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20 June 2016TrademarksMary Bagnall

EU trademarks: is one state enough for use?

It has long been a feature of EU trademark law that a registered trademark which is unused by the owner or with its consent for a continuous period of five years may be revoked and removed from the register. The reason behind the provisions is to prevent the trademark registers from becoming crowded with marks that are not in use, making those marks available to others.

In addition, registered trademarks which have been unused for a period of five years may not be relied on to oppose the application for the same or a similar trademark by a third party. A proprietor who wishes to rely on a mark which has been registered for more than five years may be asked to prove that the mark has been put to genuine use in the previous five years. If evidence of genuine use is not provided, the opposition will fail.

These principles are incorporated into articles 42(2) and 51 of the amended Regulation (EU) 2015/2424 (EU trademarks regulation), which came into effect on March 23, 2016, and articles 16 and 19 of EU Directive 2015/2436, which harmonises national trademark law for all EU member states and must be implemented (subject to a few exceptions) by January 14, 2019.

The new directive now provides for non-use as a defence in infringement proceedings. Article 17 specifically provides that a trademark owner may prohibit the use of a sign only to the extent that its rights are not liable to be revoked for non-use. It is now possible to plead non-use as a defence, rather than having to bring revocation proceedings either separately or as a counterclaim.

What amounts to use

If a challenge on the basis of non-use is launched, it is for the trademark proprietor to demonstrate that it has put its mark to “genuine use” in the relevant time period. Demonstrating use is not as simple as it may sound. The leading case on what constitutes genuine use is Ansul v Ajax Brandbeveiliging, in which the Court of Justice of the EU (CJEU), whose decisions are binding on all member states of the EU, explained the key principles in establishing genuine use.

Genuine use means actual use of the mark by the proprietor or an authorised third party, which must be more than merely “token” (ie, it must not serve solely to preserve the rights conferred by the registration). The mark must be exploited in a way that is aimed at maintaining or creating an outlet for the goods or services or a share in the market. In assessing whether genuine use has been made, all the relevant facts and circumstances must be taken into account. This includes the nature of the goods and services, the characteristics of the relevant mark and the scale and frequency of use of the mark. The use need not necessarily be quantitatively significant; there is no de minimis rule. Even minimal use may be genuine use if it is of the sort that is appropriate in the sector concerned for maintaining market share.

The challenges of the EU trademark

Proving use of an EU trade mark has proved a particular challenge where these unitary marks cover 28 different countries of the EU, from Finland to Malta and Ireland to Bulgaria.

The fundamental nature of an EU trademark is that it has effect throughout the whole of the EU and enables the proprietor to prohibit other traders from using the same or a similar mark on the same or similar goods throughout the whole of the EU (where there is a likelihood of confusion).

Given that a proprietor’s rights extend throughout the whole of the EU, are its obligations to prove genuine use of its EU trademark equally far-reaching? Or is it sufficient that the EU trademark proprietor is using its mark in only one member state? This was the question which was referred to the CJEU in the test case Leno Merken v Hagelkruis Beheer ( case C-149/11).

In that case, a registered EU trademark was challenged on the basis of its non-use. The mark, ‘Onel’, had been used in relation to legal services and its proprietor was able to demonstrate use in the Netherlands alone. The trademark proprietor argued that such use was sufficient to maintain the registration, and questions were referred to the CJEU. The CJEU ruled that in determining whether a mark has been put to genuine use in the EU, the territorial borders within the EU are to be disregarded.

“There can be no hard and fast rule that use in only one member state will never be sufficient to qualify as use in the EU as a whole.”

It is left to national courts to determine whether use has been made in accordance with the essential function of the mark and for the purpose of maintaining or creating market share within the EU for the goods and services concerned. The courts will have regard to the characteristics of the market concerned, the nature of the goods and services and the territorial extent and scale of use, as well as its frequency and regularity.

The Jumpman case

The question of genuine use of EU trademarks has been in the spotlight of late with a number of cases testing the boundaries (literally) of the concepts laid down in Leno Merken. The most recent of these is the case of an opposition by a Turkish company, Intermar Simanto, to Nike’s UK trademark application for ‘Jumpman’ in class 25, based on Intermar’s earlier EU trademark for ‘Jump’ registered for footwear. Intermar’s mark had been registered for more than five years so it was required to prove genuine use in the EU. If it failed to prove genuine use in the EU, it could not rely on the earlier mark and the opposition must fail.

There was no question that Intermar’s use was genuine in the literal meaning of the word in that it was use in good faith in the course of a legitimate business. However, Intermar’s sales in the relevant period were small—some 55,000 pairs of shoes, which was described as minuscule in the context of the entire footwear market across the whole EU. Furthermore, those sales were limited to Bulgaria (the member state adjoining its home market of Turkey) and to a single customer in Romania with no evidence of onward sale.

The UK Intellectual Property Office’s hearing officer found that in all the circumstances, Intermar’s use was not sufficient to amount to genuine use in the EU and accordingly the opposition must fail. Intermar appealed to the UK appointed person (AP), in this case Daniel Alexander QC.

In his decision the AP went back to first principles, summarised the leading cases from the CJEU, and considered a number of controversial decisions relating to use of an EU trademark in a limited territory—usually one member state. These included: Reber Holdings v OHIM, Naazneen Investments v OHIM, Now Wireless v OHIM, The Sofa Workshop v Sofaworks and The London Taxi Corporation v Frazer Nash Research.

Based on the range of decisions cited, it seems clear that there can be no hard and fast rule that use in only one member state will never be sufficient to qualify as use in the EU as a whole. It is a question of applying the principles set out in Leno Merken which state that territorial borders of the member states should be disregarded in the assessment of whether a trademark has been put to genuine use in the EU.

Returning to the Jumpman case, the AP found the aggregate summary of case law by Mr Justice Arnold to be the most helpful one.

Having reviewed this summary of the case law in relation to use of EU trademarks, the AP concluded that despite finding that Intermar’s use was not token or sham, and did serve a real commercial purpose, the hearing officer could not be criticised for finding that there was not sufficient use in the EU when:

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