Audi’s ‘S6’ and ‘S8’ confusingly similar to NIO’s ‘eS6’ and ‘eS8’ models

The Higher Regional Court of Munich rendered an interesting judgment concerning trade marks for model designations of the car makers Audi and NIO.

Background

Audi owns EU trade marks ‘S6’ and ‘S8’, both registered for ‘vehicles’ in class 12.

In 2016, NIO filed German trade marks ‘ES6’ and ‘ES8’ inter alia for ‘vehicles’ in class 12. They were cancelled upon opposition by Audi (except for some services in class 37).

In 2023, the Board of Appeal of the European Union Intellectual Property Office declared NIO’s EU trade marks ‘ES6’ and ‘ES8’ invalid because of Audi’s earlier trade marks.

These decisions did not stop NIO from using ‘eS6’ and ‘eS8’ on its website www.nio.com/de for its car models as follows:

Audi sued NIO successfully for trade mark infringement before the District Court of Munich I. NIO appealed to the Higher Regional Court of Munich.

The Higher Regional Court’s decision

The Higher Regional Court of Munich dismissed NIO’s appeal (case 6 U 385/23 e).

Non-use defence

NIO’s non-use defence against Audi’s trade marks was unsuccessful. Audi’s intensive use of the following sign on car models in the EU and particularly in Germany was deemed not to alter the distinctive character of the mark ‘S6’:

The judges considered that the figurative element in the form of a rhombus was in the background and a simple geometric figure. Consumers would perceive it as merely decorative. Such elements would not alter the distinctive character.

The relevant signs

The Court held that the assessment of the infringement may be limited to NIO’s use of ‘eS6’ and ‘eS8’. The word ‘NIO’ preceding these signs was not taken into consideration.

Consumers would understand that ‘NIO’ on the one hand and ‘eS6’/‘eS8’ on the other were separate trade marks. Although ‘NIO’ and ‘eS6’/‘eS8’ were written close together in white typeface on a black background, the word ‘NIO’ was in bold print and consisted of capital letters, while in the elements ‘eS6’/‘eS8’ at least the letter ‘e’ was written in lower case.

Further, the mark ‘NIO’ was present several times on the contested website in isolation. This suggested to consumers that ‘NIO’ was a trade mark that was distinct from ‘eS6’/‘eS8’.

Finally, consumers were used to car makers using a main brand (‘Audi’, ‘NIO’) and a separate model designation for each model (‘S6’, ‘eS6’).

Use as a trade mark/origin function

The judges confirmed that consumers would understand NIO’s model designations ‘eS6’/‘eS8’ as indications of origin, thereby affecting the origin function of Audi’s trade marks.

The signs ‘eS6’/‘eS8’ were prominently displayed several times on the website, including on the license plate of the cars.

Beyond that, the judges referred (again) to the customary practise in the automotive industry to use a main brand and a separate model designation, the latter often consisting of combinations of letters and numerals.

The Court also saw no indication that ‘eS6’ and ‘eS8’ were descriptive. Even through the letter ‘e’ might be perceived as an abbreviation of ‘electric’ or ‘electronic’, the letter ‘S’ did not have a clear meaning. In any event, it was unclear to the Court what the numerals ‘6’ and ‘8’ were supposed to describe.

Similarity of signs

According to settled case law of the German Supreme Court, a similarity of the signs (and a likelihood of confusion) can be based on only one of the modes of perception (i.e. visual, phonetic or conceptual) without assessing the others. Therefore, the Higher Regional Court only determined whether the signs were phonetically confusingly similar.

The judges left undecided if there was a significant part of the public that pronounced the letter ‘e’ in NIO’s trade marks. Even if it were pronounced, the Court found that the signs were sufficiently similar because the letter ‘e’ played a limited phonetical role because the pronunciation of the letter ‘S’ in German begins with the letter ‘e’.

Likelihood of confusion

Despite the increased level of attention, which consumers pay to vehicles, the Court found that there was direct confusion between the marks because of the average level of inherent distinctiveness of Audi’s trade marks, the identity of the goods and the phonetic similarity of the signs.

The fact that the contested use concerned a website, which could only be perceived visually, but the likelihood of confusion was based on a phonetic similarity, was not deemed relevant. Consumers could engage in conversations on the basis of the website. Moreover, the judges found that, when reading a word, the phonetic impression is also perceived and awakens memories of phonetically similar trade marks, which are known from previous encounters.

Comment

It is interesting to see that the Court accepted direct confusion, although it found a custom in the car sector to exist that main brands and model designations are perceived as separate trade marks. The main brand ‘NIO’ is clearly visible on the website. This seems to be rather a case of indirect confusion, i.e. consumers may believe that there are organisational or economic links between the parties.

It is also noteworthy that abstract model designations such as ‘S6’ are perceived as trade marks in the automotive industry. This is not self-evident in other industries, where abstract model designations consisting of combinations of letters and numbers are often just meant to distinguish models from the same manufacturer but not from that of other manufacturers.