Losing your CTM through ‘non-use’

Following the CJEU’s ruling in Leno Merken BV v Hagelkruis Beheer BV, Case C-149/11 Community Trade Mark (‘CTM’ or you may even know them as ‘EU Marks’) owners need to reconsider their trade mark protection, possibly to back up their existing registrations with national registrations in key Member States.

The background to this matter is that Leno Merken BV (‘Leno’) opposed a CTM application filed by Hagelkruis Beheer BV (‘Hagelkruis’) for the word OMEL. As is so often the standard response to an opposition (after all it can be a rather useful negotiating tactic to push the Opponent to grater exertion) Hagelkruis requested proof of genuine use of Leno’s, ONEL, mark. Leno dutifully provided proof of use of its mark in the Netherlands, however the Benelux Office for Intellectual Property rejected the opposition.

At this point the parties were in agreement that:

1. the Marks were similar;
2. the respective goods of the applied mark/earlier mark were identical or similar; and
3. the similarities were such as to give rise to a likelihood of confusion.

The remaining dispute was whether or not Leno was obliged to demonstrate use of its ONEL mark in more than one Member State (it had of course only demonstrated use in the Netherlands). The Hague (the Netherlands Regional Court of Appeal) asked the CJEU for a ruling on 4 questions, however the CJEU, seemingly in an effort to avoid repetition, opted to amalgamate these questions into one question (I will call this the ‘Super Question’). To paraphrase the Super Question asked: was Article 15(1) of the CTM Regulation (as a reminder Art 15(1) provides for the revocation of a CTM that has not been put to genuine use within 5 years of registration, or for a period of 5 years) to be interpreted as meaning that genuine use of a CTM in a single Member State was sufficient to satisfy ‘genuine use’ or were territorial borders to be disregarded.

The CJEU, in line with the Advocate General’s opinion, held that territorial borders should be disregarded in the assessment of whether a trade mark has been put to genuine use in the Community:

A Community trade mark is put to ‘genuine use’… when it is used in accordance with its essential function and for the purpose of maintaining or creating market share within the European Community for the goods or services covered by it.

By way of a reminder the CJEU kindly identified that the essential function of a trade mark is:

to guarantee the identity of the origin of goods or services for which it is registered.

In coming to a conclusion as to whether or not a CTM has been used in accordance with its essential function and to maintain or create market share within the EC a national court must take into account:

all of the relevant facts and circumstances, including the characteristics of the market concerned, the nature of the goods or services protected by the trade mark and the territorial extent and the scale of the use as well as its frequency and regularity.

The idea behind Art 15(1) is to prohibit the holding of trade marks that are not put to genuine use as such marks could obstruct competition and unfairly restrict the free movement of goods/services. Consideration of the geographic scope of use of a CTM is just one of the factors that must be taken into account and that:

The territorial scope of the use is not a separate condition for genuine use but one of the factors determining genuine use, which must be included in the overall analysis and examined at the same time as other factors.

It is nice that the CJEU has neatly summarised the meaning of its decision which is that:

Since the assessment of whether the use of the trade mark is genuine is carried out by reference to all of the facts and circumstances relevant to establishing whether the commercial exploitation of the mark serves to create or maintain market shares for the goods or services for which it was registered, it is impossible to determine a priori, and in the abstract, what territorial scope should be chosen in order to determine whether the use of the mark is genuine or not,

What does this mean for me? I hear you cry. Well, the CJEU has somewhat unhelpfully (but wholly understandably) not provided any indication as to how much territorial use will satisfy the genuine use requirement. It is therefore plausible that use in a single Member State (particularly as regards some of the smaller Member States) will not be sufficient to protect a CTM from revocation for non-use. Whilst a CTM owner can convert its mark to national applications it can only do so in those Member States in which it can demonstrate sufficient use. If therefore you obtained a CTM on the basis that you would expand your offerings but, perhaps as a result of the downturn in the economy, have not yet done so, and your mark has been registered for 5 years or more (or indeed is coming up to its 5th birthday) then it may well be worth either: (1) filing a new CTM application; or indeed: (2) filing national applications in those Member States that are of particular importance to you. Both of these options will ‘start the clock again’ and give you a further 5 years in which to use the mark (albeit benefiting from an inferior filing date to that of your existing mark(s)).