Can use of Community Trade Mark in one country constitute genuine use...a UK judge thinks not
In a trade mark dispute between two UK furniture retailers, the thorny issue of whether use of a Community Trade Mark in one member state of the European Union can constitute genuine use to defeat a non-use revocation action has raised its head, with potentially important implications for Community Trade Mark filing and enforcement strategies.
Sofa Workshop Limited, a furniture retailer brought a claim against Sofaworks Limited, another UK retailer of furniture, alleging that Sofaworks use of the SOFAWORKS trade mark infringed two Community Trade Mark Registrations (“CTMs") for SOFA WORKSHOP and that Sofaworks had passed itself off as being associated with Sofa Workshop.
Although Sofa Workshop was ultimately successful in the passing off claim based on common law rights in the UK to the SOFA WORKSHOP trade mark, and thus overall was the ‘winner’ in the case, the possibly more far reaching finding of the case concerned Sofaworks success in revoking both of the Community Trade Mark Registrations for SOFA WORKSHOP on the basis of non-use. The full decision can be found here.
The first CTM (No. 4,229,605), was for the word mark SOFA WORKSHOP, registered with effect from 11 February 2005 in respect of Classes 18, 20, 24 and 35 for, amongst other things, leather and imitations of leather, furniture, textiles and retail services of a general store specialising in household furniture. The second CTM (No. 301,531) also the word mark SOFA WORKSHOP, registered with effect from 1 August 1996 in respect, specifically Class 20: Furniture; upholstered chairs and sofas and Class 24: Textile piece goods for furnishings.
Infringement of the CTMs was alleged under the CTM Regulation, as well as passing off, on the basis that SOFA WORKSHOP and SOFAWORKS were similar and the parties were involved in the same market. Sofa Workshop counterclaimed for revocation of both CTMs for non-use and for a declaration that both CTMs were invalid as descriptive. Sofa Workshop admitted non-use in relation to some of the goods in the respective specifications and agreed that a partial revocation of both CTMs was reasonable, but that use had occurred in relation to the core areas of furniture and the retailing of furniture.
Sofaworks argued that the CTMs should be revoked entirely, because there had been no use by Sofa Workshop of the marks outside the UK. The Community Trade Mark Regulation states that the proprietor of the CTM must make genuine use of the mark in connection with the good or services it has been registered within ‘the Community’ within five years of registration. If not, a CTM Registration will be revoked.
The important issue to be decided was whether use in one member state of the Community (the UK in this case) alone would be enough to constitute genuine use in ‘the Community’. Reference was made explicitly to the well-known ONEL/OMEL decision (Leno Merken BV v Hagelkruis Beheer BV C-149/11) of CJEU which although finding that use of a Community Trade Mark in only one member state need not necessarily mean a CTM Registration would be revoked on the basis of non-use, the geographical extent of such use did have a bearing on whether a finding of genuine use in the Community could be found. In this case, although Sofa Workshop showed considerable evidence of use of SOFA WORKSHOP in the UK, they did not show use beyond the UK to any significant degree (one sale in Denmark possibly to a UK inspired purchaser) or that use of the trade mark was targeted to member states beyond the UK, as a result Judge Hacon found that the two CTM Registrations should be revoked on the basis of non-use, as use of the trade mark had not been made in ‘the Community’ in the past five years.
Judge Hacon found that in order to maintain a Community Trade Mark, some evidence should be required that the mark has been used to create or maintain a share in the market for the relevant goods or services across a section of the EU extending beyond one member state. Or looking at it another way, an applicant for a Community Trade Mark must be taken to intend to use it outside one member state and has five years in which to justify his presumed intention. Otherwise he risks having to make do with a national mark by conversion and leaving the sign in question free for use elsewhere in the Community.
Although there are provisions within the Community Trade Mark Regulation which allow for CTM Registrations revoked on basis of non-use to be ‘converted’ into national trade mark registrations in states where use was found to be sufficient, in this case in the UK, conversion had not been originally pleaded in case, although it was put forward as a position at the hearing for the case. Indeed we would contend it would hard to convert a CTM Registration mid litigation, given that conversion is very much an issue dealt with by the Community Trade Marks Office and the respective national EU IP Offices, although it is possible a court could claim powers in this regard.
The Judge also found that SOFA WORKSHOP was inherently descriptive and although accepted that there had been considerable use of the SOFA WORKSHOP trade mark in the UK, and thus the trade mark had acquired distinctiveness through use in the UK, this use did not extend to other states in the EU where English was an official language notably Ireland, Malta and Cyprus. As a result, he found that the two CTM Registrations were invalid.
This decision does appear to have wider implications for filing strategies for applications for Community Trade Marks. Although it is open to question whether higher courts, including the CJEU, and other national courts across the EU, will agree with Judge Hacon, applicants must realistically consider their plans for the use of a Community Trade Mark and whether that is to apply in one member state or in a number of member states.
Although ultimately conversion is available to Registrants of Community Trade Mark Registrations under non-use attack and thus ultimately trade mark rights will not be lost in the member states where use has occurred, and indeed any Community Trade Mark Registration will not be open to non-use attack in the first five years following registration, and thus this decision does not mean multiple national and CTM Applications should be filed in most cases, Applicants will have to decide whether they file additional national trade mark applications in parallel with or as a substitute for a Community Trade Mark Application depending on their plans for use in the long term (post five year period). If the Applicant will only ever use a trade mark in one member state and in particular if they are a small to medium sized company, then maybe this decision signals a move towards national rather than the filing of Community Trade Mark Applications.
With regards litigation, one should consider whether one converts a Community Trade Mark Registration into national registrations prior to launching litigation, if there is a genuine possibility a CTM Registration might be vulnerable to non-use attack. This decision seems to go further than the ONEL/OMEL decision, although Judge Hacon would argue it is simply an interpretation of the CJEU’s words based on the specific facts of the case at hand. Whether the CJEU would come to the same conclusion is open to debate.