The European Court of Justice (ECJ) issued its judgment on a reference for a preliminary ruling by a French court in a case concerning Articles 5(1)(a) and 6(1)(a) of Directive 89/104/EEC (Directive) to approximate the laws of the member states relating to trademarks. The issues presented were whether a registered trademark proprietor had the right to oppose third-party use of a sign identical to his registered mark; use of the sign as a company, trade or shop name; and the third party’s right to use his name. Céline SARL v. Céline SA, Case No. C-17/06 (ECJ), (Sept. 11, 2007).

Céline SA (SA) was incorporated under the name "Céline" in 1928. Its principal activities involved creating and marketing clothes and fashion accessories. SA’s trademark CÉLINE dates back to 1948.

Céline SARL (SARL) argued that its right to trade as "Céline" began with an individual who was registered in 1950 in the Nancy Commercial and Companies Register regarding the operation of a clothing business trading as "Céline" and had been transferred by successive operators of the business. SARL was registered in the same Register in 1992 to operate a business trading in ready-to-wear garments and other clothing under that name.

SA sought to prevent SARL from infringing the CÉLINE trademark and engaging in acts of unfair competition by appropriating the company and shop name "Céline." SA also sought damages. In June 2005, the national court granted all SA’s applications, forbidding SARL from using "Céline" in any way, ordering it to change its company name to one incapable of causing confusion with the CÉLINE trademark and Céline shop name and granting damages. SARL appealed, arguing that use of a sign identical to the earlier word mark as a company or shop name was not infringing conduct, as a company or shop name does not distinguish goods or services, and that, in any event, there would be no public confusion as to the relevant goods’ origin as SA operates exclusively in the luxury market.

"The ECJ held that unauthorised third party use of a company, trade, or shop name identical to an earlier mark in connection with the marketing of goods identical to those for which the mark was registered constitutes use which the proprietor may prevent under Article 5(1)(a) where the use is in relation to goods so as to affect or be liable to affect the mark’s functions. As articulated by the court "[s]hould that [affect] be the case, Article 6(1)(a) ... can operate as a bar to such use being prevented only if the use by the third party of his company name or trade name is in accordance with honest practices in industrial or commercial matters."

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