The General Court of the EU dismissed an appeal brought by Shoe Branding Europe BVBA (Shoe Branding) on March 1, 2018. The appeal was filed by Shoe Branding against the decision of the European Union Intellectual Property Office (the EUIPO) to refuse registration of its trademark. The refusal followed an opposition filed by Adidas AG (Adidas). This trademark case may be relevant to Hong Kong and Chinese mainland shoe manufacturers and sellers in the European market, who wish to protect their own marks, and see how such trademarks are protected by the courts under the EU’s intellectual property law.
On July 1, 2009, Shoe Branding filed an application for registration of an EU trademark consisting of two parallel lines positioned on the outside surface of the upper part of a shoe, to be registered under “Footwear”. Adidas opposed the registration on the basis of two provisions of the EU’s Trademark Law (now Regulation 2017/1001 on the European Union Trademark). Relying on these provisions, Adidas argued that there could well be a likelihood of confusion between Shoe Branding’s and its own trademarks; and Shoe Branding’s attempt to take unfair advantage of the reputation of the well-known Adidas trademark.
What followed was a protracted series of appeals and referrals which brought the case before the General Court and the Court of Justice of the European Union (the ECJ) in 2016. When the ECJ upheld the General Court’s finding that the signs were confusingly similar, the case was referred back to the Second Board of Appeal of the EUIPO.
Following the ECJ judgment, the Board of Appeal of the EUIPO sided with Adidas and rejected Shoe Branding’s trademark application. This time, Shoe Branding appealed to the Court alleging that the EUIPO had made several errors of assessment as regards (i) the evidence of the reputation of the Adidas trademark; (ii) the existence of damage to the reputation or distinctive character of the trademark; and (iii) the absence of any due cause for the use of the trademark applied for.
In its judgment, the Court rejected all arguments and therefore dismissed the appeal in its entirety.
Article 8(5) of the EU’s Trademark Law protects an earlier trademark that enjoys a reputation in the European Union. Shoe Branding argued that the evidence of the reputation of the Adidas trademark was insufficient. However, in its assessment of Shoe Branding’s argument, the Court took into account (i), the high degree of awareness by the relevant public of the Adidas trademark, consisting of three parallel stripes (particularly when affixed to a shoe); (ii) the existence of several decisions of national courts noting the reputation of the Adidas trademark; and (iii) the significant sponsorship activity undertaken by Adidas and the fact that many sports personalities wear footwear bearing the Adidas trademark. In view of these factors, the Court held that Adidas had adequately demonstrated the reputation of its trademark.
Shoe Branding also argued that its contested trademark application did not take unfair advantage of, nor was it detrimental to, the distinctive character or the reputation of the Adidas trademark. To that end, Shoe Branding contended that Adidas had not shown evidence of injury. According to Shoe Branding, its own two-stripe sign and the Adidas trademark had coexisted “peacefully” for a great number of years.
The Court disagreed and indicated that there had been no “peaceful coexistence” of the two trademarks as Adidas had already challenged the applicant’s trademark twice in the past. The Court also referred to the Board of Appeal’s finding that the Adidas trademark enjoyed a high, long-held and enduring reputation and that it benefitted from a power of attraction, linked to an image of quality and prestige, acquired after decades of investment, innovation and publicity. The Court added that the stronger the reputation of the trademark, the more likely a subsequent trademark is likely to take unfair advantage of it.
Furthermore, the Court noted that Shoe Branding had clearly alluded to the Adidas trademark in using the slogan “two stripes are enough” in a 2007 promotion campaign. By doing so, Shoe Branding had clearly referred to the Adidas trademark and had suggested that the goods which it sold under a two-striped trademark had equal qualities to those sold by Adidas under a three-striped trademark. The Court therefore rejected Shoe Branding’s argument.
Finally, the Court also held that there was no due cause for the use of Shoe Branding’s trademark as such use did not satisfy the conditions set out in the Court’s case law. In particular, the applicant did not show that it had used the trademark throughout the European territory. Moreover, the two trademarks had not coexisted peacefully and the Court noted that Shoe Branding was unlikely to use its trademark in good faith considering the 2007 campaign. The Court therefore dismissed Shoe Branding’s appeal.
Hong Kong shoe sellers will see that this ruling is an important victory for Adidas in its long-running dispute with Shoe Branding. Nonetheless, in a surprise twist to the case, the battle surrounding the Adidas three-stripes trademark continues. This is because the EUIPO declared the Adidas three-stripe trademark invalid for lack of distinctive character in distinct proceedings initiated by Shoe Branding. Adidas has appealed that decision at the General Court.
The comments by patent experts Dr Meyer-Dulheuer and Partners LLP
Significant loss for the German sportswear giant: adidas has recently lost legal protection for one of its three-stripe Trademark. The reason is, that it did not enable consumers to identify such clothing items to be produced by adidas. So the TM does not amount to a valid trademark registration. Read more about the case:
Adidas is very active when it comes to protecting their stripes. Just a few weeks ago we wrote about the Trademark-Dispute with FC Barcelona – which was also about the three stripes. With this very recent case, the “three-stripes saga” continues.
In Case R 1515/2016-2, the European Union Intellectual Property Office (EUIPO) recently found that one of adidas’ European Union Trade Mark (EUTM) has to be invalid, because the mark did not enable consumers to identify clothing items as originating from a particular producer (=adidas). The accused Mark was registered for ‘clothing; footwear; headwear’ in Class 25 and is part of a group of “three-striped marks” owned by the German sportswear manufacturer Adidas AG.
adidas’ ongoing Trademark Battle with Shoe Branding Europe BVBA
The decision stems from an ongoing battle between adidas and Belgian footwear company, Shoe Branding Europe BVBA, the latter of which filed a request for a declaration of invalidity in connection with adidas’ (“EUTM Proprietor”) contested 3-stripe mark back in 2014. Back then, Shoe Branding Europe BVBA (“Cancellation Applicant”) filed a request for a declaration of invalidity against the Mark (see graphic on the left).
The Cancellation Applicant argued, pursuant to Article 52(1)(a) in conjunction with Article 7(1)(b) of the European Union Trade Mark Regulation (EUTMR), that:
– There is a contradiction between the mark type (figurative) and the description, which indicates ‘positioning’. The Office should have invited the cancellation applicant to remedy the discrepancy by changing the mark type to ‘other’.
– According to the Courts, the mark ‘type’ is essential for assessing the scope of protection. In this instance, it is uncertain and with a very broad protection for a wide range of goods. A formal deficiency should have been notified in respect of those goods for which the mark cannot be positioned in the way indicated in the description.
– The mark is devoid of any distinctiveness. It is a very simple geometric sign. It consists of no more than a repetition of a stripe three times, which may be used for decorative purposes. The sign cannot be distinguished from other common shapes found on clothing.
Adidas against the declaration of invalidity
The EUTM Proprietor claimed that the Courts had already confirmed the enhanced distinctiveness of the three-striped marks in the past. On 15 June 2015, the EUTM proprietor filed observations on the request for invalidity. Its reasons can be summarized as follows:
– The contested EUTM was registered despite a third party filing observations on its supposed lack of distinctiveness. The arguments filed then are essentially the same as those filed in these invalidity proceedings.
– There is no basis in law to assert that the mark has been wrongly classified as ‘figurative’. The fact that the mark is applied to a product does not make it necessarily a ‘position mark’. There is no contradiction between the mark as ‘figurative’ and its description.
– The Courts have emphasised the enhanced distinctiveness of the many threestriped marks filed by the EUTM proprietor. The cancellation applicant itself has filed for several two-stripe marks; therefore, it is contradicting itself. The case-law cited by the latter supports the former in these proceedings. – The consumers of the relevant goods have been taught to recognise this mark as designating origin due to the significant and intensive use Adidas has made of the mark over the years.
10000 pages of evidence to win … well, or not Papierkram_Paperwork
On 30 June 2016, the Cancellation Division (“CD”) issued its decision 10 190 C, which upheld the invalidity request in its entirety. The contested mark is likely to go unnoticed by most consumers or will not be perceived as a sign denoting a connection with a specific undertaking.
In reaching this conclusion the Cancellation Division notes that the sign consists of three normal black vertical equidistant lines. It is not stylised in any way. There is nothing about the sign that is apt to make it stand out in relation to the contested goods.
It is difficult to see why such a simple design in normal font and the colour black should attract the attention of the consumer, even a highly attentive consumer with a particular interest in trade marks and visual signs in general.
There is no reason to belive that consumers would assume that three straight black vertical lines in ordinary font is primarily intended to denote a connection with a specific provider of clothing, footwear and headgear products.
Since a sign consisting of nothing more than three straight black vertical lines is clearly capable of being used in many different contexts as a banal design or decoration, it is important to bear in mind the public interest underlying Article 7(1)(b) EUTMR, namely to avoid restricting unduly the availability of certain signs for other operators.
The Cancellation Division’s noted that “the number of available simple signs utilising straight vertical or horizontal lines is extremely limited, like the number of available colours, and there is an obvious danger that their availability for the purpose of indicating commercial origin would be unduly restricted if vertical or horizontal straight lines were treated as inherently distinctive. That is what the General Court means when it says that in view of the extent of the protection afforded to a registered trade mark the public interest underlying Article 7(1)(b) EUTMR is manifestly indissociable from the essential function of a trade mark.”
Despite the 12000 pages of evidence filed by the EUTM Proprietor, the CD saw “no basis on which to conclude that the contested mark is recognised as the EUTM proprietor’s trade mark in the internal market of 500 million people“. Some images showing a design on a football shirt or boot that resembles the three lines of the contested EUTM is no basis on which to conclude that the contested mark is recognised as the EUTM proprietor’s Trade Mark in the internal market of 500 million people.
Second Board of Appeal (BoA) uphelds the Decision of the Cancellation Division
In early March 2017 the Second Board of Appeal (BoA) of the EUIPO confirmed the view of the Cancellation Division, dismissing adidas’s appeal. The BoA did not comment in detail on the EUTM’s inherent distinctiveness, since the EUTM Proprietor had apparently not disputed that part of the CD’s decision. As regards acquired distinctiveness, the BoA largely agreed with the conclusion of the CD.
In the BoA’s view, many exhibits provided by the EUTM Proprietor to prove use of the EUTM were of “doubtful value“. In the Board’s view, the following exhibits picked from the mass of evidence show doubtful use, because the marks here consist of two not three parallel black (or dark) stripes against a white (or lighter coloured) background:
In the Board’s view, the following exhibits also have doubtful value:
The footballer in the top left picture is wearing a shirt with two (not three) parallel green (dark) stripes on the shoulder, but the stripes terminate in a horizontal white strip which produces an entirely different impression to that of the mark as registered. The athlete in the top-right picture features a three-stripe design, but slants at an angle which differs from the mark as registered. Regarding the footwear in the bottom picture, the stripes are significantly thicker than the stripes in the mark as registered. They are also shorter. Moreover, the three stripes are a thick white against a dark background, the mirror image of the mark as registered.
In all the above examples, the marks on display deviate significantly from the mark as registered, either because they comprise two dark stripes instead of three, comprise three broad white stripes instead of dark stripes, or do not reflect the correct dimensions. Some of the marks on view suffer from more than one defect.
The BoA held that the decision of the CD had to be upheld and the EUTM declared invalid.
Conclusion: What do we learn from that case?!
The decisions of the Cancellation Divison and EUIPO’s Board of Appeal sets the hurdles high for upcoming Trademarks (-applications), but also for the ones that a company owns, who wish to rely on their acquired distinctiveness before. The decision could also be a signal towards the fashion industry, keeping certain design elements (such as stripes) in the fashion industry free to be used.
Though, the EUIPO’s chain of reasoning is somewhat confusing: On the one hand, the CD and BoA say that the stripes are “at least as likely to be perceived as a simple decoration on a shirt or hat“, but on the other hand, arguing that it’s quite possible to perceive trademark protection for such design elements “if the contested mark contained something in addition to the three vertical lines, that is to say something that would draw attention to the lines or make them stand out against a particular background.
The lines might, for example, be stylised or placed inside a geometrical figure, such as a square, a circle or a pentagon or set into a differently coloured background.”
With that statement it is quite sure that the EUIPO will have several discussions about such (design) trademarks. Although the standard recommendation for Trademark applicants is that your application should be held in black and white, the decision could change this view. If the applicants wants to be on the very safe side, he would try to protect the TM in every colour he wants to use it in.
That would increase the number of applications, but also the amount of fees in total – and of course EUIPO’s profit …