Supreme Court gives boost to tertiary brand strategies

Ireland
In Compagnie Gervais Danone v Glanbia Foods Society Limited ([2010] IESC 36, May 19 2010), in an important decision for European brand owners, the Irish Supreme Court has unanimously confirmed that the use of a tertiary brand for a constituent ingredient in a product may qualify as genuine trademark use in relation to that product.

Compagnie Gervais Danone owned an Irish trademark registration for ESSENSIS for, among other things, yoghurt in Class 29 of the Nice Classification. This mark was used by Danone on its Bio Activia yoghurt products as a tertiary mark in relation to a culture that it called 'Bifidus Essensis'. The culture was exclusive to Danone and was not sold independently, but only as an essential ingredient of Danone’s Bio Activia yoghurt product. Danone marketed its yoghurt product based on the health-giving benefits of its product associated with its exclusive Bifidus Essensis culture.

In 2006 Glanbia Foods Society Limited launched a yoghurt product in Ireland under the trademark ESSENCE. Danone commenced trademark infringement proceedings and Glanbia counterclaimed for revocation of Danone’s ESSENSIS mark on the basis that Danone had not made genuine use of its mark in relation to any of the goods for which it was registered, namely yoghurt. Glanbia also sought a declaration of invalidity on the basis that Danone never had a good-faith intention of using its ESSENSIS mark in relation to yoghurt and had registered it in bad faith.

At trial, and in spite of considerable evidence being presented as to the use of the ESSENSIS mark on the yoghurt packaging, its importance in Danone’s advertising campaigns and its unique nature to Danone’s product, the High Court found that Danone had not established genuine use of the trademark ESSENSIS in relation to yoghurt within five years of its registration date. The court found that such use as had been made was in relation to a culture within the yoghurt product. However, as Danone held no registration in Class 1 for microbial cultures, no genuine use had been made of the mark. Accordingly, the court ordered that Danone’s ESSENSIS mark be revoked, but refused the claim that it had been registered in bad faith.

Danone obtained a stay of the court’s order and appealed to the Supreme Court. As a matter of fact, the trial judge had found that:
  • Bifidus Essensis had always been used on the packaging, marketing and advertising materials for the yoghurt in order to designate an ingredient in the yoghurt;
  • Bifidus Essensis was a unique culture to Danone;
  • the mark had been used to distinguish Danone’s Bio Activia yoghurt product from competitor products; and
  • there had been genuine use in relation to the goods for which it was registered, namely yoghurt.
The judge had also recognized that Danone had made a “real commercial use” of ESSENSIS as part of the third-level branding of its yoghurt, which was explained as the branding of a product by reference to a unique branded ingredient. Essentially, Danone argued on appeal that, based on these factual findings, its ESSENSIS mark must have functioned in the minds of consumers as an identifier of the origin of its yoghurt products and that this constituted genuine trademark use.

Justice Macken gave the decision of the three-member bench of the Supreme Court. The court found that, based on the trial judge’s findings of fact, and on a correct application of the decision of the European Court of Justice (ECJ) in Ansul BV v Ajax Brandbeveiliging BV (Case C-40/01), Danone had made a genuine use of the ESSENSIS mark in relation to yoghurt.

The court found no reason to distinguish Ansul factually, as the trial judge had done. Instead, it found that the use of ESSENSIS as a mark for an integral constituent of yoghurt was an example of an even closer connection with the product for which it was registered than the subsequent use on spare parts for fire extinguishers, as in Ansul. The Supreme Court found that:
  • the High Court judge had placed an unduly restrictive interpretation on the Ansul principles; and
  • the ESSENSIS mark had been used in accordance with its essential function - namely, to guarantee the identity of the origin of the goods or services for which the mark was registered in order to create or preserve an outlet for those goods or services.
This decision has been met with a collective sigh of relief from the European food industry. Had the High Court decision been upheld, any strategy of using a constituent ingredient as a tertiary brand in relation to a product would have been in jeopardy. For example, a registered trademark such as ESSENSIS would have been protectable neither in relation to the product in which it was found, nor in relation to the ingredient that it represented. Danone had requested the Supreme Court to refer various questions concerning the proper interpretation of the essential function doctrine in these circumstances to the ECJ. However, the Supreme Court found this to be unnecessary, as it considered that the principles from Ansul (a case in which Justice Macken had presided as a member of the ECJ) were sufficiently clear.
 
Alistair Payne, Matheson Ormsby Prentice, Dublin

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