A deep seated question: what constitutes genuine use of a CTM?
27 July 2015
A recent decision in relation to a trade mark infringement dispute between The Sofa Workshop Ltd and Sofaworks Ltd has given further guidance regarding the scope of geographical use needed in order to maintain a Community Trade Mark (“CTM”) registration. Following this decision, it is unlikely that use of a CTM in the United Kingdom alone will be deemed sufficient. This decision will be of interest to businesses who operate in one member state of the European Union or only in a limited number of European countries but own CTM registrations.
Sofa Workshop brought an infringement action through the UK’s Intellectual Property Enterprise Court in respect of Sofaworks’ use of the name SOFAWORKS which it claimed infringed its CTM registrations for SOFA WORKSHOP and amounted to passing off. Sofaworks counter-claimed that Sofa Workshop’s CTM registrations were invalidly registered as they were descriptive and/or lacked a distinctive character and, in the alternative, that they should be cancelled on the grounds that they had not been put to genuine use throughout the EU.
In his decision, Judge Hacon held that both of Sofa Workshop’s CTM registrations were invalidity registered and, even had this not been the case, they were not put to genuine use across the EU as the evidence only showed use in the UK. However, whilst Sofa Workshops’ trade mark infringement claim was unsuccessful, its passing off claim succeeded.
The key points arising from the decision are:
1. Use must target consumers
As a preliminary issue, in order to assess whether there had been “genuine use” by Sofa Workshop of its CTMs, Judge Hacon had to decide whether there had been use of SOFA WORKSHOP outside the UK. Sofa Workshop argued that there had been on the basis that it had advertised in a magazine, “World of Interiors”, which had been distributed in a number of EU countries with a monthly circulation to non-UK consumers of 15,728. Nevertheless, whilst Judge Hacon conceded that it is likely that a significant number of those readers had viewed the advertisement, he held that this was not sufficient to show use in the EU as the advertisement did not specifically target consumers in those countries. For example, the advertisement contained a statement inviting consumers to “pop in” to the stores all of which were located in the UK and a UK telephone number was listed.
2. Use in one EU country
In determining whether a CTM has been used through the EU, the Court of Justice of the European Union (“CJEU”) has previously stated that territorial borders should be disregarded as the EU is a single-market and the only requirement for “genuine use” is that the mark is used to maintain or create a market share in the single market, irrespective of where that use is geographically. Given this, it was thought that use in just one EU country may be sufficient, depending on the size of the national market as a percentage of the EU single market as a whole. For example, in 2014, the UK’s GDP was £1913.3 billion which represented 16% of the EU’s GDP as a whole and the UK population was 64.3 million which was 12.6% of the EU population.
In interpreting the CJEU’s decision, Judge Hacon stated that, whilst territorial borders should be disregarded, the general rule is that use in one EU country is unlikely to be sufficient to support a claim that the CTM has been used in the EU. However, this was caveated by an exception which arises where the market for the relevant goods or services only exists in a single EU country. Applying this general rule to the Sofa Workshop dispute, Judge Hacon held that the market for sofas and other furniture was not restricted to the UK and, as the evidence of use only covered the UK, it was not sufficient to constitute “genuine use” of Sofa Workshop’s CTM registrations in the EU.
Judge Hacon’s ‘general rule’ is based exclusively on a test referenced by territorial borders which, on the face of it, contradicts the CJEU’s earlier decision that national borders should be disregarded. It will be necessary to see whether Sofa Workshop appeals this decision and further guidance from the Court of Appeal on this grey area would be welcome.
However, this judgement serves as a useful reminder to brand owners who only (or predominantly) operate in the UK (or only one member state) that they should considering maintaining national registrations to ensure that they have robust protection in place for their brand.