Dr. Lukasz Zelechowski (University of Warsaw)

Transcription

1 Dr. Lukasz Zelechowski (University of Warsaw) The unitary character of a Community Trade Mark and its impact on the protection of CTMs [working draft] 1. Introduction The principle of the unitary character of a Community Trade Mark (CTM) is one of the cornerstones of the CTM system. It is expressed in Art. 1(2) of the Regulation No 2007/209 on the Community Trade Mark 1 (CTMR; it replaced the earlier Regulation No 40/94 2 ). Art. 1(2) CTMR stipulates: a Community trade mark shall have a unitary character. It shall have equal effect throughout the Community: it shall not be registered, transferred or surrendered or be the subject of a decision revoking the rights of the proprietor or declaring it invalid, nor shall its use be prohibited, save in respect of the whole Community. This principle shall apply unless otherwise provided in this Regulation. The principle of unitary character can be also derived from recitals of the preamble to the CTMR, especially from the third, the sixteenth and the seventeenth recital. The unitary character of a CTM means, stated simply, that the exclusive right to a CTM enjoys uniform protection in the entire territory of the EU and is not merely a bundle of national rights in Member States. Article 1(2) CTMR enumerates a number of specific consequences of the unitary character of a CTM, which are further regulated in more detail in subsequent provisions of the CTMR. The question arises, how deeply the principle of the unitary character permeates the CTM system beyond of what is clearly stated in Art. 1(2). This question becomes especially relevant when practitioners and academics are confronted with new controversial issues connected with the protection of CTMs, which are gradually emerging and which have not been clearly solved in the CTMR. Among such issues, which have become highly debated in recent years and which were the subject of rulings from the Court of Justice of the European Union (CJEU), one needs to mention in particular: the geographical scope of prohibitory injunctions in the case of infringements of CTMs, the geographical scope of reputation of a CTM and most recently the issue of genuine use of a CTM. From the outset it needs to be stressed that the analysis of the case law of the CJEU allows drawing a conclusion that the Court has recognized as a matter of principle the significance of the unitary character of a CTM for the solution of the above issues. Nevertheless, one can still identify a number of specific problems connected with each of the abovementioned issues, in relation to which the Court has not taken a clear position or has not expressed any view at all. This marks the grey area, in which arguments derived from the principle of the unitary character remain often in a conflict with arguments supporting the need for the weakening of the unitary effect of a CTM. A good example of this problem could be the issue of the territorial scope of prohibitory injunctions against infringements of CTMs. In the DHL judgment (discussed in more detail in point 2 below) the Court provided a 1 Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (codified version), OJ L 78, Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark, OJ L011,

2 general guidance on how to strike a balance between EU-wide and non-eu-wide scope of injunctions. This guidance is however, as it will be argued, very general and applying the criterion set out by the Court to specific cases of infringements may pose serious problems. Before proceeding with the analysis one more introductory remark needs to be made. Despite the entry into force of the Treaty of Lisbon the terminology of the CTMR has not been updated in a manner that would reflect the fact that the term Community trade mark is now outdated. Therefore the title and the provisions of the CTMR still refer to the Community Trade Mark and this term will consequently be used in the paper. It should however be pointed out that in a recent proposal of March 27, 2013 for a regulation amending the CTMR 3, a respective update of terminology of the CTMR has been proposed. This in the first line means replacing the term Community trade mark with the term European trade mark. 2. Territorial scope of prohibitory injunctions in cases of infringements of CTMs The first issue, which will be examined, is the territorial scope of prohibitory injunctions in the case of infringement of a CTM. This issue was the subject of the ruling from the CJEU in the DHL judgment 4. In main proceedings before French courts the claimant (Chronopost), who owned a CTM WEBSHIPPING registered in respect of, inter alia, a variety of services in the field of logistics, transport and data transmission, brought an infringement action against its competitor - DHL, who was using similar designations for services such as express mail management service accessible via the Internet. The Court of Appeal in Paris issued an injunction along with an order of a coercive measure, in the form of a periodic penalty payment, aimed at ensuring that the prohibition is complied with. The injunction extended exclusively to the territory of France, because the Court of Appeal found that the presence of a likelihood of confusion could be established in the circumstances of the case only from the point of view of a French-speaking consumer, for whom the CTM WEBSHIPPING would not be descriptive of services covered by it 5. The claimant subsequently argued before the Cour de cassation that the verdict of the Court of Appeal violated the provisions of the CTMR, because the scope of the injunction did not extend to the entire territory of the EU. The Cour de Cassation stayed the proceedings and referred four questions to the CJEU for a preliminary ruling. The first two questions were formulated as follows: 1. Must Article 98 of Regulation [No 40/94] (currently Art. 102 CTMR) be interpreted as meaning that the prohibition issued by a Community trade mark court has effect as a matter of law throughout the 3 Document COD 2013/0088; available at: 4 Case C-235/09 DHL Express France v. Chronopost SA. Among commentaries to this judgment see in particular O. Sosnitza, Der Grundsatz der Einheitlichkeit im Verletzungsverfahren der Gemeinschaftsmarke - Zugleich Besprechung von EuGH, Urt. v C-235/09 DHL/Chronopost, GRUR 2011, p ; A. Kur, Case C-235/09, DHL Express v. Chronopost, Judgment of the Court of Justice (Grand Chamber) of 12 April 2011, CML Rev. 2012, p ; G. Würtenberg, The enforcement of judgments of Community trade mark courts, J.I.P.L.P. 2012, p ; M. Grünberger, Relative Autonomie und beschränkte Einheitlichkeit im Gemeinschaftsmarkenrecht, IPRax 2012, p Judgment of the Cour d'appel de Paris of November 9, 2007, Case 06/07457, available at 2

3 entire area of the European Union?; 2. If not, is that court entitled to apply specifically that prohibition to the territories of other States in which the acts of infringement are committed or threatened?. Questions three and four addressed the territorial effect of coercive measures imposed along with an injunction. The latter issue remains beyond the scope of analysis in this paper 6. It needs to be stressed that the Court of Justice examined in the DHL judgment only instances, in which the jurisdiction of a CTM court is based on Art. 97(1)-(4) CTMR (Note: all Member States are obliged to designate in their territories a number, as limited as possible, of national courts and tribunals of first and second instance, which have an exclusive jurisdiction for, among others, all infringements of CTMs see art. 95(1) and 96(a) CTMR). In those instances a CTM court has a jurisdiction in respect of acts of infringement committed or threatened within the territory of any of the Member States (art. 98(1) CTMR), which clearly creates a possibility of a crossborder scope of injunction. However, in cases of jurisdiction of forum loci delicti, which is regulated in Art. 97(5) CTMR (it is not applicable to actions for declaration of non-infringement of a CTM), a CTM court has jurisdiction only in respect of acts committed or threatened within the territory of the Member State, in which that court is situated (Art. 98(2) CTMR). Consequently, an injunction granted by a CTM court in the latter situation may extend only to the territory of this Member State. The latter instance does not need to be further analyzed in this paper. The CJEU found that the territorial scope of injunctions granted pursuant to art. 102 CTMR should as a rule extend to the territory of the whole EU. When taking this position the Court took into account two factors: first, the cross-border jurisdiction of CTM courts (Art. 98(2) in conjunction with Art. 97(1)-(4) CTMR); second, the unitary character of a CTM. According to the CJEU the injunction should as a matter of principle extend to the entire territory of the EU, in order to provide the unitary protection of a CTM 7. One needs to note in that regard that the issue of how much the unitary character of a CTM can affect the scope of injunctions has been quite controversial. Article 1(2) CTMR does not provide a direct response to this question. It does stipulate, among others, that use of a CTM can be prohibited in respect of the whole EU, however the cited part of this provision pertains only to an EU-wide injunction against the use of a trademark, which is registered as a CTM. It does not, however, pertain to a frequent situation, when the designation attacked by a CTM owner is not a CTM 8. This position of the CJUE proves, however, that the Court established a link between the principle of the unitary character and the issue of scope of injunctions. In the author s opinion the CJEU was right in doing so. Justification of the Court s position can be derived from the fact that because of the unitary character the territorial scope of an exclusive right to a CTM is consequently EU-wide and one can reasonably assume that a scope of an injunction should correspond with this geographical scope. Therefore, the principle of the unitary character has at least an indirect impact on the scope of injunctions, even of this is not 6 Regarding the issue of ordering and enforcement of coercive measures see in particular M. Grünberger, Relative Autonomie, p Case DHL, par A. von Mühlendahl, Community trade mark riddles: territoriality and unitary character, E.I.P.R. 2008, p. 68; S. Schnell, The Community trade mark: unitary EU right - EU-wide injunction? E.I.P.R. 2011, p In certain situations the use of a CTM can, however, be prohibited in a territory of a specific Member State only see Art. 110, 111 and 165(5) CTMR. 3

4 expressly stated in Art. 1(2) CTMR or Art. 102(1) CTMR. The CJEU did not however consider EU-wide injunctions as an absolute rule. The Court found that a CTM court must limit the territorial scope of injunctions at least in two instances: first, when the claimant has restricted the territorial scope of his action (which he might do, since he is free to determine the extent of the action also under the territorial aspect) or, second, when the defendant proves that the use of the sign at issue does not affect or is not liable to affect the functions of the trade mark, for example on linguistic grounds 9. When taking this position the CJ referred to its own case law, according to which the exercise of the exclusive right to a trade mark must be restricted to cases, in which a third party s use of the sign affects or is liable to affect the functions of the trade mark 10. As far as the first exception is concerned, one needs to point out that for various reasons a claimant may have an interest in a territorial limitation of his action. He may in particular wish to limit the territorial scope of the action to the area, in which the presence of requirements for an infringement action can be easily established. This should not prevent the claimant from bringing subsequent actions in the future with regard to territories not covered by the previous action 11. The justification of the second exception is more complex and this is where the balancing of arguments derived from the principle of the unitary character with contradicting arguments begins. One hand there is the aforementioned assumption anchored in the unitary character of a CTM that the scope of injunction should correspond with the geographical scope of the protected right, which means that an injunction should consequently be EU-wide. One the other hand one has to take into account unique conditions, in which CTMs function in the Internal Market. First of all the factual degree of integration of the Internal Market is far from full and factors such as borders between Member States or linguistic and cultural differences can lead to a territorially differing outcome of assessment of key requirements for an infringement of a CTM 12. One cannot in particular ignore the fact that the scale of differing conditions in the Internal Market is currently much greater then at the beginnings of the CTM system, because of subsequent accession of new Member States to the EU. Considering the geographic vastness of the EU and the scope of exclusivity conferred by a CTM on its owner, it appears necessary to carefully balance the interest of CTM owners and other entrepreneurs when determining the scope of injunctions against a CTM infringement, in order to avoid a situation, in which a CTM becomes an anti-competitive instrument, providing a too-excessive protection in cases when an actual conflict between a CTM and a junior sign is in a given part of the EU practically excluded, e.g. for linguistic reasons, expressly mentioned by the CJUE in the DHL case 13. The need of taking the above interests into account appears to be an argument, which can reasonable outweigh the arguments 9 Case DHL, par Case DHL, par See Study on the Overall Functioning of the European Trade Mark System presented by Max Planck Institute for Intellectual Property and Competition Law, Munich, , par available at: 12 See Study on the Overall Functioning, par ,; A. Kur, Case C-235/09, p A. Kur, Case C-235/09, p S. Schnell, The Community trade mark, p

5 derived from the principle of the unitary character. Most importantly, it seems that allowing non-eu-wide injunctions would not be totally incompatible with the unitary character, given that already the CTMR expressly allows non-eu-wide injunctions insofar as it provides for a territorially limited competence of CTM courts, when their jurisdiction is established on the basis of forum loci delicti commissi (art. 98(2) in conjunction with Art. 97(5) CTMR). On a more practical note: in the light of the function-oriented criterion adopted in the DHL judgment one could in particular pose the question whether the scope of injunction could be limited to the territory of the EU in which a CTM is actually used. In other words it is the question whether the defendant could claim (employing the criterion from DHL judgment) that only in the territory, in which the claimant (or a third person acting upon his consent) is using a CTM, an interference with the functions of the trademark, in particular the essential function of a trademark (which is to guarantee the identity of origin of the goods or services covered by it) is possible. It seems that the answer to this question should be negative. First, in the CTMR there is no requirement of use or intent-to-use as a prerequisite of registration and obtaining protection of a CTM in the EU. Second, there is no provision, which would make the geographical scope of protection of a CTM against infringements dependent on the use of a CTM. Only if a CTM has not been put to genuine use in the Community within the meaning of Art. 15(1) CTMR within an uninterrupted period of 5 years (regarding the notion of genuine use see p. 4 below) it is subject to various sanctions, the most severe being the revocation by OHIM or by a CTM court (in the latter case upon a counter-claim of the defendant - art. 100 (1) CTMR; moreover in infringement proceedings a defendant may alternatively submit a plea claiming a lack of genuine use of a CTM - art. 99 (3) CTMR). Therefore by limited use after the lapse of 5 years after registration the author of this paper understands use, which does not cover the entire territory of the EU, but still qualifies as genuine use under Art. 15(1) CTMR. Provisions of the CTMR do not allow drawing a conclusion that the territorial scope of protection of a CTM is of itself determined either directly or indirectly by the territorial scope of a CTM use. Moreover due to the benefit of the rule of free movement of goods within the EU a CTM owner may easily expand his activities and consequently the scope of use of his CTM to new territories at any time 14. One should especially stress in that regard that the CTM system was created with the purpose of reinforcing the process of elimination of barriers for the free movement of goods within the Internal Market 15. On the other hand a question could arise whether a defendant could claim that an interference with the functions of a CTM is possible only in the territory, in which he uses his junior conflicting mark. This argument should not succeed either. An action, which results in an infringement or threat of infringement of a CTM and which takes place somewhere in the territory of the EU, is an action undertaken in the EU and as such it should be a subject of an EU-wide injunction, unless there are other specific reasons (such as linguistic reasons or a territorially limited reputation of a CTM see point 3 below), which justify a limited scope of injunction due to a territorially confined interference with functions of a CTM. 14 S. Schnell, The Community Trade Mark, p. 223 and p See the second recital in the CTMR preamble. 5

6 3. Extended protection of CTMs and the territorial scope of injunctions The position taken by the CJEU in the DHL judgment regarding the EU-wide scope of the injunctions as a rule as well as exceptions from this rule seems to have a general relevance, meaning that it is not limited solely to instances of infringements connected with a likelihood of confusion in a situation, in which a limitation of the EU-wide scope could be justified by linguistic reasons (which was the issue at stake in the main proceedings between Chronopost and DHL before French courts). The content of the questions referred for a preliminary ruling did not even give an occasion for the CJEU to consider the issue of territorial scope of injunctions with regard to different cases of infringements regulated in Art. 9(1)(a)-(c) CTMR (double identity, identity/similarity of goods and services, extended protection of CTMs enjoying reputation) 16. Therefore the principles set out in the DHL judgment seem to have relevance also in the cases of protection of CTMs afforded by Art. 9(1)(c) CTMR. This provision provides extended protection of Community Trade Marks having a reputation, which is independent from the likelihood of confusion. The sole presence of a reputation is not sufficient for granting extended protection, because further specific requirements expressly set out in Art. 9(1)(c) CTMR or adopted in the case law of the CJEU must be satisfied 17. The presence of reputation remains however a pre-condition of granting extended protection and an analysis of specific requirements of extended protection is justified only upon a prior establishing that a CTM has a reputation in the Community. The CJEU examined the issue of extended protection of a CTM having a reputation in the PAGO judgment 18, in which it ruled that a CTM, in order to be qualified as a Community Trade Mark having a reputation in the Community, must be known by a significant part of the public concerned by the products or services covered by that CTM, in a substantial part of the territory of the Community 19. When taking this position the CJEU drew an analogy with the earlier judgment in General Motors case, in which it had ruled that a national trade mark qualified as a trade mark having a reputation in the Member State within the meaning of Art. 5(2) of the Trade Mark Directive 89/ (currently replaced by the Directive 2008/95 21 ), when it had a reputation in a substantial part of the Member State in question and not necessarily throughout the whole Member State 22. Second, the CJ ruled in the PAGO judgment that in the view of the circumstances of the main proceedings, the territory 16 H.-P. Kunz-Hallstein, M. Loschelder, H.-P. Kunz-Hallstein, M. Loschelder, Stellungnahme der Deutschen Vereinigung für gewerblichen Rechtsschutz und Urheberrecht zum Vorlageverfahren DHL/Chronopost -- C-235/09, par. 16; available at: Stn_Vorlageverfahren_DHL_Chronopost-C pdf. 17 See in particular judgments of the CJEU in: Case C-408/01 Adidas-Salomon AG, Adidas Benelux BV v. Fitnessworld Trading Ltd., paras and par. 41; Case C-257/07, Intel Corporation Inc. V. CPM United Kingdom Ltd., par Case C-301/07 PAGO International GmbH v. Tirolmilch registrierte Genossenschaft mbh. 19 Case PAGO, par First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, OJ L 40, Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (Codified version), OJ L 299, Case C-375/97 General Motors Corp v Yplon SA, par

7 of Austria, being the Member State, from which the request for a preliminary ruling came, could be considered as constituting a substantial part of the Community. It is important to note that the Austrian court formulated its questions on a borderoriented basis: it was essentially seeking guidance on whether a reputation existing only in one Member State is sufficient for establishing a reputation in the Community. In return the it received a response from the CJEU, which is an example of how the principle of the unitary character drives the CTM system, because the CJUE formulated its response in a manner, which nearly totally disregarded the border-oriented approach. The qualification nearly is caused by the fact that the in the end some more precise guidance was contained in the part of the response, in which the court considered the territory of Austria as being a substantial part of the Community. In the light of the PAGO judgment a question arises whether in a situation, in which a CTM has a reputation in a significant part of the EU (thus not in the entire EU), the injunction aimed at providing an extended protection pursuant to Art. 9(1)(c) CTMR should have an EU-wide scope, which would also mean that it would cover areas, in which a reputation of a CTM is not currently present. The affirmative response would well correspond with the unitary character of a CTM. Indeed although in the PAGO judgment the CJEU did not expressly refer to this issue, it was assumed in some commentaries to the judgment that as a consequence of the position taken by the CJEU one should allow an EU-wide scope of injunctions, even if the reputation is territorially confined 23. According to an opposing view in such a situation the scope of injunction could also be limited territorially and this was already noted in the opinion of AG E. Sharpston delivered in the PAGO case 24. It seems that this issue was not addressed in the PAGO judgment, which was also the understanding of AG P. Cruz Villalón in his opinion delivered in the DHL case 25. One should in particular stress that the AG Sharpston in her opinion delivered in the PAGO case, clearly opted for a territorial limitation of an injunction against an infringement and found that no provision of the CTMR would exclude such a possibility. In the light of this clear position of the AG Sharpston, a lack of an express statement in that regard in the PAGO judgment justifies the view that the CJEU avoided taking a clear position in that regard. The author of this paper would favor the limitation of the scope of injunction in cases of territorially confined reputation of a CTM. After the DHL judgment justification of this approach can be derived from the criterion of a lack of interference with the functions of the trademark. One could raise that in the case of extended protection of a CTM afforded by Art. 9(1)(c) CTMR no interference with trademark functions protected by Art. 9(1)(c) CTMR, mainly the advertising function, could be established in territories, in which no reputation is present. One cannot overlook the fact that extended protection of a CTM afforded by Art. 9(1)(c) CTMR is independent of the likelihood of confusion and if requirements for granting this 23 F. Angelini, Unintended consequences: Pago meant well, but may deliver chaos, J.I.P.L.P., p. 12; A. Folliard-Monguiral, D. Rogers, Significant 2009 case law on the Community Trade Mark from the Court of Justice of the European Union and the General Court, [2010] J.I.P.L.P., p See the opinion AG Sharpston in Case PAGO, par See the opinion AG P. Cruz Villalón in DHL, par. 38, fn 17; similarly S. Schnell, The Community trade mark, p

8 protection are met, the said provision confers on a CTM owner an extensive sphere of exclusivity. A perspective of granting an EU-wide injunction in a situation, in which a reputation exists in a part of the EU only could result in creating an anti-competitive barrier for entrepreneurs in other parts of the EU in access to designations. If one takes for example the position of the CJUE in the PAGO case that reputation of the CTM in question in the territory of Austria could be considered by the national court as a reputation in the Community then an EU-wide injunction could potentially prevent the use of a conflicting sign (also for dissimilar goods) in remote parts of the EU. Second, it is rightly argued that specific requirements for extended protection of CTMs having a reputation set out in Art. 9(1)(c) CTMR could hardly be satisfied in a territory of the EU, in which the reputation is not present 26. This is the area, where a conflict between arguments derived from the principle of the unitary character and the need to prevent an over-excessive protection of CTMs is visible. It seems that the second factor should take priority over the striving to provide a uniform protection of a CTM in the whole EU. Interestingly, a similar problem may also occur in the case of protection against a likelihood of confusion afforded by Art. 9(1)(b) CTMR, when the issue of enhanced distinctiveness is at stake. In the light of the established case law of the CJ the more distinctive the earlier mark is, the greater will the likelihood of confusion be. Consequently, marks with a highly distinctive character, existing either per se or because of the recognition, which they possess on the market, enjoy a broader protection than marks with a less distinctive character 27. The presence of an enhanced distinctiveness depends on a number of factors. Next to inherent characteristics of the representation of the trade mark account needs to be taken of, among others, the market share held by the mark, intensity, geographical scale and long-standing use of the mark, the amount invested by the undertaking in promoting the mark, the proportion of the relevant section of the public, which recognizes the mark as identifying the goods or services of a particular undertaking 28. It seems appropriate to assume that establishing enhanced distinctiveness throughout the entire EU, meaning that an enhanced distinctiveness would have to be proved for the territory of every single Member State, would not be required. Instead there should rather be a uniform standard in that regard, similar to the one set out in the PAGO case. One could pose a question whether an injunctive relief could be territorially limited in a situation, in which an enhanced distinctiveness were a decisive factor for establishing a likelihood of confusion and it would clearly be missing in a part of the EU. It seems reasonable to assume that in such instance the defendant could request a limitation of the injunction raising a lack of interference with the essential function of a trademark (which must be considered as the sole and only function protected by Art. 9(1)(b) CTMR) only to that part of the EU, in which the enhanced distinctiveness is present. There may, however, be more doubts regarding this position than in the case of limited reputation for the sake of application of Art. 9(1)(c) CTMR. This is caused by the fact that protection afforded 26 Study on the Overall Functioning, par Case C-251/95 Sabel BV v. Puma AG, Rudolf Dassler Sport, par. 24; Canon Kabushiki Kaisha v. Metro-Goldwyn-Mayer Inc., par. 18; Case C-342/97 Lloyd Schuhfabrik Meyer & Co. GmbH v. Klijsen Handel BV, par Case Lloyd, par

9 by Art. 9(1)(b) CTMR is solely the protection of the essential function of a CTM. Therefore it could be argued that the need for a uniform protection in the EU of this very function is a superior goal, which should be given a priority over any arguments pertaining to a too-excessive protection of CTMs. At least the result of balancing of arguments derived from the unitary character of a CTM and of the need to avoid a too-excessive protection of CTMs appears to the author of this paper to be less obvious in this case than in the case of extended protection. Concluding those remarks one could briefly revert to the issue of the scope of use of a CTM by the claimant and its influence on the scope of injunctions. As it has been argued earlier, a territorially confined scope of use should not of itself justify a limitation of the scope of injunctions. However, given that the scope of use of a trademark is one of the factors, which, according to case law, need to be taken into account when assessing enhanced distinctiveness 29 and reputation 30 of a trade mark, it could indirectly contribute to such a limitation insofar as in a given instance it might lead to a presence of either reputation or enhanced distinctiveness of a CTM only in a part of the EU. 4. Genuine use of a Community Trade Mark Pursuant to art. 15(1) CTMR, if a CTM has not been put to genuine use in the Community within 5 years following its registration in respect of goods or services for which it is registered, or if such use has been suspended during an uninterrupted period of five years, a CTM is subject to sanctions provided in the CTMR, the most serious being the sanction for a revocation either by OHIM or by a CTM court (upon a counter-claim), unless there are proper reasons for non-use. In recent years the issue of the territorial scope of use, which could amount to a genuine use of a CTM in the Community has become a highly debated question. The discussion became particularly politicized when the Benelux Office for Intellectual Property issued on January 15, 2010 its decision in the famous ONEL/OMEL case. The trademark ONEL, which was filed in 2009 with the Benelux Office, was opposed by the owner of an earlier CTM OMEL. Establishing a likelihood of confusion would not cause a greater problem in this case. The earlier trademark OMEL has been used for over 40 years (which means, it was used even before it was registered as a CTM), however, the use was confined only to the territory of the Netherlands. The applicant for the Benelux trademark ONEL raised a plea claiming that the CTM OMEL could not constitute a basis for a successful opposition, because it had not been put to genuine use in the Community, since it had been used only in the Netherlands (a lack of genuine use could in this case constitute an effective plea against an opposition). In response the opponent invoked the content of the Joint Statements by the Council and the Commission of , in which the view was expressed that the use of a CTM in one Member State only is sufficient for establishing genuine use of a CTM in the Community 32. A similar view had constantly been expressed by OHIM in its Opposition Guidelines. 29 Case Lloyd, par Case General Motors, par Joint Statements were entered in the minutes of the meeting of the Council of the European Union at which Regulation No 40/94 was adopted (published in the Official Journal of OHIM, 1996, p. 613). 32 Regarding a verbal analysis of the meaning of Joint Statement see J. Phillips, Interpreting Territorial Use of a Community Trade Mark in Light of the Joint Statements In: In Varietate Concordia? National 9

10 The Benelux Office took however a different view and ruled that the use of the CTM in question in the territory of one single Member State the Netherlands did not amount to genuine use in the Community. In its decision the Office stressed that non-binding nature of the Joint Statements and OHIM s Guidelines. The Office indicated further that the acceptance of the position expressed in those statements would render a CTM an instrument, which too excessively limits other entrepreneurs in the EU in their freedom to choose a designation for their goods. This could be perceived - in the author s view as the strongest argument in the hands of supporters of the position that genuine use of a CTM could not be limited to the territory of one Member State. The essence of this argument lies mainly in the assertion that the position expressed in the Joint Statements could impair the objectives of both the Trademark Directive 2008/95 and the CTMR, because the CTM system was established for entrepreneurs, who conduct or intend to conduct their activities in the EU on a larger scale, which exceeds the boundaries of a single Member State, whereas those entrepreneurs, who wish to limit the scale of their activity to the territory of one Member State may chose protection of their trademarks as national trademarks under harmonized laws of the Member States 33. Furthermore, accepting the standpoint that use of a CTM in one Member State satisfies the requirement of genuine use set out in art. 15(1) CTMR could seriously hinder the access to designations in the entire EU for other entrepreneurs. For example a CTM, which is used in one country only (e.g. in the Netherlands) could not be revoked, but at the same time because of its unitary effect throughout the EU it could e.g. preclude the possibility of obtaining a national registration in a Member State, which is remote from the area, in which genuine use takes place. Another argument invoked by the Benelux Office and raised by the supporters of the view that genuine use must exceed borders of one Member State has been derived from Art. 112(2)(a) CTMR, pursuant to which in case of revocation of a CTM due to non-use a conversion thereof into a national trademark is not possible, unless in a Member State, for which conversion is requested, the CTM has been put to use which would be considered to be genuine use under the laws of that Member State. In the opinion of the Benelux Office this provision would be pointless, if genuine use in one Member State would qualify as genuine use of a CTM, because in this case a revocation would not be possible and consequently no need for a conversion would ever arise. The Regional Appeal Court in the Hague, which was deciding on the appeal from the above decision, stayed the proceedings and referred extensive questions for a preliminary ruling to the CJEU, in which it asked for a guidance on the issue of the territorial scope of genuine use of a CTM in the Community, in particular whether use in a single Member State would be sufficient for establishing genuine use. Interestingly questions no 1-3 were formulated by the Dutch court in a manner, which linked the issue of territorial scope with the criterion of borders between Member States and only in question 4 the court was seeking guidance on whether the and European Trademarks Living Apart Together. Edited on the occasion of the 40 th anniversary of the Benelux Office for Intellectual Property, 2011, p Ch. Gielen, Genuine Use of a Community Trade Mark. Where?, E.I.P.R., 2011, p. 48,

11 assessment of genuine use must be done without reference to the borders between Member States. The opinion of AG Eleanor Sharpston was issued on July 5, 2012 and subsequently the judgment of the CJEU was issued on December 19, The CJEU basically followed the conclusions of the AG s opinion, although the details of the argumentation remained slightly different. To no greater surprise the CJUE declined to attribute relevance to the criterion of borders between Member States when assessing genuine use of a CTM. In its response to the questions of the Dutch court the CJUE ruled that 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 art. 15(1) CTMR. The Court ruled further that a CTM is put to genuine use 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 CJUE declined to establish any de minimis rule in that regard. The response of the CJUE involves many aspect of assessing genuine use of a CTM, and I would therefore like to concentrate on those, which are strictly connected with the interference between the principle of the unitary character and the issue of genuine use. The fact that the Court declined to give relevance to the criterion of borders between Member States proves that it attributed great significance to fundamentals of the CTM system including the principle of the unitary character in the absence of a clear reference in Art. 15(1) CTMR to the borders of Member States 35. This shows that the principle of the unitary character can be referred to in situations, when provisions of the CTMR do not give a clear answer on whether national borders can be taken into consideration when resolving a certain issue, like in art. 15(1) CTMR (or also in the case of Art. 9(1)(c) CTMR with regard to the scope of reputation; one can note that whereas in the PAGO case the Austrian court asked for a guidance only on a border-oriented basis, in Leno Merken case the Dutch court opted, as mentioned above, for an alternative formulation: one based on a criterion of borders and the other disregarding such a criterion). This allows refuting arguments of advocates of any position, which would link the genuine use issue with the criterion of borders, whether it is the position that use in a single Member State is sufficient for establishing genuine use of a CTM, or whether genuine use of a CTM must exceed borders of one Member State. A possibility of a clear reference in the CTMR to the borders of EU Member States with regard to the assessment of genuine use is conceivable. It would, however, first, require a very clear basis, which cannot be found at the moment in Art. 15(1) 34 Case C-149/11 Leno Merken BV v Hagelkruis Beheer BV, judgment and the opinion of Advocate general are available at 35 Case Leno Merken, par ; the CJEU is specifically referring to the principle of unitary character in par

12 CTMR or in any other provision of the CTMR. Second, if such a basis were to be introduced, it would have to be considered as an express exception to the principle of the unitary character and prior to introducing such an exception there should be a wide consensus that it is justified. One has to note that a recent proposal for a reform of the CTMR leaves this issue unchanged. As for certain detailed aspects of the guidance provided by the CJUE in Leno Merken, the situation of CTM owners, who use their marks only in one Member State, deserves a comment. In many instances use of a CTM will indeed be confined to the territory of a single Member State. One can only add that despite the non-binding nature of the Joint Statements and the of OHIM s Guidelines, those documents could have created in the past a certain level of expectations of entrepreneurs that use in a single Member State will suffice for a genuine use of a CTM. Even though such expectations do not necessarily deserve legal protection, they still could have shaped the trademark practice in some countries. For example, it is conceivable that trademarks destined from the outset for a national use only were registered as CTMs, e.g. in order to allow the owner of such a CTM in a country with no special division of IP courts to have access to a specialised CTM court also in cases of infringements of purely national dimension. This allowed avoiding bringing the case to general courts, where the level of experience and competence regarding trademark issues is normally lower than in CTM courts. This shows that in practice assessing a genuine use of a given CTM will often go down to assessing the use, which takes place within the borders of one Member State. On one hand the CJUE agreed that there is admittedly some justification for thinking that a Community trade mark should because it enjoys more extensive territorial protection than a national trade mark be used in a larger area than the territory of a single Member State in order for the use to be regarded as genuine use. Right after this the Court stated however that it cannot be ruled out that, in certain circumstances, the market for the goods or services for which a Community trade mark has been registered is in fact restricted to the territory of a single Member State 36 This means that although national borders must be disregarded when making the assessment of genuine use of a CTM (which means that use in one Member State does not of itself qualify as genuine use), the practical outcome of the assessment could in a given instance be that use in one Member State will indeed qualify as genuine use in the Community. The question arises whether despite the absence of a de minimis rule in the Leno Merken judgment with regard to assessing territorial scale of use as one of the factors relevant for establishing a genuine use of a CTM, some less general guidance in that regard can be found in this judgment. There are in the author s view - at least two statements of the CJUE, which may give certain support for a more precise guidance on the application of the criterion formulated in the judgment. First, both the AG and the CJUE found that in order to establish a genuine use of a CTM in the Community one should not require the use to take place in a substantial part of the EU, as per analogy with the PAGO judgment with regard to the territorial scope of reputation. This criterion was considered as inadequate since provisions on genuine use and provisions on extended protection pursue a different objective 37. It seems that with this statement the CJUE (and earlier 36 Case Leno Merken, par Case Leno Merken, par. 53and the opinion of AG Sharpston, par

13 AG Sharpston) is making the point that requiring the genuine use to take place in a substantial part of the EU would be a criterion putting a too excessive burden on a CTM owner. Such approach should be approved since in the case of extended protection of a CTM conferred by Art. 9(1)(c) CTMR the issue at stake is not the existence of the exclusive right to a CTM, but a certain addition in the form of extended protection, which not every CTM will enjoy, whereas the absence of genuine use affects the very existence of the right to a CTM, since it is a ground for revocation. The consequences of a lack of genuine use are therefore much more serious than the consequences of a lack of reputation. From the practical point of view, however, one needs to note that in the PAGO judgment the substantial part requirement was not set at a particularly high level, given that the CJUE considered the territory of Austria under the circumstances of the case, as constituting a substantial part of the EU. If one could maybe attempt to take this standard as a yardstick (at least with regard to CTMs registered for fast-moving consumer goods, such as fruit beverages in the PAGO case), one could assume that not only should use in the territory of a Member State larger and more populous than Austria suffice as a rule for establishing genuine use, but also, provided that the substantial part requirement is too-excessive for assessing genuine use, use in Member States smaller and less populous than Austria could in many instances amount to genuine use in the EU. This is naturally only a general assumption, and every case must be decided under its individual merits. Second, one clearly needs to distinguish in the light of the judgment in the Leno Merken case genuine use of a CTM (even if in practice confined to the territory of one Member State) from use, which would be sufficient for establishing genuine use of a national trademark in such a Member State under the provisions of national trademark law of that Member State (which implements the Trademark Directive 2008/95). The CJUE stressed that although in assessing genuine use of a CTM it is necessary to refer to the assessment criteria, which the Court had already established in its own case law with regard to genuine use of national trademarks under the Trademark Directive, still account must be taken, when applying those criteria by analogy, to the fact that the territorial extent of the protection of national marks and CTMs is different (more extensive in the case of CTMs) 38. Therefore there may be cases when use of a CTM in one Member State might satisfy the requirements for genuine use of both - a CTM and a national trademark, and in other instances use in one Member State could amount to genuine use of a national mark, but would not qualify as genuine use of a CTM 39. This also explains why (contrary to the aforementioned position of the Benelux Office) there is still room for application of Art. 112(2)(a) CTMR, which enables a conversion of a revoked CTM into a national trademark. 5. Final conclusion The above remarks allow formulating a conclusion that the principle of the unitary character deeply (though not absolutely) permeates the CTM system and it cannot be ignored when deciding on various controversial issues concerning the protection of CTMs. As far the issues examined in this paper are concerned in the light of the case 38 Case Leno Merken, par Case Leno Merken, par

14 law of the CJEU the principle of the unitary character remains a fundamental criterion. It is indeed the unitary character, which makes it, first, necessary to disregard borders between EU Member States when assessing reputation of a CTM (PAGO case) and genuine use of a CTM (Leno Merken case), bearing however in mind that the substantial part of the EU requirement, which is relevant for assessing a reputation of a CTM, is not adequate for assessing genuine use. Furthermore, it seems that the principle of the unitary character would also imply disregarding national boundaries when establishing enhanced distinctiveness of a CTM in the EU for the sake of assessing a likelihood of confusion. A clear guidance on this issue from the CJUE would, however, be valuable. Finally the principle of the unitary character does affect the territorial scope of prohibitory injunctions ordered by CTM courts, because in the light of the fact that a CTM enjoys a unitary protection in the EU, a prohibition of infringement of a CTM should correspond with the territorial scope of this exclusive right. In the light of the DHL judgment this remains a principle, which may, however, be subject to exceptions justified by arguments overcoming the need for providing a uniform protection of a CTM in the entire EU. The paper did not purport to provide an exhaustive review of all potentially controversial issues, for the solution of which the principle of the unitary character could have relevance. The aim was to concentrate on the most controversial issues, which emerged in the case law of the CJUE in recent years. There is probably little doubt that a further development of case law with regard to the existing problems and problems, which we might not yet be aware of, is likely to take place and the question of how unitary the CTM indeed is, might have to be answered again under many different aspects. 14