The shape of things to come - the growth of exotic trademarks

June 17, 2013

This article was originally written for and featured in Intellectual Property Magazine.

Fox Williams’ Simon Bennett and Rachel Cook explore the growth of exotic trademarks after Bottega Veneta’s failed attempt to achieve 3D trademark protection for its handbags

A trademark is a very powerful form of intellectual property right principally because, provided renewal fees are paid and the mark continues to be used, it can last forever. By contrast, other rights, such as design rights and patents have a finite life. Also, the infringement of a trademark is not linked to copying or whether the infringer intended, knew or ought to have known, that the use was infringing. If the trademark is on the register then knowledge of its existence is deemed. Equally, registration can take place at any time, you are not limited to show absolute novelty (patents) or a grace period after which it cannot be validly registered (Community registered designs).

Given these benefits, it is not surprising that brands try to take advantage by pushing the boundaries of what can be registrable as a trademark. In the New York courts, it was all about red soled shoes. In the UK courts, the colour purple and chocolate has come under the spotlight. At the Office for Harmonization in the Internal Market (OHIM), four finger chocolate bars were the order of the day and finally, perhaps most impressively, Apple managed to persuade the US Patent and Trademark Office (USPTO) that the layout of its retail space was capable of protection as a trademark.

The growth of so called “exotic” trademarks could be linked to a corresponding growth in the sophistication of the mimicking of branded products. The brand name and/or logo may be absent but the visual presentation of the product is the same or similar. A recent report by the UK consumer watchdog Which?, suggests that a substantial number of consumers in the UK have been misled by very similar competitor packaging. In a recent High Court judgment, Mr Justice Arnold observed that “the human eye has a well known tendency to see what it expects to see and the human ear to hear what it expects to hear”. Without a registered trademark, a brand owner’s next line of defence is either design rights, which have the downsides set out above, or passing off and/or unfair competition.

However, passing off and unfair competition are generally restricted to being able to show confusion based on a misrepresentation: did the consumer think that it was the branded product and/or produced under licence from the brandowner? In the European Union, a trademark owner, provided it can show that its mark has a reputation in the community, is able to claim unfair advantage. Unfair advantage is not solely connected to the consumer being confused. If the consumer forms a link between the brand and the infringement, variously described as “riding on the coat tails”, “winking” and/or “free riding”, then this may be sufficient for the article to be an infringement, introducing a new level of protection.

In view of the above, it is not surprising that brand owners are continuing to try, with varying levels of success, to push the envelope.

The Community Trade Mark Regulation at Article 4 states that “any signs capable of being represented graphically” can be registered, provided that they are capable of “distinguishing the goods or services of one undertaking from those of other undertakings”.

The Court of Justice of the European Union (CJEU) has emphasised in case law that there is, in principle, no special approach to 3D shape marks and/or colour marks, save for the general requirement that they must be capable of being represented clearly and precisely, in a self contained manner that is easily accessible and objective Case (C-273/00 Sieckmann [2002] ECR I-11737). However, a further theme of exotic trademark cases is the court’s view that consumers do not generally recognise the shape or colours of products as being an indicator of their commercial origin; being the essential function of a trademark.The High Court acknowledged this in Societe Des Produits Nestle SA v Cadbury UK Ltd [2012] EWHC 2637, when it said that “conventional trademarks” such as trade name or logos, do not give rise to the same conceptual problems as “exotic” trademarks such as smells, colours and by extension 3D shape marks.

Generally, these “conceptual problems” have resulted in exotic trademarks being rejected by OHIM on absolute grounds as lacking distinctive character. However, inherent lack of distinctive character canpotentially be cured by the applicant producing evidence of acquired distinctiveness through use.

The latest brand to try its hand at the registration of a 3D shape mark was the Italian luxury brand Bottega Veneta. Bottega Veneta tried to register the shape of its handbags as a Community trademark (CTM).1 The examiner refused the application on the basis that it was not distinctive. Bottega Veneta’s appeal to OHIM’s Board of Appeal was also unsuccessful and so it appealed to the General Court. Unfortunately, having considered Bottega Veneta’s submissions, the General Court confirmed the lower decisions.

Bottega Veneta tried to convince the General Court (as in the previous hearings) that its handbags had inherent distinctive character through two lines of argument. First, that the average consumer concerned (due to the high quality and value of the article and the importance that female consumers attach to purchasing fashion accessories) would show a high level of attention to detail. Secondly, Bottega Veneta sought to rely on the particular characteristics of the handbags, being the position of their handles and braided surface, as meaning that they differed significantly from the norms in that sector.

The court quickly dismissed these points, noting that the description of the products concerned did not clearly reference “luxury” and that circumstances such as marketing concept and price did not form part of a trademark registration. The average consumer was someone who would not show a particular high level of attention to detail. The court considered that the distinctive position of the handles were in fact a simple variant of the general positioning of bag handles and not sufficient to distinguish them from other bags on the market.

With regard to the braided surface, the court’s conclusions on another aspect of the appeal was disastrous for this issue. The graphic representation of the mark provided with the application had, in OHIM’s view, not clearly shown this aspect. Bottega Veneta produced a clearer depiction of the mark with its observations. However, OHIM could not take this further information into account and only the documents in the registration application and accompanying it would be assessed. Therefore, these features were excluded from any assessment of whether the mark possessed inherent distinctive character and the General Court confirmed that the shape applied for was the shape of a handbag. While ultimately the same decision may have been reached, this approach increased the chances of the mark being found non distinctive.

As such, Bottega Veneta’s case rested on acquired distinctiveness. The provisions on acquired distinctiveness (now Article 7(3) of Regulation 207/2009) are relatively concise. The CJEU has built on these by logically providing that any acquired distinctiveness for a sign must be demonstrated for the parts of the community in which it lacked distinctive character. This by reasonable extension could have been interpreted as an applicant needing to show this in each member state. However, recently in Chocoladefabriken Lindt & Sprungli AG v OHIM, the CJEU confirmed that it would be unreasonable for an applicant to be required to show proof in each individual member state.

The Board of Appeal in Societe des Produits Nestle SA v Cadbury Holdings Ltd, inferred that this meant the assessment of acquired distinctiveness was to be conducted based on whether a substantial proportion of the consumers in the European Union recognised the mark (in that case a four fingered Kit Kat bar) as denoting commercial origin. As noted by the Board of Appeal, this approach reflects the overall concept of the European Union as an entity and a territory, and the basis of a unitary right rather than each member state being viewed individually.

However, even then the threshold for acquired distinctiveness and the type of evidence that is expected remains high and potentially out of the reach of many brand owners. Bottega Veneta produced evidence of sales of its handbags in the European Union (although it was queried how much relate to the sign applied for), statements from experts and media excerpts. While this evidence took it a certain distance, it did not, in the view of the Board of Appeal, address the issue of whether the average consumer saw the mark as distinctive of Bottega Veneta and no one else.

In the Kit Kat case, Nestlé was able to produce surveys showing high levels of consumer recognition and ranking tables showing their market share in the majority of the member states. In contrast, the leap that Bottega Veneta was requesting, being the widespread availability of its handbags in many countries, was too great for the Board of Appeal.

While brand owners can claim that the shapes involved are inherently of distinctive character, with the prevailing view of the case law, this is unlikely to be universally accepted by examiners or the appeal courts, in particular for retail products. The findings of the General Court suggest equally that luxury brands are unlikely to be able to persuade the Registry that their average consumer should be more than average, with a higher level of attention.

Lessons that can be taken from Bottega Veneta are that where an application is made for a 3D shape mark, it is important to ensure that the representation shows the full details of the mark applied for as accurately and clearly as possible. Equally, brands may wish to consider a description also accompanying the mark. As stated, this probably would not have changed the result but it certainly did not help. The same is true of colour trademarks.

Christian Louboutin lost in the French courts (Cour de Cassation Appeal No 11-20724), in relation to his French national mark for the red outsole that was considered not to be sufficiently precise. However, he has just succeeded in an interim injunction application in relation to his Benelux trademark, which featured a more precise depiction of the mark with a specific pantone (District Court of the Hague C/09/436517/KGZA13-123).

Bottega Veneta is further proof of how difficult it is to show acquired distinctiveness in an exotic trademark at a community level. A way forward for brand owners may be to seek registrations at a national level, for example, like Cadbury. The CJEU has been very clear that this will not remove the need to show acquired distinctiveness in those territories, nor will it necessarily replace the need for consumer evidence. However, this is a way for brand owners to test the waters with national registries and potentially secure protection in individual member states where they do have strong consumer recognition. Also, if you pragmatically consider that the examiner is likely to reject the application, have your evidence ready. The maximum period for observations (with extensions) is four months and the chances of producing consumer surveys across the European Union in this time are pretty low. Based on the Kit Kat decision, you could seek to focus on the member states with denser populations, however, it is clear from the decision of the Board of Appeal that while they were swayed by the results for the UK, France and Germany, they also placed weight on the efforts and evidence that Nestle had presented for all the relevant member states.

Finally, with key products, brand owners may want to build in the potential for a trademark as a long-term objective and focus on strategies to ensure that the shape and/or the colour is being viewed by consumers separately as a badge of origin.

Action points

  • Trademarks must be capable of being represented graphically and distinguishing goods or services of one undertaking from those of other undertakings.
  • Applications for exotic trademarks will generally be difficult unless inherent distinctive character or acquired distinctiveness can be demonstrated.
  • Care should be taken in preparing the depiction of the mark being sought and brand owners should, prior to an application being made, consider gathering evidence of consumer recognition.


Footnote
1 See cases http://bit.ly/18hC9z8 and http://bit.ly/18hC9z8 for the handbags.


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