Sweet scent of success for Unilever as ECJ interprets Article 4(3) of Directive 2008/95

(This article was written for the World Trademark Review. The original article was published on September 11, 2015 and can be viewed here.)

unilever, trade mark dispute, frkelly, sumi nadarajah

In Iron & Smith v Unilever (Case C-125/14, September 3 2015), the Court of Justice of the European Union (ECJ) has ruled that Community trademark (CTM) owners can successfully oppose trademark applications in member states where their products are not sold if they can establish that their mark possesses a reputation within a substantial part of the European Union.
In 2012 Unilever NV, proprietor of the Community word mark IMPULSE (for deodorants), opposed a Hungarian trademark application for BE IMPULSIVE (figurative mark) by Hungarian company Iron & Smith. The Hungarian IP Office (HIPO), when presented with evidence that Unilever had advertised and sold large quantities of the Impulse product in the United Kingdom and Italy, upheld the opposition despite Unilever not being able to show any sales of the brand in Hungary. HIPO found that the reputation of the CTM had been proved in a substantial part of the European Union and refused the application.

Iron & Smith appealed against the decision to the Fővárosi Törvényszék (Municipal Court of Budapest), primarily objecting to HIPO choosing to rely on the fact that Unilever’s products represented 5% of the market in the United Kingdom and a 0.2% market share in Italy when establishing the reputation of the CTM. This court turned to the ECJ to determine the following questions:

  • Is it sufficient, for the purposes of proving that a CTM has a reputation within the meaning of Article 4 (3) of the Trademarks Directive (2008/95/EC), for that CTM to have a reputation in one member state, even if said member states is different to where the opposition was lodged?
  • Are the principles relating to genuine use of a CTM applicable in the context of the territorial scope?
  • If the proprietor of an earlier CTM has proved that that mark has a reputation in countries other than the member state in which the national trademark application has been lodged, must it also, notwithstanding that fact, adduce conclusive proof in relation to that member state?
  • If the mark has been extensively used in a substantial part of the European Union but is relatively unknown to the relevant national consumer in the territory where the application is sought, what facts must the earlier CTM proprietor prove to show that use of the later mark is taking unfair advantage of, or causing detriment to, the reputation or distinctive character of the earlier mark?

In March 2015 Advocate General Wahl provided the following opinion in response to the questions raised:

  • For the purposes of Article 4(3)… it could be sufficient that a CTM enjoys a reputation in one member state, which does not need to be the state in which that provision is relied upon. In that regard, for the purposes of determining whether a reputation exists within the meaning of Article 4(3), the principles laid down in case law in respect of the requirement to show genuine use of a trademark are not relevant.
  • Where the earlier CTM does not enjoy a reputation in the member state in which Article 4(3) is relied upon, in order to prove that, without due cause, unfair advantage is taken of, or detriment is caused to, the distinctive character or repute of the CTM for the purposes of that provision, it is necessary to show that a commercially pertinent proportion of the relevant public in that member state will make a link with the earlier trademark. In that regard, the strength of the earlier mark constitutes an important factor for the purposes of proving such association.

Advocate General Wahl, when considering the issue of reputation, turned to the principles established in General Motors (C-375/97) and Pago International (C-301/07) – ie, for a reputation to be established in a substantial part of the European Union, the mark must be known by a significant part of the relevant public in a substantial part of that territory. Consequently, the reputation in one member state, may, provided that a significant part of the public concerned by the goods/services claimed in the later right coincides with the relevant public in that same member state, be sufficient to establish a reputation in the European Union. The advocate general’s rationale was based on the principle of uniformity. He opined that reputation was dependent upon the relevant market for the goods/services under consideration. It is for the national court to establish whether the earlier CTM enjoyed a reputation in a substantial part of the European Union, taking into consideration:

  • the market share held by the mark;
  • the intensity and geographical extent of the use;
  • the duration of use; and
  • the advertising expenditure on promoting the mark.

In addition, even if a reputation is established for the CTM, the referring national court will need to determine whether the later mark takes, or will take, an unfair advantage of, or will be detrimental to, the distinctive character of the earlier mark. To determine this, it must be established that a commercially pertinent proportion of the relevant public in the member state in question (in this case, Hungary) create a link with the earlier mark.

The advocate general’s view has now largely been accepted and adopted by the ECJ, which ruled as follows:

“(1) Article 4(3) of [Directive 2008/95] must be interpreted as meaning that, if the reputation of an earlier [CTM] is established in a substantial part of the territory of the European Union, which may, in some circumstances, coincide with the territory of a single member state, which does not have to be the state in which the application for the later national mark was filed, it must be held that that mark has a reputation in the European Union. The criteria laid down by the case law concerning the genuine use of the CTM are not relevant, as such, in order to establish the existence of a ‘reputation’ within the meaning of Article 4(3) thereof.
(2) If the earlier [CTM] has already acquired a reputation in a substantial part of the territory of the European Union, but not with the relevant public in the member state in which registration of the later national mark concerned by the opposition has been applied for, the proprietor of the [CTM] may benefit from the protection introduced by Article 4(3)… where it is shown that a commercially significant part of that public is familiar with that mark, makes a connection between it and the later national mark, and that there is, taking account of all the relevant factors in the case, either actual and present injury to its mark, for the purposes of that provision or, failing that, a serious risk that such injury may occur in the future.”

Whilst generally endorsing the advocate general’s ruling, the ECJ has gone further by stipulating the need for actual or highly likely damage to be suffered by the CTM owner. Interestingly, this decision (particularly in light of the advocate general’s reasoning) is highly indicative of the importance placed by the courts on the principle of uniformity within the context of the European Union.

If you would like to learn more about this issue, please contact Sumi Nadarajah, European Trade Mark Attorney