The European Court of Justice, recently renamed the Court of Justice of the European Union ("CJEU"), released on December 19, 2012 its much anticipated decision in the case Leno Merken BV v. Hagelkruis Beheer BV (Case C-149/11, "ONEL/OMEL"). The issue in the case is whether genuine use of a Community trademark ("CTM") in just one of the Member States suffices to establish genuine use for this CTM throughout the entire European Union. Owners of CTMs frequently need to prove such genuine use in order to successfully overcome the defense of non-use, routinely raised by applicants or infringers in the course of oppositions or litigation, respectively, as justification against a cancellation motion. In a larger context, the decision also contains guidance regarding the criteria generally applicable for establishing genuine use within the meaning of Art. 15 CTMR.
The Facts of the Case in a Nutshell
Hagelkruis Beheer BV ("Hagelkruis") filed an
application in the Benelux Office for Intellectual Property
("BOIP") for the registration of a national Dutch word
mark "OMEL". Leno Merken BV ("Leno"),
proprietor of the earlier CTM "ONEL", opposed this
application. Hagelkruis resorted to the defense of non-use and
requested that Leno provide proof of use of its CTM. Leno, in
return, provided proof of use of the earlier mark "ONEL"
only for the Netherlands, but in no additional Member State.
Referring to such limited use, Hagelkruis requested revocation of
"ONEL". The parties did not dispute the marks'
similarity, that they were registered for identical or similar
services, and that there was a likelihood of confusion. Such
setting gave rise to the suspicion the litigation had been staged
in order to obtain a decision on the underlying question of
sufficient use.
The BOIP accepted Hagelkruis' defense, Leno appealed and the
Dutch Court of Appeal referred the case to the CJEU, asking it to
respond to questions concerning interpretation of the term
"put to genuine use in the Community" contained in
Article 15 (1) of the CTMR. These originally very complex questions
were summarized by Pieter Veeze, the BOIP's rapporteur in the
original case as follows:
1. Is use in one country always enough?
2. If not, is it never enough?
3. If it is never enough, what is needed?
4. Should the assessment of genuine use in the Union be done in the abstract, without reference to the borders of the territory of the individual Member States?
The CJEU's Decision
In the past, the question of whether use of a CTM in just one EU
Member State was enough to maintain the registration was discussed
at length. While the Office for Harmonization in the Internal
Market (OHIM) had always opined that use in one Member State should
be sufficient, others took the opposite point of view. In her
advisory opinion to the CJEU, Advocate-General Sharpston indicated
that the protection granted to a CTM may not be appropriate if the
mark is intentionally used on a national scale only. In essence,
the Advocate General recommended that national borders should be
ignored and that the determination of genuine use should focus on
the question whether the use in question is sufficient to maintain
or create market share within the EU for the goods and services
covered by the mark and whether it contributes to a commercially
relevant presence of the goods and services in the common
market.
The CJEU affirmed the Advocate-General's opinion that the
territorial borders of the individual EU Member States should not
be decisive in the assessment of "genuine use in the
Community", and that neither the OHIM Guidelines, nor the
Joint Statement by the EU Council and Commission of December 20,
1993 stating that "[t]he Council and the Commission consider
that use which is genuine within the meaning of Article 15 in one
country constitutes genuine use in the Community" are binding
on the CJEU for the purpose of interpreting provisions of EU
law.
The CJEU held that a CTM is "put to genuine use" within
the meaning of a Article 15 (1) CTMR when it is used in accordance
with its essential function and for the purpose of maintaining or
creating market share within the EU for the goods or services
covered by it. The CJEU also held that it is for the referring
courts to assess on a case by case basis and in the main
proceedings whether the conditions are met, 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 trademark, and the territorial extent and the
scale of the use, as well as frequency and regularity. The court
expressly refused to lay down a de minimis threshold as to what
territorial scope will satisfy the use requirement.
With regard to the use within a single Member State, the CJEU
stated, inter alia,
"Whilst there is admittedly some justification for thinking that a CTM 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", it cannot be ruled out that, in certain circumstances, the market for the goods or services for which a CTM has been registered is in fact restricted to the territory of a single Member State. In such a case, use of a CTM on that territory might satisfy the conditions both for genuine use of a CTM, and for genuine use of a national trade mark".
and
"Second, whilst it is reasonable to expect that a Community trade mark should be used in a larger area than a national mark, it is not necessary that the mark should be used in an extensive geographic area for the use to be deemed genuine, since such a qualification will depend on the characteristics of the product or service concerned on the corresponding market."
(Practical) Consequences of the Decision
The most important message of the decision is certainly that
when assessing genuine use "the territorial borders of the
Member States should be disregarded" and that a court will
have to take into account "all relevant facts and
circumstances, including the characteristics of the market
concerned, the nature of the goods or services protected by the
trademark and the territorial extent and scale of the use, as well
as its frequency and regularity". According to the CJEU,
genuine use requires the CTM owner to consider (1) whether he uses
the mark to its full essential function (i.e. to identify the
source of goods and services) and (2) whether he uses the mark for
the purpose of maintaining or creating market share.
It is not surprising that the CJEU rejected the concept of
statically associating genuine use to the borders of the Member
States, particularly in view of the fact that the Member States
differ greatly in size. A strict application of a rule that use in
one Member State is per se sufficient would have put the CTM owners
in bigger Member States in a disadvantageous position. The
court's flexible approach avoided that.
It not yet clear, however, what the CJEU thinks about cross-border
use. The decision's wording indicates that cross-border use is
of importance and that it certainly is a good argument in favor of
genuine use of a CTM, in particular, in view of the court's
enhancement of the conceptual differences between a CTM and a
national trademark. CTM owners will appreciate that genuine use of
their marks will not be tied to a minimum geographical area and
that the assessment takes into account the particularities of their
home markets. On the other hand, the CJEU's decision also
allows for consideration as to whether use of a mark in a single
Member State should be enough to block the mark for all 26 other
Member States. For single market use, national marks are still
available. CTM owners cannot rely on the doctrine that the use
within one Member State is sufficient.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.