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Wednesday, 19 December 2012

Genuine use of a CTM - the CJEU in ONEL/OMEL

The Court of Justice of the European Union (CJEU) has today issued its decision in Case C-149/11 (Leno Merken), a.k.a. ONEL /OMEL.

Community Trade Mark practitioners will need no introduction to this highly political and politicised case, in which the question before the Court was, in essence, whether use of a CTM in a single country constituted “genuine use in the Community”.

Alex and Luke, not having read the CJEU decision, remain
confident that their CTM for "Lemonade" is still bulletproof
against challenges of insufficient use within the EU
Part of the background to this case is a Joint Statement issued by the EU Council and Commission before the CTM system went live. According to that statement, “[t]he Council and the Commission consider that use which is genuine within the meaning of Article 15 in one country constitutes genuine use in the Community”. As an initial point, the Court confirmed its settled case law that it is not bound to interpret Community law in accordance with such a Joint Statement, except if the legislation itself refers to that joint statement, which was not the case here.

To understand the background facts of the (artificial) ONEL/OMEL dispute which gave rise to the CJEU reference, readers are referred to theIPKat’s post earlier this year, which also summarised the Opinion of A-G Sharpston.

The CJEU has largely followed the A-G’s Opinion but has given a different emphasis in its answers to the questions put to it, for which the Court’s answers are as follows:
Article 15(1) of Regulation No 207/2009 of 26 February 2009 on the Community trade mark must be interpreted as meaning that the territorial borders of the Member States should be disregarded in the assessment of whether a trade mark has been put to ‘genuine use in the Community’ within the meaning of that provision.
A Community trade mark is put to ‘genuine use’ within the meaning of Article 15(1) of Regulation No 207/2009 when it is used in accordance with its essential function and for the purpose of maintaining or creating market share within the European Community for the goods or services covered by it. It is for the referring court to assess whether the conditions are met in the main proceedings, taking account of all the relevant facts and circumstances, including the characteristics of the market concerned, the nature of the goods or services protected by the trade mark and the territorial extent and the scale of the use as well as its frequency and regularity.
The referring court had attempted to pin the ECJ down with a series of questions, such as (1) whether genuine use at a national scale would automatically satisfy CTM use requirements, or alternatively (2) if use in a single member state on its own could never qualify as genuine CTM use and in the latter case, asked (3) what other criteria applied in assessing genuine use of a CTM.

The fourth question is the one on which the CJEU concentrated. In this question the referring court asked if territorial borders should instead be disregarded, and as we have seen, the CJEU has said this is the correct approach to take.

The CJEU also explicitly declined to lay down a de minimis rule as to how much territorial use will satisfy the use requirement. It also declined to rule on the application of its judgment to the dispute in question, instructing the referring court to decide if the ONEL mark has fulfilled the requirement of genuine use within the Community.

The IPKat suspects that further posts may follow on the ramifications of the judgment, but will first listen with interest to the comments of readers here and those of commentators elsewhere. 

5 comments:

Anonymous said...

The Court of Justice again tries to satisfy everybody. Again he creates uncertainty.

The main question was whether the owner of a CTM is discriminated if he has exercised his option to apply for a CTM instead of a national mark or whether he creates an own market share for small Offices. Your foto highlights the question very well. That question was not directly answered by the Court.

It would appear that the Court thought, in particular in par. 50, that you need a justification to use the CTM only at a small scale. But why? This is contradictory with the statement that any trader has the possibility to apply for a national mark or a CTM, at his free choice.

But further down the Court reiterates that the main purpose is to verify if the owner of the trade mark wants to have a market share. Then it is not important whether the trade mark for which he creates a market share is the market of a Member State or of a CTM. You always start small, don’t you. And there is no justification anywhere to oblige applicants to file for a national trade mark for the first year and later upgrade to a CTM later after a first success. Therefore I am confident that it is not important whether you have to present the material for a CTM or for a national mark. The same material should be sufficient.

First an entrepreneur starts as a small company, later he upgrades as a CTM, then when things go bad he needs to downgrade again by converting to national marks in time … so an up and down all the time? Does not sound convincing. Or to put it the other way round: big companies are well advised to have a national mark and a CTM because it is cheaper to file evidence for use just for a national mark than for a CTM, if you need to file more evidence for a CTM than for a national mark. Composing proof of use is an expensive exercise. So all offices are happy: national offices because some income is maintained and the OHIM because still it is more interesting to have a CTM. Just the applicants are unhappy, as they never know whether it would not be more convenient to have a bundle of national marks.

David Brophy said...

A comment from the well-known UK trade mark expert Tony Willoughby:

"Thank you for your note. I've now retired, so professionally the grotesque extremes the CJEU will go to in order to avoid giving any helpful guidelines is of little moment to me. It's comforting I suppose to see that some things never change.

However, my son, who owns and runs a small creperie in Covent Garden market, on my advice went to the trouble and expense of registering his brand as a CTM on top of his national registration. Is it possible that genuine commercial use at a retail outlet in Covent Garden market will not constitute genuine use within the Community? I think I must have misunderstood your note, but if that is the case, over the years OHIM must have taken in loads of fees for useless the years OHIM must have taken in loads of fees for useless registrations, mustn't they?"

Unknown said...

To be honest I think the ECJ decision is as clear as it gets from a Court who can not decide on specific matters, but only give opinions on interpretation across 27 member states.....

When I read the decision I have no doubt that the ECJ is of the opinion that two elements (and two elements only) must be fulfilled to prove genuine use:

1) The trademark must be used in accordance with its essential function, AND

2) for the PURPOSE of creating or maintaining market share

There is no requirement on size of market share or quality of marketing efforts. So - in my mind - if the trademark is used in accordance with its essential function (to distinguish goods from one company from those of another) and the use is based on a real purpose of creating or maintaining a market share of whatever kind and size - then the use is genuine.

Am afraid though that parts of the TM community will interpret the decision differently ;-)

Anonymous said...

I think overall this is the right decision and supports the unitary nature of a CTM. Also, if the recommendations for co-existence of a CTM registered for 15 years and only used in 1 member state, with a later national mark filed in a remote state, are adopted from the Max Planck study, that can address concerns of an unfairly wide monopoly.

the pufferfish said...

Unknown, I think it is incorrect to assume that the subjective factor is determinative - there can still be a level of use required in order for the use to be genuine.

Sufficient to create or maintain a market in a Member State v. sufficient to create or maintain a market in the Community? I think those who argued that use in a Maltese market stall would suffice can lay that story to rest.

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