the later trade mark is invalid or to oppose the use of the later trade mark in respect of the goods or services for which the later trade mark has been used, unless registration of the later trade mark was applied for in bad faith."

Section 7 of the Trade Marks Act 1994 provides:

"(1) This section applies where on an application for the registration of a trade mark it appears to the registrar –

(a) that there is an earlier trade mark in relation to which the conditions set out in section 5(1), (2) or (3) obtain, or

(b) that there is an earlier right in relation to which the condition set out in section 5(4) is satisfied,

but the applicant shows to the satisfaction of the registrar that there has been honest concurrent use of the trade mark for which registration is sought.

(2) In that case the registrar shall not refuse the application by reason of the earlier trade mark or other earlier right unless objection on that ground is raised in opposition proceedings by the proprietor of that earlier trade mark or other earlier right."

The decision

The AG addressed the questions put by the Court of Appeal, as well as other legal issues she felt to be pertinent to the case, as follows:

Is acquiescence a concept of EU law? YES

The exclusive right conferred by a trade mark can be subject to limitation only exceptionally and under conditions that are precisely defined by law. While not all aspects of trade mark law are intended by the Directive to be fully harmonised across all member states, certain aspects such as those concerning the 'obtaining' and 'continuing to hold' a registered trade mark are intended to be fully harmonized – as such 'acquiescence' should be given an autonomous and uniform interpretation.

Can a party acquiesce to use of a later mark when he is unable to prevent it? NO

The AG's view is that the language of Article 9(1) required the passive behaviour of a party who was aware of the later conflicting use, but declined to take countermeasures. It followed that, if it was legally or factually impossible to take such countermeasures, then the person could not be said to have acquiesced. It would not be equitable to expect a person to do the impossible.

When does the five-year period for acquiescence begin?

The AG's opinion was that three conditions needed to be satisfied, on a cumulative basis, for the period to begin:

  1. The later mark must be registered; and
  2. The later mark must be used; and
  3. The owner of the earlier mark must be aware of the registration and use of the later mark.

In terms of whether the five-year period can start to run even before the proprietor of the earlier trade mark has actually had his mark registered, the AG considered it abundantly clear that, where the three conditions mentioned above are satisfied, the fact that registration of the earlier mark may still be pending does not prevent the five-year period from starting to run.

Although not in issue in the present case, the AG also noted that the earlier proprietor's state of knowledge of the registration and use of the later mark (the third condition) was a subjective consideration. However, the five-year period prescribed by the Directive created a statutory presumption that the earlier proprietor had the requisite knowledge from the date of registration of the later mark. This was rebuttable with evidence that the owner of the earlier mark acquired the requisite knowledge at a later date.

Is the doctrine of honest concurrent use compatible with EU law? NO

The Court of Appeal’s decision of February 2000 to allow registration of the trade mark ‘Budweiser’ for both parties had been based on the doctrine of honest concurrent use, provided for in section 7 of the Trade Marks Act 1994 and English common law.

The doctrine takes the form of a defence, and so operates in the same way as the rule on limitation of rights in Article 9 of the Directive, by enabling an applicant for a later mark to counter earlier rights by pleading honest concurrent use of the trade mark for which registration is sought. The AG commented that, as the law relating to the enforcement of trade mark rights was fully harmonised, if the Directive does not permit a national exception, then it would have to be regarded as incompatible with the Directive.

The AG, therefore, drew the conclusion that the doctrine is incompatible in principle with European Union law:

"it may be concluded that Directive 89/104 does not provide for any exception that would allow the coexistence of two identical trade marks in a situation such as that in the main proceedings. Article 4(1)(a) … consequently precludes in principle the long-established honest concurrent use of two identical marks covering identical goods by two different proprietors of the marks."

However, the AG also found that, in the present case, Article 4(1) of the Directive was not temporally applicable to the invalidity proceedings and that it would, therefore, be appropriate to apply national law rather than EU law. This was on the basis that the parties owed their current situation of co-existence of identical marks to pre-Directive UK trade mark law (the 1938 Trade Marks Act). To impose the provisions of the Directive in the proceedings would deprive BB of years of goodwill and have the effect of extending the effect of the Directive retrospectively, which was not intended by the Directive.

As such "the principles of legal certainty and the protection of legitimate expectations militate, in the light of the facts stretching back over the years, in favour of exceptionally permitting the coexistence of the two identical marks and thereby leaving untouched the decision of the Court of Appeal of February 2000 and its legal effects, including its effects for the main proceedings. That would necessarily require a finding that Article 4(1)(a) of Directive 89/104 is temporally not applicable in the main proceedings either."

Was there an abuse of rights? NO

Submissions made by the Czech and Slovak governments accused AB of an abuse of rights by making the application for a declaration of invalidity one day before the expiry of the five-year period, thereby depriving BB of the opportunity to respond with its own invalidity application. The AG was unconvinced by such an argument, resting as it did on the assumption that the acquiescing party is to be prevented from making full use of the five-year period. The determination of a fixed time limit of five years was necessary to promote legal certainty and create legal stability.

Conclusion

On the particular, and rather exceptional, facts of this case, the AG has advised favouring BB's 'legitmate interests' over legal certainty by allowing BB to continue to rely on the doctrine of honest concurrent use post Directive 89/104/EC, despite that doctrine being found to be incompatible with EU trade mark law.

Of more general application, the AG has provided useful practical guidance on acquiescence. If this opinion is followed by the ECJ, it is clear that the owner of an earlier mark will have the benefit of the full five year period within which to challenge a later mark, starting from the date of its registration, regardless of whether the owner of the earlier mark knew of the later mark as a pending application and regardless of the date of registration of the earlier mark.