ECTA 35th Annual Conference, Dubrovnik 24 June Mr Justice Richard Arnold

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1 Infringement under Article 10(2)(a) Trade Marks Directive (Recast)/ Article 9(2)(a) European Union Trade Mark Regulation and effect on the functions of the trade mark ECTA 35th Annual Conference, Dubrovnik 24 June 2016 Mr Justice Richard Arnold

2 The legislation TRIPS Article 16(1): The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered which such use would result in a likelihood of confusion. In the case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed.

3 Trade Marks Directive (Recast) recital (16)/European Union Trade Mark Regulation recital (8): The protection afforded by [the registered/a EU] trade mark, the function of which is in particular to guarantee the trade mark as an indication of origin, should be absolute in the event of there being identity between the mark and the corresponding sign and the goods or services. Trade Marks Directive (Recast) Article 10(2)(a)/European Union Trade Mark Regulation Article 9(2)(a): Without prejudice to the rights of proprietors acquired before the filing date or the priority date of the [registered/eu] trade mark, the proprietor of that [registered/eu] trade mark shall be entitled to prevent all third parties not having his consent from using in the course of trade, in relation to goods and services, any sign where: (a) the sign is identical with the [EU] trade mark and is used in relation to goods or services which are identical with those for which the [EU] trade mark is registered;

4 Infringement under Article 10(2)(a)/Article 9(2)(a): the six conditions 1. There must be use of a sign by a third party within the relevant territory. 2. The use must be in the course of trade. 3. The use must be without the consent of the proprietor of the trade mark. 4. The use must be of a sign which is identical to the trade mark. 5. The use must be (a) in relation to goods or services (b) which are identical to those for which the trade mark is registered. 6. The use must affect, or be liable to affect, one of the functions of the trade mark.

5 Problems with condition 6 1. It is not clear what condition 6 adds to condition 5(a). 2. It is not clear what the functions of a trade mark are for this purpose, and in what circumstances they are liable to be affected. 3. It is not clear what the relationship is between Article 10(2)(a)/Article 9(2)(a) and Article 10(2)(c)/Article 9(2)(c) in double identity cases. 4. The CJEU s jurisprudence concerning condition 6 is difficult to reconcile with its jurisprudence concerning the exhaustion of trade mark rights. 5. The CJEU s jurisprudence concerning condition 6 in the context of keyword advertising appears to have blurred the distinction between Article 10(2)(a)/Article 9(2)(a) and Article 10(2)(b)/Article 9(2)(b). 6. It is not clear who bears the burden of proof: must the trade mark proprietor prove the likelihood of an effect on one of the functions, or must the defendant prove that there is no likelihood of an effect on any function?

6 Condition 5(a) Use of a sign in relation to goods or services means use for the purpose of distinguishing the goods or services in question, that is to say, as a trade mark as such: Case C-63/97 Bayerische Motorenwerke AG v Deenik [1999] ECR I-905 at [38], Case C- 245/02 Anheuser-Busch Inc v Budejovicky Budvar np [2004] ECR I at [64], and Case C-17/06 Céline SARL v Céline SA [2007] ECR I-7041 at [20]; and cf. Article 10(6) and Case C-23/01 Robelco NV v Robeco Groep NV [2002] ECR I at [28]-[34].

7 Condition 6: CJEU case law from Hölterhoff to Bellure Case C-2/00 Hölterhoff v Freiesleben [2002] ECR I-4187 at [17]: The proprietor cannot rely upon his exclusive right where the defendant uses the sign in question solely to denote the characteristics of the goods he is offering for sale so that there can be no question of the trade mark used being perceived as a sign indicative of the undertaking of origin. It is unclear whether the decision was based on condition 5(a) or 6, but it appears that it was 5(a) i.e. purely descriptive use of a sign is not use in relation to goods or services because it is not for the purpose of distinguishing them. To the extent that the decision was based on condition 6, it suggests that the burden of proof lies on the defendant to prove no likelihood of confusion.

8 Arsenal Football plc v Reed [2002] ECR I at [55]-[60]: Condition 6 is satisfied where the use of that sign is such as to create the impression that there is a material link in the course of trade between the goods concerned and the trade mark proprietor and is therefore liable to jeopardise the guarantee of origin of the mark. This apparently means that condition 6 is satisfied by a likelihood of confusion as to origin, but it is unclear whether a likelihood of confusion must be demonstrated or may be presumed unless rebutted. It is unclear what, if anything, condition 6 adds to condition 5(a). It is unclear who bears the burden of proof with regard to condition 6.

9 Anheuser-Busch v Budejovicky Budvar at [59]-[64]: Condition 6 is satisfied where the use of that sign made by the third party is such as to create the impression that there is a material link in trade between the third party s goods and the undertaking from which those goods originate i.e. the consumers targeted are likely to interpret the sign as designating or tending to designate the undertaking from which the third party s goods originate. This suggests that condition 6 adds nothing to condition 5(a). It also tends to suggest that the burden of proof with regard to condition 6 is on the proprietor. But the CJEU also held that the relevant provisions of national law must be interpreted as far as possible in accordance with TRIPS ([57]) and that interpretation in accordance with Community law was not prejudiced by this ([70]).

10 Case C-48/05 Adam Opel AG v Autec AG [2007] ECR I-1017 at [21]-[25]: Use cannot be prevented under Article 10(2)(a) unless condition 6 is satisfied, and condition 6 is not satisfied where 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 and where Adam Opel does not claim that the use affects functions of the trade mark other than the essential one of indicating origin. It is unclear what, if anything, condition 6 adds to condition 5(a). Nevertheless this tends to suggests that the burden of proof with regard to condition 6 is on the proprietor.

11 Céline at [26]-[27]: Use cannot be prevented under Article 10(2)(a) unless condition 6 is satisfied, but condition 6 is satisfied where the sign is used by the third party in such a way that consumers are liable to interpret it as distinguishing the origin of the goods or services in question. This suggests that condition 6 adds nothing to condition 5(a). It is unclear who bears the burden of proof with regard to condition 6.

12 Case C-62/08 UDV North America Inc v Brandtraders NV [2009] ECR I-1279 at [47]- [51]: Condition 6 is satisfied where the use of that sign by the third party is likely to be interpreted by the public targeted as designating or tending to designate the third party as the undertaking from which the goods originate and is therefore such as to create the impression that there is a material link in trade between those goods and the undertaking from which they originate by such use, the third party assumes de facto the essential prerogative that is granted to the proprietor of the mark, namely the exclusive power to use the sign at issue so as to distinguish goods. This suggests that condition 6 adds nothing to condition 5(a). It is unclear who bears the burden of proof with regard to condition 6.

13 Case C-487/07 L Oréal SA v Bellure NV [2009] ECR I-5185 at [58]-[63]: Condition 6 is satisfied where there is an effect on any of the functions of the trade mark, and not just where there is an effect on its essential function of guaranteeing origin. It is unclear who bears the burden of proof with regard to condition 6.

14 Condition 6: CJEU case law on use of a sign identical to the trade mark in relation to the trade mark proprietor s own goods Use of the sign in relation to goods put on the market outside the EEA by or with the consent of the trade mark proprietor, but which have not been put on the market inside the EEA by or with the consent of the proprietor is an infringement under Article 10(2)(a): Case C-355/06 Silhouette International Schmiedt GmbH & Co KG v Hartlauer Handelgesellschaft mbh [1998] ECR I-4799 and many subsequent cases. Use of the sign in relation to goods put on the market within the EEA by or with the consent of the proprietor, but which the proprietor has legitimate reasons for opposing the further commercialisation of (e.g. where the goods have been repackaged in a manner which does not comply with one or more of the conditions laid down by the CJEU) is an infringement under Article 10(2)(a): Joined Cases C- 427/93, C-429/93 and C-436/93 Bristol-Myers Squibb v Paranova A/S [1996] ECR I-3457 and many subsequent cases.

15 It necessarily follows that all six conditions are satisfied in these cases, but on what basis is condition 6 satisfied? The case law implies that an effect on the functions of the trade mark is irrebuttably presumed in the first type of case and rebuttably presumed in the second type of case: see Case C-348/04 Boehringer Ingelheim KG v Swingward Ltd ( Boehringer II ) [2007] ECR I-3391.

16 Condition (6): CJEU case law on honest concurrent use Article 5(1)(a) must be interpreted as meaning that the proprietor of an earlier trade mark cannot obtain the cancellation of an identical later trade mark designating identical goods where there has been a long period of honest concurrent use of those two trade marks where that use neither has, nor is liable to have, an adverse effect on the essential function of the trade mark which is to guarantee to consumers the origin of the goods or services: Case C-482/09 Budejovicky Budvar NP v Anheuser-Busch Inc [2011] ECR I It appears that it is for the defendant to the claim for a declaration of invalidity to prove that the respective trade marks have coexisted on the market for a long period without there being confusion, and hence that the use of the defendant s trade mark has not had, nor is liable to have, an adverse effect on the origin function of the claimant s trade mark.

17 This suggests that a likelihood of confusion is rebuttably presumed in a double identity case, and to that extent the burden of proof with regard to condition 6 lies on the defendant. It is unclear what the position is with regard to adverse effect on the other functions of the trade mark.

18 Condition (6): CJEU case law with regard to the territorial scope of injunctions If an EU trade mark court finds that the acts of infringement or threatened infringement of an EU trade mark are limited to a single Member State or to part of the territory of the EU, either because the trade mark proprietor has restricted the territorial scope of its action or because 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, that court must limit the territorial scope of the injunction which it issues: Case C-235/09 DHL Express France SAS v Chronopost SA [2011] ECR I It is clear that, in this context, the burden of proof with regard to condition 6 lies on the defendant.

19 Condition 6: CJEU case law with regard to keyword advertising Joined Cases C-236/08 to C-238/08 Google France SARL v Louis Vuitton Malletier SA [2010] ECR I-0000 at [82]-[90], Case C-91/09 Eis.de GmbH v BBY Vertreibsgesellschaft mbh [2010] ECR I-0000 at [24]-[27], Case C-278/08 Die BergSpechte Outdoor Reisen under Alpinschule Edi Koblmüller GmbH v Guni [2010] ECR I-0000 at [35]-[41], Case C-558/08 Portakabin Ltd v Primakabin BV [2010] ECR I at [34]-[35], [52]-[54], L Oréal v ebay at [94]-[96], Interflora v Marks & Spencer at [44]-[53]: The origin function is affected, and thus condition 6 is satisfied, if the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.

20 The CJEU says that precisely the same test should be applied to determine whether there is a likelihood of confusion under Article 10(2)(b) as whether the origin function of the trade mark is liable to be affected under Article 10(2)(a). But the CJEU nevertheless says that the protection under Article 10(2)(a) is more extensive than that provided under Article 10(2)(b), the application of which requires that there by a likelihood of confusion. The English Court of Appeal has interpreted this case law as showing that the burden of proof with regard to condition 6 in keyword advertising cases lies upon the proprietor: Interflora Inc v Marks and Spencer plc [2014] EWCA Civ 1403, [2015] ETMR 5.

21 Condition 6: Four possible answers to the question of who bears burden of proof 1. Once the trade mark proprietor has shown that condition 5 is satisfied, the defendant bears the onus of proving that the use does not affect, nor is liable to affect, any of the functions of the trade mark. 2. The defendant bears the onus of proving that there is no likelihood of confusion, and hence no damage to the origin function, in which case the onus shifts to the trade mark proprietor to prove that the use affects, or is liable to affect, some other function of the trade mark. 3. The trade mark proprietor bears the burden of proof in keyword advertising cases and other cases of referential use, but the defendant bears the burden of proof in ordinary cases. 4. The proprietor bears the onus of proof in all cases.

22 Condition 6: Which answer is correct? Supreme Petfoods Ltd v Henry Bell & Co (Grantham) Ltd [2015] EWHC 461 (Ch), [2015] RPC 22 at [133], [164]: In principle, the second answer is preferable. Article 16(1) of TRIPS requires a likelihood of confusion to be (rebuttably) presumed in double identity cases, but it does not require the likelihood of any other effect on the functions of the trade mark to be presumed. But the first answer is more consistent with the CJEU s case law as a whole, and in particular its case law on exhaustion and territorial scope of injunctions.