Questions referred to ECJ in BUDWEISER dispute

In Budejovicky Budvar Narodni Podnik v Anheuser-Busch Inc ([2009] EWCA Civ 1022, October 20 2009), the Court of Appeal of England and Wales has referred three questions to the European Court of Justice (ECJ) for a preliminary ruling. The reference was made as part of the longstanding series of disputes between Anheuser-Busch Inc and Budejovicky Budvar Narodni Podnik over the BUDWEISER mark.

 

In 1973 Budvar, the Czech brewer of Budweiser beer, started to sell its beer in the United Kingdom. Shortly afterwards, Anheuser, a US brewer of a beer of the same name, entered the UK market.

 

Subsequently, Anheuser sought to register BUDWEISER as a UK trademark. Budvar opposed and made its own application for the same mark. Anheuser, in turn, opposed. Applying the Trademarks Act 1938, both Anheuser and Budvar were permitted to register their marks due to the honest concurrent use of the marks (reflecting the outcome of previous passing off proceedings between the same parties). Both marks were registered in 2000 (20 years after the start of the dispute).

 

Four years and 364 days after the registration of the two BUDWEISER marks, Anheuser applied to the registry for a declaration that Budvar's BUDWEISER mark was invalid under the Trademarks Act 1994, which implemented the First Trademarks Directive (89/104/EEC) (now the Trademarks Directive (2008/95/EC)). Anheuser succeeded in the registry and on appeal to the High Court. Anheuser's mark preceded that of Budvar by virtue of its earlier application date, and the two marks were identical and covered identical goods. Less than five years had passed since registration, so Anheuser was not prevented from challenging Budvar's mark on grounds of acquiescence. Budvar appealed.

Article 9(1) of the First Trademarks Directive states that:
 

"where the proprietor of an earlier trademark [...] has acquiesced, for a period of five successive years, in the use of a later trademark […] while being aware of such use, he shall no longer be entitled on the basis of the earlier trademark either to apply for a declaration that the later trademark is invalid, or to oppose the use of the later trademark."

 

The court supported the view that if a party has knowingly let its mark coexist for five years or more with an identical mark honestly adopted by a third party, the marks should continue to coexist. The case raised the question of how far the directive permits honest concurrent use of trademarks.

 

'Acquiescence' could be given a wider or a narrower meaning. On the narrow meaning, a party could acquiesce in the conduct of another only if it were in a position to stop it. On a wider meaning, there could be acquiescence if a party could do nothing about it and had to put up with it. In the wider sense, Anheuser and Budvar had acquiesced in each other's use for over 30 years.

 

In the court's view, the wider interpretation was supported by Recital 11 to the directive, which used the word 'tolerated' rather than 'acquiesced', and the travaux préparatoires which suggested that the purpose of Article 9 was to introduce legal certainty for trademark owners.

 

It was considered appropriate to refer the following questions to the ECJ:

 

"In [the First Trademarks Directive]:

3. Does Article 4(1)(a) apply so as to enable the proprietor of an earlier mark to prevail even where there has been a long period of honest concurrent use of two identical trademarks for identical goods so that the guarantee of origin of the earlier mark does not mean the mark signifies the goods of the proprietor of the earlier and none other, but instead signifies his goods or the goods of the other user?"

At face value. the wording of Article 9 of the directive creates a false situation in which the owner of an earlier trademark is considered to know about the existence of a later right only from the date of registration. The ECJ's ruling will hopefully give much needed clarity on the application of this provision in real-life situations.

 

Should Anheuser succeed with its invalidity claim, it would be in a strong position to succeed in a trademark infringement action against Budvar, despite the long history of concurrent use of the BUDWEISER mark and Budvar's significant goodwill in its own use of the BUDWEISER mark.