Citibank victorious in dilution case

In Citigroup Inc v Office for Harmonization in the Internal Market (OHIM) (Case T-181/05, April 16 2008), the Court of First Instance (CFI) has annulled a decision of the Board of Appeal of OHIM.

On December 20 1999 Citi SL, a company governed by Spanish law, applied for the registration of the trademark CITI for services in Class 36 of the Nice Classification ("customs agencies, property valuers and real estate agents") with OHIM.

On March 12 2001 US companies Citicorp (which subsequently merged with Citigroup Inc) and Citibank filed an opposition against the application based on various earlier trademarks beginning with 'citi', including the registered trademark CITIBANK for financial services and real estate agents, among other things.

In March 2004 the Opposition Division of OHIM upheld the opposition. In March 2005 the opposition was partly dismissed by the Board of Appeal of OHIM insofar as it relied on the registration of CITIBANK for financial services. Although the board acknowledged that CITIBANK is a well-known trademark, it found that CITIBANK and CITI were not similar under Article 8(5) of the Community Trademark Regulation (40/94). Citibank and Citigroup appealed to the CFI.

In this case, Article 8(5) of the regulation was key. In essence, this article protects well-known trademarks against dilution and free riding, even where there is no likelihood of confusion and where the products and/or services are not similar. Article 8(5) provides that an opposition based on an earlier mark should be upheld if the following cumulative conditions are satisfied:

• the marks are similar;
  
  
• the earlier trademark has a reputation; and
  
  
• there is a risk that use without due cause of the trademark applied for would take unfair advantage of, or be detrimental to, the distinctive character or repute of the earlier trademark.

The CFI held that the CITIBANK mark has a reputation, hence satisfying the second condition. The CFI also found that the trademarks CITI and CITIBANK were similar, and that the similarity between the marks was sufficient for the public to be able to establish a link between them (see Adidas v Fitness World (C-408/01)).

The CFI then assessed the third condition under Article 8(5) with regard to the three distinct types of risk. The CFI stressed that there is no requirement to demonstrate actual and present harm to the earlier mark. However, there must be prima facie evidence of a future risk that is not just hypothetical. This evidence can be delivered on the basis of logical deductions made from an analysis of the probabilities and by taking into account the normal practice in the relevant commercial sector. According to the CFI, the concept of 'unfair advantage' is intended to encompass instances where there is "clear exploitation and free riding on the coat-tails of a famous mark".

In this particular case, the CFI held that such a risk of free riding existed on the grounds that:

• the trademark CITIBANK has a strong reputation within the European Union with regard to banking services; and
  
  
• there is a natural overlap in the respective group of clients.

Interestingly, the CFI also held that there was a risk that Citi's services would be perceived as belonging to Citibank, especially as Citibank and Citigroup hold several trademarks containing the component ‘citi’. The fact that Citi was the owner of the domain name 'citi.es' was irrelevant.

Consequently, the CFI annulled the decision of the board.

Paul Reeskamp, Allen & Overy LLP, Amsterdam