The CJEU Decides on the Unitary Character of the EU Trademark

Friday, 17 of November of 2017

After the Court of Justice of the European Union (hereinafter CJEU) judgement of 22 September 2016, C-223/15, combi Software, the CJEU (judgement of 20 July 2017, C-93/16, kerrygold vs kerrymaid), has again decided on the unitary character of the European Union (hereinafter EU) trademark and on whether the tolerance in the use of a trademark in one part of the EU extends to the rest of member States.

The legal framework which must be taken into consideration in this proceeding is the Article 9.1 Regulation 207/2009 on the Community Trademark, which was subsequently modified by Regulation 2015/2424. At present, Regulation 2017/1001 on the European Union Trademark (EUTR) is in effect from 1 October 2017.

The parties involved in this litigation are, on the one hand, Ornua Co-operative Ltd (hereinafter Ornua), which is an Irish company whose business is the production and commercialization of butter. Ornua is the owner of the EU trademark KERRYGOLD and this company distributes its products in Spain, among other countries. On the other hand, Tindale & Stanton Ltd España, S.L. (hereinafter T & S), which is a Spanish company that imports and distributes margarine in Spain using the term KERRYMAID, registered as a trademark in UK and Ireland.

Ornua filed an infringement action against T & S before the Commercial Court of Alicante. The action was filed because T & S commercialized products in Spain with the Irish and UK trademark KERRYMAID. This action is brought knowing that both trademarks coexist peacefully in Ireland and the United Kingdom.

The Commercial Court of Alicante dismissed the infringement action alleging that there is only a similarity between both trademarks, which is the Kerry element. Kerry is an Irish region with an important reputation in livestock. Moreover, the Commercial Court of Alicante considered that there could not be a likelihood of confusion in Spain, due to the unitary character of the EU trademarks (according to Article 1.2 EUTR).

Ornua decided to appeal the decision. After that, the Provincial Court of Alicante decided to stay the proceedings and to refer the following questions to the CJEU for a preliminary ruling:

  • If, in accordance with Article 9.1 b), the unitary character of a trademark should prevail throughout the EU, in the sense of excluding the likelihood of confusion from other territories, when the EU trademark has coexisted with other similar national trademarks, during years of peace in two EU Member States.
  • If, taking into account Article 9.1 b), it is possible to take into account geographical, demographic, economic or other factors of EU territories where such peaceful coexistence has already existed.
  • If, according to Article 9.1 c), the tolerance of the earlier EU trademark, which has coexisted for years with the later sign in two Member States, must be extrapolated to the rest of the EU territory in order to determine the concurrence in the use by the third party of a later sign of due cause.

The CJEU, states that Article 9.1 b) EUTR protects the owner of an EU trademark against any use which adversely affects that trademark’s function of indicating origin or is liable to do so (CJEU judgement of 22 September 2016, C-223/15, combi Software). Furthermore, to invoke that right, it is not absolutely necessary that the use of the identical or similar sign that creates a likelihood of confusion occur throughout the EU territory.

Taking into account this judgement, the CJEU considers that the EU Trademark Court (in this case the Commercial Court of Alicante) it must prohibit the commercialization of the products throughout the territory of the EU, with the exception of the part where there is no likelihood of confusion.

The CJEU, answering to the first question, declares that Article 9.1 b) EUTR must be understood as meaning that the peaceful coexistence between two trademarks in a concretely EU territory does not imply that there is no likelihood of confusion in another EU Member State, where there is no such peaceful coexistence.

In relation to the second question, and taking into account the points made by the Advocate General, the CJEU states that the factors present in other Member States (in this case Ireland and UK) can only be taken into account, in order to appreciate the existence of a likelihood of confusion, by the EU Trademark Court, of another Member State (in this case of Spain), as long as the market conditions and socio-cultural circumstances do not differ significantly in these two parts of the EU.

With regard to the third question, the referring Court, what it wishes to know is whether Article 9.1 c) EUTR should be interpreted as the fact that an EU trade mark with a notoriety and a sign co-exist peacefully in a part of the EU, allow to conclude that there is a due cause that legitimizes the use of that sign in another part of the EU, where there is no such peaceful coexistence. The CJEU understands that no. In his opinion, the EU Trademark Court hearing the case cannot just base its assessment on a peaceful coexistence in Ireland and UK, but must make an overall assessment of all the relevant factors.

Finally, as we can see, the unitary character cannot be absolute, because the CJEU has tried to base his decision in the fact that whether there is no likelihood of confusion in a EU Member State, where it is a peaceful coexistence between the EU trademark and a national trademark, it does not necessarily prevent the owner of the EU trademark from taking pertinent actions against the use of the national trademark in other parts of the territory in which there is a likelihood of confusion, as may occur specifically in Spain.

In our opinion, the fact of taking into account geographical or demographic factors or circumstances is appropriate, since, for the relevant Spanish public, Kerry does not have the same meaning (understood as a region of Ireland with a livestock tradition) as in Ireland and UK. Therefore, in our opinion, this exception to the unitary character of the EU trademark is understandable.