Out-Law News 4 min. read

Trade marks: evidence of acquired distinctiveness can be extrapolated, says EU court adviser


Brand owners seeking to prevent their EU trade marks from being revoked may not need to provide evidence from every EU country that those marks have acquired distinctive character, an adviser to the EU's highest court has said.

Marks which are devoid of distinctive character cannot be registered as trade marks under EU law. However, where a mark that is not inherently distinctive has been wrongly registered as a trade mark, trade mark owners can retain it if it has "acquired a distinctive character in relation to the goods or services for which it is registered" through its use after registration.

In December 2016 the EU's General Court ruled that marks which are not inherently distinctive must be shown to have acquired distinctive character across every EU country to remain registered as an EU trade mark.

However, that view has now been challenged by an advocate general of the Court of Justice of the EU (CJEU), which has been asked to consider appeals against the General Court's judgment. Advocate general Melchiot Wathelet issued a non-binding opinion in the case on Thursday.

The case concerns a dispute between confectionary giants Nestlé and Mondelez UK Holdings & Services, the owner of the Cadbury brand over whether an EU trade mark registered in 2002 by Nestlé for its four-finger ‘Kit Kat' bar is valid.

The EU's Intellectual Property Office (EUIPO) previously held that the Nestlé mark was devoid of inherent distinctive character, but that the company had shown that the mark had acquired distinctive character through its use – a decision that Mondelez appealed before the General Court.

To support its claims of acquired distinctiveness, Nestlé submitted evidence from 14 of the 15 EU member states that existed at the time its EU trade mark was registered in 2002. Nestlé did not present evidence of acquired distinctiveness in Luxembourg.

The General Court held that evidence from 10 of the 15 countries was sufficient to show that Nestlé's mark had acquired a distinctive character through use in those countries, but that in four of the countries the evidence was not sufficient to reach such a conclusion. It ruled that Nestlé could not rely on the evidence from the 10 states as proof that the mark had acquired distinctive character throughout the whole of the EU.

However, both Nestlé and Mondelez have appealed the General Court ruling to the CJEU. A formal judgment on the case is expected in the coming months.

In his non-binding opinion which could nevertheless shape how the CJEU rules, advocate general Wathelet said that the EUIPO's decision that Nestlé's mark had acquired distinctive character should be annulled. However, he disagreed with the way the General Court had interpreted EU trade mark law.

According to the legal adviser, brand owners may be able to extrapolate evidence of acquired distinctive character gathered from one country of the EU across an entire region within the EU's single market. Evidence from each EU country may not be necessary, although it will depend on the circumstances of each case, he said.

The legal adviser said that national or regional markets may exist for goods within the EU's single market. As long as there is sufficient evidence from within each of those parts of the overall market to show that a mark has acquired distinctive character then EU trade mark rights for such marks can be retained, even if evidence is not gathered from each individual EU country.

"Account must be taken of the geographical size and the distribution of the regions in which acquired distinctive character has been positively established, in order to ensure that the evidence from which an extrapolation is made for the whole of the European Union relates to a quantitatively and geographically representative sample," Wathelet said.

The way that the EU's single market is split into parts geographically for the purpose of adducing evidence will change on a case-by-case basis depending on the type of goods being sold to which marks relate, he said.

"It is common for economic operators like Nestlé, when distributing their goods or services, to group together certain national markets for a number of reasons, such as their geographical proximity, the existence of historical links between them, or even a common language, customs or practices," Wathelet said. "In that sense, against that background and depending on the goods at issue, the evidence provided for certain national markets could, on the basis of what Mondelez called ‘market comparability’ at the hearing, be sufficient to cover other markets omitted from the evidence or for which quantitatively sufficient evidence has not been provided."

"For example, it might be that, for certain goods or services and on account of the comparability of the markets in question, the evidence provided for the Spanish market is also sufficient for the Portuguese market, or the evidence provided for the United Kingdom market is sufficient for the Irish market, and so on," he said.

However, Wathelet said that "if the relevant public in part of the European Union does not perceive" a mark as "an indication of the commercial origin of the goods or services which it covers" then that mark cannot be considered "an EU trade mark with a unitary character".

According to the advocate general's opinion, Nestlé did not submit any evidence to claim that the evidence found of acquired distinctiveness in the 10 EU member states could be extrapolated across all of the 15 countries in the EU market at the time of registration.

Intellectual property expert David Woods of Pinsent Masons, the law firm behind Out-Law.com, said that the opinion highlights that, in certain circumstances, the benefit of the doubt can be given to trade mark owners. "What the latest development in this long-running and hard-fought case shows is how important it can be to gather evidence of your trade mark and the rights you claim you have when you are seeking to protect it."

The case is likely to be reconsidered by the EUIPO if the CJEU backs Wathelet's views in its judgment.

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