Is use of CTM in single member state always enough, never enough or sometimes enough?

The judgment of the Court of Justice of the European Union (ECJ) in Leno Merken BV AG v Hagelkruis Beheer BV (Case C-149/11, December 19 2012) addresses the requirement for 'genuine use' of a Community trademark (CTM) and, specifically, whether use in only one of the 27 EU member states is sufficient to maintain a CTM or whether the mark must be used across multiple member states.

On March 19 2002 Leno Merken BV AG filed an application for its Community word mark ONEL for services in Classes 35, 41 and 42 of the Nice Classification, which proceeded to registration on October 2 2003. On July 27 2009 Hagelkruis Beheer BV filed an application to register its Benelux word mark OMEL in respect of Classes 35, 41 and 45 services. Leno opposed Hagelkruis' application on August 18 2009, to which Hagelkruis responded with a request that Leno provide proof of use of its CTM ONEL.

On January 15 2010 the Benelux Office for Intellectual Property (BOIP) rejected Leno's opposition on the basis that Leno had not shown genuine use of the ONEL mark during the five years proceeding the date of publication of Hagelkruis' OMEL mark. It was agreed between the parties that Leno had genuinely used its CTM within one of the 27 member states (the Netherlands) but Hagelkruis argued, and the BOIP agreed, that this was insufficient to prove genuine use in the wider European Community. 

Under Article 15(1) of the Community Trademark Regulation (207/2009), a CTM must be put "to genuine use in the Community in connection with the goods or services in respect of which it is registered" within a period of five years following its registration. This use requirement for CTMs is different from the use requirement for national registrations, as in Article 10 of the Trademarks Directive (2008/95/EC), to be put to genuine use "in the member state". 

The ECJ followed Advocate General Sharpston's opinion and steered a middle course between the two extreme positions that use of a CTM in only one of the 27 member states will either always or never be sufficient to prove "genuine use in the Community". The first of these positions has been historically enshrined in the OHIM guidance (which is not legally binding), while the second has been promoted by several national registries. The decision of the ECJ, in line with the advocate general's opinion, rejected both, finding that proof of use of a CTM in one member state could in principle, but would not necessarily, be deemed sufficient to prove "genuine use in the Community".

The ECJ's decision considered in some detail the overriding purpose and objective of the CTM "to offer on the internal market conditions which are similar to those obtaining in a national market". Giving particular significance to the individual territories of the member states in the context of non-use actions, frustrates this objective. Instead, the court found that "territorial borders should be disregarded in the assessment of genuine use in the Community".

At first sight, the decision supports the OHIM guidance and long-held assumption that use in one member state equates to use in the entire community. However, the ECJ considered the OHIM position over simplistic. The geographical scope of the use is only one of several conditions, to be examined collectively, when considering genuine use of a CTM. The ECJ confirmed the judgment given in Ansul, stating that:

"the territorial scope of the use is not a separate condition for genuine use but one of the factors determining genuine use, which must be included in the overall analysis and examined at the same time as other such factors. In that regard, the phrase ‘in the Community’ is intended to define the geographical market serving as the reference point for all consideration of whether a [CTM] has been put to genuine use."

This approach takes into account the fact that certain barriers inherently exist within the internal market, such as language, which make access to certain parts of a particular market more difficult. Accordingly, concentrated use in one area, potentially in a single member state, might play a more significant role in the assessment of genuine use in specific cases where it was also shown that the demand for the relevant good or service is also concentrated in that area. As the court noted, in such a case "use of the [CTM] on that territory might satisfy the conditions both for genuine use of a [CTM] and for genuine use of a national trademark".

Alternatively, where a market is less localised, such as the mobile phone handset market, it may be more difficult to claim that use which is confined to one member state is economically warranted to create or maintain market share on the wider European market. This is brought out in the court's remark that "it is reasonable to expect that a [CTM] should be used in a larger area than a national mark".

To some extent, this decision creates an additional vector of uncertainty in trademark proceedings since there may be cases where a low level of very localised use in one member state, although sufficient to support a national trademark registration, will not be sufficient to support a CTM registration. This is because it could be harder in some cases to show that use of a mark is economically warranted to create or maintain market share when the market in question encompasses the whole European Union rather than the specific member state. Businesses will therefore need to think a little more carefully when replacing national trademarks.

However, despite this additional degree of uncertainty, it will come as a great relief to brand owners that the ECJ avoided the extreme position of finding that a CTM has to be used in more than one member state. Such a finding, which would have created a position akin to the requirement for use in interstate trade familiar from US federal trademark law, would have been disastrous and would have called into question the CTM rights of a huge number of businesses who have registered in reliance on the historical OHIM position that a CTM need only be put to genuine use in a single member state.

Overall, the decision is a good one and strikes the right balance by avoiding either extreme position and emphasising that what matters in CTM law is the position within the Community as a whole, irrespective of national territorial boundaries.

Hastings Guise and Caroline Bass, Field Fisher Waterhouse, London