UK: ECJ Finds Company Incorporation Does Not Constitute Trade Mark Use

Last Updated: 25 September 2007
Article by Isabel Davies and Tom Scourfield

The European Court of Justice recently handed down its judgment in Celine SARL v. Celine SA, confirming that unauthorised use of a trade mark as a company, trade or shop name does not amount to infringement as the purpose of a company, trade or shop name is not, of itself, to distinguish goods/services, but to designate a business which is being carried on. However, subsequent use of the mark in relation to goods/services would be an infringement if it affected the essential function of the mark.

To view the article in full, please see below:

Full Article

Background To Celine

The factual background concerned the use of the name ‘Celine’ by two organisations. The registered proprietor of the trade mark, Celine SA, claimed that Celine SARL’s use of the term as a shop name was an infringement of their trade mark. Before the French national court, Celine SA were successful, receiving damages and preventing use of the mark. Celine SARL appealed on the basis that a company or shop name did not constitute use within the meaning of Article 5(1) of the Trade Mark Directive, as it was not use in relation to goods or services. SARL also sought to distinguish their goods by claiming that there would be no confusion amongst members of the general public regarding origin, as they produce mens and womenswear, while SA concentrates on luxury clothing and accessories.

The Question Referred

The central question referred to the ECJ concerned whether unauthorised use of a trade mark as a company, trade or shop name could amount to infringement.

The Advocate General’s Opinion

Advocate General Sharpston considered that the mere adoption of a company or trading name identical or similar to an existing trade mark would not amount to infringement within the meaning of Article 5(1). Rather, to rely successfully on Article 5(1) a proprietor must establish two elements:

  1. that use of the sign distinguished relevant goods; and,
  2. that the third party’s use encroached on the essential function of the mark to designate origin of goods.

The Advocate General expanded on the latter point, stating that this criteria would be fulfilled if the use created the impression of a material link in trade between the owner of the trade mark and the third party goods. To assess this, consideration must be given to target consumers and whether they would interpret the sign as designating origin.

Accordingly, the mere adoption of a sign as a company name would fall outside the scope of Article 5(1), but any subsequent use of that sign in the course of trade would be likely to constitute trade mark use if the mark were being used in such a way as to interfere with the essential function to distinguish goods and services in the course of trade.

The right of the trade mark proprietor to prohibit such use was also considered in the context of Article 6(1) of the Directive, with useful guidance concerning what amounts to "honest practices" in this respect. According to the Advocate General, a crucial issue in Celine was knowledge. If a third party knew that the proposed mark was identical or similar to a registered trade mark, they could not be said to be acting in accordance with honest practices. Similarly, mere ignorance of the existence of a trade mark could not be interpreted to mean that the use was in accordance with honest practices. The Advocate General had recommended a general obligation on third parties to exercise reasonable diligence to uncover any potential conflict with existing marks. If a potential conflict was identified, to be in accordance with honest practices, a potential infringer should request permission for such use and comply with any reasonable conditions the proprietor may have to minimise the effect upon the mark.

The ECJ’s Ruling

The ECJ’s ruling followed the Advocate General in principal in relation to the concept of use, separating the issues of adoption of a name and subsequent trading, stating that the proprietor of a trade mark can only prevent its unauthorised use if it affects the essential function of the mark, to designate the origin of goods. The ECJ found that the purpose of a company, trade or shop name is not, of itself, to distinguish goods/services, but to designate a business which is being carried on.

The ECJ confirmed that it is only when the company, trade or shop name is used in relation to goods or services that this will amount to infringement, such as by affixing the company name to the goods which are marketed or using the company name in such a way as to suggest a link between the sign and the origin of the goods/services.

On that the facts, it was for the national court to determine whether the use made by Celine SARL of the mark was liable to affect the essential function of the mark.

The ECJ did not comment upon the more detailed guidance offered by the Advocate General in relation to honest practices, which would require a third party to consider potential conflicts with the name before incorporation. Instead, the court suggested the following factors should be taken into account in assessing whether the third party had acted fairly in relation to the legitimate interests of the proprietor:

  1. The extent to which the relevant public understood the use of the name as indicating a link between the owner of the mark and the third party’s goods;
  2. The extent to which the third party should have been aware of that fact; and
  3. Whether the mark had a reputation in the member state of registration, which the third party might profit from in marketing their goods.

Again, it was for the national court to make an assessment as to whether the behaviour of Celine SARL could be regarded as competing unfairly with the proprietor of the mark.


The decision of the ECJ offers a relatively narrow interpretation of trade mark use by determining that the mere act of incorporation does not interfere with the essential function. The decision provides little guidance as to when subsequent use of the mark by that company would constitute an act of infringement, leaving such an assessment as a question of fact for the national court to decide.

This is unlikely to be welcomed by trade mark owners, who may consider that allowing such companies to remain on the register may encourage infringement by others, who may mistakenly believe that the presence of such companies suggests that the marks may not be enforced.

It is interesting to note that the ECJ did not endorse the suggestion by the Advocate General that a third party should be required to exercise reasonable diligence in considering potential conflicts with the name before incorporating the company. Instead, the court provided a list of factors to take into account in assessing the conduct of the third party in relation to the proprietor’s legitimate interests.

Presumably, however, the ECJ’s ruling means that the state of the register at, for example, Companies House, will no longer be relevant in determining whether the mark is unique to the proprietor, as the mere existence of companies on the register is now largely irrelevant to issues of trade mark use.

Brand owners may also look to other remedies in relation to the use of their marks in a company name, such as passing off in the UK, or unfair competition elsewhere in Europe. From 1 October 2008, brand owners will also be able to object to misleading company names under s.69 Part 5 of the Companies Act 2006. This additional remedy now seems all the more important in light of the ECJ’s judgment.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 19/09/2007.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.