Is a skull shaped bottle for vodka devoid of distinctive character and does it substantially enhance the attractiveness of the goods and strongly influence consumer preferences? A recent decision of the Cancellation Division considered the absolute grounds for resual of a 3D shape mark, which offered this Kat the opportunity to post a cat in a Ghostbusters costume!

The Party Products

Crystal Head Vodka is a brand of vodka made by Globefill in Canada, created by actor Dan Aykroyd [of Ghostbusters fame] and American painter John Alexander.

Globefill registered its EU 3D shape mark [shown below] in August 2016, in Classes 32 [Beers (alcoholic and non-alcoholic); fruit juices and fruit drinks; bottled water; non-alcoholic carbonated beverages; preparations for making all of the foregoing] and 32 [Vodka; brandy spirits; prepared alcohol cocktails; wines; gin; rum; sake; tequila; vermouth; whisky; aperitifs with a distilled alcoholic liquor base; anisette; schnapps; ouzo; sherry; kirsch]. The mark consists of a 3D representation of a skull in clear glass with a short tubular opening on the top, which is rounded and slightly wider round the edge, with a flat base. Globefill also hold copyright, a registered design right and patent for the same skull shaped bottle design.

EUTM No 15 736

The Application 

The application was for a declaration of invalidity against the EU trade mark (EUTM) on the absolute grounds for refusal [Art 59(1)(a) Regulation (EU) 2017/1001]. The application claimed that the mark was devoid of distinctive character [Art 7(1)(b)] and that the shape gives substantial value to the goods [Art 7(1)(e)(iii)].

Distinctive character - Article 7(1)(b)

Only a mark which departs significantly from the norm or customs of the sector and thereby fulfils its essential function of indicating origin is not devoid of any distinctive character for the purposes of Article 7(1)(b). 

The applicant argued that the EUTM consists merely of the form of a bottle and average consumers are not used to seeing the shape of bottles as being distinctive, and so are not capable of fulfilling the essential function of guaranteeing trade mark origin. 

The proprietor filed evidence to show that there are currently just over 1,000 3D EUTMs registered for goods in Class 33. Almost all of them are bottles. Many of these bottles contain a prominent word which distinguishes them, while many of them are variations on a standard bottle theme, for example, square-sided bottles, or fluted or ribbed bottles. A few of them represent a different shape such as the Big Ben Tower or a violin, but there is just one skull shaped bottle which is the proprietor’s crystal head bottle, serving to demonstrate that the EUTM is different from anything else on the market.

Absinthe brings the idea of a headache to mind....

The Cancellation Division found that the EUTM differs considerably from the shape of a typical bottle. So much so that without the opening on the top, it would be impossible to be certain that the skull was a container for liquids, as the shape of a skull does not lend itself to the act of pouring out a drink. The examples of skull-shaped containers provided by the applicant show that, aside from the fact that some are used for different products and some of them are used as decanters rather than bottles for the sale of beverages, none really resembled the EUTM. Several of the bottles retained the traditional shape of a bottle and merely incorporate 3D features on one side to bring a skull to mind. Therefore, the Cancellation Division found that the EUTM departs significantly from the norm or customs of the sector and thereby fulfils its essential function of indicating origin and consequently not devoid of distinctive character.

Does the shape provide substantive value to the goods? Article 7(1)(e)(iii)

Under Article 7(1)(e)(iii) EUTMR, signs that consist exclusively of the shape or another characteristic that gives substantial value to the goods cannot be registered, or if registered they are liable to be declared invalid. 

The applicant argued that this provision is designed to prevent the monopolisation of the external features of goods which do not necessarily perform a technical or practical function, but which substantially enhance the attractiveness of goods and strongly influence consumer preferences. The applicant argued that if the EUTM remains on the register, the protection conferred by the mark could be used to stop anyone else using the idea of a skull shaped bottle, allowing the proprietor to gain an unfair market advantage. The applicant claimed that the proprietor wished to prevent the entire drinks market from using skull shaped bottles which is a matter for design law, not trade mark law with its potentially perpetual term of protection, and precisely the ‘evil’ at which the prohibition on shape marks under Article 7(1)(e)(iii) is aimed. The applicant claimed that although the skull design is not that dissimilar from other shapes in use, it is different enough for the average consumer to notice the aesthetics and place value on that, and therefore the shape and design of the EUTM gave substantial value to the goods in question.

"Alas, poor Yorick! I knew him, Horatio, a fellow of infinite jest, of most excellent fancy." Image: Athalia Perez Aguilar

The EUTM proprietor argued that in practice, minimal labelling is used on its crystal head products. Therefore, the relevant public is obliged to rely on the shape of the mark to identify the product, rather than a distinguishing word placed on a label. 

In response, the applicant pointed out that the proprietor always sells its goods with the brand name affixed to the bottle and did not accept the proprietor’s argument that its crystal head bottle may be displayed on a shelf for sale without showing the brand name. In its opinion, if the proprietor wished to rely on this, it should have provided evidence that consumers make purchases without ever seeing the brand name. The applicant argued that this was merely a clever marketing ploy to make the consumer pick the product up and check the brand name.

The proprietor explained that its product retails in the UK for less than its recommended retail price and therefore, on these facts alone, the EUTM gives no substantial value to the goods. In addition,  the proprietor noted that to fall foul of this provision, the shape must ‘substantially enhance the attractiveness of goods and strongly influence consumer preferences’. However, the goods are sold around the average price for the luxury vodka sector, and the proprioator argued that whilst the EUTM might enhance the attractiveness of the product to a small degree, it does not strongly sway the preference of the consumer who is primarily intent upon purchasing a luxury vodka product, and therefore it is the goods themselves that determine the market success of the goods, not their packaging.

The decision

The Cancellation Division stated that the concept of ‘value’ should be interpreted not only in economic terms, but also that the goods would be purchased primarily because of their particular shape or another particular characteristic. Likewise, that the shape, or other characteristic, may be pleasing or attractive is not sufficient to exclude it from registration. If that were the case, it would be virtually impossible to imagine any trade mark of a shape, or another characteristic, given that in modern business there is no product of industrial utility that has not been the subject of study, research and industrial design before its eventual launch on the market. 

Following the case of Loudspeaker (T-508/08) EU:T:2011:575, the Cancellation Division determind that 5 questions need to be answered in the affirmative when deciding whether an EUTM falls foul of Article 7(1)(e)(iii): 
1) Is the design of the EUTM a very important element in the consumers’ choice?
2) Is the design of the EUTM very specific? 
3) Is the design of the EUTM an essential element of the branding policy of the proprietor and does this increase the appeal (the value) of the product?
4) Are the aesthetic qualities of the EUTM emphasised first by the proprietor when promoting its product?
5) As the EUTM perceived as a pure and timeless sculpture?

The Cancellation Division found that the applicant failed to demonstrate that the proprietor emphasised the aesthetic qualities of the EUTM first when promoting its products. There was no evidence of a systematic promotional campaign that placed the primary emphasis on the design of the bottle, which could have been demonstrated with adverts or screenshots of the proprietor’s website. Instead, most of the extracts seemed to be commentaries on events or interviews which was not deemed evidence of a regular marketing campaign focusing on the aesthetics of the bottle.

The Cancellation Division took the view that the applicant merely demonstrated that there are people who like the appearance of the crystal head bottle, but not that the EUTM proprietor promotes the appearance and aesthetics of its bottle to the extent that it has become an essential part of its branding, increasing the appeal, and therefore the value, of the product contained within the bottle. Furthermore, the proprietor demonstrated that the appearance of the bottle did not strongly sway the preference of the consumer, who is primarily intent upon purchasing a luxury vodka product, by way of several compelling items of evidence, such as winning blind taste test awards. Therefore, concluding that the applicant failed to prove that the design of the EUTM was an essential element of the branding policy of the proprietor which increased the value of the product and the application was rejected.

Legal interpretation is of particular interest to this Kat, so she was intrigued to hear about this case which turned on the correct interpretation of a trade mark specification; the literal vs the "common sense approach". Here's what happened.

Background to the case

Kat Alliance Image: Andy Miccone

In January 2011, AxiCorp applied for registration through WIPO designating the European Union for the word mark AXICORP ALLIANCE in Classes 3, 5, 10 and 35. The applicant, Alliance Pharmaceuticals, opposed the registration based on its earlier marks; EU word mark ALLIANCE (registered August 2006 in Class 5),  an EU figurative mark (registered December 2003 in Class 5) and an unregistered word mark ALLIANCE, used in the course of trade for ‘pharmaceutical preparations and substances’ in the UK.

In May 2017, the Opposition Division rejected the opposition in its entirety on the grounds of lack of evidence of genuine use of the earlier EU trade marks and the unregistered mark in the course of trade. The applicant appealed and by decision of 7 February 2018, the Fifth Board of Appeal of EUIPO partially annulled the Opposition Division’s decision and remitted the case to the Opposition Division. This is the contested decision in the present case.

The Applicants Case: Infringement of Regulation 2017/1001 or an infringement of a rule of law relating to its application

The applicant sought partial annulment of the contested decision in so far as the Board of Appeal had dismissed the appeal as regards the grounds for opposition set out in Article 8(1)(b) and (5) of Regulation 2017/1001. In support of the action, the applicant relied on a single plea in law, alleging that the Board of Appeal construed the specification of the earlier EU trade marks incorrectly, and so concluded that the evidence of use submitted did not show genuine use of those marks in connection with the goods included in that specification. In particular, the applicant disputed the Opposition Division’s narrow construction of the specification, which was confirmed by the Board of Appeal, that ‘chemical preparations for pharmaceutical purposes’ were excluded from ‘pharmaceutical preparations’.

Too narrow? Image: VirtKitty

The applicant submitted that the narrow construction of the specification was contrary to the EUIPO’s examination guidelines on how exclusions are to be worded in specifications, arguing that if the intention is to exclude types of goods, the conjunction to use is the disjunctive conjunction ‘or’ and not the coordinating conjunction ‘and’. As such, the words ‘but not including infants’ and invalids’ food and chemical preparations for pharmaceutical purposes’ was meant to be construed as excluding only the first category of goods - foods for infants and invalids - and as including the second category of goods - chemical preparations for pharmaceutical purposes. Moreover, the applicant submitted that the narrow construction of the specification adopted was incorrect as it resulted in a specification that makes no commercial sense, contrary to the normal canons of construction of legal texts.

The EUIPO's arguments for a narrow literal approach so that trade mark owners are obliged to draft with clarity and precision

The EUIPO disputed the applicant’s arguments, submitting that an example of the drafting of an exclusion taken from the EUIPO’s examination guidelines cannot provide the basis for a rule determining the conjunction which should be used when drafting an exclusion in a specification. It maintained that it is the responsibility of the applicant to draft clearly and precisely the specification of the goods and services in respect of which protection is sought. Further, the EUIPO argued, the way in which the specification was interpreted was neither unreasonable nor contrary to grammatical rules, even though other interpretations could not be excluded. Thirdly, the EUIPO stated that the extent of the protection sought must be capable of being determined on the basis of the register alone. Therefore, where the designation of goods or services lacks clarity and precision, the scope of the mark must be interpreted narrowly because the proprietor of the mark should not gain from the infringement of its obligation to draw up the list of goods and services with clarity and precision.

The Courts Decision

The Court pointed out that, the interpretation of the specification given by the Board of Appeal, that ‘chemical preparations for pharmaceutical purposes’ were excluded, was possible from the wording of the specification. However, that interpretation did not duly take into consideration other factors that were essential for the purpose of understanding the scope of that specification; the actual intention of the proprietor of the marks concerned and the need to give an appropriate scope to that wording, one that precludes a reading leading to an absurd result for the proprietor. The actual intention of the applicant for registration of an EU trade mark is not irrelevant. Indeed, the Court of Justice has observed that a situation in which the extent of the protection conferred by a trade mark depends on the approach to interpretation adopted by the competent authority and not on the actual intention of the applicant runs the risk of undermining legal certainty both for the applicant and for third party economic operators (Chartered Institute of Patent Attorneys, C 307/10, EU:C:2012:361).

In the present case, the Court found that if the approach adopted by the Board of Appeal were correct and the registrations of the earlier EU trade marks covered pharmaceutical products except for those ‘using pharmaceutical chemical preparations’, thereby covering only ‘natural’ preparations or preparations ‘of herbal origin’ which do not contain chemical substances or synthetic components, those registrations would cover only goods which were not contemplated by the applicant and which were not expressly referred to in the specification of those marks. Such a situation is incompatible with the requirements of predictability and legal certainty.

Further, the Court stated that although it is true that the literal interpretation of the specification of a mark is preferred, that principle is of little use where two literal interpretations are equally possible. In such a situation, it is the interpretation which, among a number of possible interpretations of EU legal instruments, is the one which does not lead to an absurd result that must be preferred. The interpretation of EU law provisions is based first and foremost on the text, since that approach reflects the core principles of predictability and legal certainty. However, if the text is ambiguous or the literal meaning would lead to a nonsensical result, the meaning may be reappraised after being placed in context and interpreted in light of the provision of EU law as a whole, bearing in mind the objectives and its state of evolution at the time.

Don't be absurd! Image: Lisa Zins

Thus, the Court found that in the context of Article 47(2) of Regulation 2017/1001 and assessing the evidence of genuine use of a mark, if two possible literal interpretations of the specification of that mark exist, but one of them would lead to an absurd result as regards the extent of the protection of the mark, the Board of Appeal must resolve the difficulty by opting for the most plausible and predictable interpretation of that specification. The Court held that it would be absurd to adopt an interpretation of the specification which would have the effect of excluding all of the applicant’s goods, leaving only goods in respect of which it has not sought trade mark protection.

As such, in the present case, the Board of Appeal had equated ‘chemical preparations for pharmaceutical purposes’ with final pharmaceutical chemical or synthetic preparations and therefore all the evidence of use of the earlier EU trade marks were rejected, despite the applicant’s main business activity was the marketing of pharmaceutical preparations and those marks were registered in respect of ‘pharmaceutical preparations’. The Court agreed with the applicant that it would be absurd to assume that it intended to seek registration of an EU trade mark in respect of a category of goods which it then restricted by a broadly equivalent category of goods.