The ECJ takes a multi-dimensional view of trademarks

In 2014 almost one-quarter of the European Court of Justice’s (ECJ) trademark decisions related to three-dimensional (3D) marks. Half of these decisions were cancellation actions brought against registrations of 3D marks. This article considers a number of these cases and reviews their implications for rights holders wishing to register 3D marks.

The importance to trademark owners of issues relating to 3D marks is highlighted by the fact that, on March 25 2014, the president of the ECJ issued an order permitting the International Trademark Association (INTA) to intervene in Voss of Norway v OHIM – Nordic Spirit, a case that involved an attempt to cancel a registration for the shape of a bottle. This permission was based on the fact that the case involved questions of principle concerning the assessment of the validity of 3D marks and was therefore likely to affect the interests of INTA’s members.

Specific grounds for refusing shape marks

In Hauck GmbH & Co the ECJ examined the boundaries of the specific grounds for refusal or invalidation of shape marks in a case centred on a 3D mark resembling the Tripp Trapp children’s chair

Hauck

In Hauck GmbH & Co KG v Stokke A/S (September 18 2014) the ECJ examined the boundaries of the specific grounds for refusal or invalidation of shape marks.

Facts: The mark in question was a registration with the Benelux Office for Intellectual Property for a 3D mark resembling the Tripp Trapp children’s chair. The trademark was registered for “chairs, especially high chairs for children”. Stokke and others brought an action in the Netherlands claiming (among other things) that the manufacture and marketing by Hauck of its alpha and beta chairs infringed its Benelux trademark. Hauck counterclaimed, seeking a declaration that the Benelux mark was invalid. The Court of Appeal in The Hague held that the attractive appearance of the Tripp Trapp chair gave the product substantial value and that its shape was determined by the nature of the product – a safe, comfortable, reliable children’s chair.

As a consequence, it held that the trademark consisted exclusively of a shape corresponding to the grounds for refusal or invalidation set out in the first and third indents of Article 3(1)(e) of the EU Trademarks Directive:

1. The following shall not be registered, or if registered shall be liable to be declared invalid…

(e) signs which consist exclusively of

- the shape which results from the nature of the goods themselves

- the shape of goods which is necessary to obtain a technical result

- the shape which gives substantial value to the goods.

On appeal, the Supreme Court stayed the proceedings and referred certain questions as to the interpretation of Article 3(1)(e) to the ECJ.

Interpretation of Article 3(1)(e): The ECJ considered whether “consist exclusively of… the shape which results from the nature of the goods themselves” covers a shape with one or more characteristics which are essential to the product’s function.

It decided that the objective of this limb of Article 3(1)(e) is the same as that of the other two – namely, to prevent the exclusive and permanent right which a trademark confers from serving to extend indefinitely the life of other rights which the EU legislature has sought to make subject to limited periods.

The ECJ applied the approach adopted in Lego Juris v OHIM to the first limb: identify the essential characteristics (ie, the important elements) of the sign and assess whether any of these elements (eg, decorative or imaginative elements which are not inherent to the generic function of the goods) play an important or essential role.

As a consequence, if all of the important elements of the mark are essential characteristics inherent to the generic function or functions of the goods, then the mark falls within the first limb.

The ECJ went on to consider whether “consist exclusively of…the shape which gives substantial value to the goods” applies where the shape has several characteristics, each of which may give that product substantial value.

It referred to the objective of the third limb being the same as that of the first, and held that the possibility of applying the third limb should not be ruled out when, in addition to the aesthetic function, the product performs other essential functions.

Indeed, the concept of shape which gives substantial value to the goods cannot be limited purely to the shape of products having only artistic or ornamental value, as otherwise there is a risk that products which have essential functional characteristics as well as a significant aesthetic element will not be covered. This would grant a monopoly over the essential characteristics of such products.

In deciding this question, account must be taken of the nature of the category of goods, the artistic value of the shape in question, its dissimilarity from other shapes in common use, a substantial price difference and a promotion strategy accentuating the aesthetic characteristics of the product in question.

The ECJ held that the use of the term ‘exclusively’ and the fact they are set out as successive points shows that each limb should be applied independently of the others.

It went on to say that the grounds for refusal set out in the first and third limbs could not be applied in combination.

Potential problem: There appears to be a tension between:

• the underlying rationale of Article 3(1)(e) as stated by the ECJ – namely, to prevent trademark protection from granting a rights holder a monopoly over technical solutions or functional characteristics of a product which a user is likely to seek in the products of competitors; and
• the answer to the third question that the limbs of Article 3(1)(e) cannot be applied in combination.

What the ECJ appears to be saying in its answer to the third question is that a mark can be registered even if some of its important elements amount to essential characteristics of products and the rest are elements that add substantial value. This is so long as all of the important elements do not fall within one limb only – which would mean that the shape consists exclusively of elements within a particular limb.

The tension arises because this appears to allow the registration of a shape mark which consists solely of elements that are excluded under the three limbs and therefore the objective of preventing a rights holder from obtaining a monopoly over a mark which consists solely of elements that are excluded is frustrated.

In a dispute centred on Nestlé’s KitKat, the following question was referred to the ECJ: “Where a shape consists of three essential features, one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result, is registration of that shape as a trademark precluded by Article 3(1)(e)9i) and/or (ii) of the Directive 2008/94/EC?”

KitKat: This issue arose in the English case Société des Produits Nestlé SA v Cadbury UK Ltd, judgment in which was handed down on January 17 2014.

The case involved an application to register the following trademark in respect of the following goods in Class 30: “chocolate, chocolate confectionary, chocolate products, confectionary; chocolate based preparations; bakery goods; pastries; biscuits; biscuits having a chocolate coating; chocolate covered wafer biscuits; cakes; cookies; wafers.”

The application was opposed by Cadbury, which relied on the equivalent provisions under UK trademark law to the first and second limb of Article 3(1)(e) of the directive.

The hearing officer at the UK Trademark Registry identified the essential features of the shape as:

• the rectangular slab shape of the mark as it appeared on the form of application, including the relative proportions of length, width and depth;
• the presence, position and depth of the breaking grooves arranged along the length of the bar, which effectively divided the bar into detachable fingers; and
• the number of such grooves, which together with the width of the bar determined the number of fingers.

In addition, he held that the first feature resulted from the nature of the goods themselves in the case of moulded chocolate bars or moulded chocolate biscuits, and that the second and third features were necessary to obtain a technical result.

As a consequence, he refused registration for a proportion of the specification.

On appeal to the English High Court, Nestlé argued that it is clear from the wording of Article 3(1)(e)(ii) that a sign is precluded from registration by that provision only if all of its essential features are necessary to achieve a technical result. This was not the case, as the first feature did not – it merely resulted from the nature of the goods themselves.

The judge indicated that he had more sympathy for the arguments raised by Cadbury. It would be bizarre if a shape composed of three essential features – two of which were necessary for a technical result and one of which resulted from the nature of the goods themselves – could be registered merely because all three features did not fall within one limb.

However, he did not feel able to say which interpretation of the directive was correct and therefore on April 28 2014 referred the following question to the ECJ: “Where a shape consists of three essential features, one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result, is registration of that shape as a trade mark precluded by Article 3(1)(e)9i) and/or (ii) of the Directive 2008/94/EC?”

The answer to the third question in Hauck (September 19 2014) now appears to have answered this question, although at the time of writing the question referred in Nestlé had not been withdrawn. It will be interesting to see whether it will be revisited by the ECJ.

What can amount to a shape mark?

In Apple Inc v Deutsches patent-und Markenamt (July 10 2014) the ECJ considered whether a depiction of the layout of Apple’s store could be registered as a 3D mark for goods and services under the Trademarks Directive.

Facts

Apple obtained a trademark registration from the US Patent and Trademark Office of a 3D mark consisting of the representation of its flagship stores for services in Class 35: “retail store services featuring computers, computer software, computer peripherals, mobile phones, consumer electronics and related accessories and demonstrations of products relating thereto.” The representation was described by Apple as “the distinctive design and layout of a retail store” and the company subsequently sought to extend the US trademark internationally under the Madrid Agreement. The extension was accepted in some jurisdictions, but refused in others, including in Germany. The German Patent and Trademark Office refused the extension of international trademark IR 1060321 on the grounds that the depiction of the space devoted to the sale of Apple’s products merely represented an essential aspect of Apple’s business. It considered that while consumers might perceive the layout of such a retail space as an indication of the quality and price of the products sold, they would not see it as an indication of their commercial origin. It also considered that the layout of the retail store which was the subject of the mark was not sufficiently distinguishable from the stores of other providers of electronic products.

Apple appealed to the Federal Patent Court, which considered that the store layout depicted by the mark at issue had features which distinguished it from those of other providers of electronic products. Nevertheless, it stayed the proceedings and referred the following questions to the ECJ:

• Is Article 2[i] of the Trademarks Directive to be interpreted as meaning that the possibility of protection for the ‘packaging of goods’ also extends to the presentation of the establishment in which a service is provided?
• Are Articles 2 and 3(1)[ii] to be interpreted as meaning that a sign representing the presentation of the establishment in which a service is provided is capable of being registered as a trademark?
• Is Article 2 to be interpreted as meaning that the requirement for graphic representability is satisfied by a representation by a design alone or with such additions as a description of the layout or indications of the absolute dimensions in metres or of relative dimensions with indications as to proportions?
• Is Article 2 to be interpreted as meaning that the scale of the protection afforded by a trademark for retail services also extends to the goods produced by the retailer itself?

In a case involving Apple’s application for protection of its store design, the ECJ found that a sign depicting the layout of flagship stores of a goods manufacturer can be registered not only in respect of the goods themselves, but also for services, even where these do not form an integral part of the offer for sale of those goods

In respect of the first three questions, the ECJ stated that it is “absolutely plain” from the wording of Article 2 that designs are among the categories of sign that are capable of graphic representation. Therefore, it followed that a representation which depicted the layout of a retail store by means of an integral collection of lines, curves and shapes could constitute a trademark, provided that it was capable of distinguishing the products or services of one undertaking from those of others. Consequently, such a representation would satisfy the requirements of Article 2 without it being necessary either to attribute any relevance to the fact that the design contained no indication as to the size and proportions of the retail store that it depicted or to examine whether such a design could equally, as a “presentation of the establishment in which a service is provided”, be treated in the same way as ‘packaging’ within the meaning of Article 2.

On the issue of distinctiveness, the ECJ said that the representation of a retail store was also capable of distinguishing the products or services of one undertaking from those of others (ie, was capable of satisfying the third condition contained in Article 2). It refused to rule out that the layout of a retail outlet depicted by such a sign may allow the products or services for which registration is sought to be identified as originating from a particular undertaking, such as when the depicted layout departs significantly from the norm or customs of the economic sector concerned. However, the distinctive character of the sign must still be assessed for the purposes of Article 3(1)(b) and the sign must also satisfy the other criteria for registration set out in Article 3(1).

Provided that the conditions set out in Articles 2 and 3(1) are satisfied, the ECJ found that a sign depicting the layout of flagship stores of a goods manufacturer can be registered not only in respect of the goods themselves, but also for services, even where these do not form an integral part of the offer for sale of those goods. Certain services – such as those referred to in Apple’s application and during the proceedings, including the carrying out of in store demonstrations of the products on display – could constitute remunerated services falling within the concept of a ‘service’.

Application of Article 3(1)(e) to figurative marks

In two of the invalidity shape mark cases considered by the ECJ in 2014 – Yoshida v OHIM and Louis Vuitton v OHIM – the question arose as to when case law and legislative limitations which apply to product shape marks will apply to figurative marks.

Louis Vuitton related to a cancellation action at OHIM to invalidate a registration for a following figurative Community trademark registered for goods in Classes 9, 14, 18 and 25. The Office for Harmonisation in the Internal Market (OHIM) Board of Appeal found that the mark had been found invalid for goods in Classes 9, 14 and 18 on the basis that it was devoid of character for those goods. Part of its reasoning was based on a series of cases that assessed the distinctive character of marks depicting the shape of products (ie, that only a mark which departs significantly from the norm or customs of the sector can have the requisite distinctiveness). In this case the mark depicted a lock that could form part of the products at issue.

Before the ECJ, Louis Vuitton disputed that such cases apply to a figurative mark which is a faithful representation of the shape of the whole product or one of its main parts and would be immediately recognisable as such.

The ECJ disagreed and held that the case law does apply where only part of the product is represented by a mark – and that such a part need not be perceived as essential to the product. The reason it gave for this was that where a figurative mark comprises part of the shape of the product, the mark is not independent of the product. In addition, the public is likely to perceive it as a representation of a detail of the product rather than as an indication of commercial origin.

Burden of proof

Louis Vuitton also addressed the question of where the burden of proving the case lies in a cancellation action brought on the basis that the registration lacked distinctiveness.

Louis Vuitton argued that the lower court did not give sufficient weight to the presumption of validity granted under Article 99 of the regulation. The onus was on the applicant for cancellation to rebut that presumption by proving that OHIM had committed an error in holding that the mark was inherently distinctive.

The ECJ appeared to hold that, at least on appeal, once the OHIM Board of Appeal had decided that the mark was not distinctive, Louis Vuitton had the burden of showing that the mark was in fact distinctive.

The issue of which party in a cancellation action has the burden of proof is of concern to owners of 3D marks. Having taken the effort to obtain a registration, rights holders may feel it unfair that their registrations can be challenged by way of cancellation and that they must then prove that their mark meets the criteria of registrability all over again – especially when they have to establish the position that existed some years previously at the filing date.

In the Voss appeal which was lodged in August 2013 and in which INTA is intervening, the ECJ has also been asked to provide guidance on this issue, although whether these questions will remain in light of the Louis Vuitton decision (published on May 15 2014) remains to be seen.

Conclusion

The high proportion of 3D-related trademark cases being considered by the ECJ is perhaps to be expected, given the value of such registrations and the interest that competitors have in cancelling them. The most contentious issue appears to be where the mark depicts the whole or part of a product. As can be seen from the cases referred to above, the range of products for which protection is sought is broad and includes chairs, locks for bags, knife handles, beverage bottles and shop designs. However, Article 3(1)(e) and the enhanced requirement for distinctive character (ie, that it depart significantly from the norms or customs of the relevant sector) mean that such registrations will be difficult to obtain and defend from cancellation attacks.

It is likely that more ECJ decisions dealing with 3D marks will be issued in 2015. In particular, the Voss decision due in early May 2015, where – in addition to any discussion of burden of proof – we can expect the ECJ to reconsider the definition of the ‘norms or customs of the relevant sector’ in the context of the assessment of the distinctive character of a 3D sign.