In the article "Here we go again…Trademark Use" (September 2007), Carina Badger expressed the view that, in light of the Opel decision, the European Court of Justice (ECJ) now always requires use of the offending sign "to indicate the origin of the goods or services" to establish infringement. The Céline decision may provide a firmer basis for this viewpoint.

Before turning to the Céline decision, it's worth asking whether it was already clear from the ECJ's guidance in the Opel case that traditional "trade mark use" was required in every case?

Opel – a clear position?

In our view the answer was unclear. Opel could support the view that use for purposes other than origin indication could infringe - at least pursuant to Article 5(2) Trade Mark Directive.

The ECJ stated:

"If… the relevant public does not perceive the sign identical to the Opel logo appearing on the scale models marketed by Autec as an indication that those products come from Adam Opel or an undertaking economically linked to it, it would have to conclude that the use at issue in the main proceedings does not affect the essential function of the Opel logo …[emphasis added]"

In this respect we agree with Badger. The Court of Appeal's finding in the Arsenal Football Club Plc v Reed [2003] EWCA Civ 696 case that the essential function can be harmed even where a mark is not perceived by consumers as indicating origin has been placed in doubt.

However the ECJ indicated that, in a non-grey goods context, the directive protected functions of a trade mark other than the essential function when it noted that "Adam Opel does not appear to have claimed that the use affects functions of that trade mark other than its essential one…[emphasis added] ". Why make this aside if the directive only protected the essential function?

In October 2007 a trade mark owner relied on Opel to support such a position. In L'Oreal SA & Ors v Bellure NV & Ors [2007] EWCA Civ 968 in the UK Court of Appeal, L'Oreal's Counsel "fastened on" to this sentence of the ECJ and stated that the ECJ was "indicating that if some other, presumably non essential, function of the trade mark, e.g. the "image" invoked by the mark was affected, the position [that there would be no infringement] would be different". The UK judges' response to this was "maybe". Interestingly the Céline decision does not appear to have been cited.

This interpretation would be more consistent with the ECJ's decision in the Parfums Christian Dior grey goods case (C-337/95). It's difficult to see how the essential function itself can be harmed, whatever the nature of the advertising used by the defendant, "in order to bring the public's attention to [his] further commercialization of [the] trade-marked goods". There is no origin confusion as the mark is completely accurate as to the origin of the goods. What might prevent the trade mark owner's rights from being exhausted pursuant to Article 7 is the "serious harm" which may be done to "the value of the trade mark by detracting from the allure and prestigious image of the goods in question and from their aura of luxury". If only essential function harm engages the infringement provisions of the directive, why would such a use ever infringe?

The language used in Opel did not restrict the possibility of infringement, if functions other than the essential function have been harmed. Nor did it deny that these other functions could be harmed without use of the sign as an indicator of origin. On the contrary, following Opel one could still argue that Nike's swoosh logo, which brings to mind healthy associations, would be harmed by its use on high alcohol beer bottles, even if it was perceived by consumers as decorative and not as an indication of origin. Such use might infringe under Article 5(2), provided it brought the sports mark to mind.

Unlike Opel, the language of the Céline decision and its citation (arguably out of context) of a key paragraph from the BMW decision is less easy to argue around.

Céline and certainty

Céline SA has sold clothing in France since 1928. The company registered the trade mark "Céline" in 1948 for clothes and shoes. Céline SARL has traded in France as "Céline" since 1950 and in 1992 registered the company name Céline. The company sold clothing but did not affix Céline to the goods themselves. In 2003 Céline SA sued Céline SARL for trade mark infringement under Article 5(1)(a).

At first instance, Céline SA was successful. On appeal the French Cour d'Appel referred a question to the ECJ. The key issue was whether the use of a trade or company name amounted to use "in relation to the goods or services".

The ECJ set out criteria which must be established for a successful claim under Article 5(1)(a):

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 "It is clear from the scheme of Article 5 … that the use of a sign in relation to goods or services within the meaning of Article 5(1) and (2) is use for the purpose of distinguishing the goods or services in question, whereas Article 5(5) is directed at 'the use which is made of a sign for purposes other than distinguishing the goods or services' (Case C-63/97 BMW [1999] ECR I-905, paragraph 38) [our emphasis]".

Article 38 of the BMW decision said;
"…it is true that the scope of application of Article 5(1) and (2) …, on the one hand, and Article 5(5), on the other, depends on whether the trade mark is used for the purpose of distinguishing the goods or services in question as originating from a particular undertaking, that is to say, as a trade mark as such, or whether it is used for other purposes…[our emphasis]"

Unless the offending sign is used to distinguish the goods and/ or services by indicating they originate "from a particular undertaking", a trade mark owner cannot successfully use Article 5(1) or 5(2) to prevent use of the sign. Instead he must rely on relevant national provisions (if any), permitted by the application of Article 5(5). Note the ECJ's express reference to Article 5(2) and Article 5(1), despite the fact that Article 5(2) was not in issue in the Céline reference.

The ECJ held that the purpose of a company name is not to distinguish goods or services. It's to identify the company or business. If a company name is not being used more widely, there can be no infringement under Article (1). The sign is not being used to distinguish the actual goods or services for which the trade mark is registered. Of course, if the company or trade name is actually affixed to goods or services then there would probably be "use in relation to goods", which would fall under Article 5.
If there is an overriding requirement for origin indicating use and an overriding defence of non-origin indicating or non-trade mark use, what is the purpose of the defences (or limitations) in Article 6? The ECJ partially addressed this in the second limb of its operative answer following its consideration of the so-called "use of your own name" defence in Article 6(1)(a)

The ECJ concluded: "the unauthorised use by a third party of a company name, trade name or shop name which is identical to an earlier mark in connection with the marketing of goods which are identical to those in relation to which that mark was registered constitutes use which the proprietor of that mark is entitled to prevent in accordance with Article 5(1)(a) of the directive, where the use is in relation to goods in such a way as to affect or be liable to affect the functions of the mark", and continued;
"Should that be the case, Article 6(1)(a) of the directive can operate as a bar to such use being prevented only if the use by the third party of his company name or trade name is in accordance with honest practices in industrial or commercial matters".

In other words, if traditional "trade mark use" was made of the offending sign (for example the company name was actually affixed to the goods) and it affected one of the functions of the mark, particularly, but not limited to, the essential function, then such use may still be non-infringing if one of the defences in Article 6 covered the defendant's behavior.

Here the ECJ was careful not to make a finding of fact. However, it did note that when making this assessment the national court should consider:

1. the extent to which the use of the defendant's name is understood by the relevant public as indicating a link between the defendant's goods or services and the trade mark owner;
2. the extent to which the defendant ought to have been aware of the link; and
3. whether the trade mark enjoyed a reputation and whether the defendant may benefit from this, in marketing the goods or services as a result of use of his name "in relation to" his goods.

The remaining purpose of the Article 6(1)(b) limitation – described as "the descriptive use defense" - is more difficult to determine.

It's hard to think of a word or phrase which would be perceived as an indication of origin by consumers to affect one of the functions of the mark (thereby engaging Articles 5(1) or 5(2)) but which amounted to an indication of a characteristic of those goods. Even more so, with one being used in accordance with honest commercial practices so as to fall within the descriptive use defence.

Perhaps this defence serves as a safety net for dual purpose signs which might otherwise infringe due to a relatively trivial affect on the functions of the mark. In other words, signs which serve both to indicate origin and to describe the characteristics of the goods. In determining whether use of such a sign is in accordance with honest practices, the Celine factors (a) to (c) above would again be relevant.

From the wording of Celine, the ECJ appears to think it has made the position on trade mark use clear once and for all. However it's difficult to reconcile what the ECJ said here with all that it said in the Adidas (C – 408/01) and Opel cases. Has the ECJ in reality quietly changed its mind?

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For further information about this published aticle, contact Kathryn Hobbs on +44 (0)121 213 2397, Alexa Highfield on +44 (0)121 213 2396 or Amie Ryalls on +44 (0)121 213 2360

This published article may contain information of general interest about current legal issues, but does not give legal advice.