"What is meant by "Due Cause" in s.10 (3) of the Trade Marks Act? The Red Bull Case

Amsterdam   Source Wikipedia

















According to Wikipedia Red Bull is the most popular energy drink in the world, with 5.2 billion cans sold in 2012. Its manufacturer, Red Bull GmbH, has registered the RED BULL mark has registered those words and their accompanying logo as word and device marks in trade mark registries around the world including the Benelux Office for Intellectual Property ("BOIP"). The company registered that sign with BOIP for non-alcoholic drinks in class 32 with effect from 11 July 1983. After decades of massive sales and extensive advertising nobody could argue that that mark has a reputation within the meaning of art 5 (2) of the Trade Marks Directive (Directive 2008/95/EC of the European Parliament and the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks OJ 8.11.2008 p 299/25). S.10 (3) of our Trade Marks Act 1994  implements that provision.

There is in the Netherlands a chain of hotels, coffee shops and other establishments retailing a range of other goods and services known as The Bull Dog. The Bull Dog's history including why it chose its trade name which makes fascinating reading can be found on the About Us page of its website. Hendrikus de Vries, the entrepreneur behind The Bull Dog, registered the words ‘The Bulldog’ combined with a a device with BOIP for a range of goods in class 32 on 14 July 1983. Subsequently, he also registered the words "The Bull Dog" as a word mark and the the word and figurative mark ‘The Bulldog Energy Drink’.

On 27 June 2005 Red Bull GmbH sued Mr. de Vries and his company, Leidseplein Beheer BV, in the Rechtbank Amsterdam (Amsterdam District Court) for an order requiring them "to cease production and marketing of energy drinks in packaging that displays the ‘Bull Dog’ sign or any other sign containing the word element ‘Bull’ or any other signs which are confusingly similar to the trade mark registrations of Red Bull." Mr de Vries and his company counterclaimed for the revocation, in respect of the Benelux countries, of Red Bull’s rights in respect of the mark ‘Red Bull Krating‑Daeng’. The Rechtbank threw out the claim on 17 Jan 2007 so Red Bull appealed to Gerechtshof te Amsterdam (Amsterdam Regional Court of Appeal).

The appeal court allowed the appeal holding

"first, that the mark ‘Red Bull Krating‑Daeng’ had a reputation within the Benelux countries and, secondly, that, because of the similarity, consisting in the common word element ‘Bull’, between that mark and the sign ‘The Bulldog’ used by Mr de Vries for energy drinks, the relevant public would make a connection between the trade mark and the sign, even if the two were not mistaken for each other."

The court also found that

the sign ‘The Bulldog’ was similar to the mark ‘Red Bull Krating‑Daeng’ and that Mr de Vries, by riding on the coat - tails of that mark with a reputation, had sought to take advantage of the reputation of that mark with a view to having his share of the energy drinks market held by Red Bull and corresponding to a multimillion euro turnover.

Despite evidence that Mr de Vries had used ‘The Bulldog’ sign before Red Bull had applied to register its mark the Gerechtshof te Amsterdam held that did not constitute "due cause" for allowing the use of that sign. In reaching its decision the appeal court considered itself to be bound by the Benelux Court in Colgate-Palmolive BV v NV Royal Distillery Erven Lucas Bols 1 March 1975.

Mr de Vries and his company appealed to the Hoge Raad der Nederlanden (Netherlands Supreme Court) on the grounds that Bols was no longer good law following the adoption of the Trade Marks Directive and the decision of the Court of Justice of the European Union in Case C‑323/09 Interflora Inc and another v Marks & Spencer Plc [2011] ECR I‑8625.  Accordingly, the Dutch court referred the following question to the Court of Justice:

‘Is Article 5(2) of Directive [89/104] to be interpreted as meaning that there can be due cause within the meaning of that provision also where the sign that is identical or similar to the trade mark with a reputation was already being used in good faith by the third party/parties concerned before that trade mark was filed?’

in  its judgment in C‑65/12, Leidseplein Beheer BV, v Red Bull GmbH [2014] EUECJ C-65/12, [2014] WLR(D) 48 the Court interpreted that question as follows at paragraph [20] of its judgment:

"By its question, the referring court asks, in essence, whether Article 5(2) of Directive 89/104 must be interpreted as meaning that the use by a third party of a sign that is similar to a trade mark with a reputation in relation to goods identical to those for which that mark is registered may be considered to be with ‘due cause’, within the meaning of that provision, if it is demonstrated that that sign was being used before that mark was filed."

In their submissions  M, de Vries argued that the use, in good faith, of a sign that is similar to a mark with a reputation, in the case where that sign was being used before that mark was filed, can be covered by the "due cause" exception.  Red Bull on the other hand contended that that concept covers only objectively overriding reasons.

The Court decided first to determine the scope of the concept of ‘due cause’ before then going on to assess whether, in the light of the finding made in that regard, the use made of a sign similar to a mark with a reputation, before that mark was filed, is liable to come within the scope of that concept in the case where that sign is used in relation to goods or services which are identical to those for which that mark has been registered.

Taking as its starting point the policy of the Directive, the Court held at paragraph [41] that:

" ...... the purpose of Directive 89/104 is generally to strike a balance between the interest which the proprietor of a trade mark has in safeguarding its essential function, on the one hand, and the interests of other economic operators in having signs capable of denoting their products and services, on the other (Case C‑145/05 Levi Strauss [2006] ECR I‑3703, paragraph 29).
42 It follows that the protection of rights which the proprietor of a trade mark derives from that directive is not unconditional, since in order to maintain the balance between those interests that protection is limited, in particular, to those cases in which that proprietor shows himself to be sufficiently vigilant by opposing the use, by other operators, of signs likely to infringe his mark (Levi Strauss, paragraph 30).
43 In a system for the protection of marks such as that adopted, on the basis of Directive 89/104, by the Benelux Convention, however, the interests of a third party in using, in the course of trade, a sign similar to a mark with a reputation must be considered, in the context of Article 5(2) of that directive, in the light of the possibility for the user of that sign to claim ‘due cause’.
44 Where the proprietor of the mark with a reputation has demonstrated the existence of one of the forms of injury referred to in Article 5(2) of Directive 89/104 and, in particular, has shown that unfair advantage has been taken of the distinctive character or the repute of that mark, the onus is on the third party using a sign similar to the mark with a reputation to establish that he has due cause for using such a sign (see, by analogy, Case C‑252/07 Intel Corporation [2008] ECR I‑8823, paragraph 39).
45 It follows that the concept of ‘due cause’ may not only include objectively overriding reasons but may also relate to the subjective interests of a third party using a sign which is identical or similar to the mark with a reputation.
46 Thus, the concept of ‘due cause’ is intended, not to resolve a conflict between a mark with a reputation and a similar sign which was being used before that trade mark was filed or to restrict the rights which the proprietor of that mark is recognised as having, but to strike a balance between the interests in question by taking account, in the specific context of Article 5(2) of Directive 89/104 and in the light of the enhanced protection enjoyed by that mark, of the interests of the third party using that sign. In so doing, the claim by a third party that there is due cause for using a sign which is similar to a mark with a reputation cannot lead to the recognition, for the benefit of that third party, of the rights connected with a registered mark, but rather obliges the proprietor of the mark with a reputation to tolerate the use of the similar sign."

The Court then considered the conditions under which the use by a third party of a sign which is similar to a trade mark with a reputation in relation to goods which are identical to those for which that mark is registered, where that sign was already being used before that mark was filed, may be covered by the "due cause" exception:

"53 In order to determine whether the use by a third party, before a trade mark with a reputation was filed, of a sign similar to that mark may constitute ‘due cause’, within the meaning of Article 5(2) of Directive 89/104, and justify the fact that that third party takes advantage of the repute of that mark, the referring court must carry out an assessment, taking into account, in particular, two factors.
54 In the first place, such an assessment requires a determination as to how that sign has been accepted by, and what its reputation is with, the relevant public. In the present case, it is not disputed that the sign ‘The Bulldog’ has been used for a range of hotel, restaurant and café services since 1983 or before. The date from which Mr de Vries has offered energy drinks for sale is, however, not specified in the order for reference.
55 In the second place, it is necessary to examine the intention of the person using that sign.
56 In this regard, in order to determine whether the use of the sign similar to the mark with a reputation was in good faith, it is necessary to take account of the degree of proximity between the goods and services for which that sign has been used and the product for which that mark was registered, as well as to have regard for when that sign was first used for a product identical to that for which that mark was registered, and when that mark acquired its reputation.
57 First, where a sign has been used prior to the registration of a mark with a reputation in relation to services and goods which may be linked to the product for which that mark has been registered, the use of that sign in relation to that latter product may appear to be a natural extension of the range of services and goods for which that sign already enjoys a certain reputation with the relevant public.
58 In the present case, it is not disputed that Mr de Vries uses the sign ‘The Bulldog’ in relation to hotel, restaurant and café goods and services which include the sale of drinks. Consequently, in the light of the recognition enjoyed by that sign among the relevant public, and in the light of the nature of the goods and services for which it has been used, the sale of energy drinks contained in packaging which displays that sign may therefore be perceived, not as an attempt to take advantage of the repute of the mark ‘Red Bull’, but rather as a genuine extension of the range of goods and services offered by Mr de Vries. That impression would be strengthened even further if the sign ‘The Bulldog’ was used for energy drinks before the mark ‘Red Bull Krating‑Daeng’ acquired its reputation.
59 Secondly, the greater the repute of the sign used, prior to the registration of a similar mark with a reputation, for a certain range of goods and services, the more its use will be necessary for the marketing of a product identical to that for which the mark was registered, a fortiori as that product is close, by its nature, to the range of goods and services for which that sign was previously used.
60 Consequently, it follows from all of the foregoing considerations that the answer to the question referred is that Article 5(2) of Directive 89/104 must be interpreted as meaning that the proprietor of a trade mark with a reputation may be obliged, pursuant to the concept of ‘due cause’ within the meaning of that provision, to tolerate the use by a third party of a sign similar to that mark in relation to a product which is identical to that for which that mark was registered, if it is demonstrated that that sign was being used before that mark was filed and that the use of that sign in relation to the identical product is in good faith. In order to determine whether that is so, the national court must take account, in particular, of:
– how that sign has been accepted by, and what its reputation is with, the relevant public;
– the degree of proximity between the goods and services for which that sign was originally used and the product for which the mark with a reputation was registered; and
– the economic and commercial significance of the use for that product of the sign which is similar to that mark."

Although that decision applies only to cases where the allegedly infringing sign was used before the registration of the mark with a reputation it is submitted that the methodology has a wider application. When a s.10 (3) point arises the following questions should be asked:
  1. Is the defendant using in the course of trade in relation to any goods or services a sign which is identical with or similar to the registered trade mark? If no cadit questio, but if yes:
  2. Does the registered mark have a reputation in the United Kingdom? If no cadit questio, but if yes:
  3. Is the use of the sign taking unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. If no cadit questio, but if yes the claimant wins unless the defendant can show "due cause".
  4. Has the defendant's sign been used before the registration of the mark? If so then paragraph [60] above applies. If not, are there any other circumstances that would objectively justify the use of the sign notwithstanding the unfair advantage or detriment? 
It is perhaps impossible to catalogue all the circumstances in which such use would be justified but consideration of the way the sign has been accepted by the public and the defendant's intention would be relevant factors.

Although it has nothing to do with this case I have to mention that Amsterdam is he home of Ernst Meisner's Junior Company about which I have written screeds in Terpsichore my ballet blog, Clearly Amsterdam is as exciting and creative a place in business as it is in the arts.

If anybody wants to discuss this case or trade mark law in general you can call me on  020 7404 5252 during normal office hours or you can message me through my contact form. You can also tweet me, write on my wall or send me a message through G+, Linkedin or Xing.

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