1. Fordham Intellectual Property Law Institute Thursday 28 April 2011 Trevor Cook, Bird & Bird LLP trevor.cook@twobirds.com EU TRADE MARK DILUTION - MAKING IT UP AS WE GO ALONG? Intellectual Property

2. © Bird & Bird LLP 2011 THE CONCERNS RECOGNISED Advocate General Jaaskinen's Opinion in Case C-323/09 Interflora v Marks & Spencer 24 March 2011: ● 7.... the Commission has criticised aspects of the Court’s case-law concerning trade mark functions other than the indication of origin function because they find it erroneous and problematic from the point of view of legal certainty.... ● 8... it cannot be denied that the Court finds itself at a rather challenging situation as to the acceptability of its case-law relating to Article 5 of Directive 89/104 also in view of the criticism presented by numerous academic commentators and leading national trade mark judges. ● 9. … in my opinion these issues partly stem from the problematic drafting of Article 5 of Directive 89/104.... ● … Therefore the actual situation might be better remedied by appropriate legislative measures than a reorientation of case-law, as the example of the development of the United States federal legislation on trade mark dilution shows....

3. © Bird & Bird LLP 2011 THE EUROPEAN COMMISSION CONCERNS Per their submissions in Case C-323/09 Interflora v Marks & Spencer ● “... that the existing jurisprudence of the Court of Justice... might not have defined the precise scope of the exclusive rights of trade mark proprietors with the required degree of clarity, and... the Court of Justice should take the opportunity presented by this reference to clarify these issues” ● “The Court should reconsider its judgment in Case C 324/09 L'Oreal v Bellure.... the Commission considers that Article 5(1)(a) is restricted to use which affects or is liable to affect the origin function of the trade mark, while use which only affects or is liable to affect other functions may only be prohited under Article 5(2).” (Para [18] of Judgment of Arnold J in Interflora 29 April 2010)

4. © Bird & Bird LLP 2011 WILL THE COURT OF JUSTICE ACT ON THOSE CONCERNS? Probably not - Opinion in Case C-323/09 Interflora v Marks & Spencer 24 March 2011: ● 7.... It would seem that only the function relating to the indication of origin of goods or services is relevant to the application of Article 5(1)(a) of Directive 89/104 in this preliminary reference. ●... Neither does the interpretation of Article 5(2) of Directive 89/104 seem to lead in this case to an unreasonably wide protection of the interests of the trade mark proprietor. ● … Therefore, I do not find it necessary to dwell further on the subject.

5. © Bird & Bird LLP 2011 THE SOURCE OF THE CONCERN? Less the drafting than two trends in the case law which have overlapped ● Rather than elaborating on the limited defences in the EU TM regime the CJEU has written in limitations into its infringement provisions, especially those for “double identity” situations, where the protection is absolute and not keyed to confusion including one that it “must affect or be liable to affect the functions of the trade mark” the main one of which is “the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services” but which has now, in some contexts, been held no longer to be the only function of a trade mark that need be affected for infringement to be found ● Despite the dilution provision in the EU TM regime having been expressed only in terms of dissimilar goods and services the CJEU held several years ago that it applies also to similar goods and services resulting in situations where it overlaps with other infringement provisions including those specific to “double identity” situations

6. © Bird & Bird LLP 2011 THE EU TM INFRINGEMENT REGIME Article 9(1) CTM Regulation (Articles 5(1) and (2) TM Directive) ● The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade: (a)any sign which is identical with the... trade mark in relation to goods or services which are identical with those for which the... trade mark is registered; (b)any sign where, because of its identity with or similarity to the... trade mark and the identity or similarity of the goods or services covered by the... trade mark and the sign, there exists a likelihood of confusion on the part of the public;... (c)any sign which is identical with or similar to the... trade mark in relation to goods or services which are not similar to those for which the... trade mark is registered, where the latter has a reputation... and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the... trade mark.

7. © Bird & Bird LLP 2011 REQUIREMENTS OF THE EU TM DILUTION REGIME Article 9(1)(c) CTM Regulation (= Article 5(2) TM Directive) protects ● Registered marks with reputation against ● Use of identical or similar (sufficient establish a link between them) sign ● Without due cause ● Where such use is any of: Detrimental to the distinctive character of the mark with reputation (ie “whittling away”, “blurring”, “dilution in the strict sense”) Detrimental to the repute of the mark with reputation(ie “tarnishment”, “degradation”) Takes unfair advantage of the distinctive character or repute of the mark with reputation (ie “parasitism”, “free-riding”)

8. © Bird & Bird LLP 2011 CJEU CASE LAW ON TM DILUTION Apparently different approaches to detriment and to unfair advantage: ● Case C-252/07 Intel (27 November 2008) Little said about unfair advantage Proof of detriment to distinctive character requires “evidence of a change in the economic behaviour of the average consumer of the goods or services” for which the mark with the reputation was registered consequent on use of the sign, or “a serious likelihood that such change will occur in the future” ● Case C-487/07 L'Oreal v Bellure (18 June 2009) Referential use, with no detriment, or effect on origin function Unfair advantage is “where that party seeks by that use to ride on the coat- tails of the mark with a reputation in order to benefit from the power of attraction, the reputation and prestige of that mark and to exploit, without paying any financial compensation, the marketing effort expended by the proprietor of the mark in order to create and maintain the mark's image” Also as to “double identity” issue held that an effect on another trade mark function than that of origin could establish liability in and of itself Also held Comparative Advertising Directive could not serve as a defence in cases of mere imitation such it regarded this to be

9. © Bird & Bird LLP 2011 ENGLISH CASE LAW ON TM DILUTION As to unfair advantage in an infringement context: ● Whirlpool v Kenwood (Court of Appeal 23 July 2009) Defendant had its own established goodwill in a related market sector and no need or wish to ride on the coat-tails of the shape mark with a reputation as it wished to establish its own goodwill in this new sector for it No dilution infringement as no unfair advantage Nor detriment either ● L'Oreal v Bellure (Court of Appeal 21 May 2010) Reluctantly applying CJEU ruling Held “double identity” infringement, but criticised CJEU approach taking account of trade mark functions as overcomplicated Held dilution infringement by reason of unfair advantage, but criticised CJEU approach as anticompetitive

10. © Bird & Bird LLP 2011 SOME MORE ENGLISH CASE LAW ON TM DILUTION As to unfair advantage: ● Hasbro v 123 Nahrnittel (Floyd J, 11 February 2011) Objection by Hasbro as proprietors of PLAY-DOH to description of defendant's YUMMY DOUGH product as “the edible play dough!” Hasbro prevailed traditional confusion grounds Hasbro also prevailed on dilution both by taking unfair advantage and by detriment to distinctive character, having chosen not to promote the eating of PLAY-DOH ● Specsavers v Asda (Mann J, 30 July 2010) Objection by Specsavers as proprietors of SPECSAVERS to straplines to defendants' advertising including “be a real spec saver at Asda” Specsavers failed on traditional confusion grounds Specsavers prevailed on dilution as having taken unfair advantage as they rode on the coat-tails of the mark with a reputation

11. © Bird & Bird LLP 2011 GENERAL COURT CASE LAW ON TM DILUTION Some late 2010 decisions in a registration context (ie Article 8(5) CTMR) ● Case T-131/09 Farmeco v OHIM, other party Allergan (28 October 2010) BOTOX – BOTUMAX Upheld BoA Held second mark took both unfair advantage of mark with a reputation and would be detrimental to its distinctive character ● Case T-59/08 Nute Partecipazioni v OHIM, other party Worldgem Brands (7 December 2010) LA PERLA – NIMEI LA PERLA MODERN CLASSIC Reversed BoA (as to the only goods it had allowed the mark for – pearls) Held no due cause Held no need to rule on injury, ie detriment Held it was established that the applicant for the second mark had tried to ride on the coat-tails of that mark and thus taken unfair advantage of it”

12. © Bird & Bird LLP 2011 OHIM BOARD OF APPEAL CASE LAW ON TM DILUTION A late 2010 decision in a registration context (ie Article 8(5) CTMR) ● Case R 240/2004-2 (2 nd BoA 23 November 2010) WATERFORD – WATERFORD STELLENBOSCH in device Dissimilar, albeit complementary goods (glassware and wine) Held no due cause Opposition rejected to the extent it was based on a serious risk of detriment to the distinctive character of the earlier mark with a reputation Opposition rejected to the extent it was based on a serious risk of detriment to the repute of the earlier mark with a reputation Opposition upheld to the extent it was based on the existence of a “non- hypothetical risk” of unfair advantage being taken of the mark with a reputation which “in the case of a mark with an exceptionally high reputation is so obvious that the opposing party does not need to put forward and prove any other fact to that end.”

13. © Bird & Bird LLP 2011 MAX PLANCK REPORT ANALYSIS AND PROPOSALS As to Double Identity and Dilution ● As to Double Identity 2.179 - “... it is undeniable that the increased focus laid on trade mark functions as an element defining the concrete ambit and scope of trade mark law has blurred the picture, notably in double identity cases” 2.184 - “An adverse effect on other functions [than of indicating origin] should have no relevance for protection under the double identity rule” 2.225 - Key double identity in referential or nominal use cases only to failure to comply with honest commercial practices, or to grey goods ● As to Dilution 2.197 - Amend Article 9(1)(c) to accord with the case law as to its also applying to identical or similar goods 2.200 - Amend English text of Article 9(1)(c) to “add to the understanding of the “taking advantage” part of the provision insofar as “unfairness” and lack of due cause need to be assessed separately, and are not implied in the taking of commercial advantage as such.” 2.121 on - Mandate Article 6bis Paris Convention protection regardless of registration