ECJ on Adidas Stripes - Assessing Infringement

Yesterday the ECJ provided a judgment relating to Adidas’ famous three-stripes logo, and came down firmly on the side of the sportswear manufacturer. The dispute saw Adidas sue fashion outlet H &M for trade mark infringement in response to the use of similar stripes by H&M on its clothing. The case had reached the Dutch Supreme Court who turned to the ECJ for guidance. The ECJ ruled on whether the general interest in the availability of given signs in the market should have any bearing on the protection provided by a trade mark. The ECJ ruled that the requirement of availability should not play a part in assessing confusion.

On 10 April 2008, the ECJ answered questions put to it by the Dutch Supreme Court in the case of C-102/07. Adidas is the proprietor of figurative trade marks consisting of three vertical parallel stripes of equal width which it features in sports clothes. Competing suppliers in the clothing and textile trade, such as H&M had begun to market sports and leisure garments featuring two parallel stripes. Adidas brought an action in the Dutch courts for trade mark infringement in relation to use of signs identical or similar to their marks, such as the motif with two parallel stripes, while the defendants, Marca Mode, C&A, H&M and Vendexs sought a declaration that they are free to place two stripes on their sports and leisure garments.

A Dutch court of first instance found in favour of Adidas, finding trade mark infringement. However a regional appeal court subsequently set aside that judgment, ruling that, as stripes are simple logos, they are signs which must remain available and do not therefore lend themselves to exclusive rights. The appeal court ruled that the marks owned by Adidas could not afford protection against the use of two-stripe motifs. Adidas appealed to the Supreme Court of the Netherlands, pleading that the requirement of availability should not be taken into consideration for assessing trade mark infringement, rather they were only considerations in relation to assessing the validity or invalidity of a mark. The Supreme Court stayed proceedings to refer the matter to the ECJ, essentially submitting the question; ‘to what extent is it necessary to take into account the general interest in not unduly restricting the availability of certain signs in the assessment of the scope of the exclusive rights of the trade mark proprietor?’.

Requirement of Availability – a Matter of Validity not Infringement

The ECJ went back to basics and considered the fundamental provisions of Directive 89/104/EEC (the Directive). The requirement of availability was an important consideration in respect of Article 3 (validity of trade marks) and Article 12 (revocation) of trade marks. While the ECJ noted that there were public interest considerations connected to undistorted competition which favoured certain signs being used freely by all economic operators, the requirement of availability was not a relevant consideration in the interpretation of Article 5 of the Directive governing trade mark infringement.

Likelihood of Confusion

Under Article 5(1) a trade mark proprietor is protected from similar marks that create the risk that the public might believe that goods or services in question come from the same undertaking or, as the case may be, from economically-linked undertakings. The likelihood of confusion must therefore be appreciated globally, taking into account all factors relevant to the circumstances of the case. The fact that there is a need for the sign to be available for other economic operators cannot be one of those relevant factors. The competitors of Adidas could not be permitted to infringe the three-stripe logo registered by Adidas by using stripes so similar that there is a likelihood of confusion in the mind of the public.

Dilution

Under Article 5(2) marks with a reputation, such as the Adidas three-stripe logo are protected where a similar or identical mark for similar or identical goods takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. It does not require a likelihood of confusion, it is sufficient for the degree of similarity between the mark with a reputation and the sign to have the effect that the relevant section of the public establishes a link between the sign and the mark. The assessment of whether the other factors exist can then be considered.

Again the ECJ ruled that the requirement of availability is extraneous both to the assessment of the degree of similarity between the mark with a reputation and the sign used by the third party and to the establishment of a link which may be made by the relevant public between that mark and the sign. It cannot therefore constitute a relevant factor for determining whether the use of the sign takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

Article 6(1) – Limitation of the effects of a trade mark

Under Article 6(1) the proprietor of a trade mark cannot prohibit a third party from using, in the course of trade, indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services, provided he uses them in accordance with honest practices in industrial or commercial matters.

While Article 6(1)(b) of the Directive seeks to ensure that all economic operators have the opportunity to use descriptive indications; the requirement of availability cannot in any circumstances constitute an independent restriction of the effects of the trade mark in addition to those expressly provided for in Article 6(1)(b) of the Directive. It must be stated in that regard that, in order for a third party to be able to plead the limitations of the effects of the trade mark in Article 6(1)(b) of the Directive and rely in that respect on the requirement of availability underlying that provision, the indication used by it must, as required by that provision of the Directive, relate to one of the characteristics of the goods marketed or the service provided by that third party.

On the 6(1) point the ECJ ruled that the competitors of Adidas were relying on the purely decorative nature of the two-stripe motif to justify their use; but the use by them was not intended to give an indication concerning one of the characteristics of the goods, as required to fall within Article 6(1).

Conclusion

The Directive must be interpreted as meaning that the requirement of availability cannot be taken into account in the assessment of the scope of the exclusive rights of the proprietor of a trade mark, except in so far as the limitation of the effects of the trade mark defined in Article 6(1)(b) of the Directive applies. The ECJ has given effect to the wording and spirit of the Directive in a manner that provides trade mark owners with comfort that they can enforce their trade marks. While the availability of marks may be a consideration when seeking to register a mark or where the validity of a mark is question, it cannot not be cited as a stand-alone defence to trade mark infringement. It is helpful that the ECJ has provided an unequivocal response – and one in favour of IP rights owners.