Is it possible to award compensation to a trade mark holder who has never exploited their trade marks and whose rights were revoked, in the context of an action for infringement of that trade mark by third parties?
This, in a nutshell, is the subject of the referral to the Court of Justice of the European Union (CJEU) in Cooper, C-622/18.
As readers might remember, a somewhat similar question has already been addressed by the CJEU in Länsförsäkringar, C-654/15. There the court held that:
Article 9(1)(b) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the [European Union] trade mark, read in conjunction with Articles 15(1) and 51(1)(a) of that regulation, must be interpreted as meaning that, during the period of five years following registration of an EU trade mark, its proprietor may, if there is a likelihood of confusion, prevent third parties from using in the course of trade a sign identical or similar to his mark in respect of all goods and services identical or similar to those for which that mark has been registered without having to demonstrate genuine use of that mark in respect of those goods or services.
In his Opinion (not available in English) last week, Advocate General (AG) Pitruzzella analysed the rationale of the revocation action and pointed out the differences between the Länsförsäkringar case and the Cooper case, first and most importantly the fact that in Länsförsäkringar the five-year period had not yet expired and no requests for revocation had been made or could have been formulated.
Let’s see how the AG tackled this case.
The law
Action for revocation and its rationale
First of all, the AG, considering the rationale underlying revocation, stressed that the use of a trade marks is fundamental for keeping the rights stemming from it. He recalled that in Leno Merken, C-149/11, the CJEU held that recital 9 of Directive 2008/95 means that “it is essential to require that registered trade marks must actually be used or, if not used, be subject to revocation”. All this demonstrates that the EU legislature wanted to make the rights of a trade mark subject to use of such sign.
The use requirement is aimed at guaranteeing both the essential function of a trade mark and ensure that competition is not distorted. All EU trade mark instruments provide that rights are acquired through registration but are maintained through use.
Article 12 of the Directive 2008/95 provides the grounds for revocation while Article 10 therein distinguishes between two different cases:
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| This Kat is clearly not using its trade mark |
when, within a period of five years following the date of the completion of the registration procedure, the proprietor has not put the trade mark to genuine use in the Member State in connection with the goods or services in respect of which it is registered;
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when such use has been suspended during an uninterrupted period of five years.
The present case is concerned with the former.
Exclusive rights on trade marks in infringement proceedings
The AG recalled the essential core of intellectual property rights: the exclusive right of the proprietor and the prohibition of interference by third parties.
AG Pitruzzella indicated the differences between traditional property rights and intellectual property rights when it comes to infringement. The rights conferred by a trade mark only allow the owner to repress unauthorised uses in the course of trade. He also recalled that it is possible to act for trade mark infringement only if the conditions in article 5 directive 2008/95 are met.
Moreover, harmonisation of trade mark law has extended the scope of infringement actions in that what is protected is not just the origin function, but also other functions, including communication, investment and advertising.
Should the infringement be examined in an abstract or concrete way?
Moving from the fact that the CJEU prefers a concrete examination of the elements to prove the infringement, the AG suggested that if it is possible to use concrete elements to prove the infringement it is not possible to evaluate the commercial exploitation of a trade mark to narrow down the scope of its protection or to eliminate such protection.
For this reason, when analyzing likelihood of confusion both abstract and concrete elements must be taken into account; the abstract elements serve to determine the minimum threshold of protection, while the concrete elements serve eventually to expand such protection.
After redefining the preliminary question, affirming that the discussion about the concrete or abstract analysis of the likelihood of confusion has limited relevance while the real question is whether or not the trade marks owner can act for infringement even after the revocation of their rights, the AG noted that the answer does depend on neither the presence of a damage to the trade mark’s function nor to the trade mark’s proprietor.
Compensation for infringement
The AG recalled that the proprietor of a trade mark cannot exercise their exclusive rights after the revocation. However, the infringing acts committed before the revocation remain illegal. Reasoning to the contrary would imply the ex post acceptance of the infringement acts performed when the trade mark was still protected.
It may seem unjustified to attribute compensation to someone who did not exercise their rights in the timeframe recognised by the law. However, in accordance with Länsförsäkringar:
It is apparent from the wording and purpose of Article 15(1) and Article 51(1)(a) and (2) of Regulation No 207/2009 that, until the period of five years following registration of the EU trade mark has expired, the rights of the proprietor cannot be declared to be revoked in respect of either some or all of the goods or services for which the mark is registered. Those provisions thus confer on the proprietor a grace period for beginning genuine use of his mark, during which he may rely on the exclusive rights which the mark confers, pursuant to Article 9(1) of the regulation, in respect of all those goods and services, without having to demonstrate such use.
According to the AG, compensation should be recognized, the only potential obstacle being national law attributing retroactive effect to the revocation.
In Länsförsäkringar, the CJEU also said that:
from the time that the period of five years following registration of the EU trade mark expires the extent of that exclusive right may be affected by the finding — made following a counterclaim, or a defence as to the merits, lodged by the third party in infringement proceedings — that the proprietor has at that time not yet begun genuine use of his mark in respect of some or all of the goods and services for which it has been registered
According to the AG, this should be interpreted as only referring to infringing acts committed after the revocation.
All this said, AG Pitruzzella advised the CJEU to rule that a trade mark proprietor who has never exploited their trade mark and whose rights were revoked on expiry of the period of five years following publication of its registration can obtain compensation for injury caused by third-party infringing activities, before the effective date of the revocation, of a sign similar to that trade mark to designate goods or services identical or similar to those for which that trade mark was registered.
The AG, in particular, advised the CJEU to rule that compensation should be obtained on the basis of Article 5(1)(b) of Directive 2008/95. Should the CJEU decide otherwise, he advised to rule that such compensation could be obtained through actions having a different legal basis, such as unfair competition or other tortious liability.
Comment
The use of a trade mark is key for maintaining relevant rights and, in some Member States, to acquire rights over a sign.
One of the implications of this Opinion is to limit the importance of use of a trade mark in the period of five years following registration, in that a trade mark holder can act for infringement even after their trade mark has been revoked.
This is in line with a broader tendency to extend the scope of protection granted by trade marks. First, we have already seen the extension of the functions of trade marks; second, the analysis of likelihood of confusion between signs extends the protection of trade marks from what was purely the object of registration. In this case it could be stated that an abstract analysis, based only on the registration, may allow protecting a trade mark that has never been used and which has been revoked.
