Whilst the majority of the decision relates to the legal issues surrounding the claim for patent infringement, this blog post will focus on the claim for infringement of the RCDs.
The product at issue is a handheld device which is used in the treatment of acne by deep cleaning facial pores. The device uses an oscillating circular head with rings of bristles arranged in concentric circles which, when used on the face, help to remove skin blockages that can cause acne.
RNV manufactured a similar product under its Magnitone range, and the claim is against certain products within that range.
Both sides relied on the evidence of expert witnesses in relation to both the claim of patent infringement and the claim of design infringement.
It was accepted by L’Oréal early on in the trial that the 747 Design formed part of the design corpus of the 046 Design. Consequently, the scope of the 046 Design was very narrow and it was found that none of the Magnitone products complained of infringed the 046 Design.
Representations of the 747 Design are as follows:-
The Magnitone ‘Barefaced’ device:-
The Informed User
Referring to the summary of the law as set out in Samsung Electronics (UK) Ltd v Apple Inc  EWHC, Carr J defined the informed user in this case as the observant user of powered skin brushes.
The Existing Design Corpus
Article 7 CDR 6/2002 excludes designs which ‘could not reasonably have become known in the normal course of business to the circles specialised in the sector concerned’ i.e. are too obscure to be known by the informed user.
L’Oréal tried to challenge the prior art relied on by RNV on the basis that, whilst not being excluded by Art. 7 CDR, it nonetheless fell outside the design corpus because it would not impact on the informed user’s awareness of the normal design features and RNV had not produced any evidence that the informed user would be aware of the prior art i.e. evidence of substantial marketing of the prior art etc.
Case law on this point was carefully considered and, drawing on the CJEU judgment in Cases C-361/15P and C-405/15 Easy Sanitary, L’Oréal’s argument was rejected. It was found that if L’Oréal’s position were followed, it would introduce an additional hurdle of needing to prove that the informed user was aware of the prior art in order for it to be considered as part of the design corpus.
Carr J concluded that such a requirement could lead to a situation where factors such as the volume of marketing, advertising expenditure etc. would play a role in the assessment of whether or not the informed user was aware of the prior design. This could lead to a situation where prior art which should form part of the design corpus would be excluded if there had been insufficient promotional activity around it.
The conclusion is that if prior art is not excluded by the exception in Art. 7 CDR, it is capable of forming part of the design corpus. There is no additional requirement to show that the informed user must be ‘aware’ of a prior design, where that design is not so obscure that it is excluded from the design corpus, but has not been widely marketed within the sector.
Effect of the Design Corpus and Design Freedom
If the differences between the registered design and the pre-existing design corpus are small, then small differences may avoid infringement. However, the greater the design freedom, the wider the scope of the monopoly and vice versa.
RNV tried to argue that the design freedom was very limited due to the functional requirements and technical aspects of the product at issue.
The expert for RNV, Mr Herbert, submitted that there were limitations on the design freedom because: (i) the design must incorporate a brush head of 3 – 5 cm diameter in size; (ii) the brush head could only be positioned on the axis in a limited number of ways; (iii) the handle had to be sculpted to create ergonomic grip; the design needed to incorporate batteries etc.; (iv) the brush head needed to be removable; (v) the product needed to be controlled whilst in use; (vi) the product must pass consumer testing; and (vii) the product must be economical so had to be made from commonly available plastics.
Whilst some of Mr. Herbert’s arguments were accepted, overall, it was found that, even within these parameters, the designer had a wide degree of freedom in relation to the design of the Magnitone product.
Comparison of the 747 Design and the Magnitone Products
RNV divided the 747 Design up into its distinctive and non-distinctive elements and then went on to compare only the distinctive features with the Magnitone products. It argued that the overall impression was different because there were insufficient similarities between the distinctive features of the 747 Design and the Magnitone product.
This argument was rejected on the basis that the test is whether or not the overall impression (which includes the combination of distinctive and non-distinctive features) is sufficiently similar to the registered design. By artificially dissecting the 747 Design and then only comparing the distinctive elements with the Magnitone product, RNV had not correctly compared the two.
The overall impression was found to be very similar.
It was found that the Patent and the 747 Design were infringed by RNV.
The case serves as a neat reminder of the law on Registered Community Designs and the infringement assessment. The discussion around the design corpus and the level of knowledge attributed to the informed user is particularly interesting. The decision will be welcome news for brand owners seeking to rely on their RCDs to prevent competitors from creating and marketing look-alike products.
Keep an eye out for our upcoming blog on the impact of Brexit on EU Registered Designs following the EU Commission’s draft Brexit agreement.
On February 13, 2018, the Russian Constitutional Court issued a judgement in which it checked whether the existing regime of parallel import was in line with the Constitution.
Although grey import has remained illegal, the burden of proof has dramatically changed: now infringers have almost 50 legal reasons to pay less and minimize the risks of customs seizure.
The constitutional review was initiated by PAG, a notorious Russian importer of labeled medicine goods. The importer was sued by Sony Corporation in 2014, when the Japanese company was notified by a customs post that the PAG was trying to import 60 rolls of medical print paper bearing the Sony trademark. Although the paper was genuine, Sony found its trademark infringed by PAG buying the goods in Poland and importing them into Russia in circumvention of the official distribution scheme.
Based on Sony’s injunction request, the grey goods were seized by a local competent court. When considering the case, the court and three superior instances declined PAG’s argument that the goods were original, awarded Sony with a compensation and ordered to seize and destroy the grey goods.
These remedies are available due to the regime of a national/regional exhaustion (Russian Civil Code, art. 1487): parallel import is illegal unless the product was first sold by or with the consent of the trademark holder specifically in Russia or the Eurasian Union. PAG objected, referring to the principle of proportionality: grey goods should not entail the same liability (seizure and destruction, significant compensation) as counterfeit goods.
The Constitutional Court supported PAG’s position. Although it found the regime of national/regional exhaustion per se valid and enforceable, it drew a clear distinction between liability imposed for “classic” counterfeit and parallel import, and introduced two new conditions for successful cases against parallel importers (neither of which had appeared in previous case law, including the key Nestle Waters case):
Grey goods could be seized and destroyed, should a trademark holder prove inadequate quality or risk of negative influence on human health, nature preservation or cultural values.
Good faith standard
A trademark holder may not enjoy legal protection against a parallel importer, if he acts in breach of good faith. Good faith heavily depends on pricing policy: a substantial difference between the prices in Russia and other jurisdictions must be economically explained before the court. The good faith standard is even higher in case of vital goods (drugs, medicine equipment) and the trademark holder’s compliance with anti-Russian sanctions policy.
Although the judgment should not influence previously decided cases against parallel importers, its ratio decidendi will dramatically change the scenario for routine parallel import disputes. Trademark holders have to become proficient in distinguishing shades of grey import: not every passionate attempt to combat grey goods will be successful or economically sensible.
On 15 March 2018, Marriott Worldwide Corp., assisted by Anna Reid (D. Young & Co.), scored a major victory at the General Court (case T-151/17) against EUIPO and Mr. Johann Graf.
Johann Graf had registered the „winged bull“ device or „taurophon“ as shown above on the right as an EUTM for, inter alia, class 43 services (provision of food and drink). Marriott owned earlier trade mark rights to the „Griffin Device“ as shown above on the left, registered for identical services, and – based on those and on copyright residing in the same design – requested that Mr. Graf’s EUTM be declared invalid.
This request failed before both the EUIPO’s Cancellation Division and the Fourth Board of Appeal, both of which held that the signs at issue were completely dissimilar – so much so that there was no need to assess the alleged enhanced distinctiveness of Marriott’s Griffin Device. On the same grounds, the Board of Appeal also rejected the copyright claim, as a dissimilar sign cannot be a reproduction, and – by way of an obiter – even questioned the existence of the copyright, although this apparently had not been put in issue by Mr. Graf.
The General Court disagreed with the assessment of similarity and confirmed that the signs were both visually and conceptually similar at least to a low degree. While one was a mythological creature and the other an invented one, both consisted of a mixture of animals together, with wings over upward curled tails and with a lion’s lower back body and paws. The position and overall impression therefore displayed similarities that were not completely outweighed by the mere fact that the heads were those of different animals (namely, an eagle and a bull, respectively).
On the same ground, the findings of the Fourth Board in respect of copyright were also annulled as they were based on the incorrect assumption that the signs were utterly dissimilar.
This is one of the relatively rare cases where the General Court rules differently from both instances at EUIPO. The decision is welcome in that, once again, the Fourth Board was rather quick in denying any similarity between the marks, thereby avoiding any analysis of all the other points raised, in particular, the distinctiveness of the earlier mark.
One thing that surprises is that Red Bull never opposed this “winged bull” – does it not remind you of Red Bull’s flagship animal combined with its slogan “Gives You Wings”? Mr. Graf is from Austria, Red Bull’s backyard, and his EUTM also covers non-alcoholic beverages in class 32, including of course energy drinks…
The IP-related provisions of the EU-Ukraine Association Agreement, signed and ratified by Ukraine in 2014, came into force on September 1, 2017. New rules regulating the non-use grace period for trademarks were thereby introduced. Where the existing trademark law provides for a 3-year non-use grace period, Article 198 of the Agreement sets forth the 5-year non-use grace period.
However, Ukraine has not adopted any laws that would implement such provisions in the national legislation yet. Consequently, Ukrainian courts are facing a dilemma in non-use cancellation actions as to what the applicable grace perios really is. This raises the question of direct applicability of the EU-Ukraine Association Agreement provisions.
Recently, in a court ruling dated February 12, 2018 by the Commercial Court of Kyiv in the case no. 910/14972/17, the judge effectively applied a 5-year non-use grace period, as provided for under the Association Agreement, and rejected the non-use cancellation action, which was based on the 3-year grace period, as per Ukrainian Trademark Law. The court held that the EU-Ukraine Association Agreement is a binding international agreement, thus its provisions should prevail if they differ from the rules provided by the Ukrainian law.
Further on, since Article 198 provides for a different grace period, the Agreement’s provisions are directly applicable. The ruling also emphasizes, that the Association Agreement does not foresee any particular means of implementation of these provisions in the Ukrainian national law.
This ruling may still be appealed before the court of second instance. It may eventually be reviewed even by the recently reorganized Ukrainian Supreme Court and the case law may be established soon. By then, the judge’s arguments in this ruling should be taken into account when filing a cancellation action on grounds of non-use in Ukraine.
Once the due diligence phase is over, and often already during the due diligence phase, the parties of an M&A transaction will start negotiating the seller’s representations and warranties in relation to the company and its assets, including its trademarks. The buyer will ensure that the findings of the due diligence, in particular red flag issues, are adequately addressed and covered in the reps & warranties and indemnification clauses. This second part of “Trademarks in Transactions” deals with the issues surrounding the trademark reps & warranties that are typically discussed and negotiated with regard to a Share Purchase Agreement or an Asset Purchase Agreement.
The typical starting point of the reps & warranties catalogue is the seller’s representation that the schedules contain a correct and complete list of all (registered) trademarks owned by the target company (in the case of a share deal) or the seller (in the case of an asset deal). Buyers will reasonably expect the seller to further represent that it/the company is the unrestricted legal and beneficial owner of such trademarks, is free to dispose of them, and that the trademarks are free of encumbrances. It is advisable to clarify that the term “encumbrances” only includes pledges, usufructs, and other security interests and liens, but not licenses granted to third parties (as licenses are usually dealt with separately).
Buyers insist in general on a representation that no licenses under the company’s/seller’s trademarks have been granted to third parties (other than those disclosed in the schedules). Such a representation is important, considering that under most jurisdictions licenses continue to be valid (and potentially devalue the trademark), even after a change in ownership of the company (in the case of a share deal) or an assignment of the trademarks to the buyer (in the case of an asset deal). In some cases, however, it may be necessary to narrow down the clause in order to avoid misrepresentations: For instance, many distribution contracts concluded between a trademark owner and resellers of the branded goods contain a right of the reseller to use the trademarks in advertising and at the point of sale. As many of these clauses go beyond the fair use right resellers enjoy under the applicable law, they qualify, strictly speaking, as a license agreement and therefore are excluded from the representation in most cases. Another example is intra-group licenses which are, in many groups, granted for all IP rights owned by the group companies. The seller may have a legitimate interest not to disclose all such intra-group licenses, at least as long as the seller warrants that those licenses will terminate as of the closing date of the transaction.
If the company has obtained trademark licenses which are significant for the company’s business, the buyer (in the case of a share deal) will want to make sure that the licenses are in force and will continue even after the transaction has been closed. A standard representation would be that the licenses have been validly granted and have not been terminated, and that to the seller’s best knowledge the respective licenses cannot be terminated by the respective licensors for cause. This would be a customary rep at least if limited to the situation which exists at the signing date or closing date. That representation typically excludes the question as to whether the licenses can be terminated by the licensors because of the contemplated transaction under change of control clauses. It is the buyer’s homework during the due diligence phase to review the agreements for change of control clauses. The seller may under certain circumstances agree to refund part of the purchase price or rescind the transaction if important license agreements are terminated, but the seller should not give a warranty that the license agreement cannot be terminated if they include change of control clauses. In asset deals, if a trademark license forms part of the assets sold and assigned, a similar issue arises in relation to the assignability of the license.
The buyer’s preference will always be to obtain a hard representation that the company, or respectively the company’s trademarks, are not infringing any third party’s trademarks, and that no third parties are infringing company’s trademarks. But for the seller this is difficult to accept, particularly considering that the similarity between trademarks is hardly a clear-cut assessment and that court and office decisions are difficult to predict. Usually, it is a good compromise to focus representations on any litigation threatened or pending within a certain time frame before the signing date, and on the seller’s best knowledge in relation to other (potential) infringements.
Valid and Enforceable Trademarks
A rep & warranty that all of a company’s trademarks are valid and enforceable sounds reasonable, but in fact is hardly acceptable for seller: In many cases trademarks are registered for goods and services for which they are not used. They may be at least partly vulnerable to cancellation on non-use grounds (after the grace period has expired, dependent on the applicable law). Furthermore, unless a company’s trademarks have already been used for many years, it will be difficult to exclude the existence of third party trademarks which could be asserted against any of that company’s trademarks. Representing that the trademarks exist validly at the signing date, have been properly maintained and that the seller has no knowledge of any third party trademarks which could be asserted against the validity usually sounds like an acceptable compromise.
If the buyer has come across red flag issues during the due diligence it may decide to request an indemnification – at least in more severe cases such as trademark disputes with a higher potential of damage claims or rebranding costs. Negotiating indemnification clauses and conditions can be burdensome, given that both parties talk about the sharing of risks and the liabilities in worst case scenarios. A focus in such negotiations usually lies in the period for which the indemnification is granted, the definition of claims and damages subject to indemnification (direct/indirect damages, loss of profits etc.) and formal and procedural aspects (e.g. notification periods and requirements, determination of the party having control over defense and settlements, and the obligations of the parties to assist each other). Negotiating indemnities in many transactions is one of the last major issues, and if the parties have agreed on them, they will all usually hope that the dark scenarios they have discussed for days and nights, will never occur in practice.
On 28th February, the EU Commission published the Draft Withdrawal Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (the “Draft”), as can be viewed here, with commentary here. In a week of weather warnings, plunging temperatures and de-icer fume related headaches, the preliminary position as presented in the draft provides us much to be positive about here in the UK.
As the name suggests, this document is a draft and not a final document. It sets out the EU Commission’s proposals for what the Brexit treaty might look like, in the same sort of language that we can expect to see in the final treaty. However, it is perhaps better seen as a codification of the proposals which the Commission has made over the last few months, rather than providing clarity on what the final position might look like – that’s still up for negotiation.
Nestled in amongst 119 pages of discussion, the Draft features a brief section relating specifically to intellectual property, beginning at page 30. Despite its relatively short length, there is a lot of information to unpack. This post will focus on the implications for trade marks, in particular with regards to preservation of rights, only. A fur post shall follow, addressing the implications for design right holders specifically.
Before delving into this explication, a brief overview of the other IP issues raised by the Draft are set out below, for reference:
Holders of Community plant variety rights will become rights holders in the UK relating to the identical plant variety, where this earlier right was granted before 31st December 2020
Holders of Registered Community Designs shall become the owner of a registered design in the UK also.
Equivalent rights shall be created for those currently entitled to exercise rights in the EU relating to Community plant varieties, geographical indications or traditional specialities, offering at least the same level of protection as afforded by EU law
The term of design rights and plant variety rights in the UK, established as per the points above, shall be equal to the remaining term of the equivalent EU rights
The date of filing or priority in relation to the design rights and plant varieties detailed above shall be the same as the equivalent EU rights
No administrative burden shall be placed on the rights holder to generate these new rights
International Registrations designating the EU shall enjoy protection in the UK in light of these International Registrations
Unregistered Community designs generated prior to 31st December 2020 shall generate an equivalent domestic right.
Rights which were exhausted in both the EU and UK before 31st December 2020 shall remain exhausted in both the EU and UK.
Trade marks: preservation of rights
The Draft proposes that the holder of an EUTM or Community Design, registered or granted before the end of the transitional period (31st December 2020), shall become a holder of an equivalent right in the UK, by way of an automatic conversion process, which will hold the same renewal/filing/priority date as the EUTM.
There are several key terms in this article which warrant further discussion. Of particular note, the resulting right is to arise without any re-examination. The right which arises in the domestic system will also consist of the same sign. The interplay of these two terms may yield interesting results, as marks which have been rejected in the UK but accepted at the EUIPO will be automatically registered domestically. In the UK Trade Marks Act 1994, which has not yet been amended in accordance with the new EUTM Directive, it is still a requirement that a trade mark should be a sign capable of being represented graphically, a provision without equivalence in EU law. As a result, the automatic assumption of registrability in the UK may result in a large number of non-traditional marks making their way onto the UK register, that otherwise may not have done.
The Draft goes on to propose that Applications which are under opposition, or any other threat of revocation/invalidation, at the end of the transitional period will be revoked in the UK if revoked in the EU. This means that a large number of EUTMs will have their equivalent right generated in the UK, only to then be declared invalid or revoked in line with the EUTM.
Of considerable importance is the reference to non-use periods, as detailed below:
Art 50 (5) (b)
[the resulting domestic trade mark] shall not be liable to revocation on the ground that the corresponding European Union trade mark had not been put into genuine use in the territory of the UK before the end of the transition period.
The upshot of this positon is that the automatically generated domestic protection shall enjoy a 5-year non-use period in the UK. This means that an enormous number of marks would hit the UK register despite being vulnerable from a use point of view, only to perch there for 5 years until the grounds to cancel them arise. This development would surely alter the fabric of the register considerably.
Finally, of considerable importance is the Draft’s reference to the registration process: specifically that there ought to be no administrative procedure for the rights owner, including no need for a domestic mailing address. The administrative burden that this position would generate for the UK Office, then, would be extensive. A huge number of rights would be afforded to EUTM rights holders, at no cost to the rights holders, with the resulting onslaught of registration related correspondence being sent all across Europe, once again, at the cost of the UK Office. Whilst it ought not be surprising that this Draft places much administrative burden on the UK, given its origin, we will need to await further negotiations before these points can be conclusively settled. One possible counter balance could be the increase of renewal fees for these automatically generated rights, in order to retrospectively counteract the cost implications.
To conclude, then, the EU Commission is prioritising the preservation of all rights currently held by the owners of unitary rights, following Brexit. The Commission is of the opinion that the cost and administrative burden of this development ought to be borne by the UK, which may be logical given the circumstances. In addition, the Draft proposes preferential treatment of the equivalent rights with regards to revocation. The true impact of this position will only be clear once negotiations are finalised, but certainly it would appear that the Commission is aware of the implications of a gap in protection for those who currently own unitary rights.
On 17 January 2018, the French Supreme Court (Cour de cassation) held that affixing a prior trademark, without consent, to products exclusively intended for export to and lawful sale in China constitutes trademark infringement.
The dispute involved the French wine company Castel Frères, owner of a number of French and European trademarks for alcoholic beverages and still wines. Among them is the following Chinese sign, which reads “KA SI TE” and best corresponds to “Castel” in Chinese:
In 2010, Castel Frères claimed trademark infringement against two individuals who had affixed the above sign to wine bottles in France for export to China. The defendants argued that their use was with due cause, since they were only exporting their products to China, where they had been the owners of the prior Chinese trademark “KA SI TE” for wine, equivalent to “Castel”. In their view, they were legitimately exercising their right of first sale in a market in which they owned valid trademark rights.
The Paris Court of Appeal found that the defendants had no due cause to affix such trademark in France.
On further appeal, the French Supreme Court upheld the decision based upon Articles L.713-2 and L.716-10 of the French Intellectual Property Code, under which a trademark owner may prevent all third parties from reproducing the trademark for goods or services that are identical to those designated in the registration, as well as exporting goods presented under an infringing trademark.
The French Supreme Court noted that, under its prior case law, it had interpreted these two provisions as creating a due cause exception where (i) the defendant merely exports the goods to a country in which they are sold legally, and (ii) if there is no risk that they could be marketed in France (French Supreme Court 10 July 2007, Buttress BV vs. L’Oréal, “Nutri Rich”; further confirmed by Paris Court of Appeal, 29 September 2015, “Aroma Floris”).
The Court overruled this precedent by relying on CJEU case law which had decided that Article 5(1) of the Trademark Directive 2008/95 (Article 10(2)(a) of the recast Trademark Directive 2015/2436) embodies a complete harmonization of the rules relating to the rights conferred by a trademark. As the Directive does not provide for such a due cause exception, the Court found that the previous case was an incorrect application of the harmonization principle.
It is now clear that due cause for exportation purposes can no longer defeat a claim for trademark infringement. As a consequence, the Court concluded that the defendants infringed Castel Frères’ trademark.
It might also have been noted that under the wording of the French Intellectual Property Code, only the holder of goods presented under an infringing trademark can rely on a “legitimate reason” to escape liability, but not the exporter. Indeed, Article L.716-10 of the French Intellectual Property Code provides that “A person who: a) holds, without legitimate reason, imports under all customs procedures or exports goods presented under an infringing trademark (…) shall be liable to a three-year imprisonment and a fine of € 300.000”.
The decision of the French Supreme Court means that French courts can no longer create exceptions to the trademark owners’ rights that are not provided in the Trademark Directive. In practice, this decision will be of interest to trademark owners as it removes an obstacle to an infringement ruling in their favor.
A Hungarian company distributed knives under the brands ‘BLAUMANN’ and ‘SWISS HUFEISEN’ in Germany and in other European countries including Hungary. The knives were manufactured in China and had no connection with Switzerland. On the handles of the knives, a cross with equal arms can be seen within a pentagonal shield with three curved sides (Contested Sign).
Victorinox AG is the owner of the following trademarks protecting a cross with equal arms in a pentagonal shield with curved sides (the infringement action was based on the first EUTM, referred to as the Cross & Shield trademark) for among others cutlery. Victorinox is the only company, which has been authorized by the Swiss Confederation to register a colour trademark similar to the Swiss coat of arms (see the third, Swiss national trademark). The knives marked with the trademarks of Victorinox have decisively contributed to the excellent reputation of Swiss products.
After the Hungarian customs authority had seized more than 30,000 products bearing the Contested Sign, Victorinox filed a request for interim injunction against the Hungarian company. The first instance Metropolitan Court ordered an ex parte injunction.
The Hungarian company appealed, arguing that there was no likelihood of confusion. The second instance Metropolitan Court of Appeal accepted the arguments of the Hungarian company and lifted the interim injunction. According to the second instance court, the Contested Sign resembles the Swiss coat of arms, which is excluded from trademark protection and cannot be monopolized. It also denied likelihood of confusion between the other features of the Cross & Shield trademark and the Contested Sign. Moreover, the Contested Sign on the handle of the knives was said to serve as an ornamentation and not as an indication of origin. The official Swiss coat of arms is the following:
As a consequence, the first instance Metropolitan Court rejected the infringement claim in the main action meanwhile brought by Victorinox. However, it did not base this on absence of likelihood of confusion, but on the fair use provisions protecting descriptive use. The court stated that although the overall impression of the compared signs was similar, the defendant did not commit trademark infringement. The use of the Swiss coat of arms was considered fair use of the sign, referring to Swiss quality, even if this reference could be eventually false. As such it was protected by the limitations of the effects of a trademark (Art. 12(b) CTMR – now: Art. 14(1)(b) EUTMR). Victorinox filed an appeal against this resolution.
The Metropolitan Court of Appeal upheld the first instance resolution in the main action in effect, however, again it established that there was no likelihood of confusion for the same reasons it relied on for lifting the interim injunction.
Victorinox filed a revision claim with the Supreme Court (Kuria). The Supreme Court established that there was a likelihood of confusion between the signs. Moreover, it did not agree that the defendant’s use was fair use and thus safe from a finding of trademark infringement. Accordingly, the Supreme Court annulled the first and second instance judgments remitted the case back to the Court of first instance.
The Metropolitan Court therefore returned to its original finding that there was infringement and ordered further sanctions (such as the publication the operative part of the judgment on the defendant’s website). This first instance judgment became final and binding.
The judgment of the Supreme Court means that where a registered trademark resembles a state emblem, trademark protection shall prevail even if the contested sign resembles the same state emblem. An argument that the use of the sign resembling the state emblem is a mere reference to qualities of products originating from that state shall not be accepted. This is to be welcome because the registered trademark, which was obtained with the consent of the Swiss Confederation, must be given due protection. From Victorinox’s perspective, one can only say – all’s well that ends well.
In a decision of 17 January 2018 (HR-2018-110-A), the Norwegian Supreme Court concludes that trade mark protection covers instances where there is a clear possibility that damage to the functions of a trade mark may occur only after the products have been sold.
This is the first decision after joining the EEA in which the Norwegian Supreme Court addresses the issue of damage to the functions of a trade mark.
The claimant Addcon is the proprietor of the registered trade mark ENSILOX for silage additives, a preserving agent, used for waste and biproducts in the fishing industry. The plaintiff Solberg had been distributing this product to the fishing industry for many years. In 2013 they changed manufacturer and started distributing essentially the same product by the manufacturer Helm under the trade mark HELM AQUA+. Solberg’s customers had been notified of this manufacturer change.
However, after the manufacturer change, Solberg mistakenly labelled 230 tons of silage additives as ENSILOX by Helm. They also mislabeled the invoices of this delivery as well as that of an additional 138 tons delivered by tank lorry. Addcon took Solberg to court for the potential damage to the functions of its trade mark.
The Oslo District Court and the Borgarting Appeal Court found no trade mark infringement; the mislabeling was based on a misunderstanding, the products were equal and the customers had been informed about the change of manufacturer. There was no damage to any of the functions of the trade mark ENSILOX.
The Supreme Court does not quite agree.
Initially, the Supreme Court assesses the requirement of damage to the functions of a trade mark when the marks are identical and are used for the same products. They lean heavily on EU jurisprudence when finding that it is sufficient for trade mark infringement that there is a clear possibility of damage to a trade mark function, in this case the origin and quality functions. Furthermore, they add that that protection of the trade mark functions is not only limited to the actual sales situation, but e.g. also to after sales situations.
According to the Supreme Court, neither the Norwegian Trade Marks Act nor the EU Trade Mark Directive makes a distinction between before and after a sale for the assessment of damage to the function of a trade mark, nor does case law from the European Court of Justice exclude after sales situations from the protection of a trade mark. The Supreme Court argues that mislabeling may damage the origin and quality function after a sale, for example if a deficient or substandard product is associated with the trade mark proprietor during subsequent use. The fact that the original purchaser is aware of the mislabeling is not decisive. The products may fall into the hands of third parties who are unaware of the mislabeling, e.g. through bankruptcy, occasional borrowing between traders or when products go astray. On the basis of this, the Supreme Court finds that there is no reason to exclude from trade mark protection the damage to trade mark functions after a sale.
Applied to the facts of the case, the Supreme Court finds that the mislabeling of products as ENSILOX is liable to cause some confusion; it is unclear if the products come from Addcon or if Helm has a license.
Furthermore, although the end users had been informed of the change of manufacturer and the goods were not meant for further sale, it cannot be excluded that traders may borrow or purchase products from each other, nor can it be excluded that all employees of the relevant customers have not been informed of the mislabeling.
Based on this, the Supreme Court finds that the mislabeling of the 230 tons may cause damage to the origin and quality functions. However, they also find that the incorrect labelling on the invoices for the 138 tons does not constitute any damage to any of the trade mark functions; the risk of any damage is simply too distant.
Although it may be tempting to excuse the mislabeling in this instance – it was not intentional, but perhaps more accidental – the decision sets a general rule which should be pretty easy to follow; don’t use the wrong trade mark on your products. Even if the relevant public will not be mistaken as to the origin or quality of the products at the time of sale. The functions of a trade mark may be harmed even after the product has been sold, in particular if the mislabeled products are substandard or deficient.
According to article 50 (1) of the draft agreement, the holder of a EU trade mark, design or plant variety right, ‘which have been registered or granted before the end of the transition period shall, without any re-examination, become the holder of a comparable registered and enforceable intellectual property right in the United Kingdom, as provided for by the law of the United Kingdom’. There is a similar provision, article 50 (2), for geographical indications, designations of origin and traditional specialities.
The draft agreement also covers the registration procedure (article 51), the continued protection in the United Kingdom of international registrations designating the Union (52), the continued protection in the United Kingdom of unregistered Community designs (53), the continued protection of databases (54), the right of priority with respect to pending applications for European Union trade marks and Community plant variety rights (55), pending applications for SPCs in the UK (56) and exhaustion of rights (57).
The system of European Patents is based on the European Patent Convention. Therefore patents are not mentioned in the draft Brexit agreement, nor the future Unitary Patent system, which is based among others on two EU Regulations.
The draft Withdrawal Agreement consists of six parts – including introductory provisions, citizens’ rights, other separation issues such as goods placed on the market before the withdrawal date, the financial settlement, transitional arrangements, and institutional provisions – and a protocol on Ireland / Northern Ireland.
It has been presented by the European Commission ‘to first allow for time for consultation with the Member States and the European Parliament and, subsequently, for negotiation with the United Kingdom’.