In Celine (case 17/06 of Sept. 11, 2007) the ECJ has, once again, ruled on the possible conflict between trade marks and trade names. Following the Advocate general’s opinion, the ECJ basically reconfirmed its erlier case law (cf. Case C-63/97, the BMW, Case C-23/01 Robelco and Case C-245/02 Anheuser-Busch) indicating that:
· the mere adoption of a trade/company name per se does not infringe trademark rights,
· that the unauthorised use by a third party of in connection with the marketing of identical/similar constitutes use which the proprietor of that mark is entitled to prevent in accordance with Article 5(1)(a) of the Directive, only where the use is in relation to goods in such a way as to affect or be liable to affect the functions of t
he mark, and
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A slighter long version.
The conflict had arisen between two French companies, Celine SA which had registered the mark CELINE back in 1948 for women-s appareil and clothing, while Celine SARL had adopted and used as company name CELINE since 1950, even though it had registered the company name only in 1992. The Céline SA commenced legal proceedings against Celine SARL seeking an order prohibiting the latter company from infringing the CÉLINE trade mark and from engaging in unfair competition by appropriating the company name ‘Céline’ and the shop name ‘Céline’
The French court asked the ECJ the following question: does the unauthorised use as a company, trade or shop name by a third party of a sign which is identical to an earlier word mark, in connection with the marketing of goods which are identical to those for which the mark was registered, constitute use which the proprietor of the mark may stop in accordance with art.5(1) of the directive?
The first issue the ECJ had to answer was: what is use?
The ECJ, remanding to earlier case law (notably the Arsenal case, Case C-206/01) remarked that a trademark owner may prevent the use of a sign by a third party under Article 5(1)(a) of the directive only if the following four conditions are satisfied: that use must be in the course of trade; that use must be without the consent of the proprietor of the mark; that use must be in respect of goods or services which are identical to those for which the mark is registered, and that use must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services.
Since Celine SARL had argued that the sign was not used ‘in relation to goods’, within the meaning of Article 5(1)(a) of the directive, the ECJ examined more in detail what was the meaning of such relationship.
According to the ECJ, use of a sign in relation to goods or services within the meaning of Art. 5(1) and (2) is use for the purpose of distinguishing the goods or services in question, i.e. there is use ‘in relation to goods’ where a third party affixes the sign constituting his company name, trade name or shop name to the goods which it markets. In addition, even where the sign is not affixed, there is use ‘in relation to goods or services’ where the third party uses that sign in such a way that a link is established between the sign which constitutes the company, trade or shop name of the third party and the goods marketed or the services provided by the third party (At §§23, 24)
The purpose of a company, trade or shop name is not, of itself, to distinguish goods or services. The purpose of a company name is to identify a company, whereas the purpose of a trade name or a shop name is to designate a business which is being carried on. Accordingly, the ECJ held (in part agreeing with Celine SARL) that where the use of a company name, trade name or shop name is limited to identifying a company or designating a business which is being carried on, such use cannot be considered as being ‘in relation to goods or services’ within the meaning of Art. 5(1). (at §21).
The ECJ thus left to the national Court to find in concrete whether or not use by Celine SARL amounted to an infringing use. But, the ECJ also noted that since Art. 6(1)(a) provides that a trade mark does not entitle the proprietor to prevent a third party from using his own name or address in the course of trade where that third party uses it in accordance with honest practices in industrial or commercial matters (and the ECJ had alreday held that such a provision is not limited to the names of natural persons but applies to company names as well) in the event that the national court should decide that Article 5(1)(a) of the directive entitles Céline SA to prevent the use of the ‘Céline’ sign by Céline SARL, the national Court, before issuing a decision should check nonetheless whether or not use by Celine SARL of the CELINE sign takes place in accordance with honest practices and if it does, then it will have to apply art. 6(1) and refrain form issuing any injunction.
It is true that the ECJ tried to limit the practical applicability of art. 6(1) by saying that in assessing whether the condition of honest practice is satisfied, one should look at the extent to which the use of the third party’s name is understood by the relevant public as indicating a link between the third party’s goods or services and the trade-mark owner, at the extent to which the third party ought to have been aware of that and at whether or not the trade mark concerned enjoys a certain reputation in the Member State in which it is registered and its protection is sought, from which the third party might profit in marketing his goods or services. However, in my view, this part carries limited importance since the case was not about the non-applicability of art. 6(1) and the circumstances of the case had not really dealt on what these honest practices are.
What are the practical consequences of this decision? Beside from basically affecting all enforcement programs aimed at eliminating company names simply because the company name appears in national registry, in my view Celine seem to reveal that the ECJ is getting progressively annoyed with the seemingly out of control expectations of protection of trademark rights.
In other words,while we have witnessed in the late 90s and early 2000s a significant expansion of trademark rights (Chevy, Davidoff, Fitnessworld) I read in Celine the desire by the ECJ to start a contraption and to begin to limit the extent of protection, narrowly focusing on the real harmful effects which trademark infringement may bring to trade mark owners and consumers rather than by setting rules under which claims of infringment are more broadly allowed and recognized. In practice, to be successful in company names actions, it will be necessary not only to investigate and gather evidence on the activities of the company in question much deeper than before, but also to objectively evaluate whether or not there are reasons of public policy which legitimize the use of the name by the third party, because they may be the cards that trumps the aces.
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