The CJEU's take on trade mark genericism - The Great Kornspitz Bakeoff decided?

The CJEU has now, on 6 March 2014, handed down its eagerly awaited decision in Case C-409-12, Backaldrin Osterreich The Kornspitz Company concerning the genericism of a trade mark (Kornspitz for foodstuff) in a case where the sellers (here: bakers) of a product (here: Kornspitz bread rolls) made using the material (here: prefabricated dough) supplied by the proprietor of the trade mark (here: the claimant) do not generally inform their customers (here: consumers buying bread in a bakery) that the sign (here: Kornspitz) used to designate the product in question (here: bread roll) has been registered as a trade mark; see the earlier IPKat post on the AG's opinion here.

By way of reminder:  Article 12(2)(a) Directive 2008/95 provides that a trade mark can be revoked when it has become the common name for a product or service. This is the case in particular under Article 12(2)(a) "...  if, after the date on which it was registered: (a) in consequence of acts or inactivity of the proprietor, it has become the common name in the trade for a product or service in respect of which it is registered." 

Still yummy....

The case was a referral from Austria and the three questions referred can be found here.  Now, whose view is decisive in this context: that of the end consumer or that of the trade owner?  The CJEU says, the end user's view...

In response to question 1, the CJEU held that Article 12(2)(a) Directive must be interpreted a trade mark is liable to revocation in respect of a product for "which it is registered if, in consequence of acts or inactivity of the proprietor, that trade mark has become the common name for that product from the point of view solely of end users of the product"; [emphasis added].  Explaining its reasoning, the CJEU - as to be expected - referred to Case C‑371/02 Björnekulla Fruktindustrier and stressed that Article 12(2)(a) Directive addresses the situation where the trade mark is no longer capable of fulfilling its function as an indication of origin (at paragraph 20): 

“Among the various functions of a trade mark, that function as an indication of origin is an essential one …. It serves to identify the goods or services covered by the mark as originating from a particular undertaking, and thus to distinguish those goods or services from those of other undertakings …. That undertaking is, as the Advocate General stated at point 27 of his Opinion, that under the control of which the goods or services are marketed.”

The court then looked at the underlying aims of Articles 2, 3 and 12 Directive and the facts of the case:  

“… the end users of … the bread rolls known as ‘KORNSPITZ’, perceive that word sign as the common name for that product and are not, therefore, aware of the fact that some of those bread rolls have been made using a baking mix supplied under the trade mark KORNSPITZ by a particular undertaking”; (Paragraph 23).

The bakers did not generally inform their customers that the sign ‘KORNSPITZ’ was a registered trade mark, did not generally, at the time of sale, offer their customers assistance which includes an indication of the origin of the various goods for sale:

“… whether a trade mark has become the common name in the trade for a product or service in respect of which it is registered must be assessed not only in the light of the perception of consumers or end users but also, depending on the features of the market concerned, in the light of the perception of those in the trade, such as sellers. 

However, as the Court pointed out in paragraph 24 of the judgment in Björnekulla Fruktindustrier, in general, the perception of consumers or end users will play a decisive role. It must be held, in line with what the Advocate General stated at points 58 and 59 of his Opinion, that in a case such as that at issue in the main proceedings, which is, subject to verification by the referring court, characterised by the loss of distinctive character of the trade mark concerned from the point of view of the end users, that loss may result in the revocation of that trade mark. The fact that the sellers are aware of the existence of that trade mark and of the origin which it indicates cannot, on its own, preclude such revocation;” (Paragraphs 28/29).

In response to question 2, the CJEU held that Article 12(2)(a) Directive must 

“be interpreted as meaning that it may be classified as ‘inactivity’ within the meaning of that provision if the proprietor of a trade mark does not encourage sellers to make more use of that mark in marketing a product in respect of which the mark is registered.”

The court referred to the underlying aim of Article 12(2)(a) Directive to balance the interests of the trade mark owner against those of his competitors in the availability of signs.  Unless the pursuit of this balance was to be abandoned, that concept included all (in-)activity by which the proprietor of a trade mark showed “that he is not sufficiently vigilant as regards the preservation of the distinctive character of his trade mark”.

Where sellers of a product, which is made by using material supplied by the proprietor of the trade mark did not generally inform their customers that the name of the final product was a registered trade mark and thereby contributed to the “transformation of the trade mark into the common name”, the proprietor’s failure to take any initiative which could have encouraged those sellers to make more use of that mark could be classified as “inactivity” within the meaning of Article 12(2)(a)Directive.   It was now for the Austrian court to examine whether, Backaldrin took any initiative to encourage the bakers to make more use of the trade mark KORNSPITZ in their commercial contact with customers.

Finally in response to question 3, the judges referred to the wording of Article 12(2)(a) Directive. In  a situation of genericism, the possible existence of alternative names for the product or service in question was irrelevant, since it could not alter the finding that the mark had “lost its distinctive character as a result of its transformation into the common name in the trade” (see paragraphs 37-40).

The CJEU provides clear guidance that it should be the end users’ view which is relevant when it comes to the question of whether a mark has become a generic term.  It makes sense  to demand that a trade mark owner should be vigilant when it comes to genericism .  This Kat is, however, still a little unsure how the trade mark owner is meant to take the initiative and influence the distributors/bakers/licensees.  Obviously, this can be covered in the terms of any kind of (license) agreement but how should it work in the reality of an old fashioned bakery where consumers do - still? - expect that the bakers gets up at 4am and prepare everything from scratch.