• ALICANTE ABSTRACT

    WINNING THE CASE ON Dilution or Tarnishment

    In a series of recent judgments, the Court of First Instance has handed down valuable guidance on how to successfully challenge a CTM based on dilution or tarnishment. The judgments are well worth examining; an understanding of the Court’s views on how to prove reputation, detriment and unfair advantage can make the difference between winning or losing a case based on Article 8 (5) CTMR.

     

    PLEADING THE CASE

    To oppose or invalidate a CTM under Article 8 (5) CTMR, a challenger must prove:

    • a reputation in an earlier registered mark in the Community (in the case of an earlier CTM) or in a relevant member state (in the case of a national registration),

    • which is identical or similar to the later CTM, regardless of the goods or services claimed under the marks;

    • that the use of the later CTM would take unfair advantage of or be detrimental to the distinctive character or repute of the earlier mark; and

    • that there is no due cause for the use.

     

    Under national laws in the E.U., national rights and Madrid designations may also be challenged under similar rules.

     

    WHAT DOES IT ALL MEAN?

    Under Community law, a claim to reputation under Article 8 (5) requires a challenger to prove that its earlier mark is registered and is known to a substantial proportion of the relevant public in the Community or, in the case of an earlier national mark, in the member state in which it is registered (General Motors, Case C-375/97).

    “Unfair advantage” encompasses cases of “clear exploitation and free-riding on the coat-tails of a famous mark or an attempt to trade upon its reputation,” unfairly drawing on and profiting from an earlier mark owner’s goodwill and investment in promotion (Spa Monopole v OHIM v SpaFinders Travel Arrangements, Case T-67/04).

    “Detriment” is commonly construed as including both dilution, or the whittling away of an earlier mark’s exclusive hold on the public mind, and tarnishment to a mark’s image arising from negative characteristics of goods or services claimed under a later CTM. There is no need to prove actual or current harm, but rather a prima facie case for future risk which is not merely hypothetical (SPA-FINDERS, para. 40).

    The CFI has acknowledged that in some very exceptional cases, reputation in an earlier mark is so great that detriment or unfair advantage arising from the use of a later mark can be presumed (Sigla SA v OHIM, Case T-215/03, para. 48). However, in practice such cases are likely to be rare, and the CFI’s recent judgments show that failure to address detriment and unfair advantage in evidence can be fatal to the claim.

     

    MAKING THE MOST OF SPONSORSHIP

    When supporting a claim to reputation, thinking outside of the box can significantly enhance a challenger’s case.

    Evidence of use of a mark for promotional purposes, for example, can help prove not only that a mark is widely known, but also that the public is accustomed to seeing it in use for goods or services similar or identical to those for which an applicant claims protection. Since most Article 8 (5) cases involve dissimilar goods or services, such evidence can be persuasive in establishing the mental association or link required to prove that detriment or unfair advantage is likely to arise from the use.

    TDK Corp.’s recent reliance on such evidence helped secure victory against a later CTM for TDK in Aktieselskabet af 21. November 2001 v OHIM (Case T-477/04).

    In that case, TDK relied on its earlier CTM and national marks for TDK for “apparatus for recording, transmission or reproduction of sound or images” against a later CTM for the identical mark, in respect of “clothing, footwear and headgear.” Under Article 8 (5), TDK soundly established a substantial reputation in TDK throughout the Community in respect of audio and video tapes and components through trade in the E.U. since 1973. Impressive evidence of market share and substantial investment in advertising helped.

    TDK’s limited field of activity might have been an obstacle to proving the requisite mental link between the earlier and later marks. However, TDK successfully proved that it had used TDK prominently and regularly in sponsoring high-profile musical events featuring well-known artists like the Rolling Stones, Paul McCartney and Tina Turner, as well as world championship athletic events, throughout the E.U. The TDK mark appeared on the athletes’ kit as well as around the stadiums and on billboards and balloons. The events were often televised, which further expanded the audience numbers exposed to the TDK mark.

    This impressive sponsorship evidence helped TDK prove a substantial reputation in the Community, and TDK prevailed.

     

    DON’T CONFUSE REPUTATION WITH PRESTIGE

    Evidence of reputation can go a long way toward proving unfair advantage or detriment. TDK’s sponsorship evidence did double-duty in this way since use of the marks in the same sphere permitted a stronger inference that the later mark would derive unfair advantage from its association in the public mind with the well-known TDK brand. However, evidence of reputation on its own will not necessarily get a case under Article 8 (5) home, as the Spanish fast-food company Sigla SA recently found to its cost (Sigla SA v OHIM, Case T-215/03).

    Sigla operated a chain of late-night fast-food joints in Spain under the brand name VIPS, for which it owned a Spanish registration covering restaurant and hotel services. It relied on that right in an opposition under Article 8 (5) to a later CTM for VIPS for “computer programming for hotel services, restaurants and cafes.”

    Sigla proved that its VIPS chain was well-known in Spain. However, it filed no evidence that the use of the later mark would take unfair advantage of or be detrimental to the distinctive character or repute of its earlier mark, relying purely on arguments based on its reputation in the fast-food sphere.

    The CFI regarded VIPS as a common abbreviation for “Very Important Persons,” understood even in Spain, and assessed its protection as rather limited. In the absence of evidence to the contrary, the CFI regarded a common word mark as less closely associated with a particular brand owner than an original, highly distinctive mark with no other meaning. There was no evidence to suggest how a reputation in the fast-food sector could be of any use to a later user for computer programming, even where the services were intended for restaurants. In the absence of evidence, the claim based on unfair advantage failed.

    On detriment, Sigla claimed that VIPS was prestigious and denoted quality, and that its use by another could undermine that image. However, Sigla provided no evidence to support this claim, either, and the CFI disagreed.

    The relevant public for the applicant’s programming services was necessarily more limited and specialist than that for Sigla’s broader restaurant services, which reduced the risk of dilution accordingly. Moreover, the CFI rejected Sigla’s assumption that reputation equated to prestige. The mere fact that a mark was famous did not mean that it conveyed an image of prestige or quality. Fast-food chains, in particular, were often well-known, but not necessarily upmarket or “prestigious” establishments. In the absence of evidence, the claim based on detriment also failed.

     

    CONSIDER THE IMAGE CONVEYED BY THE MARKS

    As is evident from Sigla, the scope for dilution is narrower in respect of terms in common use or with multiple meanings, even where they are also distinctive trade marks in practice. The burden of proving unfair advantage or detriment is likely to be heavier in such cases.

    On the other hand, the evidential burden is likely to be lighter where inherently distinctive marks are concerned. Where OHIM can more readily accept that a mark is exclusively associated with one proprietor’s goods or services, it may also more willingly find that the mark will suffer from dilution caused by a later applicant’s use. Where a mark, moreover, conveys a particular image, that image may be helpful in proving unfair advantage.

    The CFI explored this recently in Antarctica Srl v OHIM (Case T-47/06). In that case, Antarctica had applied to register a stylised form of the word NASDAQ in respect of sporting equipment and sports clothing. It was opposed by Nasdaq Stock Market Inc. on the basis of its earlier CTM for NASDAQ for financial services and related goods and services.

    Under Article 8 (5), Nasdaq proved a reputation in a substantial part of the Community based on high-profile and regular exposure on widely-available television channels and daily newspapers throughout the E.U. These sources were viewed not only by specialist investment professionals, but also by ordinary consumers with an interest in following their investments in the stock market.

    Nasdaq alleged that Antarctica’s mark took unfair advantage of its reputation by relying on the extensive reputation and promotion of the earlier mark to draw the public’s attention to the later mark. Nasdaq had obtained a copy of Antarctica’s shareholder meeting minutes proving that Antarctica had been aware of the NASDAQ mark and reputation when it adopted its later mark.

    The CFI upheld the opposition. NASDAQ was highly distinctive and conveyed a high-tech image of modernity which was attractive and relevant not only to the stock market, but also to other goods such as the applicant’s sporting goods and clothing. As a result, use of the applicant’s mark was likely to profit from the carefully cultivated image of the opponent’s mark. The very strong distinctiveness of NASDAQ and its exceptionally high reputation meant that no further evidence was needed beyond this to prevail.

     

    COMMENT

    It is notable from these cases that the better known and more highly distinctive the mark, the less evidence is necessary to persuade OHIM that unfair advantage or detriment is likely to arise from the use of a later identical or similar mark.

    Even in such cases, however, substantial proof of reputation in the relevant geographical area is critical, for without it unfair advantage and detriment will not even be considered.

    Proving unfair advantage or detriment can sometimes be straightforward, such as where an earlier mark has an exceptionally high reputation, or is registered for a family-oriented product or service and the later mark is sought for inherently seedy goods or services. In other cases, though, a challenger must think laterally. Highlighting areas like sport and cultural sponsorship, where marks may have been used on the same or related goods, can kill two birds with one stone by supporting the case on reputation and forming a basis for mental association, thus laying the groundwork for unfair advantage or detriment.

    The more disparate the goods, the more important the evidence will be. On its face, computer programming services for hotels and restaurants are closer to hotel and restaurant services than audio equipment is to clothing. However, TDK prevailed while Sigla lost because TDK provided evidence that the public would associate the marks in dispute, and Sigla did not.

    These cases also emphasise the importance of not overlooking meaning or image when preparing a case under Article 8 (5). That an earlier mark conveys a certain image is a question of fact, but proving it will be worthwhile where the image is relevant to both parties’ goods or services. Such relevance creates a framework for arguing that use of the later mark would derive unfair advantage from the reputation and image of the earlier mark, and may also help to prove detriment, since misappropriating an image and goodwill is likely to weaken the earlier mark’s hold on the public mind.

    With a little ingenuity, therefore, CTM challengers can win the case under Article 8 (5). However, they may need to work a bit harder to show the tribunal the way home.