In January of this year, the Court of Justice of the European Union (CJEU) issued a ruling in the high-profile case between Audi AG and the Polish entrepreneur operating under the name GQ. The Court sided with Audi, concluding that a car manufacturer holding an EU trademark may prohibit the use of a sign identical or similar to that trademark in spare parts.
The CJEU thereby confirmed that the so-called repair clause, established concerning Community designs, cannot be analogously applied to trademarks. Furthermore, the Court acknowledged that trademark protection rights can be invoked regardless of the purpose of using the sign in a spare part, particularly irrespective of whether the mark was used to fulfill a technical function.
THE REPAIR CLAUSE
The repair clause is defined in Article 110(1) of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs. According to this provision, "protection as a Community design shall not extend to a design which constitutes a component part of a complex product used [...] for the purpose of the repair of that complex product so as to restore its original appearance." This means that the production of a spare part does not infringe the law as long as it is used for repairs aimed at restoring the original external appearance of the product, such as a car.
The Court of Justice of the European Union (CJEU) has previously adopted a favorable interpretation for spare parts manufacturers, which permits the production of parts under this clause, even those whose final appearance is not dictated by the functionality and appearance of the car (such as lights), specifically allowing the production of identical car rims1. The CJEU justified this by citing the objective pursued by the EU legislator in formulating this clause, namely, the intention to partially liberalize the spare parts market. However, the latest ruling by the Court clearly determines that such reasoning does not apply to trademarks and may result in a significant change in the current functioning of this market.
CASE BACKGROUND
The defendant, GQ, is an individual engaged in the sale of car spare parts. From 1986 to 2017, GQ advertised and offered radiator grilles via a website, tailored and designed for old Audi models from the 1980s and 1990s. Similar to the original grilles, those offered by GQ featured an indented area meant for placing the car manufacturer's emblem, which corresponded in outline to the plaintiff's EU trademark, depicting four intersecting rings.
The plaintiff, Audi AG, holds the exclusive rights to the graphical EU trademark registered under number 000018762, including but not limited to Class 12 of the Nice Classification, which covers goods such as land, air, and water vehicles and their parts (not included in other classes), including vehicle engines. The trademark was filed in 1996 in the following form:
In May 2020, the trademark owner initiated a dispute in Poland before the Regional Court in Warsaw, alleging that GQ's production of radiator grilles with elements corresponding to Audi's graphical mark infringed upon its EU trademark rights. The plaintiff sought an injunction to prohibit the defendant from importing, offering, marketing, and advertising non-original radiator grilles bearing a mark identical or similar to the plaintiff's EU trademark. The plaintiff also demanded the destruction of 70 units of these products, which had been seized by Polish customs authorities.
GQ contested these claims, arguing that it is common practice among car manufacturers not to oppose the sale of non-original radiator grilles that include a space for mounting the emblem, reflecting the protected trademark.
The District Court in Warsaw, during the course of the proceedings, acknowledged that the plaintiff's trademark possesses a high distinctive character, is widely recognized in Poland, and is associated with the plaintiff. However, it harbored doubts as to whether the scope of protection afforded to such an EU trademark extends to an element enabling the placement and attachment of the car manufacturer's emblem on the radiator grille, and thus, whether the sale of spare parts with such an element, including radiator grilles, constitutes, in accordance with EU law, the use of a sign in commercial trade that could infringe upon the functions of the trademark.
PREJUDICIAL QUESTIONS
To clarify these doubts, the Court has referred the following prejudicial questions to the CJEU:
- Whether Article 14(1)(a) of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (hereinafter referred to as the "Regulation") should be interpreted as precluding the owner of a trademark/court from prohibiting a third party from using, in the course of trade, a sign identical or similar to the EU trademark, in relation to car spare parts (radiator grilles), if it serves as a mounting point for a car accessory (emblem reflecting the EU trademark), and:
- When from a technical standpoint there are possibilities to mount the original emblem reflecting the EU trademark on the spare part (radiator grille) without reproducing on that part a sign identical or similar to the EU trademark.
If the response to the first prejudicial question is affirmative:
1. What criteria of assessment should be applied in such cases to determine whether the use of the EU trademark is in line with fair trade practices and industry standards?
2. Should Articles 9(2)2 and 9(3)(a)3 of Regulation [2017/1001] be interpreted to mean that when the trademark is an element of the shape of a car part and in the absence of an equivalent repair clause as in Article 110(1) of Regulation [No 6/2002], the trademark does not perform a distinctive function in such a situation?
3. Should Articles 9(2) and 9(3)(a) of Regulation [2017/1001] be interpreted to mean that when the fixing element of the trademark, reflecting the shape of the trademark or deceptively similar to it, is an element of the shape of a car part and in the absence of an equivalent repair clause as in Article 110(1) of Regulation [No 6/2002], the fixing element cannot be considered as performing a distinctive function, even if it is identical to or deceptively similar to the trademark?
OPINION OF ADVOCATE GENERAL LAILA MEDINA
In her opinion presented on September 21, 2023, Advocate General Laila Medina indicated that since exclusive rights are granted to the owner to ensure the fulfillment of the basic functions of a trademark, primarily indicating the origin of the goods it designates but also ensuring the quality of those goods or performing promotional functions, the owner cannot oppose the use of a sign identical or deceptively similar to the trademark under Article 9 of the Regulation if such use does not negatively impact any of the functions performed by the trademark. According to the Advocate General, such a situation arises in the present case.
Leila Medina also questions the appropriateness of using the term "designation" in relation to the goods subject to the dispute. As she points out, the case did not concern the reproduction of the emblem itself, but only a specific element of the radiator grille, used solely for the purpose of placing and fixing an additional accessory. According to the Advocate General, this element serves only a technical function and, in order to fulfill it, must correspond in shape to the accessory.
In the opinion of the Advocate General, considering the circumstances of the case as a whole, the position that the reproduction of the shape of the EU trademark of the car manufacturer, whose sole technical purpose is to mount the manufacturer's emblem, constitutes trademark use should be excluded. Therefore, such action should not be considered as the use of a designation in commercial trade4.
CJEU'S RULING
CJEUS's ruling, however, did not align with the Advocate General's opinion. The Court held that since the goods did not originate from the owner of the Audi trademark and were placed on the market without their consent, their further use entails the risk of infringing the functions of the trademark. The Court emphasized that these functions include not only ensuring consumers are informed about the origin and quality of the goods but also serve communicative, investment, and promotional purposes.
The Court thus concluded that in a situation where the choice of the shape of the element intended for mounting the car manufacturer's emblem is driven by the desire to sell a part resembling the original product as closely as possible, EU law does not limit the rights of the trademark owner. The owner still has the right to prohibit the use of a sign identical or similar to the registered trademark.
According to the CJEU, in such circumstances, it is irrelevant whether there is a technical possibility to mount the emblem reflecting the trademark in a way that does not lead to its reproduction. If replication occurs in the described manner, it also constitutes the use of the sign as a trademark.
Therefore, GQ's use of a shape deemed by the Polish court to be identical or similar to the AUDI trademark should be assessed in light of the principles established in Article 9 of the Regulation5.
SUMMARY
The Court's decision is not without controversy. It is argued that by expanding the functions of purely technical elements to include informing consumers about the origin of the product, the CJEU has set the boundaries of trademark protection too broadly. Such significant barriers to the use of the trademark may impact the balance previously maintained in the aftermarket parts market and restrict the opportunities for manufacturers of these parts. The essence of producing these elements lies in faithfully replicating the original appearance of the car.
At the same time, the Court's ruling is not surprising, as there has been a trend in EU case law towards a broad interpretation of the protection of EU trademarks. This serves as another argument, combined with the absence of a time limit on the use of this monopoly, in favor of recognizing trademarks as one of the most effective means of intellectual property protection.
Footnotes
1 Judgment of the Court (Second Chamber) of December 20, 2017 in Joined Cases C-397/16 and C-435/16, Acacia Srl v. Audi AG (C-397/16) and Acacia Srl, Rolando D'Amato v. Dr. Ing. h.c. F. Porsche AG (C-435/16).
2 Without prejudice to the rights acquired by the proprietor before the date of filing or the date of priority of the EU trademark, the proprietor of the EU trademark is entitled to prevent all third parties who do not have their consent from using in the course of trade, in relation to goods or services:
(a) a sign that is identical to the EU trademark and is used in relation to goods or services that are identical to those for which the EU trademark is registered;
b) a sign that is identical or similar to the EU trademark and is used in relation to goods or services that are identical to those for which the EU trademark is registered, or similar goods or services if there is a likelihood of confusion; the likelihood of confusion includes the likelihood of association of the sign with the trademark;
(c) a sign that is identical or similar to the EU trademark, regardless of whether it is used in relation to goods or services that are identical, similar, or dissimilar to those for which the EU trademark is registered, if it enjoys a reputation in the Union and the use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the EU trademark.
3 The following, in particular, may be prohibited under paragraph (2): a) affixing the sign to goods or their packaging.
4 Opinion of Advocate General Laila Medina delivered on September 21, 2023. , Case C-334/22 Audi AG v. GQ.
5 Judgment of the Court (Fourth Chamber) on January 25, 2024 in Case C-334/22, Audi AG v. GQ.
Originally published 17 May 2024
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