Trademarks are extremely valuable for business. They enable customers to find products and services, and also capture and reflect a business’ reputation. In Europe legal protection against trademark infringement has been expanded – arguably in a chaotic manner – by ambitious court judgments coupled with a lack of legislative intervention.
European trademark law is contained in various legislative instruments, but for ease of reference, I will refer to Article 10(2) of the 2015 TradeMarks Directive. Initially, the double identity provision (now contained under Article 10(2)(a) of the Directive) aimed to protect consumers from being deceived by counterfeits. It provides that a trademark owner can prevent others from using, in the course of trade, a sign which is identical to a registered trademark on goods or services that are identical to those for which the trademark had been registered.
In the Arsenal preliminary ruling, the Court of Justice of the European Union (CJEU) added a gloss to this; it held that a trademark owner must show that the trademark’s ability to perform one of the functions of trademarks – and in particular the essential function – has been affected.
Court judgments commonly recognise that the essential function of trademarks is to:
According to this understanding, Article 10(2)(a) would protect against only counterfeit goods. As endorsed in Arsenal and Adam Opel/Autec, if consumers are not deceived about the origin of the products or services, a claim can be sought only under Article 10(3), which ensures protection against brand dilution.
In L’Oreal/Bellure it was explicitly recognised that, as well as the essential function, trademarks can also have investment, advertising and communication functions. The judgment failed to define the scope of these modern functions and subsequent case law has failed to create a clear framework.
In Interflora/Marks & Spencer, the investment function was described as the ability to “acquire or preserve a reputation capable of attracting consumers and retaining their loyalty”. This suggests a degree of overlap with the advertising function. In addition, in Google/Louis Vuitton, it was held that Google had not been infringing trademark law by allowing advertisers to use trademarks as keywords. However, advertisers could be held liable if they fail to be transparent about the origin of the goods or services.
This ambiguous expansion of trademark functions creates a significant overlap between Article 10(2)(a) and Article 10(2)(c). This is relevant particularly to luxury trademarks, as they are often used to convey a certain lifestyle associated with the trademark. The role of Article 10(2)(c) is to provide a route for famous brands to prohibit others from using a sign which is identical or similar to its trademark in a way that would affect consumer perception about the famous trademark. Certain specific criteria must be fulfilled before a trademark owner can be awarded protection. In turn, these checks and balances are absent from the framework of Article 10(2)(a).
By recognising new trademark functions, the CJEU has created the scope for trademark owners to make claims under Article 10(2)(a) in a way which bypasses the requirements under Article 10(2)(c). Moreover, the law’s focus seems to have shifted from protecting consumers against confusion to protecting the owners of famous trademarks.
The Commission’s 2013 proposal to revert to the original position – where Article 10(2)(a) was limited to the trademark’s essential function – was rejected. So, as things stand, it is up to the court to clarify the modern functions and their role in trademark infringement.