Following a reference by a German appeals court, the CJEU has held that use of an ordinary EU trade mark (EUTM) exclusively as a label of quality by members of a German cotton industry association is insufficient to establish genuine use. This case highlights the difficulties faced by certifying associations in maintaining enforceable rights in such marks where currently no existing registration regime is in place to protect certification marks at European level.
VBB (the claimant), a German cotton industry association, owns a figurative EUTM ("the Mark") which it licences to textile manufacturers for use as a label of quality. The Mark is registered in Class 24 for textiles and textile goods:
VBB does not actively test goods but requires manufacturers to provide an undertaking that their products are made from good-quality cotton fibres.
VBB brought infringement proceedings against one manufacturer, Gözze, and its director (the defendants) for affixing a near-identical mark to its goods without a licence (as seen in the judgment):
The defendants counterclaimed for a declaration of invalidity on the basis that the Mark was descriptive and lacked distinctiveness or, in the alternative, for revocation of the Mark on the basis that it had not been put to genuine use by VBB or its licensees. At first instance, the German court ruled in VBB's favour and found that there was a likelihood of confusion. Gözze appealed to the Higher Regional Court, which referred three questions to the CJEU, asking whether:
Use of an ordinary EUTM as a label of quality constituted 'genuine use' within the meaning of Article 15(1) of the European Trade Mark Regulation ("the Regulation");
Given the Mark was serving as a label of quality but VBB did not actively control the quality of the goods, the Mark was invalid on the basis that it was of such a nature to deceive the public under Article 7(1)(g) of the Regulation; and
The relevant sections of the EUTM Regulation governing collective EU marks could apply to the Mark because its use could be likened to that of a collective mark.
The CJEU answered all three questions in the negative:
No - genuine use of an ordinary mark requires use in accordance with its essential function, i.e. to guarantee the origin of goods or services to the consumer. This requirement will not be met where the trade mark is affixed to goods for the sole purpose of acting as a label of quality and not for the purpose of guaranteeing that the goods come from a single undertaking, which controls the manufacture of the goods and is responsible for their quality.
No - the failure of VBB to carry out periodic quality checks on goods bearing the Mark did not in itself mean that the Mark was deceptive. The court confirmed that establishing that a mark is deceptive requires proving, as at the date of filing, actual deceit or a sufficiently serious risk that the consumer will be deceived by the mark. The management and licensing by VBB of the Mark post-registration was not a relevant factor in carrying out this assessment.
No - Articles 66 to 74 of the Regulation are confined to EU collective marks and cannot be applied to ordinary EU trade marks.
The CJEU has reaffirmed that the essential purpose of an ordinary trade mark is to act as a badge of origin: using a mark for any other purpose (including as a badge of quality) does not, therefore, constitute genuine use.
The ruling will concern owners of EUTMs and national trade marks who are using their mark as a label of quality: if subject to proof of use, their mark may now be liable to revocation unless the owner can show that the mark also serves to guarantee the origin of the product. In some countries (including the UK), this may not be overly problematic because an alternative system of national certification marks is available. For certifying bodies in other countries, however, the decision creates a gap in protection because there is no alternative to registering their mark as an ordinary mark (whether as a national mark or an EUTM).
The issue may be resolved, in part, thanks to the amended EU Trade Mark Regulation which (among other things) introduces a system of EU certification marks from 1 October 2017. (For further details about the changes introduced by the amended Regulation, see our earlier blog here.) EU certification marks will function as a type of quality mark or label in the same way as a UK certification mark currently does. Until then, however, the CJEU's decision may leave some certifying bodies in a precarious position.
With thanks to Richard Lawne for his assistance in writing this blog.