ECJ introduces concept of ‘honest concurrent use’ into EU law

As businesses develop over time, they may move into sectors or geographical areas occupied by a third party who shares the same or a similar name. Likewise, as businesses develop and grow, their understanding and use of trademarks may become more sophisticated. In these cases, two business that have co-existed for a number of years may find themselves disputing rights to a name. 

 

In these cases, the owner of the later right may argue that the owner of the alleged prior rights to the name has tolerated the competing use of the name for a period of time such that it cannot now object to the use of the name (acquiescence). The owner of the later right may also argue that the marks have happily co-existed for a number of years and, again, that the owner of the prior right cannot now enforce its rights against the owner of the later right (honest concurrent use).

 

While the law of 'acquiescence' and 'honest concurrent use' is intended to be harmonised across the European Union, many EU member states apply established, local interpretations of these legal concepts that differ significantly from those in other member states.

 

In Budejovicky Budvar, narodni podnik v Anheuser-Busch Inc (Case C-482/09, September 22 2011), the long-running BUDWEISER dispute, the Court of Justice of the European Union (ECJ) has confirmed that 'acquiescence' is a European concept to be applied uniformly across all member states. It also recognised the established English concept of 'honest concurrent use' within EU law and clarified the conditions under which the provisions relating to acquiescence apply.

 

In particular, the ECJ looked at issues of 'acquiescence' and 'honest concurrent use' under the First Trademarks Directive (89/104/EEC) (now superseded by Directive 2008/95/EC). The ECJ decided that 'acquiescence' within the meaning of Article 9(1) of the directive must be identical across all member states, rather than in accordance with the disparate provisions of the national laws of individual member states. The court also clarified the circumstances when acquiescence would apply.

 

Further, the ECJ recognised that the concept of 'honest concurrent use' was a valid defence to the cancellation of an identical, later trademark covering identical goods or services, but only in circumstances where such use has not had, nor is it liable to have, an adverse effect on the essential function of the trademark, which is to guarantee the origin of the goods or services. The ECJ held that provisions with respect to acquiescence are to be applied uniformly across the European Union.

 

The ECJ also interpreted Article 4(1)(a) of the directive as incorporating a provision for 'honest concurrent use' into EU Law. Although this concept has long been recognised in the United Kingdom, the position has not necessarily been clear in other member states. This should bring clarity and reassurance to brand owners whose trademarks have co-existed with other identical marks over lengthy periods.

The case revolved around the longstanding dispute surrounding the trademarks BUD and BUDWEISER in the United Kingdom between Czech brewer Budejovicky Budvar, narodni podnik and US company Anheuser-Busch Inc, both of which have marketed their products in the United Kingdom since 1973 and 1974, respectively. 
 

Article 9(1) of the directive states as follows:

 

"Where, in a member state, the proprietor of an earlier trademark… has acquiesced, for a period of five successive years, in the use of a later trademark registered in that member state while being aware of such use, he shall no longer be entitled on the basis of the earlier trademark either to apply for a declaration that the later trademark is invalid or to oppose the use of the later trademark in respect of the goods or services for which the later trademark has been used, unless registration of the later trademark was applied for in bad faith."

 

Article 4(1)(a) of the directive 89/04 reads as follows: 

"A trademark shall... be declared invalid if it is identical with an earlier trademark, and the goods or services for which the trademark… is registered are identical with the goods or services for which the earlier trademark is protected."

 

The ECJ concluded that there are four conditions that must be satisfied before the five-year limitation period with respect to acquiescence can begin:

The registration of the earlier mark is not a prerequisite for the commencement of the limitation period – the period can start when the proprietor of the later mark begins to use the mark.

 

The ECJ recognised that the concept of 'acquiescence' contained in Article 9(1) is a matter of EU law, and is to be applied uniformly across all member states, rather than in accordance with the varying approaches contained within the national legislation of member states. The ECJ used the questions asked by the English Court of Appeal to clarify the conditions and limitations of the concept of acquiescence.

 

The most striking aspect of this decision is that the ECJ recognised that Article 4(1)(a) of the directive must be interpreted as meaning that the longstanding honest concurrent use of two identical marks is liable to prevent the proprietor of the earlier mark from obtaining the cancellation of the later mark, notwithstanding that the marks are identical. This interpretation effectively introduces the longstanding English concept of honest concurrent use into EU law, which may come as a surprise to some.

 

However, the court made it clear that 'honest concurrent use' under Article 4(1)(a) is to apply only on the condition that there is no adverse effect on the ability of the earlier mark to guarantee the origin of goods and services. Therefore, in the event that any honest concurrent use adversely affects the ability of the earlier mark to act as a guarantee of origin, the impact on the essential function of a trademark must prevail. The court also commented that the circumstances of this case were "exceptional", whereby consumers in the United Kingdom are well aware of the difference between the beers of Budvar and Anheuser Busch, despite the identity of the marks, and are able to identify the respective products as originating from different companies.
 

The clarification of the uniform approach to acquiescence will bring a greater degree of certainty for co-existing brand owners, and the recognition of the concept of 'honest concurrent use' will reassure owners of brands which co-exist with identical earlier marks. However, the court made it clear that this decision was made with reference to Directive 89/104, which has since been replaced by Directive 2008/95.