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Divided Europe

30 October 2016 by Paul Harris

Intellectual property: Divided Europe - read more

The Combit/Commit decision has opened a gulf between English speaking and non-English speaking parts of the EU

Often, when I am asked to consider what the impact of Brexit would be on EU trademarks, Dr Pepper’s ‘what’s the worst that can happen?’ slogan springs to mind. The adverts frequently show some calamitous event which occur to the drinker, and make me wonder why that is a positive thing and why anybody would want to drink it!

However, regarding trademarks, the cynical lawyer in me considers that the worst that can happen is that we no longer have to pay attention to the Court of Justice of the European Union’s (CJEU) decisions − these tend to complicate clients’ lives, throw up legal uncertainty and so keep me in a job.

Most trademark practitioners would point to the harmonising effect that the CJEU’s decisions have had on trademark law in Europe and the potential loss of that would not be beneficial for proprietors and consumers alike.

An example of this is the fact that owning an EU trademark (EUTM) means that a proprietor can obtain a pan-European injunction against an infringer, without the need to bring infringement proceedings in each separate member state. This does assume that the defendant is sued in his or her home jurisdiction and the court is willing to grant that pan-European injunction based on the evidence put forward.

That ability may well be lost if the UK does not negotiate a deal whereby the unitary nature of the EUTM is preserved (which will probably mean the CJEU will remain the Supreme Court in relation to trademark matters). However, given the recent Combit/Commit decision, this advantage may not actually exist, even though everyone believed it did.

One letter

The two protagonists (a German company and an Israeli company) marketed their software under the respective marks ‘COMBIT’ and ‘COMMIT’. The latter was available to German individuals, via a section on its website, and could be ordered for delivery to Germany.

The German company brought proceedings in Düsseldorf for trademark infringement on the basis of its EUTM for the mark COMBIT and sought an injunction restraining the Israeli company from using the mark anywhere in the European Union. They also had an identical German mark, which was used as alternative grounds for infringement.

In the first instance court, the German company lost, but on appeal it was held that the German-speaking part of the EU would be confused, but that the English-speaking part would not be confused. This is because the appeal court considered that the average English-speaking consumer would understand COMBIT to be a combination of COM meaning ‘computer’ and BIT referring to ‘bit’ or ‘binary digit’ (which ‘bit’ is the shortened version of). Therefore, any phonetic similarity would be completely cancelled out by the conceptual differences, which would be apparent to the average English-speaking consumer.

The question that was therefore referred to the CJEU was, in effect, given the unitary character that a EUTM possesses, how should Article 102, Regulation 207/2009/EC, which enables sanctions to be applied across the entirety of the EU for infringement of a EUTM, be applied?

The EU as a whole

As intellectual property lawyers, we have been drilled to consider the EU as a whole, which must not be partitioned. Any attempts to do so, for example, by using different trademarks in different jurisdictions, were stamped all over. The legion of parallel import cases shows just how paramount this is, even though there is a ‘get-out’ provision that enables a trademark proprietor to prevent parallel imports, but only if it is appropriate and necessary. That is, however, rarely the case.

In reading the Combit/Commit decision, one would be forgiven for skipping to the end of the judgment to find out the answer, in the belief that it would be a foregone conclusion and that the unitary nature would be paramount. If German speakers are confused, then it is just bad luck on those that are not and the Israeli company should be prevented from selling its goods anywhere in the EU.

However, flipping to the end would provide a big shock, since the CJEU did not decide the case in that way. Instead, it said that the national EU trademark court can prohibit any further use where there is infringement through confusion, but not in those member states where there is no such confusion.

The Court did not need to go any further, and indeed, did not do so. Instead, it pointed out that the national court that was granting the sanction must be clear as to what it finds as English-speaking countries and so the territorial scope of the relief it is granting. As the CJEU only gives guidance on how the law should be interpreted, rather than telling a national court ‘this is how it is’, it was inevitable that the onus would be put on the national court to establish precisely which English-speaking countries they understand to be included in the scope of any sanction.

The CJEU has looked at the situation of English word marks, and where basic English might be understood, in the context of acquiring distinctiveness. There is, however, a difference between ‘English-speaking’ and those understanding English (which would also include Germans).

Previous case law has considered that English is spoken in the UK and Ireland, as well as Cyprus and Malta. Those would appear to be automatically excluded from the scope of any protection. However, the courts have gone further and included the Scandinavian countries, the Netherlands and Finland.

Understanding English

The Combit/Commit decision has opened up a gulf between those parts of the EU (currently) that are English-speaking and those that are not, when it comes to the issue of use of an ordinary English language word and how it would be understood. The significance is all too obvious when taken in the context of pan-European sanctions being available to a trademark proprietor.

However, the case has thrown a spotlight upon the ability of an EU member state’s national court to grant pan-European-wide injunctive relief. The German Court of Appeal in Düsseldorf considered that German-speakers would be confused but English-speakers would not be.

That begs the question: what about the rest? In considering the scope of the territorial relief to be granted, will the national court be obliged to call for evidence as to how native speakers in those other countries would consider the marks and whether there will also be confusion there? If that were the case, then it would completely drive a coach and horses through the unitary character of a EUTM.

However, the answer to this question may well hold the key to any Brexit negotiations in relation to trademarks. If the current regime becomes, in effect, territorial, and the unitary character of the EUTM regime is not as it was believed to be, and so lost, then the system will become regarded as an additional bureaucratic layer that offers little more than is available under existing national legislation in terms of infringement.

Worse, it means the trademark proprietor could lose the underlying trademark right by reason of a ‘central attack’ on the validity of the mark at the EU IPO. Accordingly, the system would have all the problems associated with the Madrid Protocol, which is why the UK and many others chose to join the Madrid Agreement – to avoid the ‘central attack’ issue.

Paul Harris is a Partner at Venner Shipley Legal Limited

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