Celine: The ECJ clarifies the own name defence

Report Headline
The ECJ has clarified the interpretation of Article 5(1) and 6(1) in relation to whether company/trade/shop names can amount to infringement of a registered trade mark.

The Parties
Céline Sàrl -v- Céline SA

The Citation
Case C-17/06

The Court
ECJ

The Context
Article 5(1)(a) Trade Marks Directive provides that it is an infringement if a third party uses in the course of trade an identical sign to the registered trade mark in relation to goods or services which are identical to the goods or services for which the trade mark is registered.

Article 6(1) provides that a third party will not be prohibited from using in the course of trade his own name or address provided he uses them in accordance with honest practices in industrial or commercial matters.

The Facts
This case is about two organisations using the name "Celine". Celine SA had sold clothing and fashion goods in France since 1928 and registered the trade mark "Celine" in 1948 for clothes and shoes. Celine SARL sold clothing and had traded in France as "Celine" since 1950 and also registered the company name Celine in 1992. Celine SA claimed that Celine SARL infringed their trade mark by using the term as their shop name and company name.

The Decision
At first instance the French court decided in favour of Celine SA and Celine SARL were prevented from using the mark and ordered to change its company name. Celine SARL appealed on the basis that a company or shop name did not constitute use within the meaning of Article 5(1) Trade Marks Directive. The appeal court decided to refer to the ECJ the question of whether unauthorised use of a trade mark as a company name, trade name or shop name could amount to infringement.

The ECJ set out what must to be shown for a claim under Article 5(1)(a) to succeed:

the use must be in the course of trade;
it must be without the consent of the proprietor of the mark;
it must be in respect of goods or services which are identical to those for which the mark is registered; and
it must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services.

In relation to step 3 of the above test, the ECJ ruled that the purpose of a company, trade or shop name is not, of itself, to distinguish goods or services. The purpose is to identify a company or designate a business and therefore if the use of the name is limited to that purpose, it cannot be considered as in relation to goods and services. There will be use in relation to goods where a third party affixes the sign constituting his company name, trade name or shop name to the goods which he markets. Even if the sign is not affixed, the requisite use will be shown where the third party uses the sign in a way that links the sign constituting a company name, trade name or shop name with the goods marketed or services provided.

In relation to step 4, use relates to goods so as to affect or be liable to affect the functions of the trade mark when consumers are liable to interpret it as designating the origin of the goods or services in question. The ECJ said that for the trade mark to be able to fulfil its essential role in the system of undistorted competition which the EC Treaty seeks to establish and maintain, it must offer a guarantee that all the goods or services bearing it have been manufactured or supplied under the control of a single undertaking which is responsible for their quality.

The ECJ stated that it is for the national court to determine whether use of the mark by Celine SARL constitutes use in relation to the goods and services for the purposes of Article 5(1) and whether the use affects or is liable to affect the essential function of the 'Celine' mark.

The ECJ also considered the Article 6(1) "own name" defence and decided that it may still provide a defence where the use by the third party of the company/trade/shop name is in accordance with honest practices in industrial or commercial matters i.e. the third party has acted fairly in relation to the legitimate interests of the trade mark holder. The ECJ again made it clear that it is for the national court to carry out this assessment, but they should consider the following:

the extent to which the use of the third party's name is understood by the relevant public as indicating a link between the third party's goods or services and the trade mark owner;
the extent to which the third party ought to have been aware of the link; and
the extent of the reputation enjoyed by the trade mark owner and the degree to which the third party may benefit in marketing the goods or services.

Comment
The ECJ makes it clear that having a registered trade mark as your company name will not in itself interfere with the essential function of the trade mark and it is left up to the national court to decide whether subsequent use of the mark will amount to infringement.

Trade mark owners in the UK may increasingly use passing off rather than trade mark infringement to get at those who use their mark in a company name.

As of 1 October 2008 trade mark owners will also be able to object to misleading company names that are too similar to their trade mark under s.69 Part 5 of the Companies Act 2006, which may be another useful weapon given the decision by the ECJ in Celine. When in force, s.69 will provide a new remedy whilst avoiding the question of "use" which arose in this case.