Death By A Thousand Cuts? Court Of Appeal Refers Trade Mark Dilution Questions To ECJ

In the recent decision of Intel Corporation Inc v CPM United Kingdom Limited¹, the Court of Appeal referred certain questions to the European Court of Justice, asking to what extent brands with a huge reputation should be protected against trade mark ‘dilution’. At the same time the Court expressed its own view that a narrow interpretation of the concept is to be preferred.

Background

This is an appeal by Intel Corporation ("Intel") from a High Court decision of Patten J on 26 July 2006 (which in turn was an appeal from a Trade Marks Registry decision of Mr Reynolds) on the issue of the registrability of word mark ‘Intelmark’, registered in class 35 for "marketing and telemarketing services."

The High Court held that Intel has a huge reputation in the word mark ‘Intel’ for microprocessor products and multi-media and business software. Even though end consumers generally do not purchase from Intel directly, many computer manufacturers use the slogan ‘Intel Inside’ which has contributed to the reputation of the mark, such that anyone seeing the mark will associate it with Intel. Intel has a large number of registrations all related to computer goods and services and all dissimilar to the services of the disputed mark. The disputed mark, ‘Intelmark’, was decided below to have been unused at the date of registration.

Legal issues

On appeal from the Registry to the High Court, Patten J held that "the reputation enjoyed by the INTEL mark would be sufficient for the average consumer to focus on INTEL in INTELMARK at least so as to bring to mind the INTEL mark" (para.42). The issues on appeal to the Court of Appeal were:

1. Is the mere "bringing to mind" of an earlier mark with a reputation enough to prevent a later registration? And
2. Is it an infringement of a registered mark which has a reputation if a defendant uses (for dissimilar goods or services) a mark which merely "brings to mind" the registered mark?

In his leading decision, Jacob LJ set out Articles 4(4)(a) (relating to registrability) and 5(2) (relating to infringement) of the Trade Marks Directive 89/104 and summarised the issue before him as "whether Intel’s registrations for dissimilar goods preclude use of the Intelmark for CPM’s dissimilar services."

He briefly reviewed the relevant European case law, quoting Advocate-General Jacobs’ summary of the concept of trade mark ‘dilution’ in Adidas-Salomon v Fitness World ([2004] FSR 21). Pursuant to Article 5(2) the Advocate-General stated: "there are thus in principle four types of use which may be caught: use which takes unfair advantage of the marks’ distinctive character, use which takes unfair advantage of its repute, use which is detrimental to the mark’s distinctive character and use which is detrimental to its repute." Dilution itself (as articulated in the case of Schechter) is "the gradual whittling away or dispersion of the identity and hold upon the public mind" of certain marks. Thus Advocate-General Jacobs stated that "the essence of dilution in this classic sense is that the blurring of the distinctiveness of the trade mark means that it is no longer capable of arousing immediate association with the goods for which it is registered and used." ‘Detriment’ he defined as the situation where "the goods for which the infringing sign is used appeal to the public’s senses in such a way that the trade mark’s power of attraction is affected." The ECJ in the Adidas case was, however, not concerned with dissimilar goods. It held in the context of Article 5(2) that if, on the facts, the mark was seen by the public as an embellishment and as having a "link" to the trade mark, then that was enough to amount to infringement.

In the present case, Intel argued that a "link" was a mere "bringing to mind" of the earlier mark and that the stronger the earlier mark’s distinctive character and reputation; the easier it is to accept that detriment has occurred. Intel also argued it was important to stop any encroachment on the mark at the outset or it would "suffer death by a thousand cuts". Intel further argued that the Court of First Instance appeared to accept Advocate- General Jacobs’ definition of ‘dilution’ by applying it in various dissimilar goods cases and that the UK national decisions on the point are wrong (e.g Premier Brands v Typhoon Europe [2000] FSR 767 which held that Article 5(2) does not enable the proprietor of a well-known registered mark to object as a matter of course to the use of a sign which may remind people of his mark). National cases also suggest that the later mark should have (or be likely to have) an effect on consumers’ economic behaviour before it can be said to infringe or be barred from registration.

Court of Appeal Judgment

The Court of Appeal (Jacob LJ, Keene LJ and Mummery LJ) referred three questions to the ECJ and Jacob LJ offered his own view on each as follows:

1. For the purposes of Article 4(4)(a) where:

1. the earlier mark has a huge reputation for certain specific types of goods/services
2. those goods/services are dissimilar or dissimilar to a substantial degree to the goods/services of the later mark
3. the earlier mark is unique in respect of any goods/services
4. the earlier mark would be brought to mind by the average consumer when he/she encounters the later mark used for the services of the later mark.

Are those facts sufficient in themselves to establish a "link" and/or unfair advantage and/or detriment within the meaning of the Article?

In Jacob LJ’s view, ‘no’; "I would hold that a link requires more than such a tenuous association between the two marks". A trade mark with such a reputation, he states, ought to be strong enough to withstand a "mere bringing to mind". Any confusion as to trade connection should be sufficient. If a consumer wonders whether there is a connection and that wonder is "substantial as opposed to fleeting" that might also be sufficient. He also comments that the distinctive character of a mark is tied to the goods/services for which it is registered.

2. If no, what factors should the national court take into account in deciding whether such is sufficient? What significance is to be attached to the goods/services in the specification of the later mark?

Jacob LJ suggests two factors: a whether, having regard to the nature of the goods/services for which the later mark is used, the average consumer would consider there is an economic connection between the owners of the two marks; and b whether the distinctiveness or repute of the earlier mark for the goods/services for which it is registered is really likely to be affected if the later mark is used for the specific goods/services covered by its registration.

3. In the context of Article 4(4)(a), what is required in order to satisfy the condition of detriment to distinctive character? Specifically, (i) does the earlier mark have to be unique? (ii) is a first conflicting use sufficient to establish detriment to distinctive character and (iii) does the element of ‘detriment’ require an effect on the economic behaviour of the consumer?

Jacob LJ proposes a "realistic global appreciation of the position" including whether the "pulling power" of the earlier mark for its specific goods/services is really likely to be affected by the use of the later mark for its specific goods/service and whether the later mark is likely to get a real commercial advantage from the reputation of the earlier mark.

Commercial implications

Trade mark owners will have to wait some considerable time for the ECJ to opine on the questions referred and, in the meantime, the position on registrability and infringement in cases of brands with a huge reputation and disputed marks for dissimilar goods/services will remain unclear. The Court of Appeal would like any concept of ‘dilution’ to be curtailed so that it only applies in circumstances where the earlier mark is "really likely to be affected" by the use of the later mark and, in particular, where some commercial advantage will be secured or there is some change in the economic behaviour of the consumers. This is a narrower concept than that developed in the USA where greater protection is provided against the blurring or "insidious gnawing away at" a trade mark by use in relation to dissimilar goods/services. In Jacob LJ’s view, "A mere possibility or assertion of damage is just too remote and would leave trade mark owners in too monopolistic a position." Many companies invest heavily in their brands and understandably wish to protect them from erosion. It will be left to the ECJ to demarcate the scope of ‘dilution’ to achieve the right commercial balance between fair competition and registered trade mark rights.

Footnote

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.