EUROPEAN PERSPECTIVES

ECJ Buys into Retail Services

Retailers stand to profit from the ECJ’s seminal ruling in July that trade marks must be registrable for retail services throughout the E.U.

The Court handed down its decision in Praktiker Bau- und Heimwerkermärkte AG (Case C-418/02) following a reference from the German Bundespatentgericht. The reference was made in the context of Praktiker’s appeal against the refusal of the Deutsches Patent- und Markenamt to register the trade mark PRAKTIKER in respect of “retail trade in building, home improvement and gardening goods for the do-it-yourself sector.”

 

German Practice, Reconsidered

Under German practice, retail services did not denote independent services with their own economic significance.

Consequently, in Praktiker, the Deutsches Patentamt held that retailers could secure trade mark protection for shop names and other marks used in connection with retailing only through registration in respect of the specific goods sold in the shops, or in respect of identifiable non-retailing services. The latter might include, for example, credit card services, loyalty card schemes, repair services and the like. Protection in respect of the more metaphysical notion of “retailing,” covering the innumerable ways in which retail shops lure in and serve their customers, was rejected.

Protection of shop and business names for “retail services” is critical to retailers of all kinds, whether trading via shops, mail order or the Internet. Without it, a win or loss in an infringement claim depends on how fully a retailer lists his goods when registering his mark. It also imposes a heavy burden on retailers to ensure that their trade mark protection reflects any changes to or expansions in stock over the years. Fully up-to-date trade mark protection reflecting all of a retailer’s interests is often simply a practical impossibility, because his range of goods is too large or varied, or it changes over time. Protection in respect of “retail services” avoids these problems.

Praktiker appealed, therefore, and the Bundespatentgericht noted that the German practice appeared to be out of step with that of OHIM and the majority of the E.U. Member States. It therefore asked the ECJ to rule on whether retail trade in goods constituted a recognisable service within the meaning of the Trade marks Directive, and, if so, to what extent it was necessary to specify the content of such services in a specification.

 

Varying Practices in the E.U.

The submissions by interested parties hinted at the breadth of practice relating to retail services in the E.U., and the majority’s recognition of at least some form of wording by which retail services were regarded as registrable.

The French, Austrian and United Kingdom governments all confirmed their own practice of accepting trade marks in respect of certain services ancillary to the sale of goods, provided that the content of those services was specified sufficiently clearly.

The European Commission agreed that a trade mark could be registered in respect of services ancillary to pure selling, but it was less dogmatic on the question of specificity. In its view, it was not possible to list exhaustively all the services ancillary to retailing which might be relevant, which might include “the arrangement of the goods, the site, general ease of use, the attitude and commitment of staff, and customer care.” In any event, the Commission considered that the degree of specificity in trade mark goods and services claims was a matter relating to registration procedure, and should therefore be left to the national offices even though some differences in practice would inevitably result.

 

Retail Services Registrable

The ECJ accepted that Member States were free to fix the form of trade mark registration procedures within their national offices. However, it regarded the definition of “services” as a substantive rather than a procedural matter.

In respect of substantive matters, the aim of the Trade Mark Directive was to approximate the laws of the Member States in order to bring about generally identical conditions for obtaining registered trade mark protection throughout the E.U. It was not, therefore, possible to allow the Member States to decide for themselves whether and on what terms to protect trade marks in respect of retail services.

The Court observed that the aim of retail trade was to achieve sales to consumers, and that retail trade therefore included not only the sales transactions, but also all the surrounding activities such as range and arrangement of goods and the provision of services designed to induce customers to buy from one retailer, as opposed to another. There was no basis in the Directive (which did not define “services”) or elsewhere to prohibit the recognition of those ancillary services as protectable services in their own right.

This, the Court found, was supported by OHIM’s acceptance of trade marks for retail services, and by the Explanatory Note to Class 35 of the Nice Classification, which recognised the term, “the bringing together, for the benefit of others, of a variety of goods, enabling customers to conveniently view and purchase those goods.”

The ECJ ruled, therefore, that “the concept of ‘services’ within the meaning of the directive includes services provided in connection with retail trade in goods.” Member States, it held, must all afford protection in respect of such services.

 

How Specific Must a “Retail Services” Claim Be?

The ECJ found it difficult to answer the question of just how specific a retail services claim must be.

It was satisfied that some degree of precision must exist, in order to avoid ambiguity in the scope of a party’s rights and to ensure that use could be properly evaluated for the purposes of Article 12 (1) of the Directive, which provides for revocation in the case of non-use. However, the degree of specificity required by the Member States that recognised “retail services” varied. Moreover, too much specificity as to the nature of the services claimed would defeat the object of protecting trade marks in respect of retail services generally, as it was impossible exhaustively to identify all the services which might be provided as part of a normal retail business.

The Court came to the view that a very restrictive definition of retail services, which would require applicants to specify all the aspects of retailing that they wished to protect, would be artificial and problematic.

In its view, the economic importance of the retail trade sector justified a broader approach and more general wording. Provided the goods or type of goods involved were specified, a broad claim such as “the bringing together of a variety of goods, enabling customers to conveniently purchase those goods” would be acceptable in all the Member States, and would confer protection in respect of retailing at large.

 

Comment

This important judgment puts retailers squarely in the black.

The names of shops and other retail businesses will now be uniformly recognised as registrable trade marks in the field of retail trade across the E.U., provided the specific goods or type of goods being retailed is specified.

The different approaches that had evolved in Member States had created a maze of local requirements and paradoxes. A mark might be protected in respect of retail services in some countries but rejected for the same claim in others. It might be registered as a CTM and thus have legal effect in all Member States, but with only questionable enforceability in Member States which did not recognise retail services, or which did so, but on a different, or more limited, basis.

Now, however, a retail services claim which specifies the goods or types of goods involved will be construed as covering the services of retail trade generally, in all Member States of the E.U. This injects a welcome dose of common sense and certainty into the system of trade mark protection in Europe, and Member States who do not already recognise protection of trade marks in respect of retail services must now come into line with the majority.

In its pragmatic approach to specification wording, the judgment also recognises the practical economic realities of the retail sector: retailing is a service like any other, in which businesses compete, profits are reaped and lost, and customer service generally, in too many ways to identify, attracts, holds and sometimes loses custom.

Retail services have for years been recognised in the U.K. and before OHIM and both have required at least some indication of the nature of the goods. Both have accepted, however, that the nature of the retail outlet (eg department store, supermarket) might suffice as a sufficiently clear indication of those goods, particularly where, as in those cases, a wide and disparate range of goods is involved.

It is unclear whether this practice will continue, or whether specific goods or ranges of goods (eg ladies’ wear, shoes, food and drink) must now be listed.

For small retailers whose range of goods is clearly definable and unlikely to expand appreciably, the point may be of little import since listing their stock by product type may not be difficult. However, even small retailers change and expand, and businesses with varying or large inventories will always find it hard, if not impossible, to list current stock types comprehensively and to foresee all future stock expansions.

It seems most likely, therefore, that the practical effect of this ruling will be that retailers will have to identify the broad type of products they retail when applying for trade mark protection, but not to list all goods within those categories. Category terms such as “clothing and footwear” and “food and drink” are likely to be specific enough.

Retailers whose inventories are too wide or too constantly-changing to be quantified in this way, however, must not be excluded from the party. Although each case will be different, the authorities are likely to recognise that it is more appropriate for some retailers to continue to define their retail services by reference to the type of business in which they are provided (eg a department store, an antiques shop, a women’s fashion boutique, etc.). In such cases, the nature of the goods sold is commonly understood and defining the business type is tantamount to identifying the categories of products offered.

In each case, care must be taken to identify the right approach and to avoid defining the business too restrictively.

The ECJ has opened the doors to broader vistas for retailers: let them now go through.