General Court considers rare plea of limitation in consequence of acquiescence

In SFC Jardibric v Office for Harmonisation in the Internal Market (OHIM) (Case T-417/12, October 23 2013), the General Court has upheld a decision of the Fourth Board of Appeal of OHIM in which the latter had found that there was a likelihood of confusion between the marks AQUA FLOW and VAQUA FLOW.

French company SFC Jardibric applied for the registration of the figurative mark AQUA FLOW (depicted below) in Classes 6, 11, 17 and 21 of the Nice Classification on May 5 1999, and renewed the mark on May 17 2009.

A few days earlier, on May 12 2009, Aqua Center Europa SA filed an application for a declaration of partial invalidity of the mark on the basis of the figurative Spanish mark VAQUA FLOW (depicted below), registered on December 7 1998 and renewed until 2018, covering "apparatus of distribution of water" in Class 11.

On September 16 2010 the Cancellation Division of OHIM upheld Aqua Center's application with regard to the goods in Classes 6, 11 and 21, but rejected it with regard to the goods in Class 17. The Cancellation Division found that the Spanish mark predated the contested mark, and rejected the defence based on acquiescence, since no evidence had been provided of Aqua Center's acquiescence in the use of the contested mark in its territory for a period of five years. The Cancellation Division also found that the marks were similar conceptually, and visually and phonetically similar to an average degree.

Jardibric appealed, but the Fourth Board of Appeal rejected the appeal on July 20 2012. Notably, concerning acquiescence, the board refused to take into consideration new evidence produced late. It also concluded that genuine use of the earlier mark in Spain had been demonstrated.

Jardibric appealed to the General court, alleging limitation in consequence of acquiescence under Article 54(2) of the Community Trademark Regulation (207/2009), and infringement of Article 8(1)(b) of the regulation.

The first ground is an issue that is not often raised. The General Court recalled that, under Article 54(2), if the proprietor of an earlier national trademark has acquiesced, for a period of five successive years, in the use of a later Community trademark in the member state in which the earlier trademark is protected while being aware of such use, it is no longer entitled to apply for a declaration that the later trademark is invalid or to oppose the use of the later trademark. The court pointed out that four conditions are required to apply this rule:

1. the later mark must be registered;
2. application for its registration must have been made in good faith;
3. the later mark must have been used in the member state where the earlier mark is protected; and
4. the owner of the earlier mark must be aware of the use of the later mark after its registration.

It specifically noted that it is only after the owner of the earlier mark has become aware of the use that it has the option of not acquiescing in its use and, therefore, start an action. Accordingly, it is from the time when the proprietor of the earlier mark is made aware of that use that the period of limitation in consequence of acquiescence starts running.

The General Court then recalled that Article 76(2) of the regulation provides that, as a general rule and unless otherwise specified, the submission of facts and evidence by the parties remains possible after the expiry of the time limits to which such submission is subject, and that OHIM is in no way prohibited from taking account of facts and evidence which are submitted or produced late. However, it is equally apparent from that wording that a party has no unconditional right to have facts and evidence which were submitted out of time taken into account by OHIM. In other words, OHIM has a wide discretion to decide, while giving reasons for its decision in that regard, whether or not to take such information into account. Where OHIM is called upon to give a decision in the context of invalidity proceedings, taking such facts or evidence into account is particularly likely to be justified where OHIM considers:

• first, that the material which has been produced late is, on the face of it, likely to be relevant to the outcome of the application for a declaration of invalidity brought before it; and
• second, that the stage of the proceedings at which that late submission takes place and the circumstances surrounding it do not argue against such matters being taken into account.

In the present case, Jardibric had argued before the Cancellation Division that its mark had been registered in May 1999 and used in Spain without being challenged. The Cancellation Division noted that the owner of the earlier mark was not expected to prove a negative fact - namely, that it was not aware of the use of the later mark in its country. In addition, Jardibric had not filed any evidence proving that the owner of the earlier mark was aware of the later mark. Several documents were filed before the Board of Appeal in this respect, but, because they were filed late, the board had to decide whether they were relevant and should be taken into account.

The board had observed that Jardibric's statements did not lead to the conclusion that there had been a limitation in consequence of acquiescence. The board referred to the specific nature of the relationship between the parties – their commercial relationship amounting to a licence agreement – and stated that the parties disputed when that relationship ended, how it ended and the identity of another undertaking which marketed goods in Spain under the contested mark. The board had added that the late evidence postdated May 2004 and would not therefore be enough to find that there was an uninterrupted period of five years before the beginning of this action.

In light of this, the General court considered that the first plea was based both on Article 54(2) and 76(2) of the regulation, since Jardibric implicitly claimed that the late evidence should have been taken into consideration. The General court recalled that, according to the case law, the Board of Appeal has a wide discretion to accept evidence filed for the first time before it. Therefore, the General court had to consider wheter the board had used its discretion in deciding not to take into account the evidence. It could be seen from the statement of reasons set out in Paragraphs 17 to 22 of the board's decision that it had exercised its discretion.

The General Court then examined whether the Board of Appeal had committed a manifest error of assessment, taking into consideration the fact that Jardibric had all the relevant information at the time of the proceeding before the Cancellation Division. According to the court, the board had rightly considered that the additional documents gave rise to new questions - they highlighted the complexity of the commercial relationship between the parties and the resulting difficulty in interpreting the evidence. Therefore, it was impossible to consider that this evidence was, on the face of it, relevant to the issue of limitation in consequence of acquiescence and, consequently, to the outcome of the invalidity proceedings.

One may wonder whether the outcome would have been different if the same documents had been filed before the Cancellation Division, since, in the absence of questions put to the parties or in the absence of an oral hearing, the Cancellation Division would have faced the same difficulties. In any case, the court found that the Board of Appeal had correctly refused to take the new documents into account. 

Jardibric also claimed that more than five years had elapsed between September 16 2001 (the date of registration of the contested mark) and May 12 2009 (the starting date of the cancellation action). The General Court recalled that the period of limitation in acquiescence started from the moment when the owner of the earlier mark had become aware of the later mark. Therefore, it was up to Jardibric to prove that Aqua Center was aware of the contested mark before May 2004.

Jardibric relied on the commercial relationship that it had had with Aqua Center since 1993 and the fact that Aqua Center had purchased goods under the French trademark AQUA FLOW for several years to market the goods in Spain. However, the court found that the fact that Aqua Center had purchased goods under the French mark AQUA FLOW and that it was therefore aware of that mark did not mean that it was aware of the contested mark or, a fortiori, that it acquiesced in the use thereof in Spain. In that regard, the late evidence submitted by Jardibric in support of its arguments was not taken into account for the abovementioned reasons.

As a consequence, the first plea was rejected.

With regard to the second plea, the General Court took into consideration the fact that the relevant public was composed of Spanish professionals involved in the watering and irrigation industry, but also of members of the general public, such as Spanish do-it-yourself enthusiasts. The Board of Appeal had taken the view that the degree of attentiveness of the members of the general public was higher than average, given the long-lasting and technically sophisticated nature of the goods. This definition of the relevant public was not disputed.

Concerning the comparison of the goods, the court recalled that only the goods in Classes 6, 11 and 21 were concerned. The "apparatus for distribution of water" in Class 11 covered by the earlier mark was found to be identical to "water supply, watering or irrigation installations" in the same class designated by the contested mark, since an installation is machinery or apparatus placed in position or connected for use. With regard to the products in Classes 6 and 21, the court confirmed that they were similar to an average degree to the goods in Class 11 covered by the earlier mark, since they were complementary.

The General Court rejected the argument that the wording used to describe the product designated by the earlier mark did not make it possible to identify a specific use of the product and that it was not therefore possible to determine straightaway what was covered by the term ‘apparatus for distribution of water’. The nature and specific purpose of the product covered by the earlier mark were sufficiently clear from its wording, and 'apparatus for distribution of water' covered all devices, mechanisms and installations for delivering water. As a consequence, the court confirmed that the goods designated by the contested mark in Class 11 were identical to the product designated by the earlier mark, and that there was an average degree of similarity between that product and the goods designated by the contested mark in Classes 6 and 21.

Concerning the comparison of the signs, the General Court stated that, from a visual point of view, the word elements of the marks had eight letters in common, that they were both written in white capital letters and that their type fonts were highly similar. The difference created by the use of the letter 'V' at the beginning of the later mark was not sufficient to counteract these similarities. The court also rejected the argument that the graphic layout and the colours led the two marks to give a different visual impression. The word element of the earlier mark was juxtaposed with a black rectangular background, whereas only the outline of the letters of the word element of the contested trademark was in black. The court stated that those figurative elements were not configured so elaborately that they might substantially influence the overall impression given by the signs. Those figurative elements were likely to be perceived by consumers as being essentially decorative elements, and not as indicating the commercial origin of the goods. Therefore, they were not decisive for distinguishing the goods at issue in the mind of the relevant public.

Phonetically, the court noted that the two verbal elements had three syllables which were pronounced according to the same rhythm and intonation and contained the same sequence of vowels. Thus, the only feature distinguishing the signs phonetically stemmed from the pronunciation of the additional consonant placed at the beginning of the earlier mark. This difference was not able to counteract the overall impression of phonetic similarity stemming from the fact that the group of letters ‘aquaflow’ of the later mark was included entirely in the earlier mark.

Conceptually, the court noted that the contested trademark referred to ‘aqua flow’ for the relevant consumer, and this was not disputed. As regards the earlier mark, the term ‘vaqua’ contained the element ‘aqua’, which is very similar to the Spanish term ‘agua’ (meaning 'water'). The earlier mark is registered for "apparatus for distribution of water". Thus, the reference to water appeared to be all the more evident given the nature of those goods. It followed that the relevant Spanish consumers would establish a link between the earlier mark and the goods that the mark designates and would see in that mark an allusion to the concept of ‘aqua flow’. That reference to water would also be reinforced by the term ‘flow’, which is a basic English term commonly used in the watering sector, the meaning of which would be identified by the relevant consumers, who have a high level of attention. The court thus confirmed that the marks at issue were conceptually similar to an average degree.

Since the products were identical or similar, and the signs had an average visual and conceptual similarity and a strong phonetic similarity, the board had correctly found that there was a likelihood of confusion.

The General thus rejected the second plea and dismissed the action.

Richard Milchior, Granrut Avocats, Paris