ECJ reaffirms its interpretation of the EU anti-dilution provision

European Union

In adidas-Salomon AG v Fitnessworld Trading Ltd, the European Court of Justice (ECJ) has followed the advocate general's opinion and reaffirmed its interpretation of Article 5(2) of the Community Trademark Directive given in Davidoff II. It also specified that the EU anti-dilution provision does not apply where a court finds as a matter of fact that the public views a sign "purely as an embellishment".

The adidas Case before the Dutch courts concerned adidas-Salomon AG's well-known triple-stripe logo. The UK defendant, Fitnessworld, made and imported clothing bearing a double-stripe motif. A lower Dutch court rejected adidas's case under Article 5(1)(b) of the Community Trademark Directive on the basis that the adidas mark enjoys such a high degree of recognition that there was no likelihood of confusion with the clothing being sold by Fitnessworld. adidas claimed that use of two stripes would be associated by consumers with its sports clothing bearing the three stripes and thereby take unfair advantage of the repute of the adidas mark. The Dutch Supreme Court sought guidance from the ECJ on Article 5(2).

The ECJ concluded that, where a member state provides protection under Article 5(2), it is bound to grant that protection to the owner of a famous registered mark where a third party makes use of a later mark or sign that is identical with or similar to the famous mark both for goods or services that are similar or identical to those covered by the registered mark and for those that are not similar. As in Davidoff II, the ECJ felt that it would be inconsistent to leave the owners of famous marks with less protection, where the matter concerned dissimilar goods rather than similar goods.

The ECJ also clarified that Article 5(2) provides protection without a finding of confusion on the part of the consumer. It is sufficient for the degree of similarity between the famous mark and the sign to have the effect that "the relevant section of the public establishes a link between the sign and the mark", even if it does not confuse them.

One of Fitnessworld's arguments was that the two stripes would be viewed merely as an embellishment by the public. The ECJ dismissed this finding as irrelevant. The fact that the public may view the sign as an embellishment did not in itself bar a finding of infringement, where the public established a link between the sign and the mark. However, if a court found as a matter of fact that the public viewed the sign "purely as an embellishment", then there would be insufficient similarity between the sign and mark to establish the necessary link.

The adidas Case should encourage trademark owners to bring actions based on Article 5(2) (or Section 10(3) of the UK Trademarks Act 1994) where they have a mark with a reputation, but there is no evidence of confusion. However, it will still be necessary to demonstrate that the use complained of takes unfair advantage of, or is detrimental to, the distinctive character of the mark - elements that can be difficult to demonstrate. Even so, the anti-dilution provision looks set to become a more potent weapon for trademark owners.

For the advocate general's opinion on the case, see EU anti-dilution provision does not extend to decorations.

Joel Smith, Herbert Smith, London

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