On 11 September 2007, the European Court of Justice (ECJ) delivered a preliminary ruling regarding the interpretation of Article 5(1) of the Trade Mark Directive in relation to the right of the owner of a registered trade mark to prevent a third party from using a company name which is identical to its sign. The question of interpretation had been raised in an infringement action brought by Celine SA against Celine SARL for the use by Celine SARL of the company name Celine.
According to Article 5(1) of the Directive, the owner of a registered trade mark is entitled to prevent any third party from using a sign provided that the four following conditions are met: (i) the use made by a third party must be made in the course of trade; (ii) it must be without the consent of the trade mark owner; (iii) it must be in respect of goods or services which are identical to those for which the trade mark is registered; and (iv) it must affect, or be liable to affect, the functions of the trade mark, in particular its essential function of guaranteeing the origin of the goods or services to consumers.
In its decision, the ECJ stated that the purpose of a company name is not of itself to distinguish goods and services. A company name may therefore be used without it infringing a trade mark right, as long as such use is limited to identifying the company.
The ECJ also ruled that the use of a company name may be prohibited when this use is "in relation to goods in such a way as to affect or to be liable to affect the functions of the mark". This would apply if the sign was fixed onto the goods marketed by the company name's owner, or if it was used in such a way that a link is established between the company name and the trade mark owner's goods or services.
The French courts will have to adapt their case law in light of this decision. Up until now, they had mostly regarded the use of an identical company name as being per se an infringement of a trade mark right. As a result, the plaintiff will now have to prove that the company name is used "in relation to goods or services".
Despite its ruling, the ECJ has not defined the kind of link that must be proven to exist between the trade mark owner and the company using the trade mark as its name. A broad interpretation of such a link by the French courts might uphold the current French case law. As a general point, the link would probably be more easily proven if the trade mark at stake is very distinctive or famous.
The ECJ's decision also raises questions about the nature of company names within the context of intellectual property law. Article L.711-4 of the French Intellectual Property Code defines the corporate name as a prior right preventing the registration of a trade mark. It will be interesting to see how the courts will explain that a company name constitutes per se a prior right, but still infringes a trade mark if it is used "in relation to goods or services".
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