Volkswagen stalls before the CFI

In Volkswagen AG v Office for Harmonization in the Internal Market (OHIM) (Case T-174/07, January 28 2008), the Court of First Instance (CFI) has upheld a decision of the First Board of Appeal of OHIM in which the latter had refused to register the mark TDI on the grounds that it was descriptive and lacked distinctiveness.

 

In June 1998 Volkswagen AG applied to register the mark TDI for goods and services in Classes 4, 7 and 37 of the Nice Classification (including land vehicles). The OHIM examiner refused registration on the grounds that the mark was descriptive. In particular, the examiner stated that:

Volkswagen appealed. In May 2003, the Fourth Board of Appeal of OHIM annulled the examiner’s decision on the grounds that the reasoning applied related exclusively to land vehicles. The application was then re-examined. In November 2005, it was again rejected on the grounds that the mark was descriptive of all the goods and services applied for.

In March 2007, the First Board of Appeal upheld the decision of the second examiner. The board of appeal found that:

Volkswagen appealed to the CFI, arguing that:

Interestingly, the TDI mark had already been found to be descriptive in another case, Audi v OHIM (Case T-16/02), in relation to land vehicles and reparation and maintenance services for such vehicles. In that case, the CFI’s reasoning was that 'turbo diesel injection' or 'turbo direct injection' was a characteristic of engines and motors in general, and of car engines in particular (for further details please see "Audi's TDI registration crashes out").

In the present case, the CFI upheld the board’s conclusions on descriptiveness. The CFI reiterated that descriptiveness must be assessed by reference to:

With regard to the goods and services applied for, the CFI noted that the board had considered that the findings in the first TDI Case applied by analogy to the goods and services applied for by Volkswagen. The TDI mark, which indicates a 'turbo diesel/direct injection' engine, was descriptive in relation to any engine based on that technology, even if not designed for land vehicles. This was further evidenced by the website of a manufacturer of motorboats which referred to the same technology (but did not use the 'TDI' abbreviation). On this basis, the CFI agreed with the board’s conclusion that the expressions 'turbo diesel injection' and 'turbo direct injection' describe a certain type of engine, regardless of the type of vehicle in which it is incorporated.

In relation to perception of the relevant consumer, the first TDI Case had established that the average consumer of cars would perceive the abbreviation 'TDI' as descriptive. Volkswagen argued that the board had erred in relying on the conclusions of the first TDI Case, as the perception of consumers in relation to cars was irrelevant in this case because the goods and services were different. However, the CFI upheld the board’s reasoning, highlighting, in particular, that the relevant characteristic was shared by the relevant engines in both cases.

Volkswagen also argued that the board had erred in finding that the relevant consumers would perceive 'TDI' as an abbreviation for 'turbo diesel injection' or 'turbo direct injection', as the use of this abbreviation was unusual for engines, except in relation to land vehicles. It then contended that the mark was not exclusively descriptive and thus did not satisfy the test set forth in Article 7(1)(c) of the regulation. The CFI held that whether the abbreviation was used exclusively to describe the relevant engines as of the date of application was irrelevant: Article 7(1)(c) requires only that the mark may be used to describe the relevant goods. The CFI went on to clarify that this was the proper interpretation required by the public interest objective of Article 7(1)(c) - that is, preventing descriptive terms from becoming the monopoly of one undertaking to the detriment of others.

The CFI also dismissed Volkswagen’s argument that even if the mark consisted of three descriptive components, the mark as a whole was distinctive. The CFI held that 'TDI' was the single component of the mark and that its being descriptive rendered the mark as a whole descriptive. As regards Classes 4 and 37, the CFI noted that Volkswagen had not submitted any specific arguments. It held the mark was also descriptive in respect of these classes, as the relevant goods and services were designed specifically for, or otherwise related to, engines and motors using the 'turbo diesel/direct injection' technology.

 

The CFI declined to consider the issue of inherent distinctiveness: because the mark was descriptive, it was irrelevant whether it fell foul of any other absolute ground for refusal.

Volkswagen had submitted evidence to the Board of Appeal to show that the mark had acquired distinctiveness through use in relation to land vehicles. The board rejected this evidence as irrelevant in relation to the goods and services applied for. Volkswagen argued before the CFI that if the perception of the consumers of cars was relevant to the descriptiveness of the mark applied for, the fact that the same consumers would perceive the mark as distinctive was also relevant. The CFI dismissed this argument. The CFI took the view that the board had not taken into account the perception of consumers of cars, but the conclusions in the first TDI Case that the TDI mark was descriptive of engines and motors in general. Based on the finding that 'TDI' could be perceived as an abbreviation for 'turbo diesel/direct injection', the board had reasoned (appropriately) by analogy with the perception of consumers of cars. The CFI held that the board had properly refused to take into account the evidence provided by Volkswagen, as it was incapable of showing distinctiveness acquired through use in relation to the goods and services applied for.

According to Volkswagen, the Fourth Board of Appeal had, in May 2003, annulled the decision of the first examiner on the grounds that the latter had wrongly concluded that the mark was descriptive. Volkswagen argued that this annulment was binding on both the second examiner and the First Board of Appeal. The CFI took a different view and held that the first appeal decision had dealt only with the basis on which the examiner had reached his decision. Therefore, the first appeal decision did not settle whether the mark was descriptive and the second examiner (who provided evidence that did not relate to the car industry in support of his reasoning) was entitled to conclude that the mark was descriptive.

Volkswagen also argued that the board had breached Article 74(1) by failing to investigate properly the perception of marks in sectors other than land vehicles and criticized the examiner for using the Internet as evidence in support of his refusal, calling it an “unreliable source”. The CFI cited its case law on Article 74(1) and held that OHIM was not obliged to carry out economic analyses or consumer surveys in order to prove the accuracy of information that it takes into account when there is concrete circumstantial evidence to that effect. The CFI, once again, made it clear that the onus is on the applicant to carry out in-depth investigations and fact-finding exercises in order to show that its mark should be registered and/or dispel any objections that OHIM may have to registration.

In particular, the CFI held that:

In relation to the application of Article 62(2), the CFI stated that it did not have to consider the validity of the second examiner’s decision in this respect, as the CFI’s role was limited to considering the validity of the board’s decision. Such an approach could defeat the very purpose of Article 62(2) by depriving applicants from a remedy should the board wrongly decide that a second examiner can reach a different conclusion on a point decided in a previous appeal.