ECJ provides guidance on acquired distinctiveness

In Oberbank AG v Deutscher Sparkassen- und Giroverband eV (Joined Cases C-217/13 and C-218/13, June 19 2014), the Court of Justice of the European Union (ECJ) has replied to three questions referred to it for a preliminary ruling by the German Federal Patent Court in a complex dispute concerning a colour mark.

Deutscher Sparkassen- und Giroverband (DSGV), an association of German savings banks, has been using the colour red since the 1950s for banking and financial services. The colour red was primarily used in relation to the German term 'Sparkasse' ('savings bank') and for a stylised letter 'S'. However, members of DSGV also used the colour red for their promotional material. In 2002 DSGV filed a trademark application for a contourless colour red; the mark was registered in 2007 by the German Patent and Trademark Office for specific services in Class 36 of the Nice Classification on the ground that it had acquired distinctiveness through substantial use. DSGV and the Patent and Trademark Office primarily referred to a survey showing that 67.9% of the German public associated this colour with DSGV.

Austrian bank Oberbank, as well as Spanish bank Banco Santander, also use red colours in relation to their banking and financial services. DSGV claimed trademark infringement and sued both banks. The two banks then filed cancellation actions with the GPTO arguing that the colour mark should not have been registered. The cancellation division of the GPTO rejected the cancellation actions and both claimants filed appeals with the Federal Patent Court. The 33rd Senate of the Federal Patent Court referred three questions to the ECJ for a preliminary ruling.

The 33rd Senate of the Federal Patent Court was of the opinion that the percentage of awareness and recognition shown in the survey (67.9%) was not sufficient to show acquired distinctiveness for a basic colour such as red, and claimed that the minimum percentage should be 70%. In its first question, the Federal Patent Court wanted to know whether such an interpretation would be in line with Articles 3(1) and (3) of the Trademarks Directive (2008/95/EC).

The ECJ pointed out that the national authorities should make an overall assessment of the evidence, which must relate to the use of the mark as a trademark, and reiterated (in Paragraph 41) the standards set forth in Windsurfing Chiemsee (Joined cases C-108/97 and C-109/97), namely that the following elements must be taken into consideration:

• the market share held by the mark;
• how intensive, geographically widespread and long-standing the use of the mark has been;
• the amount invested by the owner in promoting the mark;
• the proportion of the relevant class of persons who, because of the mark, identify goods and services as originating from a specific undertaking; and
• statements from chambers of commerce and industry or other trade and professional associations.

Further, the ECJ stated that a survey could be helpful, provided that it is allowed under national law. In view of the necessary overall assessment of the evidence and the fact that a consumer survey cannot be the only decisive criterion, the ECJ, however, refused again to provide any predetermined percentages relating to the degree of recognition (Paragraphs 44 and 48).

Hence, the Federal Patent Court’s attempt to establish minimum percentages with regard to the acquired distinctiveness of a colour mark failed. The ECJ clearly stated that Articles 3(1) and (3) of the directive must be interpreted as precluding an interpretation of national law which would require that a consumer survey indicate a degree of recognition of at least 70%.

With the second question, the Federal Patent Court sought to know what would be the relevant date for the assessment of acquired distinctiveness if the member state at issue has not exercised the power laid down in the second sentence of Article 3(3) of the directive. The first sentence of Article 3(3) clearly states that a trademark shall not be refused registration or be declared invalid if, before the date of application for registration and following the use which has been made of it, it has acquired a distinctive character. The second sentence allows the member state to provide that this provision shall also apply where the distinctive character was acquired after the date of application or even after the date of registration.

The Federal Patent Court was of the opinion that Germany has not exercised this power, and the ECJ clearly stated that, under these circumstances, it was clear from the unequivocal terms of the first sentence of Article 3(3) that the mark must have acquired a distinctive character before the date of filing of the application. The ECJ only allowed one exception in Paragraph 60 - where there is evidence which, although subsequent to the date of filing the application, enables the drawing of conclusions on the situation as of the filing date, such evidence may be taken into account.

Hence, the ECJ referred to the filing date as the relevant date for the assessment of acquired distinctiveness. However, the ECJ could not decide on the interpretation of national German law. It is apparently disputed whether or not Germany has exercised the power laid down in the second sentence of Article 3(3) of the directive. Some authors refer to the option of transferring the priority date under §37, Section 2 of the German Trademark Act. Others refer to the fact that:

• §8, Section 3 of the Trademark Act, which allows registration based on acquired distinctiveness, does not refer to the filing date, but states: “before the date of the decision on registration”; and
• §50, Section 2 of the Trademark Act states that a mark should be declared invalid only if the ground for refusal still exists on the date of the decision on the application for a declaration of invalidity.

These provisions seem to refer to dates other than the filing date, so this point is still open. Interestingly, the German Federal Supreme Court recently changed its practice in this respect and now looks at the filing date to reach a decision (see the decisions in Aus Akten werden Fakten and, in particular, TEST). This could also have an impact on the interpretation of German law.

The last question referred to the burden of proof in invalidity proceedings if specific facts can no longer be established with the necessary certainty. The ECJ first stated that, even though member states should remain free to fix the procedural provisions concerning the invalidity of trademarks (Recital 6 of Directive 2008/95), it could not be inferred that the question of the burden of proof constitutes such a procedural provision, as this could result in different decisions in different member states.

The ECJ further held that the burden of proof concerning the distinctive character of a mark acquired through use must be borne by the proprietor of the mark. This applied to application and to cancellation proceedings, even though the basic rule in Germany is that the claimant has the burden of proof, and that burden of proof shifts only in very specific circumstances. The reason why the burden of proof must be borne by the trademark owner is, according to the ECJ, that the owner relies on an exception to the general rule that non-distinctive signs should not be registered. As the trademark owner wants to obtain a registration despite a lack of inherent distinctiveness, it must prove that the exception exists. Further, the ECJ stated that the trademark owner is best placed to adduce evidence in support of its allegation that the mark has acquired distinctiveness. If it is no longer possible to prove that the mark had acquired distinctiveness at the relevant date (ie, at the date of filing - see the answer to question 2), the mark must be declared invalid (Paragraph 71). The ECJ believed that this position does not breach the principle of the protection of the legitimate expectations of the trademark owner (Paragraph 72).

With respect to the requirements for acquired distinctiveness, it is not a real surprise that the ECJ referred only to the general guidelines laid down in Windsurfing Chiemsee. The ECJ refused to give specific percentages in previous decisions and clearly refused again here.

However, the decision in the present case is very important with respect to the other two questions, even though they deal primarily with procedural aspects. In invalidation proceedings, it is often a problem to show that a mark had acquired distinctiveness at a specific date in the past. Here, the filing date was in 2002, even though the mark proceeded to registration only in 2007 and was attacked by Oberbank and Banco Santander in 2008 and 2009, respectively. It was problematic for the claimant to prove that the relevant mark had not acquired distinctiveness at that date. According to the ECJ's decision, the mark must have acquired distinctiveness at the date of filing if other options have not been used, and the burden of proof lies solely on the trademark owner and not on the claimant, as the trademark owner seeks to benefit from an exception to the general rules. This could have an impact in a number of cases, and it remains to be seen how the Federal Patent Court will now rule in the cancellation action against the red colour mark.

Carsten Albrecht, FPS Fritze Wicke Seelig, Hamburg