Trade names – a Class of Signs “more equal” than others?
Dr. jur. Annette Kur
Max-Planck-Institute for Intellectual Property, Competition and Tax Law, Munich
Adjungerad professor at Stockholms University
If European beer drinkers were asked to indicate their preference between the two brands involved in the conflict underlying the ECJ’s (The Court of Justice of the European Communities) decision in Budweiser case, the result might be equally clear as in the polls conducted among Europeans before the US presidential election of November 2nd. Whether that is true or not – and irrespective of whether it is justified or not – it is clear this should not influence the outcome of a legal decision.
It is therefore presumed that personal tastes or preferences have not played a role in the interesting and important judgment handed down by the ECJ on 16 November. The decision concerns basic issues in the relationship between trade marks and trade names, and it was rendered in the light not only of European, but also of international law. The weight attributed to the decision by the Court itself is marked by the fact that it was handed down by the Grand Chamber.
In this brief comment I do not intend to dig into the history of the case, nor speculate on the outcome of the actual lawsuit pending before the Finnish Supreme Court. Nor will I consider in detail the way in which the ECJ construed and motivated its competence with regard to the interpretation of international law, in particular Art. 8 of the Paris Convention. Those findings are in line with the previous case law. The contention that Art. 8 Paris Convention is covered by TRIPS is also backed by the WTO Appellate Body report in the Havana Club case .
“Prior right” of trade names even more unclear than before
The decision does, however, give rise to serious doubts and concerns in two aspects. Firstly, the issue as to when a trade name qualifies as a “prior right” in the meaning of Art. 16.1, 3rd sentence TRIPS appears even more unclear after the judgment than before it. Secondly, the ECJ’s interpretation of Art. 6.1 (a) Trade Mark Directive 89/104/EC (and thereby also Art. 12 (a) CTMR 40/94/EC) entails a privileged treatment of trade names, which might jeopardize fundamental principles of trade mark law.
Regarding the qualification of trade names as prior rights in the meaning of TRIPS, the ECJ confirms, on one hand, the right of the national legislature to establish certain thresholds for protection, like minimum use or minimum awareness. The Court points out that Art. 8 of the Paris Convention, according to which protection for trade names must be granted in all Member States without the obligation of registration or filing, does not prohibit such minimum requirements (paragraph 96 of the judgment). The clear message this seems to convey is, however, blurred when the ECJ concludes that “The answer…must be that a trade name which is not registered or established by use…may be regarded as an existing prior right… if the proprietor has a right falling within the substantive and temporal scope of the TRIPS agreement which arose prior to the (conflicting) trade mark” (emphasis added). What does that mean?
Deviation from the territoriality principle?
If the legislature in the country where the conflict arises is free to stipulate minimum use or awareness as a requirement for protection of foreign trade names, the logical consequence would be that a trade name not living up to that legal standard does not qualify as a prior right in that territory. How else, if not by taking account of the requirements posed in national law, shall it be established that the trade name “arose prior to the conflicting mark?” Does the ECJ mean to suggest that it is the situation in the foreign company’s home country which is decisive in that regard?
If that, indeed, were the intended meaning, it would entail a clear deviation from the territoriality principle. It would also evidently clash, without so much as a discussion, with the judicial practice established in a number of Member States (e.g. in Germany), that it is irrelevant for the protection claimed by a foreign trade name under Art. 8 of the Paris Convention whether it has been validly established, or is still being protected, according to the law in the country where the proprietor has its seat.
But as said, the ECJ’s decision is all but clear on prior rights. This assuming that the Court’s reasoning was meant to have the far-reaching implications sketched above may therefore amount to an over-interpretation. Maybe the only purpose of those lines was to reinforce the point made in the first part of the judgment, namely that the limitation of a trade mark holder’s right to prohibit the use of a name does not only relate to personal names, but also encompasses trade names. Indeed, this message seems to have been a major concern for the ECJ, as the Court took care to address this point even in absence of a question posed by the national court.
The Court also deliberately chose to set aside as irrelevant the joint declaration by the Council and the Commission, stating that the relevant provision, Art. 6.1 (a) Trade Mark Directive, is only intended to cover personal names.
Commission and Council had good ground for their declaration
It is of course true that the joint declaration does not have formally binding character. However, before discarding it for good, it might have been wise for the Court to investigate the motives on which it was grounded. Such an inquiry would have led to the following considerations.
In spite of the fact that trade marks and trade names differ with regard to the objects they are meant to identify and distinguish, the respective areas regularly overlap in practice. This is particularly obvious with regard to service marks: the difference between a trade mark designating specific services and the trade name designating the firm rendering them may be hardly perceivable for an average member of the public.
With regard to product marks, the situation is not quite the same. But is there really a difference in substance, from a practical and economic viewpoint, between the situation that someone uses an identical or similar mark for identical or similar products, and thereby causes the public to assume that they stem from the same or related enterprises, and the situation that an enterprise producing identical or similar products adopts a trade name that is identical or similar to a protected trade mark?
Is it not so that in both cases alike, the public is set at risk to be fooled about the connection between certain products and the enterprise or enterprises producing them? Why should the sanction be strict only in the first case in the sense that the prior right prevails, while in the second case, the use of a younger sign enjoys privileged treatment under Art. 6.1 (a)?
In Germany, these issues have long been debated with regard to § 16 WZG, the limitation clause in the previous Trade Mark Act, which in its wording referred to trade names (“Firma”) as well as to personal names. As a result of thorough deliberations, the scope of that limitation clause was considerably narrowed, praeter legem, by the courts: Only trade names including the personal name of the owner were held to be entitled to the privilege, whereas others were subjected to the same rules as trade marks, i.e. their use could be prohibited by the owner of a prior trade mark if, in view of the identity and similarity of the signs and the similarity of the products or services on one hand and the field of business on the other, a likelihood of confusion was found to exist. It was this experience from Germany, and also corresponding experiences of some other European countries which lay behind the joint declaration issued by the Commission and the Council that was now dismissed with a light hand by the ECJ.
Similar issues considered in WTO and elsewhere
The repercussions the ECJ decision will have for future practice are difficult to predict. The most feasible way to deal with the situation will probably be to apply a strict test of “honest practices” within the framework of Art. 6. Contrary to what the ECJ has pointed out in paragraph 82 of the judgment, however, the experiences in Germany and other Member States’ previous practice with trade mark/trade name conflicts should be observed as a guideline in this process rather than the standards indicated in Gerolsteiner Brunnen/Putsch Case (C-100/02, ECJ judgment on 7 January, 2004 ).
It is a remarkable coincidence that on the same day as the ECJ decision was handed down, the WTO panel investigating the complaint filed by the USA and Canada concerning the EU system for registration of geographical indications issued its interim report to the three parties involved. As the interim report is confidential, no details are available at present.
However, sources claim that the panel is sceptical inter alia about the breadth of limitations trade mark owners have to respect with regard to ‘fair use’ of geographical indications. If that is true, there is reason to assume that a WTO panel would likewise not look favourably upon broad limitations applying in favour of trade name holders. The ECJ might be too sanguine in assuming that Art. 17 TRIPS is in accordance with its own interpretation of European trade mark law. For national courts, this could mean that they have to make a choice between compliance with international norms and the ECJ’s ruling. This would be a most unfortunate situation, which will hopefully be amended soon.
 ECJ decision of 16 November, C-245/02 – Anheuser-Busch, Inc./Budĕjovický Budvar, národní podnik.
 Appellate Body report of January 2, 2002 (WT/DS176/8).
 That the ECJ might indeed endorse the approach that the situation in the trade name holder’s home country is decisive with regard to priority and existence of the right further seems to be reflected in Paragraph 94 of the judgment, where ECJ points out that to qualify as a prior right the trade name must be “an existing right. The term ‘existing’ means that the right concerned must…still be protected at the time when it is relied on by the proprietor…”. If, as usual, solely the situation in the protection country (=the country where the conflict arises) were held to be decisive for the assessment of the conflict, the fact that the right which is claimed to have priority must still be existing would be self-evident and would hardly have to be pointed out expressly.
 For a certain class of small businesses, it was mandatory under German law for some time to include the personal name of the owner in the “Firma”. It was in particular with respect to those cases that the privilege was granted.
Yhteisöjen tuomioistuinten ratkaisut. Kirjoita hakukenttään tapauksen numero C-245/02 ja napsauta ETSI-painiketta: