Use requirement clarified by Federal Supreme Court
The Federal Supreme Court has issued a decision that clarifies the degree of use required by a trademark owner in order to avoid the cancellation of a mark on the grounds of non-use (Case I ZR 293/00). It held that (i) a mark owner must demonstrate normal business use of the mark, and (ii) other factors, such as the mark owner's level of activity in other markets in comparison to the German market, may be significant.
A German subsidiary of US breakfast cereal manufacturer Kellogg brought a cancellation action for non-use against an Austrian company marketing snacks under the trademark KELLY'S in Germany. The case made its way to the Supreme Court.
KELLY'S was registered prior to Kellogg's German registration for KELLOGG'S. However, the KELLY'S registration only covered the territory of the former Democratic Republic of Germany. Pursuant to German law, in order to retain its trademark following German reunification in 1990, the owner of the KELLY'S mark needed to show use of the trademark before 1996. The KELLY'S mark owner provided evidence that it had delivered consignments of KELLY'S snacks to one customer in Germany for a limited period during 1995, amounting to approximately €1,100 per week.
The Supreme Court found these marketing activities insufficient to qualify as use of the trademark as required by Section 26(3) of the German Trademark Act and ordered the transfer of the rights in the German KELLY'S registration to Kellogg. In addition, it upheld a lower court's decision to issue an injunction preventing the use of KELLY'S in Germany by the Austrian company and also awarded damages to Kellogg.
The test to determine whether a mark has been used sufficiently, said the court, was designed to eliminate marketing activities carried out by a mark owner solely for the purpose of maintaining the protection of its trademark. Consequently, the mark owner must demonstrate that it has used the mark in the course of normal business. When assessing whether this is the case, the court noted that the mark owner's level of activity and the reputation of its mark in other markets may be of significance. In the case at hand, the KELLY'S mark was part of a well-known and successful brand in Austria and there was no reason offered by the mark owner for the comparatively minor level of activities it had carried out in Germany.
However, the court cautioned that evidence of a low number of customers or a small amount of revenue in a particular country was not necessarily decisive. It could be explained, for example, by the fact that the customer was only in that country temporarily and deliveries had been made as a special service to that customer.
Julia Meuser, Freshfields Bruckhaus Deringer, Hamburg
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