Geography 101: Surveying Reputation in an Expanding E.U.

Securing a CTM or defeating one may require proof of a reputation in one or more E.U. states. In a region of 27 countries, however, it can be costly if not impossible to prove reputation across the entire E.U. or, in the case of a small business, even across a member state. In two rather different cases, the ECJ recently pondered how far parties must go to prove this point on both an E.U. and a member state level.

Community Level

“Reputation” in the first case took the form of acquired distinctiveness, and the question before the CFI was the extent to which it needed to be proved across the E.U. where the mark in question was a CTM (Glaverbel SA v OHIM (T-141/06).

In that case, the applicant sought protection for a figurative mark consisting of a patterned sheet of glass in respect of glass and glass sheets in Classes 19 and 21. OHIM rejected the mark on the basis that it was devoid of any distinctive character. On appeal to the CFI, the applicant argued, inter alia, that the mark had acquired distinctiveness “in the Community” under Article 7 (3) of the CTMR.

In support, Glaverbel filed declarations from trade journalists, glass processors, wholesalers and competitors in 10 of the 15 countries that were E.U. member states on the date the application was filed. The declarants stated that they immediately recognised the mark as denoting a glass design produced by Glaverbel. The only member states not covered were Denmark, Finland, Sweden, Greece and Ireland. The territory covered by the declarations represented some 90% of the E.U. population, and Glaverbel submitted that they were representative of the E.U. as a whole.

Despite this impressive showing, the CFI upheld OHIM’s rejection of the CTM. It held that to prove acquired distinctiveness under Article 7 (3), an applicant must show that at least a significant proportion of the relevant public in the member states where the objection applies identify the mark as denoting the applicant’s goods or services (Case C-25/05 P, Storck v OHIM [2006] ECR I-5719, para. 83).

In this case, the mark was a figurative mark without any words, which was likely to be perceived in the same way in all member states. The objection therefore applied to the E.U. as a whole. Giving short shrift to the supporting sales figures and advertising material filed in respect of the missing 5 countries, the CFI observed, “proof of distinctive character acquired through use cannot be furnished by the mere production of sales volumes and advertising material.”

As Glaverbel had not shown acquired distinctiveness in all 15 member states, the CFI upheld the rejection.

Member State Level

On a comparatively microcosmic level, the ECJ recently examined a similar issue of geographical extent in Alfredo Nieto Nuño v Leonci Monlleó Franquet (Case C-328/06), a reference from the Spanish national court.

Here, the issue was whether Monlleó Franquet could invalidate a Spanish registration for FINCAS TARRAGONA, registered for property services in Class 36, on the basis of prior use of FINCAS TARRAGONA for estate agent services in Spain since 1978.

Monlleó Franquet pleaded that his earlier mark was a well-known mark in a member state on the date of application for registration of Nieto Nuño’s mark, under Article 8 (2) (d) CTMR, and given the identity of the marks and the services at issue, invalidation should be granted under Article 8 (1) (a) CTMR.

The use by Monlleó Franquet, however, had been restricted to the city of Tarragona and its surrounding area. The question before the ECJ was whether a well-known mark “in a member state” under Article 8 (2) (d) could include one that was well-known only in a city and its surrounding area.

The ECJ drew an analogy between this case and the 1999 decision in General Motors Corporation v Yplon S.A. (Case C-375/97 [1999] ECR I-5421, para. 28). That case concerned the question of “reputation” in a member state under Article 5 (2) of the E.U. Harmonisation Directive in the context of infringement proceedings. Following similar reasoning, the ECJ in Nieto Nuño held that in the absence of specific wording requiring such an interpretation, the words “in a member state” could not be construed as meaning “throughout a member state.” They instead meant either throughout a member state or in a substantial part of it.

Applying this reasoning, the ECJ held that the customary meaning of “in a member state” precluded a finding under Article 8 (2) (d) CTMR that a mark was well-known if the reputation extended only to a city and its surrounding area, as these were not “a substantial part” of a member state.

Comment

These cases are especially interesting for smaller businesses active in the E.U.

To some extent, the questions raised had been considered before. The decision in General Motors presaged the outcome in Nieto Nuño, for example. However, the ECJ’s dismissal of “a city and its surrounding area” as capable of representing a substantial part of a member state is notable, first because it is essentially a finding of fact, when the ECJ’s normal role under the reference procedure is to provide guidance on E.U. law, and second, because it is so categorical. Instances may be rare, but in a diverse and expanding E.U. there may well be countries that are sufficiently small, or in which most of the population lives in one or two main cities, that a different finding of fact in another case might be warranted. If such cases arise, a further reference might well be made.

In general, though, it is clear that smaller businesses trading in limited geographical areas will find it challenging to assert unregistered rights in their brands and names against later comers. National laws may permit actions based on passing off or unfair competition and national registrations may be challenged on the same basis under Article 4 (4) of the Directive. However, such actions are generally more costly and evidence-intensive than a trade mark infringement action, and the outcome is often less predictable. It is normally a better investment to obtain a registered trade mark at the outset, even if activities are likely to be geographically limited.

As for businesses who seek CTMs based on acquired distinctiveness, Glaverbel’s experience is disconcerting. There were, to be sure, other weaknesses in its case apart from the mere lack of 5 declarations. In particular, the declarations it did file emanated only from professionals rather than end-users, and it failed to specify its market share in each member state. Nonetheless, the declarations it filed seemed persuasive as far as they went, and the outcome may have been different had it supplied declarations for all 15 countries.

More problematic is what would have happened if Glaverbel had filed declarations for 13 or 14 member states, or where the omissions related to countries where the relevant goods or services were commercially minor for all businesses in the relevant sector. Rejecting a CTM in such circumstances would seem unduly harsh, but the CFI’s reasoning could permit it.

Glaverbel emphasises the critical importance of tailoring evidence for the case and of supporting sales, advertising and market share figures with evidence that the relevant public recognises the mark in every member state in which an objection applies. Building such a case for nondistinctive non-verbal marks may pose a formidable challenge in a region that now embraces 27 member states. English-language word marks present similar challenges given the extent to which English is understood and spoken internationally.

An early assessment of rights and prospects and a realistic approach are essential. In cases where evidence would not support a CTM filing, national protection may be the better option. With lateral thinking and creative advice, however, smaller businesses can rise to the geographical challenges of an expanding E.U.