Advocate general provides guidance on consent under Article 5(1)

European Union

In Martin y Paz Diffusion SA v Depuydt (Case C-661/11, April 18 2013), Advocate General Cruz Villalón has provided some guidance on the nature of consent under Article 5(1) of the First Trademarks Directive (89/104/EEC) and remedies under national law. 

The questions arose in connection with an unusual set of facts. Both parties in the main proceedings are active in the industry of leather fashion items. The parties used the same trademark either for small leather goods (Martin y Paz Diffusion SA (MyP)) or for bags and shoes (Depuydt and Fabriek van Maroquinerie Gauquie SA, collectively Gauquie). The parties sell their products to each other and display them in their respective shops.

Initially, the parties used the mark NATHAN. Another company claimed that NATHAN was too similar to its trademark NATAN, and the parties reconsidered their use of the mark. Since 2002, both MyP and Gauquie have used the figurative mark N and the new mark NATHAN BAUME. These marks were shared in the same way as the NATHAN mark.

In 1998 MyP filed both the N mark and NATHAN as figurative marks with the Benelux Office for Intellectual Property. The trademark NATHAN BAUME was filed by MyP in 2002. Gauquie claimed that it was not informed of the filing.

Despite these registrations, the parties continued their relationship as before. Eventually their relationship deteriorated when MyP started to put other products on the market and demanded consultations with Gauquie with respect to the choice of materials, colours and communication. As of 1998 MyP complained to Gauquie of a lack of cooperation between them to the detriment of the image of the mark, suggesting repeatedly a closer collaboration. In December 2004 MyP complained, according to the referring court, "that the rules of co-ownership of the mark NATHAN BAUME are violated".

An attempt to reach an agreement failed and the parties sued each other. The Cour de Cassation (Belgium) decided to stay the proceedings and referred questions to the Court of Justice of the European Union (ECJ) for a preliminary ruling.

In his opinion, Advocate General Cruz Villalòn provided guidance on the question of whether the owner of a trademark can be permanently prevented from exercising its exclusive rights and from using the trademark for certain goods because a third party has used the mark for these goods with the consent of the owner over an extended period of time.

The advocate general relied on Zino Davidoff and Levi Strauss (Joined Cases C-414/99 to C-416/99) to state that consent under Article 5(1) of Directive 89/104/EEC (now laid down in Article 5(1) of the Trademarks Directive (2008/95/EC) in almost identical wording) is a matter of Community law. Consent is a voluntary legal transaction between the owner and the person receiving the consent. As a voluntary legal transaction, consent is subject to the general principles covering legal transactions and will thus be given for either a determined or an undetermined period of time. This means that termination is possible, even though it may require reasonable notice or cause. Therefore, consent can never be deemed to be irrevocable. This secures the function of a trademark as a guarantee of origin, as this guarantee would be affected if a party continued to use the mark even though it no longer has consent to do so. If this line of thinking is followed by the ECJ, then consent without an explicit or implied licence in place would have the same legal effects as a licence.

The advocate general also stated that national law on the wrongful or abusive exercise of rights may not permanently prevent the proprietor of a trademark from exercising its rights with respect to some of the goods for which the trademark is registered. However, nothing prevents national law from providing for a different remedy that complies with EU law such as damages or even an injunction, enjoining the proprietor of the trademark from the exercise of its exclusive rights. However, the advocate general noted that such an injunction may only be temporary, respecting the rights of the owner of the trademark.

Article 5(1) does not allow national courts to prevent the proprietor of a registered trademark from recommencing the use of the mark itself after terminating an undertaking to a third party not to use that mark for certain goods. Such a prohibition would be based on the prohibition of unfair competition, arguing that the proprietor unfairly benefits from the publicity and investments made for the mark by the third party and from the confusion of consumers. As Article 5(1) creates a system in which the owner can revoke consent given to a third party to use the trademark and then recommence that use, the advocate general argues that the proposed national measure would conflict with the directive. Again, however, nothing prevents national law from granting other remedies that comply with EU law to the third party.

If the ECJ follows the opinion of the advocate general, this would bring an end to any national sanctions to the termination of consent or licences to use a trademark outside the scope of the directive - and would therefore bring the Community a step closer to a unified trademark law.

Sophie van de Graaff and Paul Reeskamp, Klos Morel Vos & Schaap, Amsterdam

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