Rule of Reason curbs Basic Instinct as trade mark loses its appeal

This may be one of those instances in which the title of a blogpost is more entertaining than the post itself. This post features Case C-400/14 P Basic AG Lebensmittelhandel v OHIM),  Repsol YPF SA intervening, a Court of Justice of the European Union (Sixth Chamber) decision dating back to 16 July. It's not a judgment but a 'reasoned order' -- a rather lower species of decision, binding but not normally likely to hit the headlines.

So what was this case about? In March 2008 Basic applied to register as a Community trade mark (CTM) a figurative sign, shown on the right, which featured the word ‘basic’ in lower case letters. 

Registration was sought for a large number of services in Class 35, including ‘retail and wholesale services relating to foodstuffs, fresh fruits and vegetables, alcoholic and non-alcoholic beverages and syrups, effervescent tablets and other preparations for making beverages, mail order (except transport) or internet retail services, all in relation to beverages and foodstuffs’ and also for some services in Class 39, including ‘distribution of staple foodstuffs, pastry and confectionery, ices, prepared meals’.  

Six months later Repsol opposed, relying on its own earlier CTM, shown on the left, which contained the word ‘basic’ in upper case letters. Repsol's mark covered ‘commercial retailing of tobacco, press, batteries, playthings, goods for cars, accessories and spare parts for cars, lubricants, fuel for cars; advertising; office functions’ (Class 35); ‘building construction; repair; installation, service stations (petrol stations); repair of vehicles; maintenance, greasing and washing of vehicles; repair of tyres’ (Class 37) and ‘distribution of staple foodstuffs, pastry and confectionery, ices, prepared meals, tobacco, press, batteries, playthings, goods for cars, accessories and spare parts for cars, lubricants, fuels and fuel for cars, transport; packaging, storage and supply of goods of all kinds, including fuels; travel arrangement’ (Class 39). Said Repsol, given the similarity of the marks and the identity or similarity of their respective goods and services, there existed a likelihood of confusion of the relevant consumers under Article 8(1)(b) of the CTM Regulation 207/2009.

Basic Instinct: Marjorie
rehearses the notorious
"leg-crossing" scene

In May 2010 the Opposition Division upheld the opposition in respect of some of the services in Class 35 and all of the services in Class 39. In July 2010, Basic appealed.  The First Board of Appeal found that there was indeed a likelihood of confusion as regards Basic’s application to register its sign in respect of ‘retail and wholesale services relating to foodstuffs, fresh fruits and vegetables, alcoholic and non-alcoholic beverages and syrups, effervescent tablets and other preparations for making beverages, mail order (except transport) or internet retail services, all in relation to beverages and foodstuffs’ in Class 35 and the ‘distribution of staple foodstuffs, pastry and confectionery, ices, prepared meals’ in Class 39. Consequently, it upheld the opposition by refusing to register the CTM for those services. However, the Board of Appeal found that the other services in Class 35 were different from the services covered by the earlier mark and therefore dismissed the appeal with regard to them.

Basic then applied to the General Court to annul the decision of the Board of Appeal in so far as it had upheld the opposition, maintaining that the Board of Appeal had misapplied Article 8(1)(b).  The General Court dismissed this application and Basic appealed against the decision of the General Court to the Court of Justice of the European Union (CJEU).

The CJEU dismissed Basic's appeal in its entirety.  The significant bits of the CJEU's reasoned order are as follows:

* Under Article 181 of the CJEU's Rules of Procedure, where an appeal is, in whole or in part, manifestly inadmissible or manifestly unfounded, the CJEU may at any time, acting on a proposal from the Judge-Rapporteur and after hearing the Advocate General, decide by reasoned order to dismiss that appeal in whole or in part -- and that was what the CJEU decided to do here.

* Basic had argued that the General Court, in drawing a distinction between ‘retail services’ and ‘distribution services’ assessed the similarity of the services at issue without actually defining the scope of ‘distribution services’ -- a term which Basic wanted the Court to define in a way that would prevent it from being similar to either wholesale or retail services.  This was not in fact the case: the General Court explained that distribution and wholesale services had an intermediate function and contributed to the attainment of the same ultimate objective, which was the sale to the end consumer. 

* In accordance with the case-law of the CJEU, the legality of the decisions of the Boards of Appeal must be assessed not on the basis of a previous decision-making practice of those Boards of Appeal, but solely on the basis of the CTM Regulation.  It cannot therefore reasonably be objected that the General Court did not take those decisions into account in analysing the merits of the Board of Appeal’s decision.

This appeal looks like a bit of a no-hope, straw-clutching exercise -- and this is exactly why Article 181 of the Rules of Procedure exists. The CJEU doesn't seem to have much scope for refusing to accept appeals or for deciding which cases come before it, so the 'reasoned order' is the neat way out. This Kat doesn't think that there is any ground on which to appeal against or set aside the CJEU's decision to use its Article 181 facility either, though he is happy to be put right on this.  Adds Merpel, when parties feel aggrieved by a decision, it can be difficult for them to live with it: the urge to appeal is what one might call a Basic Instinct.