When a company creates a product, new because of its shape, its design or its functionality, it has an interest to market and distribute it under a particular trade name and to do its best to encourage the public to assimilate the relevant trademark and the product in order to attract and retain its customers.
But the trademark could be victim of its own success. If, because of its widespread use, the mark becomes the common name in the trade for a product or service for which it is registered, whether it is due to the active or passive attitude of its holder, the mark would lose its distinctiveness and would be susceptible to cancellation.
This issue is very important since the holder may then lose its trademark rights and not be able to take advantage of its marketing and promotional investments, while its competitors can lawfully and quite happily use it.
The appreciation of the circumstances and the conditions leading to the loss of its trademark rights by the owner, and in particular the relevant persons to take into account for making the assessment had been defined by the ECJ at first on 2004 (1) as follows:
“The relevant classes of persons comprise principally consumers and end users. However, depending on the features of the product market concerned, the influence of intermediaries on decisions to purchase, and thus their perception of the trade mark, must also be taken into consideration.
[…] In cases where intermediaries participate in the distribution to the consumer or the end user of a product which is the subject of a registered trade mark, the relevant classes of persons whose views fall to be taken into account in determining whether that trade mark has become the common name in the trade for the product in question comprise all consumers and end users and, depending on the features of the market concerned, all those in the trade who deal with that product commercially.”
This interpretation, favourable to trademark owners, is overshadowed by a recent decision of the ECJ rendering a preliminary ruling (2).
The dispute is about Austrian trademark KORNSPITZ owned by the firm Backaldrin. It is registered in connection with bakery goods and used for a baking mix supplied primarily to bakers who turn it into bread rolls are is oblong in shape and have a point at both ends.
Backaldrin’s competitors, like the majority of bakers, know that the word or sign KORNSPITZ has been registered as a trade mark. But that sign is perceived by end users as the common name for a bakery product, namely for bread with a particular shape. That perception is explained, inter alia, by the fact that the bakers using the baking mix provided by Backaldrin do not generally inform their customers either that the sign KORNSPITZ has been registered as a trade mark or that the bread rolls are produced using that specific mix.
Firstly, to the question of the possibility to revoke the trademark because of a loss of distinctive character from the point of view of end users only, the Court answers that “in a case such as that at issue in the main proceedings, a trade mark is liable to revocation in respect of a product for which it is registered if, in consequence of acts or inactivity of the proprietor, that trade mark has become the common name for that product from the point of view solely of end users of the product.”
Since the market of bread is not that different from those of gherkins, this decision could be considered as an evolution of ECJ’s case law. But it must be outlined that in the first case, it had been agreed that the relevant class of persons for determining whether or not the trade mark had lost its distinctive character was mainly the distribution chain level consisting of leading operators in the grocery, mass catering and food stall sectors.
So the determination of the relevant class of public still remains the key question.
The second question was about the behaviour of the trademark owner.
If the proprietor of a trade mark does not encourage sellers to make a more ostensible use of that mark in marketing a product in respect of which the mark is registered, can he be qualified as being inactive?
According the Court, inactivity includes all omissions “by which the proprietor of a trade mark shows that he is not sufficiently vigilant as regards the preservation of the distinctive character of his trade mark.” And in this case, taking no initiative which may have encouraged sellers to make more use of the mark KORNSPITZ in their commercial contact with customers may be classified as inactivity.
Thirdly and last, it was asked to the Court if the revocation of a trade mark necessarily presupposes that it must be ascertained whether there are other names for a product for which the trade mark has become the common name in the trade (3).
The Court answers that “the possible existence of alternative names for the product or service in question is irrelevant, since it cannot alter the finding that that trade mark has lost its distinctive character as a result of its transformation into the common name in the trade.”
What you need to remember
- The owner of a registered trademark must always pay close attention to the way the trademark is used in the trade and ensure that it is always perceived as an indication of the origin of the goods or services it covers and not as the name of such goods or services. To that end, it is very important to secure, through very strict licence agreements, the way the trademark may be used by licensees and, afterwards, to monitor the way the trademark is really used on the market.
- For some products intended for a very large public (such as bread), the perception of the end users may be enough to consider a trademark is not or no longer perceived as such but as the common name in the trade for the goods it covers. For such products, trademark owners should carefully monitor the use of their trademarks in their own marketing campaigns but also as made by the general public on the internet (web pages, online articles, blogs, comments, online dictionaries, etc.) and they should regularly take action in order to remind the public the trademark is not a common name. Evidence of these actions must also be kept very carefully in case they must be filed in lawsuit.
(1) ECJ, case C‑371/02, 29 April 2004, Björnekulla Fruktindustrier, related to trademark Bostongurka used for chopped pickled gherkins.
(2) ECJ, cases C‑409/12, 4 March 2014, Backaldrin Österreich The Kornspitz Company GmbH v. Pfahnl Backmittel GmbH.
(3) A parallel can be made with the multiplicity-of-forms theory known and sometimes used in industrial designs matters.