In a judgment described as good news for trademark owners and practitioners, the Court of Justice of the European Union (ECJ) has clarified the treatment of distinctiveness of prior-registered national marks in Community trademark (CTM) opposition proceedings.

As reported previously in WTR Daily, in Formula One Licensing BV v Office for Harmonisation in the Internal Market (OHIM) (Case T-10/09, February 17 2011), the General Court upheld a decision of the Board of Appeal of OHIM refusing an opposition filed by Formula One Licensing BV against an application to register the mark F1 LIVE in Classes 16, 38 and 41 of the Nice Classification.

The Board of Appeal had ruled that, even though the goods and services were identical or similar, there was no likelihood of confusion due to the differences between the marks. It held that the relevant public perceived the combination of ‘F’ and ‘1’ as a generic designation of a category of racing cars, and by extension, of races involving such cars; and the reputation of the earlier trademarks concerned only the ‘F1’ element of the F1 logo.

Formula One Licensing appealed to the General Court, which agreed with the decision, stating that the registrations for the letters 'F1' had only a weak distinctive character and that the reputation of the mark was linked to the F1 device and not the word mark.

Hastings Guise, trademark and brand protection lawyer at Field Fisher Waterhouse, explains: "Formula One Licensing had been left in a very difficult place by the General Court judgment, which essentially held that third parties could register trademarks which contained the element ‘F1’ where it might be perceived as referring descriptively to Formula 1 racing. Essentially, the F1 marks were declared generic by the backdoor, rather than in the context of proper cancellation proceedings. Given that Formula One Licensing have very extensive rights in F1 both as a word mark and in the F1 logo, the judgment, by putting an end-run around those rights, raised serious questions about the reliability of registered rights and undermined the legislative provision that a registered right in enforcement proceedings must be considered valid unless challenged by way of a cancellation action.”

Given this, Formula One Licensing BV subsequently appealed the decision. In its decision today, the ECJ focused on the fourth aspect of the first plea (unlawful removal of the protection afforded to an earlier trademark), stating: “It is true that… where an opposition, based on the existence of an earlier national trademark, is filed against the registration of a Community trademark, OHIM and, consequently, the General Court, must verify the way in which the relevant public perceives the sign which is identical to the national trademark in the mark applied for and evaluate, if necessary, the degree of distinctiveness of that sign. However… their verification may not culminate in a finding of the lack of distinctive character of a sign identical to a registered and protected national trademark, since such a finding would not be compatible with the coexistence of Community trademarks and national trademarks or with Article 8(1)(b) of Regulation 40/94, read in conjunction with Article 8(2)(a)(ii). Such a finding would be detrimental to national trademarks identical to a sign considered as being devoid of distinctive character, as the registration of such a Community trademark would bring about a situation likely to eliminate the national protection of those marks.”

The court added that, as Article 8(2)(a)(ii) of Regulation No 40/94 provides, in opposition proceedings, for trademarks registered in a member state to be taken into consideration as earlier trademarks, it is necessary to acknowledge a certain degree of distinctiveness of an earlier national mark on which an opposition against the registration of a Community trademark is based – something the General Court had not done. As such, there was no need to consider the other pleas and the judgment was set aside.

Guise characterises today’s judgment, which means “that the freedom of OHIM and General Court in comparing marks and factoring in consumer perception is limited and they must presume - particularly in the case of national trademarks - that the registered marks are valid and will be perceived as distinctive”, as “a welcome return to common sense”.

For Guise, the decision does not lower the bar for the assessment of distinctive character in the EU, but does offer reassurance that, once a mark is registered, it will perform as expected. Guise concludes: “Under the General Court judgment, businesses which have developed brand equity and trademark rights through a long history of use, and acquired distinctiveness, potentially faced an invidious situation of needing to reaffirm the acquired distinctiveness of their marks each time they sought to enforce them so it will be a relief to see this vulnerability closed off. The underlying principle behind registered rights is to allow the acquisition and recordal of enforceable rights that can then be relied upon without the need to re-examine the basis of the right on each occasion, with great benefits in terms of costs and legal certainty. The ECJ judgment reaffirms this principle and is good news for trademark owners and trademark practitioners alike."