Adidas 3, i.e. 3 stripes and you are out! The saga continues...

Fabio Angelini

The ECJ has yesterday issued the long awaited decision on the third installment of the Adidas’ saga (case C‑102/07, Adidas AG and Adidas Benelux BV v. Marca Mode CV, C&A Nederland CV, H&M Hennes & Mauritz Netherlands BV and Vendex KBB Nederland BV). The case revolved around the concept of availability of signs in relation to the scope of protection of marks. The Hoge Raad der Nederlanden had referred the following questions to the Court for a preliminary ruling:

1. In the determination of the extent to which protection should be given to a trade mark formed by a sign which does not in itself have any distinctive character or by a designation which corresponds to the description in Article 3(1)(c) of the Directive … but which has become a trade mark through the process of becoming customary (“inburgering”) and has been registered, should account be taken of the general interest in ensuring that the availability of given signs is not unduly restricted for other traders offering the goods or services concerned (“Freihaltebedürfnis”)?

2. If the answer to Question 1 is in the affirmative: does it make any difference whether the signs which are referred to therein and which are to be held available are seen by the relevant public as being signs used to distinguish goods or merely to embellish them?

3. If the answer to Question 1 is in the affirmative: does it, further, make any difference whether the sign contested by the holder of a trade mark is devoid of distinctive character, within the terms of Article 3(1)(b) of the Directive … or contains a designation, within the terms of Article 3(1)(c) of the Directive?

The decision
The ECJ first defined the framework of reference to decide the 3 questions. This is a quite important step because it signals that the ECJ does not consider as equal the principles which are to be considered on registrability issues and those which come into play in assessing a trademark scope of protection. The ECJ recognized that the requirement of availability is the reason underlying certain grounds for refusal of registration set out in Article 3 of the Directive.

It also recalled Article 12(2)(a) of the Directive which provides that a trade mark is liable to revocation if, after the date on which it was registered, in consequence of acts or inactivity of the proprietor, it has become the common name in the trade for a product or service in respect of which it is registered, noting how by such provision, the Community legislature had balanced the interests of the trade mark proprietor against those of his competitors in the availability of signs.

But since Marca Mode, C&A, H&M and Vendex had not sought to obtain a declaration of invalidity within the meaning of Article 3 or revocation within the meaning of Article 12, of the Adidas’s mark, but rather had pleaded the need for the availability of stripe motifs other than that registered by Adidas in order to argue their right to use those motifs without the consent of the latter, the ECJ found that the requested preliminary ruling falls outside the above mentioned framework since it raises the question of whether the requirement of availability constitutes a criterion, after registration of a trade mark, for the purposes of defining the scope of the exclusive rights of the proprietor of the mark. In other words, when a third party relies on the requirement of availability to argue its right to use a sign other than that registered by the trade mark proprietor, the relevance of such an argument cannot be assessed under Articles 3 and 12 of the Directive, but must be examined in the light of Article 5 of the Directive, which concerns the protection of the registered mark against use by third parties, as well as of Article 6(1)(b) of the Directive, if the sign in question comes within the scope of that provision.

The first question. Does Freihaltebedürfnis matter? The ECJ in such a context, held that if the third party could rely on the requirement of availability to use a sign which is nevertheless similar to the trade mark freely without the proprietor of the latter being able to oppose that use by pleading likelihood of confusion, the effective application of Article 5(1) of the Directive would be undermined: the competitors of Adidas cannot be authorised to infringe the three-stripe logo registered by Adidas by placing on the sports and leisure garments marketed by them stripe motifs which are so similar to that registered by Adidas that there is a likelihood of confusion in the mind of the public.

The same conclusion must apply if protection is sought by virtue of Article 5(2) of the Directive which provides trade marks with a reputation with a protection whose implementation does not require the existence of a likelihood of confusion, that is to say, is triggered when the relevant public establishes a link between marks even though it does not confuse them. For the ECJ it is clear that the requirement of availability is extraneous both to the assessment of the degree of similarity between the mark with a reputation and the sign used by the third party and to the link which may be made by the relevant public between that mark and the sign.

It cannot therefore constitute a relevant factor for determining whether the use of the sign takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

The second question. What about the decorative function?
While it is for the national court to determine whether such a likelihood of confusion exists, the ECJ examined whether it is relevant in such an assessment the possibility that the public perceives the sign used by the third party as mere decoration of the goods in question.

The ECJ found that the public’s perception that a sign is a decoration cannot constitute a restriction on the protection conferred by Article 5(1)(b) of the Directive when, despite its decorative nature, that sign so similar to the registered trade mark that the relevant public is likely to perceive that the goods come from the same undertaking or, as the case may be, from economically-linked undertakings.

The test, however depends not solely on the degree of similarity between the trade mark and the sign, but also on the ease with which the sign may be associated with the mark having regard, in particular, to the recognition of the latter on the market. The more the mark is well known, the greater the number of operators who will want to use similar signs. The presence on the market of a large quantity of goods covered by similar signs might adversely affect the trade mark in so far as it could reduce the distinctive character of the mark and jeopardise its essential function, which is to ensure that consumers know where the goods concerned come from. In other words, if the TM owner has allowed a multitude of similar signs to coexist, it will be very likely that the consumers would no longer associate that sign with a unique source.

The third question. Does it matter if the signs is a designation or if it is an abstract/fanciful sign?
Article 6 of the Directive seeks to reconcile the fundamental interests of trade mark protection with those of free movement of goods and freedom to provide services in the common market in such a way that trade mark rights are able to fulfil their essential role in the system of undistorted competition which the EC Treaty seeks to establish and maintain. Specifically, Article 6(1)(b) of the Directive seeks to ensure that all economic operators have the opportunity to use descriptive indications.

However, the requirement of availability cannot in any circumstances constitute an independent restriction of the effects of the trade mark in addition to those expressly provided for in Article 6(1)(b). In order for a third party to be able to plead the limitations of the effects of the trade mark, the indication must relate to one of the characteristics of the goods marketed or the service provided by that third party. Since in the present case, Adidas’ competitors rely on the purely decorative nature of the two-stripe motifs at issue to justify their use, the placing of motifs with stripes on their garments is not intended to give an indication concerning one of the characteristics of those goods and thus it does not fall into the circumstances of art. 6(1)(b).