Monster v Red Bull: ‘intention’ in the dock
A legal battle between two of the world’s most popular energy drinks threw up some interesting points of argument earlier this month.
The dispute between Red Bull and Monster, over Monster’s trademark application for ‘Red Dawg’, culminated in a ruling at the English High Court, which fell in Red Bull’s favour.
Red Bull had successfully opposed the registration of the mark on August 26, 2021, winning on one of the three grounds.
Hearing officer James Hopkins denied two of Red Bull’s objections but accepted that the famous drink’s UK reputation would mean Monster would gain an unfair advantage.
On appeal, the English High Court upheld Hopkins’ decision.
Olivier Vrins, partner at ALTIUS, delves into the important aspects of the case and explains why he believes Hopkins’ original finely balanced decision was correct.
Analysis
I believe James Hopkins was right when upholding Red Bull’s objection based on s.5(3) of the Trade Marks Act 1994 (TMA).
According to settled case law, the notion of ‘association’ supposes that the relevant section of the public establishes a link between the signs at issue, even though it does not confuse them (see, for example, the Court of Justice of the European Union’s [CJEU’s] judgments in cases C-408/01 Adidas-Salomon and Adidas Benelux v Fitnessworld Trading, and C-102/07 Adidas and Adidas Benelux).
The existence of a link must be assessed globally, considering all factors relevant to the circumstances of the case, such as: the degree of visual, phonetic or conceptual similarity between the conflicting signs; the nature of the goods or services at issue, including the degree of closeness or dissimilarity between them, and the relevant section of the public; the strength of the earlier mark’s reputation and the degree of its distinctive character (whether inherent or acquired through use); and the existence of a likelihood of confusion on the part of the public, it being understood, however, that the risk of confusion is not required to be able to establish a risk of association (CJEU’s judgment in case C-252/07 Intel).
In the present case, Hopkins pointed out that the goods in question were identical. He found that the average consumer of the goods in question was the general public, whose level of attention would be medium, and that the signs at issue were visually similar to between a low and medium degree, and aurally and conceptually similar to a medium degree, on account of the fact that they both consisted of two words that begin with the word ‘RED’ and would be understood as referring to red animals.
He found that Red Bull’s word mark had a very high distinctive character as well as a very strong reputation in the UK for energy drinks, which was not contested. In my opinion, therefore, he was right to conclude that a significant part of the relevant public would make a link between them, even though it would not confuse them.
Regarding the similarity of the signs
Hopkins found that, although the marks at issue were similar overall, the differences were nevertheless not negligible and were sufficient to preclude any risk of confusion under s.5(2)(b) TMA.
In a similar case, the EUIPO’s Board of Appeal found that the earlier marks ‘Bull’ and ‘Red Bull’, on the one hand, and the contested sign, ‘Bulldog’, on the other, had a fairly low degree of visual and phonetic similarities and were conceptually different. It concluded that the signs at issue could not be regarded as similar overall and, consequently, there was no likelihood of confusion.
The Board of Appeal also found that, because the marks at issue were different overall, one of the conditions laid down in article 8(5) of the EU Trade Mark Regulation (“EUTMR”) (which corresponds to s.5(3) TMA) that must be satisfied if a proprietor of an earlier trade mark is to be entitled to rely on that provision against an EU trade mark application had not been fulfilled, and that that was sufficient for Red Bull’s claims grounded on that provision to be rejected.
The EU General Court overturned this ruling. It found that the signs at issue had an average visual and phonetic similarity. Regarding the conceptual comparison, the court held that the English-speaking part of the public would recognise that the signs at issue referred to two separate animals, so that the marks in question were similar at least to a low degree. Given that the goods covered by the trade mark application and those covered by the earlier word marks were identical, and the signs at issue were similar overall, the court concluded that there was a likelihood of confusion. Therefore, there was no need to rule on the plea alleging infringement of article 8(5) EUTMR.
In the present case, the ‘Red Bull’ and ‘Red Dawg’ trademarks are less similar than the (Red) ‘Bull’ and ‘Bulldog’ marks. I am therefore inclined to consider that Hopkins was right in rejecting Red Bull’s objection based on the alleged risk of confusion. I am a bit surprised, though, that his assessment of the conceptual similarity of the signs at issue was not challenged by Monster before the High Court; I am not suggesting that such a challenge would have been successful, but there certainly was room for discussion on the topic.
Intention
The discussion in the Monster v Red Bull case regarding the need for Red Bull to demonstrate that Monster was actually intending to free-ride on the reputation of their earlier marks is at the core of the dispute before the High Court.
As I understand it, Monster contended that it had no such intention (or at least, that the contrary had not been established) and, therefore, there was no proof of an ‘unfair’ advantage.
In Leidsplein Beheer v Red Bull (C-65/12), the CJEU held that good faith is a relevant factor when assessing whether the use by a third party, before a trade mark with a reputation was filed, of a sign similar to that mark may constitute ‘due cause’, within the meaning of the provision of the (former) EU Trade Marks Directive corresponding with s.5(3) TMA, and justify the fact that that third party takes advantage of the repute of that mark.
The court pointed out that there can be no ‘due cause’ when the use that is being made of the contested sign is in bad faith, that is with the intention of taking advantage of the early mark’s repute.
Conversely, good faith does not automatically preclude a finding of an ‘unfair advantage’. If this were the case, then there would be no need to assess whether there is ‘due cause’ in the first place. That good faith is not enough to be able to conclude that there is no unfair advantage also follows from the court’s findings, in the same case, that good faith is not sufficient, on its own, to conclude that there is ‘due cause’ for the contested mark’s use.
I would add that, in the Intel case (C-252/07), the CJEU emphasised that, where the proprietor of the mark with a reputation has demonstrated the existence of one of the forms of injury referred to in the provision of the (former) Trade Marks Directive corresponding with s.5(3) TMA, the onus is on the third party using a sign similar to the trade mark with a reputation to establish that he or she has due cause for using such a sign.
Since, according to the court’s judgment in Leidsplein Beheer v Red Bull (C-65/12), good faith is one of the factors to be taken into account when assessing whether there is a due cause, it follows that it is, in principle, up to the alleged infringer to prove good faith, rather than for the proprietor of the mark with a reputation to prove that the third party had a positive intention to free-ride on the mark’s reputation. In Monster v Red Bull, Monster made out no case that it had due cause for using the contested mark.
In case C‑661/11 Martin Y Paz Diffusion, the CJEU pointed out that the exclusive right under article 8(5) EUTMR (the same applies under s.5(3) TMA) was conferred to enable the trade mark proprietor to ensure that the trade mark can fulfil its functions.
Therefore, the exercise of that right must be reserved for cases in which another party’s use of the sign adversely affects or is liable to adversely affect one of the trade mark’s functions. Those functions include not only the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services in question, but also its other functions, such as that of guaranteeing the quality of those goods or services or those of communication, investment or advertising.
In the Monster v Red Bull case, irrespective of whether Monster intentionally chose the ‘Red Dawg’ sign to trigger a link with ‘Red Bull’ in the relevant public’s mind and to free-ride on that mark’s reputation, it is fair to consider that Monster’s choice of the contested mark would, at least, have the effect of calling to mind the ‘Red Bull’ trademarks and to confer on the contested sign the power of attraction, the reputation and the prestige of the earlier marks.
In my view, this is sufficient, in the absence of due cause, to conclude that use of the contested mark would adversely affect or be liable to adversely affect the communication, investment and/or advertising functions of the ‘Red Bull’ trademarks.
In my opinion, an analogy can be drawn in this regard with the CJEU’s case law in the field of geographical indications. Like trademarks with a reputation, GIs are protected, among other things, against the use of signs that ‘evoke’ a GI, when such use takes undue advantage of the reputation enjoyed by it. The term ‘evocation’ has been defined by the court in a way that is essentially identical to ‘association’ under trade mark law: it covers a situation where the term used to designate a product incorporates part of a protected designation, so that when consumers are confronted with the name of the product, the image triggered in their mind is that of the product whose designation is protected (see, for example, the court’s judgments in cases C-87/97 Consorzio per la Tutela del Formaggio Gorgonzola v Käserei Champignon Hofmeister; C-4/10 and C-27/10 Bureau national interprofessionnel du Cognac; and C-75/15 Viiniverla).
In cases C-87/97 and C-75/15, the CJEU held that information suggesting that the proximity between the signs at issue or products concerned is intentional is only one of the factors to be taken into account when assessing the likelihood of a link. The intentions of the economic operators trading in the products or services at issue are, therefore, also relevant in the framework of the overall assessment.
When it appears that the third party is actually seeking to allude to the GI, this reinforces the fact that there is an evocation. However, for the purpose of establishing that there is an ‘evocation’, it is not required to prove that such a proximity is not fortuitous. In his opinion in the Queso Manchego case (C-614/17), Advocate General Pitruzzella pointed out that the analysis as to whether there is an evocation must take into account: any implicit or express reference to the GI; the degree of similarity between the products and the way they are marketed; and elements that make it possible to establish whether the reference to the product covered by the GI was intentional or unintentional.
The national court is therefore required, in his view, to assess a set of indications, “without the presence or absence of any such indication entitling it alone to establish or rule out the existence of evocation”. Thus, the fact that there is no intention to evoke a GI is not sufficient, on its own, to preclude a finding of an evocation.
More importantly, the fact that there is no intention to take advantage of the GI’s reputation is not enough either, on its own, to preclude a finding of an unfair advantage (EUIPO, Trade Mark Guidelines, Part B – Examination, Section 4 Absolute grounds for refusal, Chapter 10, 4.2.2. Imitation/évocation).
In the Champanillo case (C-783/19), the CJEU explicitly confirmed that the protection scheme against evocation is an objective one: it is not subjected to the need to prove an intention or a fault. I see no reason to decide otherwise under s.5(3) TMA. I think Jacob J was entirely right when he held, in Jack Wills, that “there is nothing in the case law to preclude the court from concluding in an appropriate case that the use of a sign the objective effect of which is to enable the defendant to benefit from the reputation and goodwill of the trade mark amounts to unfair advantage even if it is not proved that the defendant subjectively intended to exploit that reputation and goodwill”. Proof of an ‘intention’ (however diffuse) is not a requirement under s.5(3) TMA.
Threshold of evidence for proving unfair advantage
The CJEU held that, while it is up to the proprietor of the earlier trademark to adduce evidence enabling the conclusion to be drawn that unfair advantage is probable, in the sense that it is foreseeable in the ordinary course of events, it is not required to demonstrate that the contested trademark is actually used in a way that takes advantage of the earlier mark.
There must, however, be prima facie evidence of a future risk, which is not merely hypothetical, that use of the contested sign might indeed unduly benefit from the earlier mark’s reputation, on the basis of logical deductions founded upon an analysis of the probabilities and by taking account of the normal practice in the relevant commercial sector as well as all the other circumstances of the case (see, for example, judgments in cases C-252/07 Intel; T-332/10 Viagra; C-383/12 P Environmental Manufacturing v OHIM; and T-61/16 Coca-Cola). In the UK, this test has been correctly applied by Jacob J in Jack Wills.
It follows from this case law that, unlike as Monster contended before the High Court, to be successful under s.5(3) TMA Red Bull was not required to provide evidence directly supporting a risk of free-riding or from which such a risk could properly be inferred.
Bearing the principles above in mind, Hopkins correctly justified that use of the ‘Red Dawg’ trade mark would take unfair advantage of Red Bull’s earlier marks. At [86], Hopkins rightly stressed that Red Bull did not need to prove actual or present damage and that it was permissible to deduce from the evidence that there is a serious risk of such damage.
At [87] he emphasised that the similarity between ‘Red Bull’ and ‘Red Dawg’, although not apt to cause confusion, would nonetheless “mak[e] it easier for the applicant to establish its mark and to sell its energy drinks without incurring the marketing costs that would usually be required. The contested mark would be able to attract more consumers to purchase goods offered under it than would be the case if the earlier mark was not brought to mind. This would essentially allow the contested mark to free-ride on the reputation of the earlier mark and gain an unfair commercial advantage”.
I agree with Johnson J’s findings that it would be inaccurate to characterise the conclusions expressed by Hopkins as mere suppositions: they were logical deductions reflecting the inherent probabilities and founded on the findings of Hopkins’ decision as a whole.
The mere fact that there was no risk of confusion (let alone a positive intention for Monster to cause confusion) in the Monster v Red Bull case does not obviously mean that there can be no free-riding, and hence no unfair advantage. Sections 5(2)(b) and 5(3) TMA serve different purposes.
As has been pointed out above, it is settled case law that, under s.5(3), there is no need to prove that use of the contested sign would be liable to adversely affect the trademark’s essential function, which is to guarantee to consumers the origin of the goods or services in question; it is sufficient to demonstrate that such use would be liable to affect its other functions, such as that of guaranteeing the quality of the goods or services or those of communication, investment or advertising.
Finally, I concur with Johnson J that Hopkins’ reasoning did not conflate the ‘link’ requirement with the ‘unfair advantage’ requirement. I agree that Hopkins considered both questions. He did, of course, point out that the unfair advantage was a direct consequence of the link (which is commonsense); but he did not confuse the two. At [73] of his decision, he clearly referred to them as being different requirements.
When applying those requirements to the facts of the case, he concluded his reasoning on the existence of a ‘link’ at [80] and subsequently assessed whether there was ‘unfair advantage’ at [81-89].
At [87], he first stated that “upon encountering the contested mark, (…) consumers of the contested mark will certainly be reminded of the third earlier mark”, which relates to the ‘link’ requirement.
Then, he added that such familiarity would make it easier for the applicant to establish its mark and to sell its energy drinks without incurring the marketing costs that would usually be required”, that the ‘Red Dawg’ mark would be able to attract more consumers to purchase goods offered under it than would be the case if the ‘Red Bull’ mark was not brought to mind, and that this would essentially allow the contested mark to free-ride on the reputation of the earlier mark and gain an unfair commercial advantage; by this, Hopkins concluded that the ‘unfair advantage’ requirement was satisfied too.
Olivier Vrins is a partner at Altius. He can be contacted at: olivier.vrins@altius.com
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