Daimler loses Mercedes-Benz trade mark case

The High Court has found that the well known Mercedes-Benz three pointed star trade mark is not infringed by a similar three pointed star trade mark owned by Sany, a Chinese manufacturer of construction machinery. Sany’s counterclaim for part cancellation based on non use by Daimler was also rejected. This case is one of the first to apply the ECJ’s decision in L’Oreal -v-Bellure, Case C-487/07 concerning infringement of marks with a reputation by taking an unfair advantage. The case also highlights an important difference in practice between the Intellectual Property Office in the UK and OHIM concerning the classification of goods and services.

Background

Daimler owned registered trade marks in classes 7 and 12 for the well known three pointed Mercedes-Benz star mark relating to machinery and vehicles. Sany was a well established Chinese manufacturer of construction machinery with sales of over £1 billion, although distribution in the UK had been very limited. In August 2006 Sany applied to register its logo as a UK trade mark in combination with the word SANY in class 7 for various machinery and class 12 for vehicles. It had used this logo in the course of its business generally since 1995.

Daimler started infringement proceedings under Articles 9(1)(b) and (c) of the CTM Regulation, claiming infringement through use of Sany’s logo, with or without the word element, and also claiming passing off. Sany counterclaimed for part cancellation of Daimler’s marks based on partial non-use. Daimler also filed an opposition which was stayed pending the infringement proceedings (interestingly, the preliminary indication from the IPO was that the opposition should fail).

Daimler then applied for summary judgment under Article 9(1)(b), which was refused in May 2009. This application had highlighted the difference in approach between the UK IPO and OHIM in relation to trade mark classification and class headings. For example, the class heading for class 12 is “Vehicles; apparatus for locomotion by land, air or water.” OHIM’s view is that the use of a complete class heading is a claim to all goods and services within the class. The UK IPO’s view is that use of class heading wording in a specification is a statement relating to those particular goods or services only, and no more. Clearly this difference in approach will affect the scope of protection enjoyed by the mark.

In closing submissions at trial Daimler dropped the Article (9)(1)(b) case as well as its passing off claim, it seems because its trial evidence as to confusion may not have been sufficiently robust. The remaining claim concerned unfair advantage under Article 9(1)(c).

IPO/OHIM conflict

The Court did not resolve the conflict between the approaches of the IPO and OHIM concerning class headings as it found that there was no need to do so on this occasion. The problem of the disparity in the approaches remains and will probably require an ECJ judgment ultimately to resolve.

Cancellation application

The Court also rejected Sany’s counterclaim for cancellation. It found on the balance of probabilities that Daimler had sold relevant products in classes 7 and 12 within the last 5 years, and therefore had made genuine use. Sany’s argument that Daimler could not rely on one product to support both its class 7 and class 12 registrations was rejected as some goods may straddle more than one class. These findings followed detailed examination of evidence as to use and some criticism as to Daimler’s failure to produce more substantive evidence (parts of the evidence were given by one uncorroborated, but reliable, witness with no underlying documents).

The Court also found that in both classes the specifications were fair, taking into account evidence from both parties and the interests of Daimler, other traders and the public.

Infringement

In relation to infringement the Court followed the Court of Appeal’s decision of Whirlpool Corporation -v- Kenwood, which had summarised the law on Article 9(1)(c) of the CTM Regulation, in particular the ECJ’s case of L’Oreal -v- Bellure of June 2009 concerning unfair advantage. Here, the Court found that there would be no “link” made by the average consumer between the two logos which would lead to a “clear exploitation on the coat-tails of the mark with a reputation”. This applied whether the average consumer was a member of the public or a person working in the construction industry. Although the Mercedes-Benz three pointed star was highly distinctive and famous which gave it a wide scope of protection, the Sany mark did not “call to mind” the Mercedes-Benz mark.

The Court also commented that as the average consumer was so well accustomed to the Mercedes-Benz mark, the usual principle of imperfect recollection would be less relevant than usual.

Further, the Court found that even if there were a link, it would not have found that Sany took unfair advantage of the distinctive character and repute of the Mercedes Benz mark. There was little evidence on this issue and the Court was influenced by the commercial background: Sany had used the mark for a long period of time, had spent considerable sums of money in promoting itself in the UK and often used the word SANY with the logo. The evidence was that its intention was simply to use its “long established and innocently adopted corporate logo”.

Comment

As with the Court of Appeal’s decision in Whirlpool -v- Kenwood, the High Court has taken a relatively narrow view of the concept of “unfair advantage”. Admittedly the facts are completely different from those in L’Oreal -v- Bellure where the defendants had a clear and flagrant intention to take advantage of well known marks.

Daimler AG -v- Sany Group Company Limited, High Court, 23 October 2009

For a copy of the judgment, please click here.