In Céline SARL v Céline SA1, the European Court of Justice ("ECJ") considered a reference from the French Court of Appeal in relation to use of a term as a company name and whether it could amount to trade mark infringement.
The ECJ stated that a trademark owner cannot stop a third party from using an identical name as the name of a company or the name of a shop, even in relation to the use of identical goods and services for which the trade mark has been registered, where the third party's use of the name is in accordance with honest practices.
The Facts Of The Case
Céline SA was incorporated in 1928 and filed an application for the word mark CÉLINE (to designate all goods in classes 1 to 42, in particular "clothes and shoes") in 1948. The company creates and markets clothing and fashion accessories.
In this dispute Céline SARL claimed the right to trade as "Céline", selling garments and accessories. The company name was originally registered in 1950 and transferred by successive operators of the business to Céline SARL.
Céline SA brought proceedings against Céline SARL for trade mark infringement and unfair competition. The Nancy Regional Court of France found in favour of Céline SA, awarded damages and prohibited Céline SARL from using the term "Céline".
Céline SARL appealed against the decision, arguing that the use of "Celine" as a company or shop name did not amount to infringement, since it was not the purpose of either a company or a shop name to distinguish goods and services and that, in any event, there could be no confusion on the part of the public as to the origin of the goods concerned.
The French Court of Appeal made a reference to the ECJ for a preliminary ruling on the following question: "Must Article 5(1) (of the Directive)...be interpreted as meaning that the adoption by a third party without authorisation, of a registered word mark, as a company, trade or shop name in connection with the marketing of identical goods, amount to use of that mark in the course of trade which the proprietor is entitled to stop by reason of his exclusive rights?"
Legal Issues
Article 5 of the Trade Marks Directive2 (the "Directive") confers certain exclusive rights on the proprietor of registered trade marks. The proprietor is entitled to prevent third parties (not having the proprietor's consent) from using in the course of trade any sign which is identical to the trade mark in relation to identical goods or services and any sign which is confusingly similar to the trade mark where there exists a likelihood of confusion on the part of the public. The Article goes on to specify prohibited acts.
Referring to previous case law3, the ECJ ruled that a proprietor could only prevent the use of a sign by a third party if the following four conditions are satisfied: use must be
- in the course of trade;
- without the consent of the proprietor of the mark;
- in respect of goods or services which are identical to those for which the mark is registered; and
- affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services.
Céline SARL denied that the sign was being used "in relation to goods". The ECJ held that "the purpose of a company, trade or shop name is not, of itself, to distinguish goods or services...where...[it] is limited to identifying a company or designating a business which is being carried on, such use cannot be considered as being 'in relation to goods or services' within the meaning of Article 5(1) of the Directive." However, if the sign is also affixed to goods which are marketed or is used in such a way that a link is established between the sign and the goods or services, there is use 'in relation to goods or services'. Such use of a sign may damage the trade mark's ability to act as a guarantee of origin.
ECJ Judgment
The ECJ also confirmed that under Article 6(1)(a) of the Directive, a trade mark proprietor cannot prevent a third party from using his own name or address in the course of trade where that third party uses it in accordance with honest practices. This provision is not limited to the names of natural persons.4 "Honest practices" equate to a duty to act fairly in relation to the legitimate interests of the trade mark proprietor. A court must consider the extent to which the use of the third party's name is understood by the relevant public as indicating a link between the third party's goods or services and that trade mark proprietor and also whether the trade mark concerned enjoys a certain reputation in the Member State in which it is registered and its protection is sought.
The ECJ confirmed this "two stage" test. The court must first consider Article 5 including whether use of a company name, trade name or shop name affects or is liable to affect the functions of the mark. Should that be the case, Article 6(1)(a) of the Directive can operate as a bar to such use being prevented only if the use by the third party of his company name, trade name or shop name is in accordance with honest practices in industrial or commercial matters.
Commercial Implications For Trade Mark Holders
The ECJ has confirmed earlier case law concerning trade mark "use". In summary, there is little a trade mark owner can do faced with a third party using a mark as its own company name, trading name or shop name providing it is doing so in accordance with honest practices.
However, new legislation to be introduced on 1 October 2008 will allow any person to object to the registration of a company name if it is the same as a name in which that person has goodwill, or if they believe that the company's name is so similar that it would be likely to be misleading.5 This should provide a useful mechanism for getting in early to enforce rights against companies seeking to use the same or a very similar name.
Footnotes
1. Case C-17/06.
2. Directive 89/104/EEC of 21 December 1988 to approximate the laws of Member States relating to trade marks (OJ 1989 L 40, p1).
3. Arsenal Football Club, Case C-245/02; Anheuser-Busch, [2004] ECR I-10989; Adam Opel, [2007] ECR I-0000.
4. Anheuser-Busch, paragraphs 77 to 80.
5. Section 69 of the Companies Act 2006
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.
