Canada: Court Of Justice Puts F1 Back On Track

In a case that has seen almost as much mileage as a Formula One car, the Court of Justice of the European Union ('CJEU') finally brought the chequered flag down on the race between Global Sports Media Limited ('GSM') and Formula One Licensing BV ('Formula One'). Towards the end, GSM were leading by some distance, if only because the General Court appeared to have poured 'generic' fuel into Formula One's tank. Fortunately, a pit stop in the CJEU has seen Formula One back in the race!

Background Facts

GSM's predecessor in title, Racing - Live SAS filed an application for a CTM on 13th April 2004 for the figurative sign shown below:

Registration was in Classes 16, 38, & 41 for such things as magazines, communication and dissemination of books & magazines via computer terminals; and electronic publications and periodicals etc., and all Classes had the words '....relating to the field of formula 1'.

In May 2005 Formula One opposed the application on the grounds of Article 8 (1)(b) and (5) of Regulation 40/94 (now 207/2009). Opposition was based on three registrations of the word sign F1 being an international registration in respect of the identical classes and covering the identical goods and services as the mark applied for: a German registration in Class 41 only; and a UK registration in Class 16 and Class 38. In addition, the opposition was based on Formula One's CTM, which was registered in Classes 16, 38 & 41 and covered the identical goods and services. The CTM was described as the 'F1 Formula 1 logo type' and is reproduced below:

In the Opposition Division, based only on the international registration, Formula One was successful in that it was found that the goods and services were similar or identical and that the signs were similar to a medium degree and as a result there would be likelihood of confusion between the marks. On appeal, however, the decision was reversed on the basis that even though the goods or services were identical or similar, there was no likelihood of confusion because the marks had obvious differences. More particularly, the Board of Appeal considered that the relevant public would perceive the combination of the letters 'F' and '1' as the generic designation of a category of racing car or races involving such cars. The Board of Appeal did consider Article 8 (5), but concluded that unless the mark was in the F1 Formula 1 logotype representation, few consumers would attribute any distinctive character, and certainly would not do so in relation to the simple abbreviation 'F1'. Unsurprisingly, Formula One appealed.

Sadly for Formula One, the General Court confirmed the decision of the Board of Appeal.

Formula One argued that the Board of Appeal: (i) ignored their own findings that the goods and services were identical or otherwise extremely similar; (ii) erroneously regarded 'F1' as being generic and descriptive in character or otherwise lacked distinctiveness; (iii) as 'F1'was the dominant element, from a visual, phonetic and conceptual analysis there was similarity between the marks and therefore the Board should have found a likelihood of confusion, where the earlier mark had only a weak distinctive character; and (iv) the F1 Formula 1 logo type mark had a strongly distinctive character, which would inevitably lead to a likelihood of confusion.

It was not disputed that the average consumer was 'the relevant public', i.e. the general public at large within the EU, and the General Court also upheld the Board of Appeal's finding that the goods and services were identical or else very similar. It is, however, the area of comparison of the marks and their perception by the relevant public that came in for two and a half pages of legal analysis (long by EU judgement standards). The Court's conclusion that a distinction was to be made between 'F1' as an abbreviation of 'Formula One', thus designating the race car or races, and the 'F1' element of the F1 Formula 1 logotype mark, which the Court acknowledged the public would perceive as being the trade mark of Formula One. Supporting its conclusion was evidence by Formula One that they strictly enforced laws relating to the 'F1' element of the CTM, but there appeared to be no evidence in relation to 'F1' as a simple letter and numeral; the subject of the other registrations owned by Formula One. Also, GSM submitted a survey in Germany of the public, together with a witness statement, which appeared to persuade the Court that 'F1' as an abbreviation was generic, and the public do not specifically associate it with the races organised by Formula One. There appeared also to be evidence that 'F1' was used in a descriptive sense, thus making 'F1' generic as a term for 'Formula 1'. Accordingly, the public would not perceive a descriptive element of a complex mark as being the distinctive and dominant element in the overall impression conveyed by that mark. However, the Court considered that simply because the mark had been registered (as 'F1' for the international registrations and also that of the UK) did not prevent it from being largely descriptive or from having only a weak intrinsic distinctive character in respect of the goods or services it covered. In doing so it cited the Case T-146/08 Deutsche Rockwool v. OHIM – Redrock Construction (REDROCK), in which the earlier mark 'ROCK' was being used to prevent REDROCK being registered. And while the Court considered that the validity of an international national trade mark in an opposition proceeding could not be put in question, they nevertheless concluded that the way the relevant public perceived the 'F1' element was acceptable. It thus concluded that the 'F1' element in ordinary type set had only a weak distinctive character and did not have a separate reputation in its own right.

In carrying out the comparison between the application and the F1 Formula 1 logotype mark, the Court concluded, while there was no visual similarity, there was some degree of phonetic and conceptual similarity. However, the Court felt that because of the particular lack of visual similarity the Board of Appeal was correct to find that there was no likelihood of confusion.

With regard to the argument under Article 8 (5) the Court concluded that because of the lack of visual similarity and only weak phonetic and conceptual similarity, that was insufficient for a 'link' to be caused in the mind of the average consumer. The Court did not go any further to consider damage as a result.

Analysis

On the one hand, the General Court's application of the law and applying it to the facts has been shockingly woeful, and fundamentally wrong. On the other hand, one can perhaps perceive their tortured logic in that Formula One has become a victim of its own success and the lack of policing of the lesser marks 'F1' has led to the 'generic' conclusion. However, the Court does not appear to have considered the impact of that decision on the actual mark being sought to be registered itself. If the 'F1' element is generic then given the public's perception it seems unbelievable that simply adding the word 'LIVE', putting that in a rectangular box with a circle behind it, becomes something that is capable of functioning as an indicator of source or origin of the goods. While one might have a certain sympathy with the Court's approach in not allowing Formula One to enforce its trade marks where the use of 'F1' is used in either a generic or descriptive sense, it is a totally different matter where a third party is seeking to register as a trade mark that very element.

More worryingly, however, is the omission by the Court in considering all the relevant factors to decide whether the mark applied for could be registered. Having found, as a fact, that the goods and services were identical or very similar, and that there was some similarity (whether weak or otherwise) between the marks themselves on the basis of phonetics and conceptualism, the Court omitted to take into consideration that a lesser degree of similarity between the marks may be offset by a greater degree of similarity between the goods or services. Adding that factor into the 'global appreciation test' should have ensured that the conclusion that there was a likelihood of confusion (as found by the original Opposition Division) would have been upheld.

Decision of the CJEU

In setting aside the General Court's decision and referring it back, the CJEU has chastised the General Court in its finding that the earlier mark lacked distinctive character being an absolute ground for refusal, not something it was possible to find in opposition proceedings. While the CJEU accepted that the General Court had to verify the way in which the public perceived the sign identical to the earlier (in this case, national) mark, there were limits to that verification. That did not extend to find a lack of distinctive character since such a finding is not compatible with the coexistence arrangement between CTMs and national marks, or as read between Article 8 (1)(b) of Regulation 40/94, and Article 8 (2)(a)(ii) which defines 'earlier trade marks'. To find otherwise would be detrimental to the national trade mark system.

The CJEU therefore found that it was necessary to acknowledge a certain degree of distinctiveness, which the General Court had not done. Instead, it had held that 'F1' was generic and not perceived as a distinctive element, rather, as an element with a descriptive function. Also, by considering that the public attributed a generic meaning to 'F1' the General Court was in fact questioning the validity of the earlier marks, which they were not entitled to do. The CJEU remitted the case back to the General Court to assess the facts.

Comments

In holding that the 'F1' element is descriptive and/or generic, the General Court had, undoubtedly overstepped the mark, and the CJEU has, fortunately, recognised this fact. Although they did not say so, a finding that has such a fundamental effect on the rights of a trade mark owner, should not be left to one piece of survey evidence, and in proceedings for which that finding was not designed. The approach in Case C-371/02 Bj?rnekulla Fruktindustrier (BOSTONGURKA) gives the more appropriate approach to be taken. Secondly, and once again, this case highlights how crucial the evidence is at the beginning of the procedure (Formula One attempted to put in additional evidence at a later stage but this was rejected). All too often trade mark owners cannot be bothered to put in the degree of effort required by their lawyers/trade mark agents to find the relevant evidence, or even sufficient of it.

The decision by the CJEU must come as considerable relief, not only to Formula One, but to brand owners generally who would otherwise have been blindsided in relation to the validity finding. Even so, it is something of a wake up call to brand owners to get the evidence right in the first place.

Next time, don't just kick the tyres, make sure there is air in them!

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