BUD war reaches ECJ for the second time

In Anheuser-Busch Inc v Budĕjovický Budvar, národní podnik, the European Court of Justice (ECJ) has answered a number of questions referred by a Finnish court in yet another case in the multi-jurisdictional fight over the marks BUDWEISER and BUD. Among other things, the ECJ held that although the alleged trademark infringement started before the date that the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs Agreement) came into force, it still applied to the case as the alleged infringement had continued beyond that date.

Czech brewer Budĕjovický Budvar, národní podnik (BB) registered the trade name Budweiser Budvar with the Czech authorities in 1967. In 1962 and 1967 it registered the trademarks BUDVAR and BUDVAR BUDWEISER in Finland. However, these trademarks were later declared null and void by the Finnish courts due to non-use. Between 1985 and 1992 US brewer Anheuser-Busch Inc registered in Finland several marks, including BUDWEISER and BUD. In October 1996 Anheuser-Busch initiated injunction proceedings before the Finnish courts, seeking to prohibit BB from using, among others, the trademarks BUDWEISER and BUDVAR. The Finnish court of first instance held that there was no likelihood of confusion, since BB's beer bottle labels were dominated by the sign BUDĔJOVICKÝ BUDVAR, while the phrase 'Brewed and bottled by the Brewery Budweiser Budvar' was depicted in a smaller font. The Finnish Court of Appeal set aside this judgment on the grounds that it could not be proven that the trade name Budweiser Budvar was well known to the target public, meaning that BB could not rely on the protection of Article 8 of the Paris Convention for the Protection of Industrial Property. BB appealed.

The Finnish Supreme Court held that, before it could issue a ruling, it required some clarification from the ECJ on the interpretation of Article 16 of the TRIPs Agreement, which concerns the scope of a trademark right in relation to an existing trade name. This is the second case involving these breweries to have been brought before the ECJ, the first having led to a judgment on November 18 2003 (see Budvar one step closer to exclusive right to use BUD in Austria).

One of the issues to be determined by the ECJ related to the temporal scope of the TRIPs Agreement, which entered into force on January 1 1996, since the alleged trademark infringement started before that date. According to the ECJ, the matter was within the temporal scope of the TRIPs Agreement because the alleged trademark infringement continued beyond January 1 1996.

Another question answered by the ECJ was under what conditions a trademark owner may oppose the use of a trade name. In line with its earlier case law, the ECJ remarked that the essential function of a trademark is to serve as a guarantee of the origin of goods to consumers. It was for the national court to examine whether consumers were likely to interpret the sign used by BB as a designation of the origin of its beer. Should the Finnish court find that BB did not use the sign to distinguish the goods in question but rather as a trade or company name, it must protect Anheuser-Busch's rights pursuant to Finnish national law.

However, the ECJ pointed out that the TRIPs Agreement and Community Trademark Directive permit third parties to use a sign in order to indicate their name or address. Although the Joint Statements regarding the establishment of the directive state that this exception can be relied upon by private persons only, the ECJ ruled that the Joint Statements can be ignored now that they are not reflected in the directive itself. Hence, the exception can also be relied upon by undertakings with respect to their trade names. That exception is subject to the condition that such use be made in good faith (the TRIPs Agreement) or in accordance with honest practices (the directive). The national court must carry out an overall assessment of all the relevant circumstances (eg, the labelling of the bottle) in order to establish whether BB had been competing unfairly with Anheuser-Busch.

The ECJ held that under the TRIPs Agreement, where the holder of a trade name has a right which existed prior to the trademark, the use of that trade name cannot be prohibited. It held that a trade name is a right falling within the scope of the TRIPs Agreement and therefore may constitute an existing prior right. It is for the Finnish court to establish whether BB's right was already "existing".

The Finnish courts will now have to render a final decision in this dispute. Although the answers of the ECJ seems to support BB's reliance on its trade name, it is yet to be seen whether it can prove that its trade name is well known in Finland and hence protected under Article 8 of the Paris Convention.

For a discussion of other cases in this long-running dispute, see Anheuser-Busch loses trademark battle in South Korea, BUDĔJOVICKÝ BUDVAR registrations upheld by Board of Appeal, Anheuser-Busch precluded from registering BUD in Switzerland, Budvar chalks up another victory against Anheuser-Busch and Anheuser-Busch fails to revoke Budvar trademarks.

Paul Reeskamp, Allen & Overy, Amsterdam