Are you XKING kidding me? Making sense of trade mark conflict in the EUTM system

Just how broad a monopoly does an ever-so-slightly stylised registration for the letter X grant an EU trade mark owner? More than you’d think, thanks to the decision of the Court of Justice of the EU (CJEU) in Continental Reifen Deutschland v Compagnie generale des etablissements Michelin Case C‑84/16 P [2017] EUECJ C-84/16 (26 July 2017).

Katfriend Darren Meale (Simmons&Simmons) explains it all.

Here’s what Darren writes:

“X versus XKING

The two marks shown in the table below faced off in an opposition before the EUIPO. The parties were tyre giants Michelin and Continental.

The opposition was successful at first instance, but Continental won on appeal to the EUIPO Board of Appeal. However, Michelin won before the General Court and its decision was upheld by the CJEU.

The General Court’s decision

The General Court’s decision essentially turned on the following factors:

Goods	Highly similar or identical
Visual similarity	Average: ·       The X in XKING was dominant and carried more weight ·       KING was weakly distinctive because it conveyed a laudatory message ·       Both marks had an X which are “white and outlined in black”
Aural similarity	Average: The rhythm and intonation of the two marks “were only slightly different and … they shared the same first syllable”.
Distinctiveness of earlier mark	Normal level of inherent distinctiveness, both because it was stylised (“white and has a double outline in black”) and because it did not, contrary to a claim by Continental, designate a characteristic of tyres.

The challenge before the CJEU

A number of these conclusions were challenged before the CJEU (and why not, some of them are highly questionable), which was quick to point out in its judgment that the appeal was limited to points of law and could not be used to seek a revaluation of the facts (not that this isn’t, in practice, a possible result of a CJEU judgment).

This meant that Continental got essentially nowhere in seeking to challenge the General Court’s evaluation of the distinctiveness of the XKING mark and its similarities with Michelin’s X mark. The CJEU dismissed Continental’s attempts to reargue these points. It also dismissed an argument that a single letter element of a sign constitutes, as a general rule, a weakly distinctive element of a sign – there is no such rule in CJEU jurisprudence.

The only area where Continental was able to make headway was on the distinctiveness of the French X registration. Here, the CJEU re-examined Continental’s evidence that X was used in isolation or in combination with other letters in Michelin’s brochures to designate the tread pattern of some of its tyres. The CJEU found that Continental was correct and that the General Court had misread the brochures. So it was wrong to say that the X mark had normal distinctiveness. The CJEU does not then say what distinctiveness the X mark does have, but the inference is that it is weak. Quite why everyone had to bury their heads in brochures to reach this conclusion is unclear. Surely a slightly stylised single letter should always be adjudged of below average distinctiveness (whether or not this is a general rule), given that full words, which must surely be more distinctive as trade marks by their very nature, will generally be adjudged of normal distinctiveness.

In such altered circumstances can the weakly distinctive stylised X still prevent the registration of a stylised XKING mark? Where this left the analysis was that the goods were highly similar or identical (not challenged and fairly obvious); the similarity of the marks was average (Continental could not challenge because the findings were factual and the CJEU was unwilling to interfere); and the earlier French X mark had weak distinctiveness (knocked down from average following Continental’s successful challenge).

At this point, the CJEU undertook an interesting exercise in predicting alternate realities. Its reasoning appears to have been as follows:

1.    One mistake by the General Court isn’t enough to mean its whole decision is wrong (Merpel says “got it”).

2.    Distinctiveness of the earlier mark is only one factor in the global assessment (Merpel says “got it”).

3.    Case law shows that earlier marks which are weakly distinct may still block similar marks, it is just less likely they will confuse (Merpel says “ok got this one too”).

4.    The General Court was therefore “fully entitled” to find a likelihood of confusion in this case. Its error in law regarding the distinctiveness of the earlier mark “cannot lead to the setting aside of the judgment” and is “irrelevant” (Merpel says – huh?).

Appeal therefore dismissed.

The logic and reasoning of point 4 is difficult to understand. It seems to say that even though one of the key principles/findings upon which the General Court’s decision was made was wrong, this was fine because if it had made the correct finding on that point, the General Court would still have been entitled to reach a final conclusion that there was a likelihood of confusion. That is a different thing to saying that the General Court would have reached the same final conclusion, only that it would have been within its bounds of discretion to do so. In which case Continental – hard luck, you’re stuck with it.

What is wrong with this decision?

The application was filed in February 2012. Four years later it was appealed to the CJEU which has finally resolved the matter another 18 months on. Still, it took it 105 paragraphs to do so.

Trade mark conflict is supposed to be assessed through the eyes of the “average” consumer, whose recollection is imperfect and who, in fact, rarely has a chance to compare two marks side by side. Yet when called upon to make the assessment, a court or tribunal inevitably attempts to apply some sort of analytical process comparing the marks directly and breaking them down into their constituent elements, if only to have something to write in the decision. This can lead to the painful deconstruction of marks as found in this decision, in which the applicant, the opponent, the EUIPO and the CJEU debate the relevance of the fact that KING is slightly smaller than X in the application and a major factor in the decision is that both marks have an X which is white with a black outline. It is hard to think of more banal points to make and it exposes the difficulty in trying to turn trade mark conflict into a science, at least one based on human analytical comparison.

The end result here is that one trader with a weakly distinctive trade mark for the single letter X, distinguished from the letter of the alphabet only by the merest stylisation, can prevent the registration (and potentially use) of a stylised mark XKING. It must also follow that the same trader can prevent other X-formative marks, especially if the other element is in some way laudatory (and the word “king” is hardly at the top of the laudatory scale). Might it be said that this hands too strong a right to the trader?

What troubles me about the decision making in this case is that at no stage does it feel as if the courts were taking the sort of step back one might think a global assessment requires in order to ask: “how broad a monopoly is it right to grant the trade mark owner?”. The answer is as much about policy as it is law, but the courts should be laying down clear principles and guidance such that we know for ourselves the answer to that question. The pseudo-scientific approach seems to bypass this important question and might be said to apply machinery to the analysis just for the sake of it.

Making sense of this decision in the context of brand clearance

Clearing a brand is the bread and butter of a trade mark lawyer’s diet. A long list of potentially conflicting marks must be evaluated and the risks they represent assessed. As trade mark registers grow, so does the number of potential conflicts. To make the evaluation process a practical one, and for lawyers to be able to do it reliably, we need to understand clearly the principles which a court or tribunal considering the conflict would apply, so we too can apply them. While the mechanical analysis may serve as a good starting point, more is needed to make the ultimate decision.

In my view, a better way of looking at this case would have been as follows:

1.    The earlier mark is for a single letter, with minimal stylisation. While it is not under a validity challenge, it is sensible to conclude that it must provide its owner with only a very narrow scope of protection. That is consistent with its low or very low distinctiveness, and the obvious problem of letting traders monopolise letters of the alphabet (there are only 26 of them).

2.    The application is not for X, it is for X with another four letters forming an additional word – XKING. It is stylised too but the stylisation is different. When the scope of protection is narrow, it should follow that the later mark does not need to be so far apart to escape the earlier mark’s monopoly. Here, it is quite some way apart, even if the word KING might carry a laudatory meaning.

3.    Taking everything into the round, Michelin’s monopoly in a stylised X should be a narrow one, and it would go too far to allow it to prevent the use of XKING without something else, such as perhaps use of the same stylisation. The opposition should be rejected.

Although I have still analysed the elements of the marks in this approach, I have kept in mind the principles of trade mark law and sought to draw a line between what is and is not appropriate to keep off the register in the interests of protecting consumers and traders alike. In my view, if you approach this case as I have done you end up with a much more sensible and reasoned decision than the General Court or the CJEU provided (if I do say so myself). What’s more, if we adopt the same line of thinking in comparable situations, coupled with the trade mark lawyer’s experience and judgment, we’ll be better equipped to make the many decisions which need to be made in brand clearance, and help traders avoid seven year court battles in the first place.”