Authors: Reda Zaboliene, Managing Partner, Attorney-at-Law, Patent Attorney, European Patent Attorney, European Community Trademark and Design Attorney at METIDA
According to the trademark law regulations, when a trademark becomes a common name in the trade for a product or service it represents in consequence of the proprietor’s acts or inactivity, its registration is liable to revocation. However, when only a part of trade is known publicly, this rule becomes difficult to apply in practice causing quite a few problems.
These business models evoke two types of consumers’ perception. Specifically, some of them believe that the trademark covers particular goods manufactured by a particular company, whereas others think that the trademark is a generic name of those goods.
This type of matter has been tackled by the Court of Justice of the European Union (CJEU) in 6th March, 2014 case Backaldrin Österreich The Kornspitz Company GmbH v Pfahnl Backmittel GmbH’s regarding the revocation of trademark registration due to the proprietor’s acts or inactivity causing trademark‘s transformation into a common name in the trade for those goods and services, which it was registered for.
Backaldrin registered a verbal trademark KORNSPITZ in Austria for the entire variety of baked goods and bread listed in Class 30 of the Nice classification. The trademark of these goods is designated to mark the company’s produced cooking mixture, which is primarily supplied to bakeries that use it to bake bread rolls with elongated tapering at its both ends. With Backaldrin‘s consent, bakeries and grocery stores provided with the products from another bakeries sell these rolls marked with the aforementioned trademark.
Like most of the bakeries, the main Backaldrin’s competitor Pfahnl knew that the verbal mark KORNSPITZ was registered as Backaldrin’s trademark. On the other hand, the consumers appear to perceive this verbal mark as a common name of the baked product, i.e. bread rolls with the prolonged tapering at both ends. In fact, the bakeries that use the baking mixture supplied by Backaldrin usually do not inform their customers that the mark KORNSPITZ was registered as a trademark or that the bread rolls are made from this particular baking mixture.
On 14th May 2010 Pfahnl filed an application to revoke the registration of KORNSPITZ trademark designated for the aforementioned goods. On 26th July 2011 the Cancellation Division of the Austrian Patent Office granted the application for revocation. Backaldrin appealed against this decision to the Supreme Patent and Trademark Senate (Oberster Patent- und Markensenat). The Senate noted that the trademark KORNSPITZ must be recognised as having a distinctive character to mark unprocessed and intermediate products, i.e. flour and corn goods, bakery additives, ready to be fried pastry goods and already prepared dough. On the other hand, KORNSPITZ should be considered as a common name of bakery and confectionery goods.
Due to the conflicting arguments the senate referred to the CJEU for preliminary ruling on the Trademark Directive interpretation raising the following questions: 1) Is the trademark liable to revocation if it is an indication of origin, yet, the end consumers perceive it as the common name for goods or services, in respect of which the trademark is registered? 2) Can the proprietor’s behaviour be regarded as an ‘inactivity‘, if the proprietor of the trade mark remains inactive notwithstanding the fact that traders do not inform customers that the name is a registered trademark? 3) Is the trademark registration liable to revocation if it has become a common name and if the end consumers use this name because there are no equivalent alternatives?
Having considered all the facts, the CJEU held that the mark KORNSPITZ does not perform its essential function to indicate the origin of goods. This is a sufficient reason for the trademark proprietor to loose the rights of the trademark registered for the particular product if in the consequences of the acts or inactivity of the proprietor the mark loses its distinctive character. The fact that the consumer considers the mark as a generic name of the bread rolls gives enough grounds for the revocation of the trademark.
One of the main CJEU‘s conclusions is related to the proprietor’s so called failure to act. In other words, in order to preserve their trademark rights, Backaldrin was supposed to make sure that the sellers inform the customers about the KORNSPITZ trademark belonging to Backaldrin. The decision did not specify whether Backaldrin must have contracts with the vendors, where they would discuss the uses and conditions of the trademark, however the proprietor must ensure that the vendors not only recognise the trademark, but also inform the end customers about it. The relevant contractual provisions would not be sufficient to ensure the protection of the trademark unless they were strictly binding.
Regarding the second question, the CJEU stated that ‘inactivity’ could be considered a case where the proprietor refrains from taking action to encourage the traders to use this trademark more when selling goods for which it has been registered.
In response to the third question, the CJEU noted that in order to revoke the trademark rights, it is not necessary to determine whether the product whose trademark has become a common name in the trade has other names.
This CJEU’s decision reaffirms the rule that the trademark proprietor must make sure that the mark is delivered as a trademark on different levels, i. e. for suppliers, vendors and consumers.
It will be interesting to see how the procedures and case law regarding this matter will develop further. In particular, the CJEU did not respond to the first applicant’s question whether a mark that for consumers has become a common name of the goods it represents can remain a trademark for unprocessed and intermediate products. In others words, according to the CJEU, the trademark registration is possible for revocation if it has become a common name. Hence, the question, whether the trademark can be revoked in respect to the final product and survive as a trademark for unprocessed and intermediate products, or since it became a common name of the final product, it can no longer be a trademark for any goods, remains unanswered.