IPEC offers 'surprising' interpretation of ONEL in Sofa Workshop case

In The Sofa Workshop Ltd v Sofaworks Ltd ([2015] EWHC 1773 (IPEC), June 29 2015), the Intellectual Property Enterprise Court, England and Wales, has held that two Community trademarks (CTMs) for the word mark SOFA WORKSHOP were invalidly registered as well as liable to be revoked on the grounds of non-use, since the marks had only been used in the United Kingdom.

Under Article 51(1)(a) of the Community Trademark Regulation (207/2009), a CTM shall be liable to be revoked on the grounds of non-use if “within a continuous period of five years, the trademark has not been put to genuine use in the Community in connection with the goods or services in respect of which it is registered, and there are no proper reasons for non-use".

Both the claimant (Sofa Workshop) and defendant (Sofaworks) are sofa and furniture retailers active in the United Kingdom. Sofa Workshop took objection to Sofaworks’ use of the sign SOFAWORKS, deeming it confusingly similar to its two CTMs for the word mark SOFA WORKSHOP and thus infringing. The claimant further argued that the defendant had passed itself off as being associated with Sofa Workshop. The defendant denied the allegations and counterclaimed for revocation of the claimant’s CTMs under Article 51 of the regulation, arguing that the claimant’s use of the marks only in the United Kingdom did not amount to genuine use.

In its decision, His Honour Judge Hacon initially decided that the claimant’s CTMs were invalid because the words were descriptive of, and non-distinctive for, furniture and related accessories and services as covered by the marks. A review of the evidence indicated that the sign was used descriptively by its owner and in the trade.

On the point of the CTMs having potentially acquired distinctiveness though use, the court found that, with the sign being descriptive to native English speakers, it would also be found descriptive in Ireland and Malta, where English is one of the official languages, as well as in other EU countries, such as the Netherlands, Cyprus or Scandinavia, where English is widely understood. However, there was no evidence that SOFA WORKSHOP had been used in these jurisdictions.

Notably, and somewhat controversially, Judge Hacon agreed with the defendant that the claimant’s use of its CTMs solely in the United Kingdom within the relevant five-year period did not amount to genuine use under Article 51. He based his finding on the conclusion that “genuine use” of a CTM generally required evidence that a mark has been used to create or maintain a share in the market at least beyond the boundaries of one EU member state. A detailed review of the claimant’s advertisements, website and promotional material had revealed that it had used its CTMs only in the United Kingdom and, realistically, had only been targeting consumers there, even though some of its advertisements were included in publications that had also been published in other EU member states. Consequently, the defendant’s use of the sign SOFAWORKS in relation to identical goods/services could not be infringing.

The decision rests on the judge's interpretation of the decision of the Court of Justice of the European Union (ECJ) in the ONEL/OMEL case (C-149/11). The judge expressly distinguished the ONEL/OMEL decision from the ECJ’s decision in Sunrider v OHIM (Case T-24/00), where it was held that the proprietor of a national mark who sold goods to one person in one town may have, in due course, wished to trade all across that country. It could not be assumed that a trader, who was active in one EU country, would equally wish to extend its trade to further EU states:

“If I am right about the effect of the court's judgment, it means that there is a distinction between national marks and Community marks when it comes to assessing genuine use. For national marks the geographical extent of use is a factor to be taken into account, but it is apparently of no great weight… In respect of Community marks the geographical extent of use is, in the general run, crucial: it must extend at least beyond the boundaries of one member state. By way of a non-exhaustive exception to the general rule, this does not apply where the market for the goods or services is confined to one member state.” (Paragraph 26)

Even so, the claimant succeeded in its claim for passing off. The court accepted that the claimant's trading name had acquired secondary meaning in the mind of the relevant public in England and Wales, despite being descriptive when used in relation to sofas and related goods and services. The defendant’s use of SOFAWORKS also amounted to a misrepresentation to a sufficiently significant section of the relevant public to cause material damage to the claimant's goodwill.

Judge Hacon’s interpretation of the ONEL/OMEL case is surprising and appears to contradict the “established” interpretation of this judgment that all facts and circumstances should be considered when assessing whether use of a CTM was genuine. While such use had to be in accordance with its essential function to guarantee trade origin and for the purpose of maintaining or creating market share in the EU for the goods or services covered, territorial borders should be disregarded. Indeed, according to the common reading of ONEL/OMEL, the ECJ had expressly declined to establish a de minimis rule for the size of a territory to satisfy the use requirement. While it might be reasonable to expect that a CTM should to be used in a larger area than a national mark, it was not required that such use was in an extensive geographic area. 

It is not yet known whether Sofa Workshop will appeal, which appears unlikely since it prevailed with its passing off claim. It will be interesting to see whether other courts will follow this interpretation, since this could potentially have serious implications for the maintenance and appeal of CTMs since it clearly requires use of a CTM in more than one EU member state within the relevant five-year period.

Birgit Clark, Locke Lord (UK) LLP, London