Introduction

On 5 July 2012, Advocate General Sharpston delivered her opinion on Case C-149/11 Leno Merken BV v Hagelkruis Beheer BV. The case involves a dispute over the trade marks ONEL and OMEL, and whether use of a trade mark in a single Member State meets the genuine use threshold in order to support a Community Trade Mark ("CTM") registration.

The opinion highlights the nature of the Community as a single market and the unique characteristics of a CTM registration as a unitary right covering all 27 Member States. It also has practical implications for trade mark owners, as the question of genuine use can often play a vital role in the fate of an opposition or continued registration of a CTM.

The decision of the Court of Justice of the European Union ("CJEU") is expected within the coming months and, although it is impossible to tell whether it will follow the Advocate General's opinion, it would be a huge surprise if the decision went in a different direction.

Legal Framework

Before a CTM application proceeds to registration, third parties are given a three month window within which to oppose that application. Opponents will rely on their various prior trade mark rights and claim that, because the later filed mark is confusingly similar, registration must be refused.

As in the present case, many opponents rely on their prior registered Community Trade Mark ("CTM") rights. Under Article 15 of Council Regulation No 207/2009 ("the Regulation"), CTM registrations become subject to a use requirement after five years. If a mark covered by a CTM registration has not been used for a period of five years and is relied on in opposition proceedings, the applicant can (and almost always will) request proof of use of the mark "in connection with the goods or services in respect of which it is registered". If the opponent is unable to provide evidence of genuine use of its mark within the Community, it loses the ability to rely on that registration. The registration may in turn may be challenged through non-use revocation proceedings.

In the right circumstances, requesting proof of use can be an important and effective counter-attack for applicants caught up in opposition proceedings. Being able to demonstrate genuine use is also a strong defence to a revocation action. The question of what constitutes genuine use within the Community can therefore be a particularly contentious issue and the opinion of the Advocate General touches directly on that point.

Facts

The ONEL story begins within the context of a trade mark opposition. In July 2009, Hagelkruis Beheer BV ("Hagelkruis") filed an application to register OMEL as a Benelux trade mark in classes 35, 41 and 45. The application was opposed in August 2009 by Leno Merken BV ("Leno") who relied on a CTM registration for the trade mark ONEL covering similar services in classes 35, 41 and 42.

Crucially, Leno's ONEL mark had achieved registration in October 2003 – more than five years prior to the opposition – which meant it was subject to proof of use. Hagelkruis accordingly asked Leno to prove genuine use of its ONEL mark within the Community.

When Leno responded by filing use of its mark, Hagelkruis argued that the use was insufficient because it was restricted to the Netherlands only. The geographically limited use, Hagelkruis claimed, did not constitute genuine use within the Community.

The Benelux Office for Intellectual Property agreed with Hagelkruis, rejected Leno's opposition and concluded that OMEL should be allowed to proceed to registration - they felt that proving use had been made in just one Member State was not sufficient to allow the owner of a CTM registration to rely on it in an opposition. Unsurprisingly, Leno appealed to the Regional Court of Appeal in The Hague which referred a number of questions to the CJEU.

Questions Referred

The Regional Court of Appeal referred a number of questions but it has primarily sought clarification on whether use of a trade mark in a single Member State amounts to "genuine use in the Community" and is therefore enough to support the continued registration and enforceability of that mark under Article 15 of the Regulation.

Advocate General Sharpston's Opinion

Without committing one way or the other, the Advocate General has opined that use of a mark in a single Member State may, in some circumstances, amount to genuine use – but not always.

In her view, the territorial scope of the use of a mark is one factor to consider when assessing genuine use, but account must be taken of several others. The characteristics of the goods and services involved, the nature of the relevant market and the frequency of the use – for example – are equally important.

Indeed, once these factors are considered, the question of genuine use becomes one of impact:

"What matters is the impact of the use in the internal market: more specifically, whether it is sufficient to maintain or create market share in that market for the goods and services covered by the mark and whether it contributes to a commercially relevant presence of the goods and services in that market. Whether that use results in actual commercial success is not relevant."

Does the mark have a commercial presence within the EU "sufficient to maintain or create a market share" for the relevant goods or services? If so, the use may well be enough for the purposes of maintaining a registration and defending non-use actions:

"Genuine use in the Community within the meaning of Article 15(1) of the Regulation is use that, when account is taken of the particular characteristics of the relevant market, is sufficient to maintain or create market share in that market for the goods and services covered by the Community trade mark"

To illustrate her point, the Advocate General noted that if the market for the services of the ONEL mark is concentrated in the Netherlands, use of the mark in only the Netherlands may have particular weight. In other words, if a market for a certain product is focused on one Member State, use of a mark for that product in only that single Member State can be enough to amount to genuine use – provided the mark has enough of a commercial presence. The geographic scope of the use is a key factor in this example, but so too is the nature of the products involved and the characteristics of the relevant market.

Comment

The position taken by the Advocate General seems sensible and in line with the EU being a single market and not 27 different markets. While the geographical scope of the use made has to be an important relevant factor in any assessment, it cannot be the only or even the determinative factor when considering whether "use" of the mark has been made, as this would be at odds with previous CJEU decisions.

Assuming the Advocate General's opinion is followed by the CJEU, it will provide hope for trade mark owners with a strong presence in a particularly niche market. The opinion indicates that such use of marks may well be enough to ward off non-use actions and satisfy proof of use requests. For trade mark owners in less favourable conditions, whose use also remains within the bounds of a single Member State, there would still be uncertainty over whether their use is sufficient.

In any event, the key issue is for trade mark owners to be able to prove that they have a commercially significant presence; that their use is sufficient to maintain or create market share. From this point of view, nothing changes and the traditional forms of proving genuine use remain the same. Trade mark owners would be well advised to keep a record of catalogues, advertisements and invoices which relate to that mark and any information that would help show that the use has had a commercially meaningful impact within the Community.

This article was first published in Intellectual Property Magazine 1 Sept 12.