F1 pulls ahead of Global Sports Media
This article first appeared in Intellectual Property Magazine 1 July 2012
In May, the Court of Justice of the European Union overturned the controversial judgment of the General Court in Formula 1 Licensing BV v OHIM (Case C-196/11) which had held that national rights in the word mark F1 could not block a Community Trade Mark application for F1-LIVE.
The reasoning of the General Court was that the F1 element would be perceived not as distinctive of origin, in the context of the above mark, but as indicating that the services related to Formula 1 racing.
The effect was that the F1 word mark was rendered unenforceable in the context of the opposition proceedings, despite the fact that it remained a valid registered right. Formula 1 Licensing appealed to the Court of Justice, claiming that this was an "unlawful removal of the protection afforded to an earlier trade mark".
The Court agreed and overturned the judgment. In particular, the Court examined the relationship between the national trade mark system and the Community Trade Mark system. The balance between the two systems is carefully maintained within the legislative framework and it has been confirmed in case law that the validity of a national trade mark may not be called in question in Community Trade Mark opposition proceedings. Against this background, it was not appropriate for the General Court to remove all enforceability from the F1 word marks.
At first glance, the judgment seems obvious and the General Court's earlier ruling clearly defective. However, the case becomes less obvious once the legal tests are pulled apart and the theoretical foundations underlying the General Court's position are examined.
Courts and registries have a range of processes and legal tests to apply when administering trade mark law – including a bundle of tests relating to the creation of a new trade mark right, a further bundle relating to the enforcement of that right and, finally, a bundle of tests dealing with its dissolution.
One of these tests, either applied prior to registration or applied retrospectively, is the test for whether a given sign was capable at the time of filing of distinguishing the goods and services of a given undertaking. If not, it should not be, or should not have been, registered. This is, of course, the validity test and can result in the refusal to grant a trade mark right or the dissolution of a right granted in error.
The likelihood of confusion test, by contrast, cannot result in the dissolution of the mark. This test takes the registered trade mark right as its starting point and determines the boundary of that right by examining whether given third party marks are going to result in consumer confusion. The test effectively fuses the exclusionary principles of property law with the consensus-driven principles common in parts of tort law. It is as though the land registry recorded the centre point of your garden by putting up a flag pole and then let the boundaries of the garden be determined by reference to popular expectation – if it is reasonable for some people to expect that your garden continues as far as the flower bed, then that's the boundary. The challenge for tribunals, as in many negligence cases, is to make an educated and informed guess at what the reasonable expectation of relevant people would be in given circumstances.
The harmonized legal framework distinguishes between tests governing the existence of the property right – whether you get, or keep, your flag pole – and tests that determine the boundary around the right. The first set of tests are reserved and a court of tribunal only has jurisdiction to apply those tests in certain circumstances – i.e. in examination or cancellation proceedings before the registry or court responsible for granting the right or by way of counterclaim in an infringement action. In F1 both the General Court and the Court of Justice acknowledged that the OHIM have no jurisdiction to challenge the existence of a trade mark right that has been granted by a national registry.
Where the two Courts differed was on the application of tests that impact on the scope of the right. It is clear that in the context of opposition proceedings against a CTM it is appropriate to determine the boundary around the earlier rights. In doing so, the OHIM must look at how distinctive the earlier mark is – the prominence of the flag pole to continue the analogy – and how relevant consumers will be likely to perceive the boundary as a result.
The General Court took the view that it was open to the OHIM to ascribe a negligible level of distinctiveness to the earlier mark, in the context of this comparison of marks, and consequently draw the border around the mark so narrowly that it effectively disappears. It is as though they held that the flag pole was so obscured, when approached from a given angle, that people would walk right past without noticing it.
Global Sports Media had argued that the judgment was legitimate. The General Court had not contested the existence of the registered right, they had simply drawn its boundary extremely narrowly – to the point where it was effectively unenforceable. This delimiting was part of the Court's legitimate function in determining the scope of the right.
The Court of Justice's response in overturning the General Court decision is a pragmatic one. Although theoretically justifiable on some interpretations, it was clear that the earlier decision created a loophole in the agreed separation between the role of a tribunal in governing the existence of rights with its role in determining the scope of those rights.
In the case of national trade marks, in particular, this separation serves an important purpose. National trade marks are governed by national law and serve the purpose of protecting consumers and brand owners within that jurisdiction. For this reason, and in accordance with the general European principle of subsidiarity, it is desirable that the existence of these rights is a matter for the registries and courts of that Member State. It is not appropriate for a European body to intervene in the registration of a particular national trade mark except where there is a wider question of harmonization at stake, in which case the wider question should be referred.
The Court of Justice had a close eye on this relationship between the two systems and sought to close the loophole by adding a constraint to the tests used for determining the scope of the rights. The Court held that when determining the boundary around a registration, a tribunal has to ascribe a minimum level of distinctiveness to the registered mark. Picking up the analogy of the flag pole, a Court must presume that the pole is sufficiently prominent to be visible. Going further in the assessment, and seeking to tighten the boundary around the right until it disappears, means stepping across the line into the territory that is reserved for proceedings dealing with the existence rather than the scope of the right.
In a sense, the F1 decision simply reinforces the common sense view. However, it does provide useful clarification on the limits between different kinds of analysis.
The decision also contrasts with the recent UK decision in The Wella Corporation v Alberto-Culver Company  EWHC 3558 (Ch)*. In that case Colin Birss QC found a CTM to be totally unenforceable for lack of distinctiveness while assessing UK opposition proceedings. Birss examined the distinction between the role of the tribunal in determining the scope of the rights and the role in examining the existence of the right which was prohibited to it. He held that the freedom of the hearing officer to reduce the scope of the right to zero did not constitute a challenge to the validity of the right and so was on the right side of this line; however, following the F1 judgment it is likely that this reasoning is longer reliable.
It is well established that the nature of a registered trade mark is harmonized across the EU. By integrating a minimum level of distinctiveness to the presumed validity of a trade mark registration the Court of Justice implies that all trade marks should be treated in this way, whether registered nationally or as Community Trade Marks.
*Thanks are due to Bill Ladas (Corrs Chambers Westgarth) for bringing the case to my attention.