ECJ rules on use of stripes in adidas Case

In adidas AG v Marca Mode CV (Case C-102/07, April 10 2008), the European Court of Justice (ECJ) has held that the public interest in ensuring that certain signs remain available for use must not be taken into consideration in assessing the protection afforded to a mark in relation to a potential infringement, except in the defence of descriptive use. Decorative use can still be infringing if there is a likelihood of confusion or unfair advantage.

adidas AG is proprietor of a figurative trademark composed of three vertical, parallel stripes of equal width in a colour contrasting with the basic colour of the garment. adidas found that competitors were using double parallel stripes in a similar way.

An earlier reference to the ECJ in 2003 changed trademark law across the European Union by highlighting the inconsistency between the protection afforded to identical or similar marks applied to similar goods, and that afforded to dissimilar goods (for further details please see "ECJ reaffirms its interpretation of the EU anti-dilution provision").

In the current case, adidas brought an action in the Dutch courts for prohibition of the use of any sign consisting of its three-stripe logo or a motif similar to it (eg, a two-stripe motif). Marca Mode CV and the other defendants sought declarations that they were free to place two stripes on their sports and leisure garments for decorative purposes. At the interlocutory stage, adidas's trademark was held to have been infringed and the court issued an injunction restraining the use of the three-stripe logo or any similar sign, such as a two-stripe motif.

On appeal, adidas's trademark was held not to have been infringed and the injunction was set aside. In making this assessment, the Dutch court took into account its finding that the three-stripe mark was not very distinctive and had become so only through adidas's use. The court found that stripes and simple stripe logos were generally signs which must remain available and, therefore, do not lend themselves to exclusive rights. Consequently, the mark owned by adidas could not afford any protection against the use of two-stripe motifs.
On appeal to the Dutch Supreme Court, adidas argued that the 'availability' argument should be taken into account only where the court was considering grounds for refusal or invalidity under Article 3 of the First Trademarks Directive (89/104/EEC). The court referred various questions to the ECJ.

The ECJ was asked, in the context of considering the extent of the protection of an innately non-distinctive mark (which had nevertheless become distinctive through use), whether account should be taken of the general interest in ensuring that the availability of given signs is not unduly restricted for other traders offering the goods or services concerned.

The ECJ held that such factors are taken into account when considering the registrability or revocation of a mark, but should not be taken into account when considering the extent of protection conferred upon the mark. The question of whether there is a likelihood of confusion should be based on the perception by the public of the goods covered by the mark of the proprietor on the one hand, and the goods covered by the sign used by the third party on the other (see Article 5(1)(b) of the directive). The fact that a certain type of sign should be freely available for use in the market is not a factor that potential infringers can rely on in defence of their actions - to do so would undermine Article 5(1)(b). It is for the national court to determine whether such likelihood of confusion exists.

The ECJ also held that even if the public sees the sign as decorative or an embellishment, this does not constitute a restriction of the protection conferred by Article 5(1)(b) if, despite its decorative nature, that sign is so similar to the registered trademark that the relevant public is likely to perceive that the goods come from the same undertaking or, as the case may be, from economically linked undertakings. The ECJ set out the assessment that a national court would have to make in this regard:

"In the present case, it must be determined whether the average consumer seeing sports or leisurewear featuring stripe motifs in the same places and with the same characteristics as the stripes logo registered by adidas, except for the fact that they consist of two rather than three stripes, may be mistaken as to the origin of those goods."

Given the undoubted reputation of the three-stripe logo, the ECJ also assessed the position under Article 5(2) of the directive. Under this provision, similarity between a mark and a sign does not have to produce a likelihood of confusion to be objectionable; a link in the minds of the relevant section of the public is sufficient. The existence of such a link must be appreciated globally, taking into account all the factors relevant to the circumstances of the case. The ECJ held:

"The requirement of availability is extraneous both to the assessment of the degree of similarity between the mark with a reputation and the sign used by the third party, and to the link which may be made by the relevant public between that mark and the sign. It cannot therefore constitute a relevant factor for determining whether the use of the sign takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark."

The availability argument was also considered in relation to the Article 6(1)(b) defence, which limits the effect of the trademark such that it cannot prevent a third party from using indications concerning the kind, quality, nature and intended purpose of the goods, among other things, provided that such use is in accordance with honest practices. The ECJ found that this provision does give "expression to the requirement of availability", but it held that:

"The requirement of availability cannot in any circumstances constitute an independent restriction of the effects of the trademark in addition to those expressly provided for in Article 6(1)(b)."

The ECJ stated that only where the indication used relates to one of the characteristics of the goods marketed or the service provided can it be considered in relation to Article 6(1)(b).

This decision strengthens the position of owners of descriptive or logo trademarks by clarifying that the public interest in the general availability of signs for use will not be taken into consideration in relation to the assessment of potential infringement, unless the similar sign is being genuinely used in a descriptive fashion, and then only as a secondary factor, not an independent one.

If there is still a likelihood of confusion or a link is established, the fact that the alleged infringers claim that they are using the signs as embellishment or decoration will not restrict the protection afforded by the mark, nor will the public's perception that the signs are being used decoratively. The outcome of the case will depend on the national court's assessment of the existence of a likelihood of confusion or a link sufficient to cause unfair advantage.

Mark Shillito and Rachel Montagnon, Herbert Smith, London