Protecting Well-Known Trademarks in the European Union

It is in every brand owner's best interest to protect his intellectual property, and given the sheer value of trademarks - especially within the fashion industry, where branding plays such a central role - attention to them (whether it be a brand name, logo, or other branding element) is crucial. Such protection is not merely essential in the market that a brand calls home, but in those in which the brand is present, as well. 

With this in mind, the European Union is one of particular importance, not only because of the recent Brexit vote but because it comprises such a vast number of countries, and thus, markets. Trademark protection in the European Union has developed mainly based on international treaties, such as the Paris Convention, the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPs”) and the Madrid Agreement.

Protection granted to famous trademarks (any word, name, symbol, or design (including logos, colors, sounds, product configurations, etc.), or any combination thereof used in commerce to identify and distinguish the goods of one brand from those of another) originates from Article 6bis of the Paris Convention and Article 16 of TRIPs. These statutes give additional protection to well-known marks, even where they have not been registered. However, there is still no common definition of a “well-known” mark, leading to variations in interpretation and thus, protection, from country to country.

In the European Union, well-known marks enjoy a special and broader degree of protection, as set out in Article 5(3) of the EU Trademark Directive (2015/2436 – formerly Article 5(2) of Directive 89/104/EEC) and Article 9(1)(c) of the EU Community Trademark Regulation (207/2009, as amended by Regulation 2015/2424). The owner of a well-known trademark is entitled to prevent third parties from using any sign that is identical or similar to its mark, irrespective of whether it is in relation to goods or services which are identical or similar to, or even completely dissimilar to, those for which the well-known mark is registered, where such use, without due cause, would take unfair advantage of or be detrimental to the earlier mark’s distinctive character.

These provisions were created to protect the functions of a trademark other than the most traditional ones, the latter of which include indicating the source or origin (or better yet, the brand) responsible for a product or service. In the most straightforward sense, trademarks help brands to distinguish their products and services from those of competitors. They also indicate a consistent level of quality that consumers can expect from a brand’s products and/or services.

Trademarks also serve some untraditional functions, include conveying messages as to a brand’s ethos. A mark may embody messages as to the qualities or particular characteristics of goods or services; it may also convey images or feelings, such as luxury, lifestyle, exclusivity or adventure, depending on the brand at issue. Such messages give the mark an inherent economic value independent of and separate from the goods or services for which it is registered, which is nearly always the result of considerable effort and investment on the part of the rights holder.

INTEL AND L’OREAL

In Intel Corporation v CPM United Kingdom Ltd (C-252/07, November 27 2008) and L’Oréal v Bellure (C-487/07, June 18 2009), the European Court of Justice (“ECJ”) attempted to define the scope of protection granted to “well-known” trademarks.

In the Intel case, the ECJ held that a well-known mark will be diluted if a later mark is used to create an immediate association with the goods and services for which it is registered. The court found that the stronger the distinctive character of the earlier mark, the more likely it is that the relevant public will call it to mind – increasing the risk of dilution.

Moreover, the ECJ held that the owner of a well-known mark must provide proof that use of the later mark “would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark.” Although the owner of the earlier mark need not demonstrate actual and present injury, it must prove that there is a serious risk that such an injury would occur in the future. This requirement introduces a high threshold for proof of dilution, which is arguably unfavorable to owners of well-known marks.

In the L’Oréal case, the ECJ extended the protection granted to well-known marks, holding that it is not necessary to demonstrate a likelihood of confusion, a likelihood of detriment to the mark’s distinctive character or reputation, or even any general detriment in order to find unfair advantage.

The ECJ held that the advantage is unfair where a third party “seeks by that use to ride on the coat-tails of the mark with a reputation” and does so to benefit from the mark’s power of attraction, reputation and prestige, with a view to exploiting the marketing efforts of the well-known mark’s owner, without any financial compensation and regardless of any detriment to the mark.

In L’Oréal, the argument that a later mark might take unfair advantage of the earlier mark’s reputation or distinctive character became more advantageous over claims of dilution of the earlier mark, previously argued following Intel.

POST-INTEL AND L’OREAL

More recently, the ECJ provided guidance on the extent of protection granted to well-known trademarks in Iron & Smith v Unilever (C-125/14, September 3 2015). Unilever, owner of an EU trademark registration for “IMPULSE,” filed an opposition against a Hungarian trademark application for “BE IMPULSIVE,” which it considered too similar to its earlier mark, even though this was intended to cover dissimilar goods.

In support of its opposition, Unilever referred to Hungarian legal provisions which provide extensive protection to famous marks and which go beyond the protection set out in Article 4(3) of the EU Trademarks Directive (2008/95/EC). The Hungarian application was subsequently rejected. The applicant appealed the decision and the Hungarian court asked the ECJ to clarify whether it was sufficient for Unilever to provide evidence of its reputation in some EU countries only (not including Hungary), or whether it had to provide specific evidence of its mark’s reputation in Hungary.

The ECJ confirmed that an EU trademark has a reputation in the European Union if it has a reputation in a substantial part of the European Union. However, it also explained that such substantial part of the EU territory may coincide with the territory of a single member state, even though this might not be the state in which the application for the later national mark is filed.

The ECJ thus provided a more flexible analysis of the requirements for a mark to be considered well known. It was not relevant that the IMPULSE mark had no reputation in Hungary, provided that it still fulfilled the requirement of reputation in the European Union.

Nonetheless, where a national trademark application has been opposed and an earlier EU trademark has a reputation in a substantial part of the European Union, but not within that particular member state, the owner will have to show that a “commercially significant part of that public is familiar with that mark, makes a connection between it and the later national mark, and that there is, taking account of all the relevant factors in the case, either actual and present injury to its mark, for the purposes of that provision or, failing that, a serious risk that such injury may occur in the future”.

By doing so, the ECJ has opted for a more practical approach, basing the assessment on the reality in the member state in which the owner of a well-known mark seeks protection. However, given that the ECJ did not define precisely what would be considered a ‘commercially significant part of the public’, this is likely to require further clarification in the future.

EU TRADEMARK LAW REFORMS

The protection granted to trademarks with a reputation has been extended by the new EU Trademark Regulation (2015/2424), which came into force on March 23 2016, and the new Trademark Directive, (2015/2436), and will have to be transposed by member states into national law by January 14 2019.

Previously, owners of well-known trademarks could oppose or apply to invalidate a later mark covering “goods or services which are not similar to those for which the earlier trade mark was registered”. However, in Adidas-Salomon v Fitnessworld Trading (C-408/01, October 23 2003), the ECJ held that where goods or services are identical or similar, the protection granted to the well-known mark must be at least as extensive as where the goods or services are dissimilar.

The new rules set out in the regulation confirm and codify Adidas by providing that oppositions or applications for invalidation can be filed “irrespective of whether the goods or services for which it is applied are identical with, similar to or not similar to those for which the earlier trade mark is registered”. Even if in practice this will not affect the owners of earlier marks directly, it does clarify the rule and helps to prevent potential questions of interpretation.

Additionally, the directive states that registered trademarks with a reputation must enjoy the same protection under the legal systems of all member states, making the protection of marks with a reputation against dilution mandatory in all EU member states.

Frédérique Bodson is a trademark attorney in the London office of Locke Lord LLP with extensive experience in all aspects of trademark law.