Issues of non-use clarified by ECJ

European Union

In Häupl v Lidl Stiftung & Co KG (Case C-245/05), the European Court of Justice (ECJ) has issued an important ruling clarifying issues relating to claims for cancellation on the grounds of non-use of a trademark. The decision stems from a reference for a preliminary ruling from the Oberster Patent- und Markensenat in Austria in a case involving German supermarket chain Lidl Stiftung & Co KG.

Lidl owns the trademark LE CHEF DE CUISINE filed originally in Germany and as an international trademark in Austria where it has been registered since October 12 1993. Lidl opened its first supermarket in Austria on November 5 1998 and started to sell its products under the LE CHEF DE CUISINE mark at that time.

On October 1 1998 an individual named Armin Häupl requested the cancellation of the international trademark in the territory of Austria on the grounds of non-use, arguing that the start of the period to compute non-use started on October 12 1993 (date of registration). Lidl submitted that the time period started to run on December 2 1993 (date of publication by the World Intellectual Property Office) and ended five years later on December 2 1998. It argued that as at December 2 1998 it had already sold its product in its Austrian supermarket and added that it had wanted to open its supermarket in Austria as early as 1994, but was delayed for bureaucratic reasons beyond its control.

At first instance, the court sided with Häupl and upheld the claim for cancellation. On appeal, the Oberster Patent- und Markensenat stayed the proceedings and referred the following questions to the ECJ:

  • Is Article 10(1) of the First Trademarks Directive to be interpreted as meaning that the "date of the completion of the registration procedure" means the start of the period of protection?

  • Is Article 12(1) of the directive to be interpreted as meaning that there are proper reasons for non-use of a mark if the implementation of the corporate strategy being pursued by the trademark proprietor is delayed for reasons outside the control of the undertaking, or is the trademark proprietor obliged to change its corporate strategy in order to be able to use the mark in good time?

In dealing with the first question, the ECJ noted that an international registration, such as the type in issue here, requires the application of both the provisions of the Madrid Agreement and national law, the latter of which must comply with the First Trademarks Directive. However, the ECJ stated that as Article 10(1) of the directive does not determine in an unambiguous manner the beginning of the period of use and therefore the starting point of the relevant five-year period, the wording makes it possible to adapt that period to the specific features of national procedures. It follows that member states are free to organize their registration procedure and, accordingly, they can decide in particular when that procedure is to be regarded as having been completed. Thus, in the case of international registration, it is for the member state for which the registration application has been filed to determine the time at which the registration procedure comes to an end in accordance with its own procedural rules.

Turning to the second question, the ECJ examined Article 12(1) of the directive, which states that:

"[a] trademark shall be liable to revocation if, within a continuous period of five years, it has not been put to genuine use in the member state in connection with the goods or services in respect of which it is registered, and there are no proper reasons for non-use."

Contrary to its ruling on Article 10, the ECJ stated that it could provide a general definition of the words 'proper reasons for non use' in Article 12(1) as that provision makes no reference to the national rules of member states. However, as Article 12(1) does not contain any indication of the nature and characteristics of the 'proper reasons' to which it refers, the ECJ took into consideration Article 19(1) of the Agreement on Trade-Related Aspects of Intellectual Property Rights, which deals with the requirement of use of a mark and the reasons justifying non-use.

Article 19(1) specifies that circumstances arising independently of the will of the mark owner, which constitute an obstacle to the use of the mark may be valid reasons for non-use. Added to this, the ECJ held that 'bureaucratic obstacles' preventing use of the mark must have such a direct relationship with the mark that its use depends on the successful completion of the administrative action concerned. The ECJ noted that the administrative obstacle need not necessarily make the use of the trademark impossible, but such an obstacle can be considered to be a justifiable excuse where it makes use of the mark unreasonable. It would, for example, be unreasonable to require a mark owner, prevented from selling its goods in its own stores, to change its corporate strategy to one in which it sells its goods in the outlets of its competitors.

In summary, the ECJ concluded that Article 12(1) of the directive must be interpreted as meaning that obstacles having a direct relationship with a trademark which make its use impossible or unreasonable and which are independent of the will of the proprietor of that mark constitute 'proper reasons for non-use' of the mark. It is for the national court or tribunal to assess the facts in the main proceedings in the light of that guidance.

Richard Milchior, Granrut Avocats, Paris

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