Trademark Infringement

Court of Justice of The EU Ruled on Trade Marks Used Only to Indicate Quality Standards

Trade marks will not only be associated with the company they origin from, but might also be associated with certain quality or ethical standards. Certain associations are using their trade marks only to license it to producers who fulfill a certain standard. While some jurisdictions recognize such use of a trade mark as sufficient to maintain trademark protection, the European Union Trade Mark Regulation (EUTMR) does only mentioning the term “genuine use” of a trade mark. On 8 June 2017, the Court of Justice of the European Union (CJEU) has decided whether using a trade mark only to indicate certain quality or ethical standards can be seen as “genuine use”.

The Facts

The Verein Bremer Baumwolle (VBB), an association under German law, owns an individual European Union trade mark (EUTM) displaying a cotton flower. The VBB concludes license agreements under this trade mark with associated producers of textiles who oblige themselves to comply with certain quality standards concerning the cotton they use. The defendant, a German manufacturer of textiles, displayed this trade mark on its products without having an appropriate license to do so.

VBB sued the defendant for trade mark infringement. The defendant brought a counterclaim for declaration of invalidity of this trade mark. In first instance the Düsseldorf District Court found infringement , but the Düsseldorf Court of Appeals referred the case to the CJEU with the following questions: Is the use of a trade mark as a label for quality a “genuine use” in regards to an individual trade mark? Must such a trade mark be declared invalid, if the holder of said trade mark does not ensure the quality standard by carrying out periodic quality controls?

First Question

According to the CJEU, the essential function of a trade mark is to guarantee that all goods or services marked by the sign come from the same undertaking or economically linked undertakings. It might be a secondary purpose of a trade mark to ensure a certain quality, but the “genuine use” of a trade mark is only to guarantee that the goods origin from the same or an economically linked entity. Therefore, the proprietor is not using the trade mark in terms of the EUTMR, if it is only licensing the trade mark to ensure a certain quality. This is particularly relevant, because, if there is no “genuine use” of a trade mark for five years, the trade mark proprietor might face an application for revocation of its trade mark.

Second Question

In relation to the second question, the CJEU stated that an individual trade mark is not to be declared invalid, if the proprietor does not conduct quality controls on a regular basis. While this is a reason for invalidation of collective trade marks, it cannot be applied to individual trade marks because these trade marks are not designed to guarantee a certain quality standard. Individual trademarks might be declared invalid, however, if the public is made to believe that there will be quality controls while the trade mark proprietor never intended to conduct them.

Background

The judgment is apparently guided by the fact that the EUTMR provides two specific instruments to mark products that come from certain undertakings. There is the possibility to file a collective trade mark to display that the user of the trade mark is a member of a certain association that follows certain standards. Further, as of 1 October 2017, a certification trade mark could be used to show that certain standards are met. The CJEU apparently tries to ensure that individual trade marks cannot be used to circumvent the requirements for collective and certification trade marks.

On 24 April 2017, the Beijing Intellectual Property Court (“ the Court”) published 18 classic cases concerning trademarks filed in bad faith. One of these cases dealt with a invalidation action filed by Tiffany and company (“Tiffany”), the luxury jeweler.

Tiffany prevailed in the invalidation action brought in 2013 against Chinese trademark registration no. 8009772 for “蒂 凡尼” (pronounced as “Di Fan Ni” in Mandarin) on wallpaper, carpets etc. in Class 27 in the name of Shanghai Zhendi Decoration Materials Co., Ltd. (“Shanghai Zhendi”). After the Trademark Review and Adjudication Board (“TRAB”) rejected the registration, Shanghai Zhendi appealed to the Beijing IP Court.

The Beijing IP Court held that Tiffany’s “TIFFANY” mark registered in respect of jewellery and precious stones had become well-known prior to the application date of the subject “蒂凡尼” mark. Not only is the “蒂凡尼” mark phonetically similar to “TIFFANY”, there is also only one Chinese character difference between Tiffany’s mark and the corresponding Chinese mark “蒂凡尼”. The  contested mark therefore constituted an imitation of Tiffany’s marks.

Tiffany Case Takeaway

This is a classic case about deterring bad faith registrations under Chinese Trademark Law. In deciding whether the mark concerned would mislead the public and cause detriment to the rights of the well-known trademark owner, the Court  considered all factors, such as the extent of the reputation of the well-known mark, the similarity between the marks, how related the designated goods are, the intention of the owner of the mark concerned, etc.

In the case at hand, Tiffany’s extensive and substantial use of the mark “TIFFANY” and of its Chinese mark “蒂凡尼” had resulted in a strong reputation in the market and an immediate correlation of any similar or identical mark to goods associated with the company, namely jewellery. Apart from registering the mark “蒂凡尼”, Shanghai Zhendi had also registered the English mark “DIFFANY” and the combination mark “蒂凡尼壁纸 DIFFANY” (essentially “Di Fan Ni Wallpaper DIFFANY”) and used the mark “蒂凡尼” together with “DIFFANY”. Shanghai Zhendi’s intention to ride on the reputation of Tiffany’s well-known mark could therefore not have been more obvious. The Court considered that the relevant public would likely associate the two marks, so that the source of the goods would be mistakenly be attributed to Tiffany and Tiffany’s rights would consequently be damaged.

Good News to Brand Owners

The outlined case demonstrates the Chinese Court’s determination to reject or invalidate trademarks which amount to acts of copying another’s well-known mark in bad faith. Yet this cannot be achieved without the vigilance of the legitimate trademark owners who need to be proactive, and take action as soon as such registrations are detected.

Athlete showing medalsThe Olympic Games 2016 which take place in Rio de Janeiro, Brazil, from 5 to 21 August are supported by a huge volume of marketing and advertising campaigns. As many countries have done before, Brazil enacted special legislation to protect the Olympic symbols and expressions specific to the games hosted in Rio. The protection offered in these Olympic-special legislations often can go beyond what would normally be available under trademark or copyright protection laws. For example, the London Olympic Games and Paralympic Games Act 2006 created a sui generis right of association to prevent the use of any representation that is likely to suggest an association between the London Olympics and goods or services.

Germany, as another example, also put some special legislation into place. However, a company that had offered “Olympic discounts” in its advertisements during the 2008 games was found not to infringe the German Olympic Protection Act. The German Federal Supreme Court ruled that, unlike trademark protection, the Olympic Protection Act did not grant legal protection to the advertising function of the Olympic symbols. Therefore, a mere time-related reference like “Olympic discounts” did not lead to infringement.

The Brazilian Olympic Act

Under the Brazilian Olympic Act (Federal Law No 12,035/2009), as amended by the Brazilian Federal Law No 13,284/2016, the Olympic symbols are granted special temporary protection. These include emblems, flags, anthems, mottos, mascots and torches used by the International Olympic Committee, the International Paralympics Committee and the Association Rio 2016, charged with the organization of the Games. The protected symbols also include various expressions such as Olympic Games, Paralympic Games and Rio 2016 – in any language. However, unlike the London Olympic Act, for example, the Olympic symbols are all subject to protection under trademark law. The protection period shall begin with registration of the symbols with the Brazilian National Institute of Industrial Property (INPI) and extend until 31 December 2016.

The use of such symbols is prohibited, even for non-commercial purposes, except if authorized by the International Olympic Committee or the Association Rio 2016. Furthermore, the act prohibits the use of terms and expressions that, albeit outside the list of protected symbols, are sufficiently similar to them to the extent that they are able to invoke an undue association of any products and services whatsoever, or even any event or company, with the Rio 2016 Games or the Olympic Movement.

During the time of protection, requests for registration of trademarks that constitute a reproduction or an imitation of the official symbols or are likely to cause any confusion or association with the organizing entities or the official symbols, shall be rejected. In addition, the INPI shall inform the responsible entity for the registration of domain names in Brazil, NIC.br, of all registered trademarks, so that any requests for registration of domain names containing terms or expressions identical or similar to the trademarks be refused ex officio.

Enjoy the Games!

Even though the legislation may have arrived a bit late (Federal Law No 13,284/2016 was published on 10 May 2016), the Olympic Act provides a solid framework for the protection and enforcement of intellectual property rights related to the Olympic games. So, all that is left for corporate sponsors or fans of the Olympics is to enjoy the Games!

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

iStock_81284397_XXLARGEOn 29 September 2007, a PRC entity, Xintong Tiandi Technology (Beijing) Company Limited (“Xintong”), filed a trademark application for the word “IPHONE” in class 18 (“Opposed Mark”) with the PRC Trade Marks Office (“TMO”). The goods covered by the application are a range of leather goods, wallets and cases under sub-classes 1801 and 1802. On 26 April 2010, Apple Inc. (“Apple”) filed an opposition against the Opposed Mark. It should be noted, however, that Apple does not have any China trademark applications or registrations for the word “IPHONE” in class 18 that pre-date the filing date of the Opposed Mark.

Both the TMO and, subsequently, the PRC Trademark Review and Adjudication Board rejected Apple’s opposition claim and allowed the application for the Opposed Mark to proceed to registration. Apple then filed an appeal to the Beijing No. 1 Intermediate People’s Court but had to suffer another legal defeat. The Intermediate People’s Court’s decision was, inter alia, based on the fact that most of the evidence of use of the word “IPHONE” submitted by Apple was taken after the date of filing of the Opposed Mark; and that the evidence presented was insufficient to show that the word “IPHONE” had attained well-known status before the application date of the Opposed Mark.

Appeal to the Beijing Higher People’s Court

In 2016, Apple filed a further appeal to the Beijing Higher People’s Court and argued, inter alia, that the word “IPHONE” had attained an extremely high level of fame and distinctiveness in respect of goods in class 9, such as mobile phones, and should therefore be recognized as a well-known trademark. Apple further alleged that the Opposed Mark was a blatant copy or imitation of Apple’s well-known trademark. The Higher People’s Court, however, found that Apple had failed to establish that its “IPHONE” mark had achieved well-known status at the relevant time, which is the date of filing of the Opposed Mark. At the time of the filing date, Apple’s iPhone products had only been launched in China for three months.

Whilst the Higher People’s Court decision is final, Apple may request for a re-trial with the Beijing Supreme People’s Court. Apple has already indicated its intend to do so.

Conclusion

This case emphasizes the need for international brands to thoroughly review and formulate their trade mark portfolio and filing strategy prior to launching relevant product or services in a particular market. It is vital to not only consider the core classes that are directly related, but also other classes that cover potential areas of future expansion or related products and services.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

big stadiumOn 16 June 2016, the General Court of the European Union rejected an opposition by Fútbol Club Barcelona to the wordmark “KULE” (T‑614/14). The opposition was based on an alleged infringement of the club’s Spanish wordmark “CULE,” the term culé being a Spanish variation of the Catalan word cul and used as a nickname for supporters of the club. Apparently, this is not the only negative experience Fútbol Club Barcelona has had with the General Court in recent years. In 2015, the General Court dismissed an action brought by the club seeking registration of the outline of its crest as a Community trademark (T-615/14).

Facts of the Case

On 22 April 2011, US-based fashion company Kule filed an application for registration of the EU wordmark “KULE” with the European Union Intellectual Property Office (EUIPO). The goods for which registration was sought are in class 14 (jewellery and precious stones), class 18 (wallets, purses and trunks) and class 25 (clothing, footwear and headgear). On 2 November 2011, Fútbol Club Barcelona filed a notice of opposition to registration of the wordmark in respect of all goods concerned. The opposition was based on an alleged infringement of the Spanish wordmark “CULE,” which the club applied for in 1982 and which was also registered to cover goods in classes 14, 18 and 25.

On 1 October 2013, the Opposition Division rejected the opposition. An appeal against the Opposition Division’s decision was dismissed by the EUIPO Board of Appeal on 18 June 2014. The Board of Appeal found that the documents presented by the Fútbol Club did not demonstrate genuine use of the earlier trademark in relation to the goods concerned. This decision was now confirmed by the General Court. Pursuant to Article 42(2) and (3) of Regulation No. 207/2009/EC, a trademark opposition shall be rejected if, at the applicant’s request, the opposer is unable to prove genuine use of the earlier mark during the five years preceding publication of the new mark.

Key Considerations of the General Court

The General Court followed previous Court of Justice of the European Union (CJEU) decisions that genuine use of a trademark could be found where the mark is used in accordance with its essential function, which is to guarantee the identity of the origin of the goods or services for which it is registered. Regarding the extent of the use made of the earlier trademark, the General Court stated that account must be taken to both the commercial volume of the overall use of the mark and the length of the period during which that mark was used, including the frequency of that use.

In the present case, the General Court found that Fútbol Club Barcelona had not adduced evidence “to show the place, time, extent or nature of use of the earlier trade marks in relation to the goods covered.” While the General Court acknowledged that the Spanish term culé was indeed used as a nickname for the supporters and players of the club, the use of that term had not been proven in relation to the goods covered by the ”CULE” wordmark.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

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The EU Trademark Regulation (2015/2424/EU) (the “new Regulation”) amending the Community Trademark Regulation (the “old Regulation”) entered into force on 23 March 2016. Among other things, it brought about new rules concerning the transit of counterfeit trademark goods through the EU.

The Old Rules

The transit of goods was not specifically dealt with under the old Regulation. The latter contained only general provisions about the rights conferred by a Community Trademark, and what should be considered an infringement of a trademark. Section 9 para. 2 of the old Regulation listed infringement actions that could be prohibited by the trademark owner, including, for instance, affixing the sign to goods or to the packaging thereof, offering the goods, putting them on the market or stocking them for these purposes under that sign, among others. The transit of goods from countries outside the EU through the EU territory was not included in the list of infringement actions.

Based on Section 9 of the old Regulation, the Court of Justice of the European Union issued a few decisions according to which:

  • the mere transit of products containing the trademark or a similar sign did not per se constitute a trademark infringement. An infringement would only exist if the party having requested the transit (“the shipper”) took concrete actions to put the trademarked goods on the market, for instance, by selling or offering to sell the goods within the EU during transit (C-405/03, Class Unilever case);
  • in the absence of a trademark infringement, the customs authorities would not be entitled to take action pursuant to the Regulation (EC) No. 1383/03 (now Regulation (EU) No. 608/2013) on the customs enforcement of IP rights (C-446/09 and C-495/09, Philips/Nokia cases),
  • however, trademark owners were entitled to prevent the release for free circulation of trademarked goods into the EU without their authorization, even if the goods were not yet released for consumption, but instead were detained in a tax warehouse until the import duties were paid (C-379/14, Bacardi case).

The trademark owner was the one bearing the burden of proving the trademark infringement.

The New Regulation

Under the new Regulation, trademark owners are now expressly allowed to oppose the transit of goods bearing without authorization the EU trademark or a sign essentially similar, even if the goods are not released for free circulation or intended to be put on the European market. This new rule is codified in Section 9 para. 4 and also specifically addressed in Recital No. 16 of the new Regulation. Trademark owners may further contest other customs situations such as transhipment, warehousing, free zones, temporary storage, inward processing or temporary admission. Customs authorities are entitled to take the actions laid down in the Regulation (EC) No. 608/2013 on the customs enforcement of IP rights, such as detaining shipments suspected to infringe a EU trademark.

However, Section 9 para. 4 also establishes that such a right of the EU trademark owner shall cease to exist if, during the proceedings to determine whether the trademark has been infringed according to the Regulation No. 608/2013,  the shipper provides evidence that the trademark is not protected in the country of final destination. According to Recital No. 17 of the new Regulation, this rule is intended to strike a balance between fighting counterfeiting and the need to protect the free trade of legitimate goods.

New Challenges for Trademark Owners?

At first glance, the new rules seem to strengthen the rights of trademark owners. However, the changes might also create difficulties, especially in cases in which the final destination of the goods is not declared in the customs declaration. In this case, in practice, the trademark owner will not know whether or not it is entitled to have the customs authority detain the shipment. If it decides to have the shipment seized and start infringement proceedings, it will run the risk that the shipper declares a country of destination in which the trademark is not protected. This might expose the trademark owner to the risk of liability towards the shipper.

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In a recent decision, the Supreme People’s Court of China ruled that the use of a trademarked sign on goods manufactured in China solely for export purposes does not constitute “use” of a trademark. Consequently, such use could not be considered an infringement of a trademark registered in China.

The decision was given in a case involving a trademark which was used on goods that were produced for export to Mexico. The Supreme People’s Court ruled that the first and second instance courts erred in their finding of trademark infringement, because both courts had based their assessment of infringement on the sole fact that a sign identical or similar to a trademark, and in relation to identical goods, was used without authorization. However, in the eyes of the Supreme Court, the first and second instance courts had ignored an essential prerequisite – namely, that the alleged infringing act must constitute “trademark use in the sense of the trademark law.

The Supreme People’s Court determined that the use of a China registered trademark on goods that were manufactured in China solely for export purposes does not amount to trademark “use”. Consequently, there could be no finding of trademark infringement. The key element to note in this case was that the trade marked goods were not intended to enter the Chinese market. For this reason, the Chinese public could not have possibly been confused into thinking that the trademarked goods come from the same source or, at least, think that permission has been given to use the mark.

Takeaway Points

The decision resolves years of uncertainty about the position of Chinese courts, government and customs authorities on the so-called “OEM” (Original Equipment Manufacturing) principle. Although court decisions in China are non-binding authorities on future cases, judgments from the Supreme People’s Court are strongly indicative of possible future trends. Still, whether or not OEM constitutes trademark infringement remains a somewhat complicated issue that has to be resolved on a case-by-case basis.

In view of this Supreme People’s Court decision, foreign brand owners that have their marks registered in China will need to consider a potential defense of non-infringement available to local OEM manufacturers that deal with counterfeit trademark goods. Thorough and well-supported investigation can help ascertain whether the allegedly infringing goods were produced solely for export sales and whether the OEM manufacturers had knowledge (or should have had knowledge) of the foreign brand involved.

Roma, Italy - March 14, 2011: Sign of an opening soon Moncler shop in Via dei Condotti, center of fashion shopping in Rome. A poster of a model covers the shop window. On the left, another old palace of the street shows the name of Dior on its windowsIn 2013, Moncler S.P.A. (“Moncler”) became aware of the manufacture and sale of down jackets by Beijing Nuoyakate Garment Co., Ltd. (“Nuoyakate”). Nuoyakate used marks and logos confusingly similar to Moncler’s marks on its products and also applied for the registration of several trademarks and domain names confusingly similar to Moncler’s marks in China and other Continue Reading Moncler Awarded Highest Amount of Damages Ever for China Trade Mark Infringement

iStock_000074680895_LargeOn 21 October 2015, the German Federal Court of Justice ruled that a bank cannot refuse to disclose personal data of a client if that client’s bank account was used to receive payments ‎for the sale of counterfeit trademark goods. In this case, the fundamental right of the trademark holder to protect its intellectual property prevailed over the banks’s right to secrecy.

Plaintiff is Coty Germany GmbH, a licensee for the production and sale of “Davidoff” perfumes. Defendant is the German bank Stadtsparkasse Magdeburg. A seller offered on eBay a knock-off of the “Davidoff Hot Water” perfume while using the wordmark “Davidoff” to advertise its sale‎. Plaintiff made a trap purchase and wired the money to the bank account that the seller had indicated on eBay. However, because the seller used a pseudonym, its identity remained unkown to Plaintiff. Plaintiff thus asked the bank to disclose the name and address of the bank account holder, pursuant to Section 19(2) No. 3 of the German Trade Mark Act (MarkenG) (right to information). The bank refused this request, arguing that because it was obliged to keep this information confidential, it was allowed to refuse disclosure, pursuant to Section 383(1) Nr. 6 of the German Code of Civil Procedure (ZPO) and to Section 19(2) of the German Trade Mark Act (right to refuse disclosure of information)‎.

The Directive 2004/48/EC on the enforcement of intellectual property rights (“the Directive”) contains a provision concerning the right to information (Sections 8(1)(c)). Nevertheless, according to Section 8(3)(e) of the Directive, the right to information is without ‎prejudice of statutory norms for the protection of confidentiality of information or personal data. The Federal Court of Justice sought guidance from the Court of Justice of the European Union (“CJEU”) on how to interpret these provisions (C-580/13). The latter decided that a statutory provision allowing banks to generally and unconditionally refuse requests for disclosure of information would go beyond the content of what is necessary to achieve the purpose underlying Section 8(3)(e) of the Directive. Such a statutory provision would  contradict other basic principles and rights, as it would not leave any room for the analysis of whether in a particular case there was an intentional misuse of a third party’s right. Whether the provisions of national law contain such a right to unconditionally refuse disclosure is to be decided by the national courts on a case-by-case basis.

On this basis, the Federal Court of Justice decided that in the case at hand, given that the bank account had been used specifically for the IP-infringing activity, the bank is not entitled to evoke its confidentiality obligation in order to refuse disclosing the information requested. The right of the bank account holder of having its personal data protected must recede behind the right of the IP right holder of protecting its intellectual property.

Analysis

The provisions of the Directive and of ‎German law establish a priority of confidentiality of information and protection of personal data as opposed to an IP right holder’s right to information. In the case at hand, interestingly, the decision of the Federal Court of Justice went the opposite way and granted priority to the right to information. The rationale behind the decision is that in this particular case, the person whose personal data would have been protected by confidentiality had infringed a third party’s IP right. The infringer’s right to protection of its personal data was thus no longer on an equal footing with the IP right holder’s right to information. In these conditions, the generic legal rang between right to confidentiality and right to information could not be followed by the Federal Court of Justice.

The colors of the letters, written with chalk on blackboard

On 5 March 2015, the German Federal Court of Justice (I ZR 161/13) issued a ruling that two wordmarks that consist of the same three letters, albeit in a different order (here: IPS and ISP), might lead to confusion as to the origin of goods and services sold under these marks. In particular, the Court noted that the pronunciation of the individual letters in their given order had the same sequence of vowels (here: i-e-e, German pronunciation). Thus, the Court found there to be a likelihood of confusion between the two wordmarks that were both used for IT services.

Pursuant to section 14 para. 2 No. 2 of the German Trademarks Act (MarkenG), “a third party shall be prohibited, without the consent of the proprietor of the trademark in the course of trade, from using a sign if the likelihood of confusion exists for the public because of the identity or similarity of the sign to the trademark and the identity or similarity of the goods or services covered by the trademark and the sign, including the likelihood of association with the trademark”. The question whether a likelihood of confusion exists between two marks must be assessed globally, taking into account all factors relevant to the circumstances of the case. According to the German Federal Court of Justice, the Hamm Court of Appeal was right, therefore, to consider that the two marks share a first identical vowel, “i”, that both are formed according to the pattern “vowel-consonant-consonant”, that they have the same number of syllables and have a similar sequence of vowel sounds in German (“i-e-e”).

The relevant factors to be considered in the assessment of similarity between two marks are phonetic similarity, graphic similarity and similarity in meaning. Under established case law, it is, in principle, sufficient to show similarity between two marks in one of these areas. Thus, in the present case, the fact that the sequence of vowels is identical led the Court to conclude that the (German) pronunciation of the two marks may lead the public to believe that the IT services at issue derive, at the very least, from economically linked undertakings. In the Court’s opinion, a likelihood of confusion in the perception of the targeted public could therefore not be ruled out, despite differences in the consonant pattern.