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European Court of Justice rules on trade mark defences

The European Court of Justice (ECJ) last week restricted the ability of trade mark holders to prevent others from using an audibly similar "geographical indication" – such as a place name. The court said that the geographical name "KERRY" did not infringe on the trade mark "GERRI", provided it was used "in accordance with honest practices."13 Jan 2004

The case concerned German company Gerolsteiner Brunnen, owner of the word mark "Gerri", and word/figurative marks that include the word "GERRI". These relate to mineral water, and mineral water-based soft drinks.

Another company, Putsch, marketed similar drinks in Germany, but with labels containing the phrase "KERRY Spring". These products are made in Ireland, by the Kerry Spring Water company.

Gerolsteiner took Putsch to court, claiming that the "KERRY Spring" products infringed on its trade marks. It argued that the similarity in sound between the two terms was sufficient to create confusion in the mind of the public. The Munich Regional Court (the Landgericht Munchen) agreed.

On appeal, the Higher Regional Court dismissed Gerolsteiner's claims, but allowed a further appeal to the Bundesgerichtshof – the German Federal Court of Justice.

Before ruling, the Bundesgerichtshof asked the ECJ to decide whether a provision in a trade mark Directive, limiting the effects of a trade mark, applied in this case.

The provision in question states:

"1. The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade,

...(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services; ...

provided he uses them in accordance with honest practices in industrial or commercial matters."

In particular, the German court was concerned whether the provision applied if the geographical indication "KERRY" was also a trade mark. If it did apply, the German court wanted to know whether the trade mark use had to be taken into account when considering Putsch's use "in accordance with honest practices."

The court was concerned to balance the rights of trade mark owners with the principles of free movement of goods and services and last week ruled:

"The mere fact that there exists a likelihood of aural confusion between a word mark registered in one Member State and an indication of geographical origin from another Member State is therefore insufficient to conclude that the use of that indication in the course of trade is not in accordance with honest practices."

It continued:

"In a Community of 15 Member States, with great linguistic diversity, the chance that there exists some phonetic similarity between a trade mark registered in one Member State and an indication of geographical origin from another Member State is already substantial and will be even greater after the impending enlargement."

Accordingly Gerolsteiner could only prohibit the use of "KERRY" if the use was not "in accordance with honest practices in industrial or commercial matters."

The ECJ left it to the Bundesgerichtshof to assess the circumstances of the case.