Impact of the Principle of the Unitary Character of the EUTM
The remarks in Sect. 3 allowed the conclusion to be drawn that the division of the internal market into sub-markets determined across national borders should not – as a rule – be necessary for assessing inherent distinctiveness of non-word EUTMs where linguistic considerations do not play a role. On the other hand, descriptiveness or otherwise indistinctiveness of word EUTMs, where territorially, linguistically varying perceptions are crucial, will – as a rule – involve looking at sub-markets usually tailored along borders between individual Member States, or delimiting groups of Member States where similar linguistic conditions are present.
A corresponding approach towards establishing acquired distinctiveness of EUTMs would invite a prima facie conclusion that whenever no need arises to refer to territorially varying consumer perceptions with a view to establishing a lack of inherent distinctiveness, there should be no justification for a division of the internal market into sub-markets for the sake of assessing acquired distinctiveness. Instead, it would seem a natural consequence in such instances to consider the EU as one territory undivided by borders between Member States. The case law does not, however, follow this logic. As indicated in Sect. 4, despite the readiness in the case law to establish a lack of inherent distinctiveness of non-word marks in the entire EU without territorial references, the presence of acquired distinctiveness is still required in every Member State, even if theoretically some relaxation on the evidentiary level is simultaneously provided.
There appears to be no justification for applying this border-oriented approach as a general and universal method. First and foremost, it indeed gives rise to doubts from the perspective of the principle of unitary character. One should observe that while the principle of unitary character is clearly anchored in Art. 1(2) EUTMR, the requirement that an EUTM must be distinctive in every EU Member State does not have such a normative grounding. In particular, despite extensive case law considering that a single Member State might constitute a “part” of the EU within the meaning of Art. 7(2) EUTMR, it should be stressed that this provision employs the word “part” not “Member State”. It does not, therefore, per se impose an application of a border-oriented criterion. A coincidence between a “part of the EU” and territory of even one Member State or several Member States is possible in cases in which the refusal grounds set out in Art. 7(1)(b)–(d) are caused by varying consumer perceptions connected with linguistic reasons. The situation is different in cases of a lack of inherent distinctiveness of non-word marks with no varying consumer perceptions involved, when the presence of the refusal ground set out in Art. 7(1)(b) EUTMR is not linked with any specific part of the EU. In that case, proving acquired distinctiveness in accordance with Art. 7(3) EUTMR should allow the refusal ground set out in Art. 7(1)(b) EUTMR to be overcome directly, and not in conjunction with Art. 7(2) EUTMR, since there is no individual part of the EU affected by this refusal ground. With this position in mind, there should be no reason to assume that a lack of acquired distinctiveness in, for example, just one or two Member States must inevitably result in the EUTM’s ineligibility for registration. Instead, this view allows taking a more unitary approach towards the assessment of acquired distinctiveness.
One can conclude at this point that the principle of unitary character should indeed affect the approach towards establishing the acquired distinctiveness of an EUTM in the manner presented above. More specifically, the position argued postulates the need to adhere to this principle for the purpose of assessing acquired distinctiveness by avoiding a fragmentation of the EU territory whenever no varying consumer perceptions have been necessary to establish a lack of inherent distinctiveness of a mark. Caveats to this rule should only be justified in situations involving varying consumer perceptions. These are caused – as a rule (as argued in Sect. 3) – by linguistic reasons concerning word marks.
Towards the Positive Content of the Requirement Concerning the Territorial Scope of Acquired Distinctiveness of an EUTM
The mere negation of the country-by-country assessment of acquired distinctiveness in cases of inherent distinctiveness lacking in the entire EU with no varying consumer perceptions involved, could not, however, of itself offer an answer concerning the positive requirements of assessing the territorial reach of acquired distinctiveness. Pursuing the unitary approach could encourage the argument that no different assessment should be made in this case than in national cases, where it is not necessary to demonstrate acquired distinctiveness throughout the entire territory of a given state. Consequently, the presence of acquired distinctiveness among a substantial proportion of consumers in the EU, taken as a whole, would be sufficient.Footnote 71 It is, however, hard to ignore the great geographical scale of the protection of EUTMs, which renders the aspect of the territorial scope of acquired distinctiveness thereof quite unique and different from the national setting. Therefore, the requirement that a substantial part of the public in the EU taken as a whole must recognise the distinctiveness of an EUTM appears to be too abstract to be applied in practice, if it is detached from guidance concerning the geographical scope of the territory in which the substantial part of the public should be found. This might justify why there has been so much focus in case law, and in the legal doctrine, just on the sole issue of the territorial aspect of acquired distinctiveness of EUTMs.
More tempting could be comparisons drawn between the EUTM system which co-exists with national trade mark protection regimes in Member States, and the US system in which federal registrations co-exist with state trade mark protection regimes. In this regard, it has been suggested that obtaining a federal US registration based on acquired distinctiveness (secondary meaning) does not require demonstrating its presence everywhere in the US territory, and even a presence in a small territory could be sufficient.Footnote 72 There may, however, be doubts as to whether the level of integration of the market in the entire territory of protection is as advanced in the EU as in the US, in particular in the areas relevant for issues of trade mark protection.Footnote 73 It is also not without significance that federal registration is the dominant method of protecting trade marks in the US, making state protection far less important.Footnote 74 By contrast, in the EU, despite a reduction in the number of national trade mark applications in most Member States and the increase in EUTM applications,Footnote 75 there is still a considerable role for national regimes of protection.Footnote 76 This might demonstrate that there are industries and markets that are not strongly integrated into the internal market in the EU.Footnote 77
How then could the positive requirements of establishing acquired distinctiveness of EUTMs under the territorial aspect be formulated? Would the presence of acquired distinctiveness in a substantial part of the EU be sufficient? Should this part cover the majority of the territory of the EU? Should there be factors (relevant just for the sole territorial aspect) other than the mere quantitative proportion of the territory of the EU and the population living there? Answering these questions is not an easy task and it calls for a certain framework.
As already raised above, in the case of assessment of acquired distinctiveness there is really no room at the stage of registration to introduce any relaxation of the unitary effect of the EUTM, since it is about the very creation of the unitary exclusive right, whereas at the stage of infringement there is some leeway to introduce exceptions to the unitary effect of an already existing unitary right (cf. Sect. 4). In view of this “all or nothing” effect of the EUTM registration, the question about the geographical reach of acquired distinctiveness is one about the extent to which the EUTM system is (or should be) oriented to moving ahead of the actual market understanding of an EUTM as a trade mark, for the sake of pursuing the concept of treating the EU as one territory of protection, or to what extent priority should rather be given to the actual market understanding of a sign as a trade mark.Footnote 78 The tendency in case law to eliminate, or at least narrow, the dissonance between the formal territorial scope of unitary protection and the actual territorial scope of acquired distinctiveness might be read as underpinned by fears that the integration of the internal market is insufficient to look “unitarily” at the EU.Footnote 79 Although the country-by-country approach is vulnerable to criticism from the perspective of the principle of unitary character, these concerns, apparently noticed by the CJEU, should not be disregarded when attempting to formulate the desirable content of the requirement concerning the territorial presence of acquired distinctiveness, while simultaneously trying to take a more unitary approach.
An obvious inconvenience, linked with the current country-by-country approach, is that the requirement of evidencing acquired distinctiveness in every Member State puts a considerable burden on the applicant. As has been raised, this might render obtaining a registration with acquired distinctiveness virtually impossible.Footnote 80 One could argue, however, that even when rejecting the country-by-country approach the latter argument should still be balanced against the need to take account of other interests involved, notably the interests of consumers and other traders. There are several aspects that should be taken into consideration in this regard.
First, trade marks lacking inherent distinctiveness in the EU with no specific territorial link might often concern non-conventional marks. This is a fragile issue from the perspective of consumer perceptions. While the case law stresses that the test for distinctiveness of such marks as shapes or colour marks should not be higher than with regard to other types of marks, it simultaneously indicates that since the public is not normally accustomed to treating such forms as indicators of the commercial origin of goods, it may in practice be more difficult to establish distinctiveness thereof,Footnote 81 and such forms should significantly depart from the norm or customs of the relevant sector in order to be distinctive.Footnote 82 Therefore, when examining the issue of the geographical aspect of acquired distinctiveness of EUTMs, one should not only look at the fact that burdensome requirements might make obtaining protection difficult for applicants, but one should also look at the interest of consumers resting on the fact that, given the territorial greatness of the EU, there is a sufficient geographical scale of consumer understanding of a certain sign as performing the function of a trade mark.
Second, one could postulate a more balanced assessment of acquired distinctiveness that would, next to consumer perceptions, also take into the equation competition concerns and the need to leave certain marks in the public domain for other traders regardless of their factual distinctiveness, if functional features of such marks are not eminent enough to reject them on the basis of the permanent exclusions set out in Art. 7(1)(e) EUTMR. The “need to keep free” perspective appears to be missing in the CJEU case law, given the focus on consumer perceptions in cases of acquired distinctiveness.Footnote 83 This raises concerns, and suggestions have even been made to exclude registrations of certain signs, notably non-conventional signs, regardless of their acquired distinctiveness as otherwise the public domain might be endangered.Footnote 84 Fears connected with the preservation of the public domain could be a further factor that would call for a measured approach when examining territorial aspects of acquired distinctiveness of an EUTM. This position would correspond to the proposal for an integrated approach that would allow taking into account and balancing all interests involved with regard to the application of all refusal grounds set out in Art. 7(1)(b), (c) and (d) without tailoring each of these refusal grounds to one group of interests.Footnote 85
Third, there is a clearly noticeable tendency in the legal scholarship towards searching for a mitigating tool against the potentially overly excessive effects of unitary protection of EUTMs registered with acquired distinctiveness at the infringement level (cf. Sect. 6). While this, of itself, is a justified direction, also advocated in this paper, there are, however, arguably drawbacks to such a solution, mostly from the perspective of the interests of other traders (competitors). Therefore, a more viable model appears to be one in which a proper balance of all interests involved is provided by a combination of tools, namely, first, a proper control at the registration level with, second, a further possibility of mitigating some potential negative consequences of the registration at the infringement level.
With this framework in mind, the question recurs about the positive content of the requirement concerning the geographical scope of acquired distinctiveness of an EUTM at the level of assessing its eligibility for registration that would simultaneously depart from the country-by-country approach currently adopted in case law.
The unitary approach could, at first glance, consist of applying the substantial-part criterion as employed in early case law (cf. Sect. 4) and advocated in literature.Footnote 86 However, the requirement, so framed, opens more questions than it provides answers, particularly in the light of the content that was given to the notion of the “substantial part” in the CJEU’s PAGO decision. In this judgment, the CJEU ruled that for an EUTM to benefit from extended protection enjoyed by marks with a reputation “in the Union”, based on Art. 9(2)(c) EUTMR, an EUTM must be known by a significant part of the public concerned by the goods or services covered by the mark in question in an important (significant) part of the territory of the Union. Simultaneously the CJEU acknowledged that the territory of Austria was a significant part of the Union.Footnote 87 It is worth noting that criticism exercised in case law after PAGO over the application of the “substantial part” criterion with regard to cases of acquired distinctiveness was expressed based on the assumption that a “substantial part” in the latter cases would be given the same meaning as in PAGO.Footnote 88 This criticism finds reasonable justification. Since, in the light of PAGO, a territory of one Member State could constitute a “substantial part” of the EU, establishing a “substantial part” in this sense would not automatically allow a contrario describing the remainder of the EU as a “non-substantial part”. In other words, the PAGO formula is not based on a “substantial” versus “non-substantial” dichotomy, but there could rather be numerous “substantial parts” of the EU. This poses problems in the area of acquired distinctiveness if the existence of distinctiveness in a “substantial part” of the EU (which could, in a given situation, consist of a single Member State) were sufficient to overcome the registration bar. This would mean that an EUTM is eligible for registration, although it could be deprived of distinctiveness in a considerable, “substantial” rest of the EU. This scenario could hardly be accepted,Footnote 89 especially in the light of the framework outlined above, aimed at balancing the various interests involved. It, therefore, appears that the territorial requirement would have to be much greater than the “substantial part” criterion as understood in PAGO.
This implies searching for a more extensive quantitative scope of the territory in which acquired distinctiveness should be present. The mere criterion of, for example, a “large” part or “majority of the territory” of the EU would not necessarily be sufficient. For instance, if a shape mark was substantially used in northern and western Europe, but would not be used in the south and east, granting unitary protection to such a mark could be problematic with regard to the territories where the mark is perceived as merely decorative.Footnote 90 It appears that any criterion which focuses on a “part” (used in the singular) of the Union, be it a “substantial part”, “large part” or even a “majority” of the territory, resonates too distinctly with a certain potential for excluding the remaining part of the EU. It also encourages opposition towards a more unitary approach such as the one set out by the General Court in Mondelez, stating that the lack of perception of a particular sign as an indication of commercial origin of goods in a certain part of the EU cannot be offset by a high degree of such perception in another part of the Union.Footnote 91
This directs attention towards an approach that is not just oriented to the size of the geographical area where acquired distinctiveness should be present, but also takes account of the geographical spread of acquired distinctiveness. One can, therefore, argue that not only a respective quantitative criterion pertaining to a considerable proportion of the territory of the EU should be applied, but also this large proportion, conceivably covering in quantitative terms the majority of the EU territory, should be combined of parts located at a proper geographical spread. It is argued that territories of the EU where acquired distinctiveness has not been established should rather constitute “blank” areas sporadically scattered across the EU. Such “blank” areas could correspond to territories of a specific Member State or Member States. These “blank” areas should not, however, together constitute a concentrated larger part of the EU. It cannot be ruled out that with the deployment of this approach the evidence of acquired distinctiveness of the “KIT KAT” shape mark in the Mondelez case, covering territories of numerous Member States at a wide geographical spread representing 90% of the EU population, on the date of the application of the mark in question, and indicating that almost half of the population in that territory identified this mark as an indicator of the commercial origin of the product, could be considered as sufficient for establishing an acquired distinctiveness of this mark in the EU taken as a whole.Footnote 92 On the other hand, it appears that circumstances such as those in Basic Net, when acquired distinctiveness could be established only in the territories of four large Member States, representing approximately 40% of the population of the EU, could not be considered as sufficient to establish acquired distinctiveness in the light of the proposed approach.
The posited more unitary approach could probably again invite criticism. First, it could be raised that the proposal might disadvantage smaller and less populous Member States that are more likely to be considered as sporadic “blank” areas. The proposed approach should not, however, be understood in the sense that providing evidence of acquired distinctiveness only in larger and populous Member States, such as France, Germany, Italy, Poland or Spain, would be sufficient to overcome a lack of inherent distinctiveness in the EU. No “default” disadvantage for smaller Member States is intended in this proposal. Admittedly, however, the smaller size and population of a given Member State or even several Member States, which are not situated in proximity to each other, might contribute to considering them under circumstances of a given case as isolated “blank” areas in comparison with the vast and proportionate territorial spread of an established presence of acquired distinctiveness in the EU. Consequently, a lack of acquired distinctiveness in such areas would not disrupt the registrability of an EUTM when pursuing a more unitary approach, since the latter focuses on the internal market as a unitary market area. Next, the risks of overprotection in territories referred to above as “blank” areas could still be mitigated with tools available at the stage of infringement and enforcement of an EUTM, which is an issue addressed in Sect. 6.
On the other hand, the emphasis put in the above proposal on the vast and proportionate geographical spread of established acquired distinctiveness with only sporadic “blank” areas permitted could raise criticism from proponents of a greater liberalisation of assessments. They could still point out a considerable evidentiary burden put on the applicant in this proposal. The argued position is, however, based on the necessity to take other interests into the equation, rather than just the interests of applicants. It should also be remembered that when the requirement of acquired distinctiveness in the EU could not be satisfied, an applicant might always turn to national applications in these Member States in the territories for which acquired distinctiveness could be established. Moreover, the applicant, while being backed by the protection already secured by national trade marks, is free to undertake further efforts towards “educating” a sufficient proportion of consumers in the EU on a proper geographical scale to treat a given sign as distinctive. This might, thus, increase the chances of a successful registration based on acquired distinctiveness at the EU level in the future.
Perspectives in the Light of Current Case Law
A more unitary approach towards defining acquired distinctiveness as a fact that needs to be proved in cases of an EU-wide absence of inherent distinctiveness, however, remains a postulate, since case law prefers to define this fact as relating to acquired distinctiveness existing throughout all Member States. In turn, the CJEU in Lindt and next in Mondelez offered a different solution that could – at least theoretically – mitigate the effects of the strict country-by-country approach by stressing that it was not necessary to submit evidence for each individual Member State in every instance, but the evidence could be “relevant with regard to several Member States, or even to the whole of the European Union”.Footnote 93 This might encourage searching for some potential for a unitary approach under the current case law, at least with regard to evidentiary requirements.
As indicated in Sect. 4, in Mondelez the Court of Justice gave two further examples of how the lack of a requirement of separate evidence for every Member State could operate. The scope of the first example, concerning common evidence covering a group of Member States treated by the EUTM applicant in its marketing strategy as just one national market, is, however, obscure. It is not clear whether this criterion should be oriented to the marketing strategy of the individual applicant or should rather take into account a general perspective of settled strategies in a given branch.Footnote 94 Regardless of these uncertainties, the potential of this example for achieving a more unitary approach is also dubious. It would greatly increase if the content of the CJEU’s statement carried with it explicit permission for extrapolation of conclusions based on available evidence concerning some of the Member States in a respective sub-market to other Member States in the same sub-market. As indicated above, AG Wathelet’s opinion in Mondelez allowed such an extrapolation based on the criterion of comparability of national markets. This approach has also been considered as acceptable in the EUIPO’s Guidelines.Footnote 95 It was not, however, expressly reiterated by the CJEU in the Mondelez judgment. This might leave the door open as to whether the CJEU would indeed allow such an extrapolation, or whether it merely intended to allow evidence that collectively pertained to the territory of a given sub-market comprised of several Member States, leaving, however, no doubt that such evidence must cover the entire territory of this respective sub-market.
The second example indicated by the Court of Justice concerns a situation where “due to a geographic, cultural or linguistic proximity between two Member States, the relevant public of the first has a sufficient knowledge of the products and services that are present on the national market of the second”.Footnote 96 If this example were to be given any real content as an exemption from the necessity of providing evidence for every individual Member State, it should be construed as allowing some room for extrapolation of conclusions coming from evidence directly concerning the territory of a given Member State to the territory of another Member State for which no evidence has been provided at all, or the type of evidence provided does not allow making decisive conclusions regarding the presence of acquired distinctiveness or a lack thereof. While linguistic or cultural proximity does indeed assume varying consumer perceptions in specific regions of the EU, the factor of geographical proximity does not necessarily do so. Therefore, it could play a role in cases of acquired distinctiveness of non-word marks, when no varying perceptions are relevant. One should note, however, that the CJEU has accepted relaxations merely on the evidentiary level without abandoning the country-by-country approach on the level of acquired distinctiveness as a fact to be proved. Consequently, if a third party contesting the registration of an EUTM in invalidation proceedings presents proof that a certain sign is not recognised as distinctive in a given Member State, it should open up the possibility of contesting the registration of an EUTM with a justification that the employment of evidentiary relaxation set out in Mondelez has led to incorrect assessments at the stage of registration. This appears to be the consequence of the line drawn in Mondelez between the issue of acquired distinctiveness throughout the EU as the fact that needs to be proved and evidence necessary to prove this fact. By contrast, a unitary approach posited in this paper would allow maintaining the registration despite a lack of acquired distinctiveness in a given Member State and despite Art. 7(2) EUTMR. In such a case, the respective framework for mitigating overly excessive effects of unitary registrations could be provided at the level of infringement (cf. Sect. 6).
Finally, varying consumer perceptions do play a role with regard to the assessment of descriptiveness or otherwise indistinctiveness of word marks that are caused by linguistic reasons. As indicated in Sect. 3, in order to establish ineligibility of such signs for registration there is a need to take into account unique language conditions existing in sub-markets in which a given language is used or in which a foreign word or expression is understood. Consequently, the same approach should be applied to establishing the acquired distinctiveness of such marks, which means that the territorial reach of acquired distinctiveness should be established individually in every respective linguistic sub-market where a mark has been considered descriptive or otherwise indistinctive. Such sub-markets might, depending on the circumstances of the case, coincide with the territory of a single Member State or a group of Member States. This approach certainly entails a weakening of the unitary character, which has to concede to the fragmentation of the internal market due to varying consumer perceptions. In Mondelez, the CJEU in its second scenario of evidentiary relaxations expressly referred, however, to linguistic proximity between two Member States as a factor that might justify formulating conclusions with regard to one Member State based on evidence from another. Bearing this in mind, there could be some room for the territorial extrapolation of the relevance of evidence of acquired distinctiveness covering one Member State to the territory of another Member State, both of them belonging to the same linguistic sub-market that is made up of several Member States (e.g. French-speaking countries).