An Irish company had filed several European Union (EU) trademarks, including the word mark "Kerrygold" in 1998, to designate dairy products. In continental Europe, a Spanish company, the subsidiary of an Irish company, sold similar products under the sign "Kerrymaid" and another company in the same group registered "Kerrymaid" as an EU trademark in 2003. The Irish company then brought the Spanish company before the Community trademark court in Alicante. It argued that use of the trademark in Spain infringed its rights, and wanted to prohibit its use only in that territory.
The first-instance court rejected the infringement of rights in Spain on the grounds that it had peacefully co-existed in Ireland and the United Kingdom since long before the two trademarks were filed in the EU. The “Kerry” element common to the two trademarks refers to an Irish county known for its dairy farms. The judges ruled that this coexistence in the two Member States neutralised the adverse effect on the function of indicating origin of the prior trademark due to the unitary character of the EU trademark. Doubting those conclusions, the appeal court then referred three questions to the Court of Justice of the European Union (CJEU) for a preliminary ruling.
In its first question, the court asked whether, in the presence of a peaceful coexistence of two trademarks in part of the Union (Ireland and the United Kingdom), there was an absence of risk of confusion between the sign operated in another part of the Union (Spain) and the European trademark.
Article 1 of regulation 2017/1001 of 14 June 2017 regarding the European Union trademark (EUTR) states the unitary character of the EU trademark by stipulating that it confers uniform protection across the entire EU territory. Can article 9 of the EUTR therefore prohibit the use of an identical or similar sign throughout the EU territory, when there is peaceful coexistence in part of that territory?
As a reminder, the Court of Justice has already accepted that it cannot be excluded that “peaceful” coexistence of two brands in a given market could potentially contribute, alongside other factors, to reducing the risk of confusion between them in that territory (ECJ, 3 September 2009, C-498/07 P, Aceites del Sur vs. Koipe, point 82).
Quoting its "Combit Software" judgement (CJEU, 22 September 2016, C-223/15, Combit Software; see our article on LEXplicite), the CJEU, in its judgement dated 20 July 2017, lays down the principle that when "the use of a sign gives rise, in one part of the European Union, to a likelihood of confusion with an EU trade mark, whilst, in another part of the European Union, that same use does not give rise to such a likelihood of confusion, there is an infringement of the exclusive right conferred by that trade mark. In that case, the European Union trade marks court hearing the case must prevent the marketing of the goods concerned under the sign at issue throughout the entire territory of the European Union, with the exception of the part in respect of which there has been found to be no likelihood of confusion" (CJEU, 20 July 2017, C-93/16). But above all, citing the same judgement, the CJEU recalls that "the examination of the likelihood of confusion in part of the European Union must be based on a global assessment of all the relevant factors in the case concerned and that that assessment must include a visual, phonetic or conceptual comparison of the mark and the sign used by the third party, which may lead, in particular for linguistic reasons, to different conclusions for one part of the European Union and for another.”
The CJEU therefore considers that the first-instance court had not made a global assessment of the signs in question since it based its judgement solely on the presence of a peaceful coexistence in part of the EU in order to dismiss the risk of confusion. In general, since coexistence is not an effect of unitary protection, it is not possible, on this ground alone, to conclude that there is no risk of confusion in another part of the EU without carrying out a global assessment of the signs.
In its second question, the referring court asked whether, in order to assess the risk of confusion, the court hearing the case could take into account factors relevant on the territory not subject to the infringement claim, in this case the descriptive nature of the Kerry element, in order to prohibit use of the sign in another part of EU territory.
Unsurprisingly, the court in Luxembourg did not object to this extrapolation, provided of course that, "the market conditions and the sociocultural circumstances are not significantly different in one of those parts of the European Union and in the other.” It is only possible to compare what is comparable.
Finally, a third question asked whether peaceful coexistence in one part of the Union between a EU trademark with a reputation and a sign could provide legitimate grounds for the exploitation of that sign in another part of the EU on the basis of article 9 paragraph 1 c) of the EUTR.
The question appears to be redundant: if coexistence can potentially neutralise the risk of confusion, it must necessarily weaken the link between the trademarks, a vital condition for damage to reputation. Coexistence is therefore not a "due cause" in itself, but a factor making it possible in certain circumstances to exclude the possibility of a confusion between the brands in the public’s perception.
The CJEU therefore logically concludes that coexistence in one part of the EU territory not subject to the request to prohibit use is not automatically effective as a "due cause" in another part. It rules that in all cases a global assessment of all the relevant factors should be carried out, rather than basing the decision on whether due cause exists simply on the presence of peaceful coexistence in one part of the Union. Coexistence is therefore not a "due cause" in itself, but a factor making it possible in certain circumstances to exclude the possibility of a confusion between the brands in the public’s perception.