Germany: Tough Times For Fashion Brands In Germany? A Brief Update On The Legal Issues With Style Names

A. Background

Given that it is much easier for the consumer to pick or differentiate between certain items, styles and washes within a clothing line or collection by name rather than by an article code sequence, fashion houses have established a practice to use style names. In order to fulfil their function as an easy reference, style names typically consist of male or female first names or geographic indications.

Even though a style name's basic function is to enable the public to differentiate between a fashion company's very own styles and not to serve as a reference to third party products, its use may give rise to trademark conflicts.

Whilst sometimes claims will be put forward by a competitor, it increasingly occurs that cease and desist letters are sent by companies which do not manufacture or supply clothing, or at the very least are not known for this, but rather hold trademarks and engage in monitoring the market for possibly infringing style names in order to collect legal fees and damages. Apart from the fact that these companies would usually not let a party "off the hook," unless it issued a formal cease and desist declaration (with penalty clause) and paid a certain compensation, a litigious claimant would often sue other companies in the distribution scheme, including retailers, in order to increase the pressure on the fashion house.

Fashion companies, however, are caught unattended by this current 'trend.'

B. Case Law

From the legal perspective, claims may only be asserted, if the specific use of the style name qualifies as "use as a trademark."

In order to assess whether a style name (such as "Angela" or "Jim") is used in a trademark-like manner (or, in other words, as a secondary mark), or, on the other hand, as a mere article designation, the court will have to take into account all the specific circumstances of the case.

Whereas the assumption of a trade custom in the fashion industry to use style names as article designations has played an important part in several older decisions of the German Federal Court of Justice (see for example BGH, judgment of 26 November 1987, I ZR 123/85 – Gaby; BGH, judgment of 20 March 1970, I ZR 7/69 – Felina-Britta), the German instance courts have traditionally followed a particularly rights holder-friendly approach.

Based on the ECJ's findings in its judgment of 23 March 2010, Cases C-236/08-C-238/08 – Google France and Google, according to which the trademark's function of indicating the origin of the product is adversely affected, if an advertisement does not allow consumers, or allow them only with difficulties, to ascertain whether a given product originates from the trademark owner or a company economically connected to it or, to the contrary, originates from a third party, the Appellate Court of Hamburg only recently ruled that the female first name "USHA,, which was not descriptive for the designated goods, would (at least also) be perceived as an indication of origin and thus as a secondary trade mark – a view which is i.a. shared by the Appellate Court of Frankfurt on other occasions and regarding other names.

In contrast, the Hamburg District Court (first instance) and the Cologne Courts (both levels, first and appellate) have expressed different thoughts with respect to the style names "USHA" (in Hamburg) and "MARLO" (in Cologne). In these decisions, the courts acknowledged that the average consumer is perfectly aware of the fact that fashion companies use style names in order to identify a certain style or product line. These courts held that neither the function as an indication of origin nor another function of the claimant's mark would be adversely affected by such use.

It has to be noted, though, that different scenarios of use might be assessed differently. Use of a style name on a hangtag and thus in a position in which the consumer is accustomed to find the brand, is more likely to be considered use as a trademark as when depicted on care labels along with further article details, and that may lead to "split" decisions in the individual case.

C. Comments

Due to these inconsistencies in German case law and the fact that even a (false) allegation of infringement may impose a serious threat to a fashion company's distribution scheme and the relationships with wholesalers and retailers, trade mark conflicts involving style names have to be handled carefully. Keeping in mind that larger fashion companies are using hundreds or even thousands of style names, worldwide clearance is not always an option because of enormous costs. If a certain style name has become important for the company's business, e.g. because of its extensive use, it may be worth treating it as a trademark and protecting it. There are famous examples, where simple style codes have evolved to renowned brands – just think of the "501" by Levi's.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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