The end of Budweiser v Budweiser?

This article was included in the winter 2011/12  issue of snIPpets - the intellectual property newsletter.

On 22 September 2011, the Court of Justice of the European Union (CJEU) gave its ruling in the latest instalment of the Anheuser-Busch v Budejovický Budvar saga.  The dispute, relating to competing beers under the mark Budweiser, has been has been entertaining IP practitioners for over a century.  However, the CJEU's decision may put the matter to bed once and for all, at least as far as the European Union is concerned.

History

In the UK, the parties had been in dispute since the 1970s and their respective applications for the mark BUDWEISER, of which A-B's was technically the earlier, had both been subject to lengthy opposition proceedings.  The marks were finally registered in 2000 following a decision of the Court of Appeal allowing each party to retain its respective mark.  A-B then filed for invalidity in 2005 – four years and 364 days after registration of Budvar's mark.  The purpose of this timing derived from the fact that under trade mark law an invalidity action cannot be brought once one party has acquiesced in the registration of the other party's mark for a period of five years.  A-B could bring their action within this five-year window while effectively preventing Budvar from bringing a comparable counter-attack.

The matter ended up before the CJEU who were asked to clarify the nature of acquiescence and, more importantly, to assess the impact that the long period of concurrent use of the marks might have on the assessment of infringement.

Ruling

In regard to acquiescence, the CJEU found that the five year period necessary before a party could be held to have acquiesced could only start once the potential attacker was aware of both the registration of the mark in dispute and the use of that mark and once they were able, in principle, to take action.  Once the period has started, if the potential attack takes no action for five years, then they will thereafter be barred from doing so.  If, however, they do take action then this will reset the five-year period.

The second strand in the CJEU's decision concerned the assessment of conflict between marks.  A trade mark registration can in principle be used to contest the use or registration of an identical mark for identical goods.  However, it is well-established that this right only comes into play in so far as the later mark is liable to affect the functions of the earlier mark as an indication of commercial origin. 

In the present case, the Court was asked whether this assessment was affected by the long period during which the parties had concurrently been using their marks on the UK market and, in particular, the fact that UK consumers were well aware of the difference between the products.

The Court held that where two parties' marks had been used for a long period concurrently, such that consumers in the market were readily able to identify the commercial origin of each product, then this factual background did, in principle, indicate that the continuing use of the later trade mark would not impact on the correct functioning of the earlier trade mark.  This means that since there is no negative impact on the function of its earlier trade mark then A-B has no basis to take action to prevent registration of Budvar's later trade mark or, by implication of the Court's reasoning, to take action against its use.

In practice

It is likely that this decision will effectively put the brakes on further substantial action by A-B against Budvar, at least within those parts of the EU where the marks have co-existed, and could ultimately spell the end of the long running dispute, although there will certainly be further litigation as the effect of the decision shakes out.  For bystanders, however, the decision provides both a warning and a reassurance:  the risk presented by a late-in-the-day attack from an earlier rights owner will be significantly reduced over time as a business develops an established customer base which readily recognises the commercial origin of its own goods and services; conversely, when enforcing a mark in order to maintain exclusivity it is essential that action is taken swiftly and effectively since it may be impossible to put the fizz back in the bottle once a second similar or identical brand becomes established in the market place.

Hastings Guise, Senior Associate, IP Protection and IP Enforcement and Litigation at Fieldfisher.