itma-1
26 May 2016TrademarksKate O’Rourke

ITMA: EU and US trademark law

The doctrine of functionality in trademark law originated in Europe, but its application was restricted to shape marks. However, on March 26, 2016, Regulation (EU) 2015/2424 (the trademark regulation) came into force and amended article 3(1)(e) and article 7(1)(e) of Directive 2008/95/EC and Council Regulation (EC) No. 40/94 respectively.

The trademark regulation provides absolute prohibitions to registration, not only for shape marks, but also signs which consist exclusively of:

(i)  The shape or another characteristic which results from the nature of the goods themselves;

(ii) The shape or another characteristic of goods which is necessary to obtain a technical result; or

(iii) The shape or another characteristic which gives substantial value to the goods.

These prohibitions on registration are absolute in that they cannot be overcome by providing evidence of acquired distinctiveness.

The term “another characteristic” extends the scope of the functionality doctrine in the EU to traditional trademarks, such as patterns and packaging, as well as non-traditional signs, such as colour and sound marks, just as in the US.

European case law

Many of the European cases to date concerning the exclusions in articles 3(1)(e) and 7(1)(e) have related to the prohibition on signs which consist exclusively of “the shape of goods which is necessary to obtain a technical result”. The public policy reason for this prohibition is that trademark law should not be used to grant a monopoly on technical solutions or functional characteristics of a product (Lego v OHIM). In that 2010 case, the Court of Justice of the European Union (CJEU) summarised this policy as follows:

“When the shape of a product merely incorporates the technical solution developed by the manufacturer of that product and patented by it, protection of that shape as a trademark once the patent has expired would considerably and permanently reduce the opportunity for other undertakings to use that technical solution.”

A similar approach was taken for shapes that can be protected by registered designs in the 2014 CJEU case relating to the Tripp Trapp chair (Hauck v Stokke), where it was held that a key purpose of the prohibition against the registration of shapes which give substantial value to the goods was to prevent trademarks from being used indefinitely to extend the time-limited protection of other intellectual property rights.

US policy

This public policy doctrine has also developed in the US to prevent trademark owners from inhibiting legitimate competition through use of a trademark registration for a functional feature of a product. The US Lanham Act, which governs federal trademark law, states:

“No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it comprises any matter that, as a whole, is functional.”

Mr Justice Arnold concluded that the shape of the cab under dispute would have been recognised as an iconic London taxi and therefore did add substantial value to the goods.

The similarities between the US legislation and the traditional prohibitions in the EU are self-evident—both apply to “goods” only, there is a complete prohibition, and the wording used (“exclusively”/“as a whole”) is conceptually identical. However, unlike in the EU, the US doctrine of “functionality” has never been limited to shape marks.

Striking divergence

This divergence becomes more striking when non-traditional trademarks are considered, such as colour and sound marks. For example, a US district court found in Specialty Surgical Instrumentation (SSI) v Phillips in 1994 that the use of the colour grey was primarily functional for “promotional material”.

The court therefore refused to grant protection, on the basis that the colour grey was utilitarian, because it “serves to make SSI’s catalogues more effective as the colour grey highlights the design of the instruments in SSI’s catalogues”.

The court said that had it provided protection for the colour grey in this case, it would have precluded competitors in the surgical instrument industry from their “reasonable right” to use the colour grey in promotional materials to highlight their instruments.

More recently, the colour red has been the subject of a number of court cases on both sides of the Atlantic. In Qualitex v Jacobson Products, the US Supreme Court decided in 1995 that colour alone could serve as a trademark provided it had acquired a secondary meaning, but not if it is “essential to the use or purpose of the article, or if it affects the cost or quality of the article”.

This echoed the EU prohibition on registration of trademarks which give substantial value to the goods. Fortunately for Christian Louboutin in Christian Louboutin v Yves Saint Laurent in 2012, the US Court of Appeals for the Second Circuit held that protecting the colour red for the sole of shoes would not significantly undermine a competitor’s ability to compete and therefore it was not ineligible for trademark protection.

We may see a decision on the issue of whether the famous red-soled shoes are still entitled to registration under the new EU laws following the recent reference to the CJEU from the Court of the Hague in the Netherlands, which queries whether the former prohibitions in articles 3(1)(e) and 7(1)(e) apply to colour as well as shape—a distinction not relevant under the new law.

The UK case in January 2016 of The London Taxi Company v Frazer-Nash Research and another illustrated the current judicial attitude towards shapes which give substantial value to the goods, in this case the shape of a traditional London cab.

Having considered the case law (particularly the CJEU’s decision in the Tripp Trapp case), Mr Justice Arnold concluded that the shape of the cab under dispute would have been recognised as an iconic London taxi and therefore did add substantial value to the goods.

The decision also suggests that if a 3D trademark could be protected by other IP rights such as registered designs or patents, the mark will fall foul of article 3(1)(e)(iii) of Directive 2008/95/EC.

Another US decision which may assist in interpreting the new EU laws extending the absolute prohibitions concerns a US trademark application by Harley-Davidson. Here, Harley-Davidson failed in 1994 to register the sound of its “45-degree V-twin single crankpin motor” due to the functionality rule. The crucial issue was that the sound was the result of the technical construction of the V-twin crankpin motor.

It is reasonable to infer that a similar trademark application for a sound mark would be rejected under the new EU provisions if the sound directly relates to or is produced by the goods themselves. On a similar analysis, it has long been accepted that it will not be possible to secure registered trademark protection for the smell of a perfume.

So, is this the start of greater convergence between US and EU trademark law and more international legal cross-referencing? For many international businesses, that would undoubtedly be welcome in planning their IP protection strategies worldwide.

Kate O’Rourke is president of the Institute of Trade Mark Attorneys. She is a senior counsel at Charles Russell Speechlys. A solicitor and registered trademark attorney, O’Rourke has more than 20 years’ experience in trademark and related copyright, design and internet matters. She can be contacted at: kate.o’rourke@crsblaw.com

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Adrian Tapping at atapping@newtonmedia.co.uk