http://ipkitten.blogspot.com/2024/12/challenging-nestles-fitness-for-trade.html
On 27 November, the EU General Court rendered a decision (T-799/21) marking a significant
milestone in the 13-year long trade mark battle between European Food SA (European Food) and
Société des produits Nestlé SA (Nestlé). The General Court, in essence, found that submitting
evidence for the first time at the stage of appeal to the Board of Appeal (BoA), where it could have
been submitted at the first instance to the Cancellation Division, did not necessarily make the evidence
inadmissible, especially in invalidity proceedings based on absolute grounds for invalidity.
| A Kat trying to decide whether “FITNESS” is descriptive or distinctive |
Background
Nestlé has an EU trade mark for the word “FITNESS” in Classes 29, 30, and 32 of the Nice
Classification. In 2011, European Food brought an action before the Cancellation Division claiming
that Nestlé’s word mark lacks distinctiveness and is descriptive for all the Classes it was registered,
and therefore, it needed to be declared to be invalid, as per Article 52(1)(a), read together with Articles
7(1)(b)-(c) of Regulation No 207/2009 (now Articles 59(1)(a) and 7(1)(b)-(c) of the EU Trade Mark Regulation (EUTMR), respectively). After the Cancellation Division refused to invalidate the word
mark on these grounds, in 2013 European Food appealed to the Fourth BoA with additional evidence
supporting that “FITNESS” would be descriptive for the goods listed in Classes 29, 30, and 32. In
2015, the Fourth BoA dismissed the appeal, and did not take into consideration the evidence
“submitted late”. Following this, both the General Court (T-476/15) and the Court of Justice of the
EU (CJEU) (C-634/16 P) held that the BoA erred in law in not taking into consideration the evidence
submitted by European Food for the first time at the appeal stage.
Eventually, in 2018, the case returned to the BoA level. This time, the Second BoA assumed from
both courts’ rulings that it was required to examine the evidence submitted for the first time at the
appeal stage. Accordingly, it held that the word mark was descriptive and lacked distinctiveness. Now,
it was Nestlé’s turn to appeal against the decision before the General Court, which sided with Nestlé
by holding that the BoA was incorrect in stating that it was “apparent from [the previous judgments]
that it was required to take into account the evidence submitted by the applicant for the first time
before the Fourth Board of Appeal”. The General Court thus annulled the Second BoA’s decision
(T-536/18). The CJEU agreed (C-908/19 P).
In 2021, the third round of the combat over the admissibility of European Food’s belatedly submitted
evidence started with the First BoA’s decision, which stated that European Food “had not adequately
justified the late submission of that evidence” and thus, the Fourth BoA was “obliged to exercise its
discretion negatively and not accept it”. European Food, once again, appealed to the General Court
in December 2021, which rendered the decision that this Kat will analyse shortly.
In all this, it should be highlighted that, in the meantime, in February 2022, the First BoA realised that
it had made some errors and informed the parties about its intention to revoke its 2021 decision under
Article 103 of the EUTMR and eventually did so in June 2022. Nestlé appealed to the General Court,
seeking the annulment of this revocation decision, which the Court granted in June 2023 (T-519/22).
This left the appeal brought by European Food in December 2021 valid and subject to further
consideration.
The General Court’s Decision (Case T-799/21)
In its appeal, European Foods asked the Court to annul the First Board of Appeal’s decision or, in
the alternative, alter the decision by upholding its appeal against the Cancellation Division’s decision
dated 2013. After setting the applicable law (in paras 24-27), the Court assessed whether European
Food’s claim for annulment of BoA’s decision could be accepted. Among the four pleas in law
European Foods relied, the Court only addressed the second one, namely the infringement of Article
76(2) of Regulation No 207/2009, and of Rules 37 and 50(1) of Regulation No 2868/95.
a. Applicability of Rule 50
European Foods claimed that the BoA inaccurately based its analysis on the “premiss that Rule 50
was applicable” which constituted an error of law affecting, and arguably changing, the outcome of
its analysis. The Court, by referring to Case T-519/22, para 38, stated that the relevant provision was
“not applicable in the context of [trade mark] invalidity proceedings based on absolute grounds for
invalidity”. The Court, nevertheless, held that it was not apparent that this error had any material
influence on the BoA’s findings on the admissibility of the evidence newly submitted by European
Foods. Consequently, the Court rejected finding that the BoA erred in law in a way that had an impact
on the legality of its decision, at least in relation to the applicability of Rule 50.
b. Breach of Article 76(2)
The provision states that facts and evidence which are not submitted in due time by the relevant parties
may be disregarded. According to the European Foods, the so-called belated evidence was supplementary
evidence and therefore, the BoA exercised its discretion incorrectly by not taking it into consideration.
The BoA (i) noted that the evidence initially submitted to the Cancellation Division was insufficient,
but this insufficiency did not automatically preclude the submission of additional evidence to remedy
the inadequacy and strengthen the evidence already provided, and (ii) believed that the intention
behind submitting additional evidence (relating to the use and understanding of the term ‘fitness’) was
to strengthen the initial evidence and eventually prove the descriptiveness of the term ‘fitness’ in
relation to Nestlé’s goods. Nonetheless, (iii) it held that the mere fact that the new evidence was
provided in response to the Cancellation Division’s decision – finding the relevant mark neither
descriptive nor non-distinctive – was insufficient to justify the late submission of evidence.
The Court, on the other hand, stated that European Foods must have been aware that the evidence it
submitted to the Cancellation Division could be deemed insufficient, that the rules governing the late
submission of evidence were strict, and that it was required to provide a persuasive explanation for
both the delayed submission and the impossibility of presenting that evidence during the proceedings
before the Cancellation Division. Inevitably, the Court, contrary to European Food’s claim, concluded
that the BoA correctly emphasised the need to demonstrate the existence of a “new factor” to justify
the late submission of evidence.
However, the Court held that the BoA made an error of law in assessing whether a new factor capable
of justifying the late submission of evidence actually existed. It stated that the concept of a new factor
and the time limitation should not be interpreted as strictly in invalidity proceedings based on absolute
grounds for invalidity as they are in opposition proceedings. This is because the purpose of invalidity
proceedings based on absolute grounds for invalidity is to “enable EUIPO to review the validity of
the registration of a mark and to adopt, where necessary, a position which it should have adopted of
its own motion” [citing Castel Frères v OHIM, C-622/13 P, para 42]. Thus, adopting a strict approach
to reviewing the belated evidence that might prove the invalidity of Nestlé’s “FITNESS” trade mark,
the Court explained, would “considerably limit” the EUIPO’s ability to accurately decide whether it
should be invalidated on absolute grounds. Accordingly, the Court annulled the First BoA’s decision.
c. Alteration of BoA’s Decision
Although the Court acknowledged that, under certain circumstances, it has the power to direct how
the BoA should have decided on the established facts and law [citing Edwin v OHIM, C-263/09 P,
para 72], it ultimately refused to amend the BoA’s decision. This was primarily because the BoA had
never examined the substance of the evidence, and the General Court did not have the authority to
review it in lieu of the BoA.
While the Second BoA had examined the evidence in 2018, the Court pointed out that, due to the
annulment of its decision, both the decision and its assessment of the evidence were “retroactively
eliminated from the EU legal order”, preventing the Court from relying on that assessment.
Accordingly, the Court rejected European Food’s claim for alteration of the BoA’s decision.
Comment
It is, in this Kat’s view, crucial to maintain the principles of legal certainty and predictability [as
emphasised by the Court in para 55] in order to ensure that parties to a lawsuit can foresee the possible
outcomes at the earliest opportunity by preventing the introduction of additional facts, claims, or
evidence after a certain stage. However, if there has been a fundamental error or a breach of the law
from the outset, fairness and justice may require that the timing of its revelation should not matter in
certain cases.
With the availability of bringing invalidity claims based on the absolute grounds of refusal, competing
trade mark proprietors, companies, and more broadly, the general public are given the opportunity to
ask the EUIPO to review the signs that should not have been registered as trade marks in the first
place, and invalidate them accordingly. This mechanism ensures the protection of the frontiers of the
public domain and the availability of words, signs, colours, and shapes which can and should be used
by anyone freely.
Thus, this Kat believes that the General Court made a fairly apparent but highly valuable point in
allowing the admissibility of late submission of evidence in invalidity proceedings based on absolute
grounds for invalidity.
It will now probably be Nestlé’s turn to appeal to the CJEU, or up to the BoA to re-assess the so-called late, but admissible, evidence submitted by European Foods. And since after examining the
evidence, the Second BoA had previously found that “FITNESS” was descriptive and lacked
distinctiveness, it is reasonable to expect a similar finding.
In any event, this Kat believes that the finish line in the race over “FITNESS” is within sight, with a
strong possibility that Nestlé’s word mark will be invalidated – if not on grounds of descriptiveness,
then certainly due to a lack of distinctive character… [Merpel: Ouch! It hurts…]
Image credit: ChatGPT
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