Exotic trade marks have always been difficult to get on the register. Shape marks are no exception, and the latest judgment in this area was handed down by the Court of Justice of the European Union (CJEU) on 18 September 2014. It concerned the interpretation of Article 3(1)(e) of the Trade Marks Directive (2008/95/EC).
The Tripp Trapp trade mark
The essence of the ruling in Hauck GmbH & Co. KG v Stokke A/S and others is that a sign is not registrable as a three dimensional shape mark simply because it exhibits characteristics which do not arise from the nature of the goods.
Similarly, a sign will not be registrable in relation to a product whose substantial value derives from its shape merely because there are other characteristics of the product that also give substantial value. However, the ruling provides minimal guidance on the thresholds for satisfying the Article 3(1)(e) grounds and, as is often the case, appears to raise as many questions as it attempts to answer.
Article 3(1)(e) provides that a sign shall not be registered as a trade mark, or a trade mark shall be liable to be declared invalid if already registered, if it consists exclusively of:
- the shape which results from the nature of the goods themselves;
- the shape of goods which is necessary to obtain a technical result;
- the shape which gives substantial value to the goods.
The referral was made by the Supreme Court of the Netherlands in the context of a three dimensional Benelux trade mark registered in respect of "chairs, especially high chairs for children". The mark depicts the shape of the well-known "Tripp Trapp" chair, which the claimant, Stokke, has marketed successfully in the Netherlands since 1995.
Hauck, the defendant, had manufactured and sold two similar lines of chair, known as "Alpha" and "Beta", resulting in Stokke bringing proceedings for copyright and trade mark infringement in the Netherlands. Stokke also sued Hauck in Germany where it established copyright infringement by the Alpha chair.
In response to the Dutch action, Hauck counterclaimed for a declaration of invalidity of Stokke's Tripp Trapp trade mark. The first instance court found copyright and trade mark infringement by the Alpha and Beta chairs, but held Stokke's trade mark to be invalid under subsections (i) and (iii) of Article 3(1)(e).
In relation to the latter, the court said that "the attractive appearance of the chair gave it a substantial value and that its shape was determined by the very nature of the product - a safe, comfortable, reliable children's chair". The decision was then upheld on appeal, but the validity of the trade mark remained in dispute following the parties' cross appeal, leading the Supreme Court to refer to the CJEU on the interpretation of Article 3(1)(e).
Shapes resulting from the nature of goods
The first question referred to the CJEU asked whether subsection (i) should be interpreted as meaning that only a sign consisting exclusively of a shape which is indispensable to the function of goods should be considered as resulting from the nature of the goods themselves, or whether the ground could also extend to the presence of one or more substantial functional characteristics of goods which consumers may look for in competitors' goods.
The CJEU ruled that subsection (i) of Article 3(1)(e) extends to "a sign which consists exclusively of the shape of a product with one or more essential characteristics which are inherent to the generic function or functions of that product and which consumers may be looking for in the products of competitors".
However, precisely where the bar lies for Article 3(1)(e) to apply remains unclear: it would seem that the CJEU is prepared to leave it to the national courts to decide what an "essential characteristic inherent to the generic function of a product" might mean, and when it might apply.
In this case, therefore, it seems likely that the CJEU expects the mark to be invalid, given the earlier finding of the Dutch court, as the Tripp Trapp chair's essential characteristics are inherent to its functions of being "a safe, comfortable and reliable children's chair".
The objective of Article 3(1)(e)
The CJEU cited Philips (EU:C:2002:377) as authority that Article 3(1)(e) must be interpreted in light of its rationale, namely to prevent trade marks creating a monopoly over functional characteristics, and to prevent trade marks from serving to extend the life of other time-limited intellectual property rights, such as design rights.
Accordingly, the CJEU pointed out that if subsection (i) was limited to signs consisting of shapes indispensable to the product's function, it would only operate to invalidate (1) natural products which have no substitute, and (2) regulated products having a prescribed shape, thus not achieving its objective.
Identifying the essential characteristics
It is notable that the CJEU considered that, "in essence", the first question was whether Article 3(1)(e) "may also apply to a sign which consists exclusively of a shape with one or more characteristics which are essential to the function of that product and which consumers may be looking for in the products of competitors".
This shift of focus from the "functional characteristics of the goods" (as it was framed in the referral) to the "essential characteristics of the sign" is interesting, not least because the CJEU added that, in order to identify the essential characteristics, one can assess "either... the overall impression produced by the sign or [by] examination of each of the components of that sign in turn".
This passage suggests that a sign should be assessed differently in the context of Article 3(1)(e) than in the context of Articles 1(b), 4 and 5 (i.e. when considering the distinctiveness of a sign or its similarity to another sign, where it is the overall impression that must be considered).
The CJEU cited paragraphs 68 - 70 of Lego Juris v OHIM (EU:C:2010:516) as authority for this, but in doing so may have overlooked a crucial qualification in the Lego Juris judgment. Paragraph 70 of that judgment states that "in determining the essential characteristics of a sign, the competent authority may either base its assessment directly on the overall impression produced by the sign, or first examine in turn each of the components of the sign concerned".
That is to say, as set out in paragraph 28 of the CJEU's judgment in SatellitenFernsehen Gmbh v OHIM (C-329/02 P), "the distinctiveness of each of those terms or elements, taken separately, may be assessed in part, but must, in any event, depend on an appraisal of the whole which they comprise".
Indeed it would be difficult to reconcile a decision where the essential characteristics identified for the purpose of assessing registrability under Article 3(1)(e) were different from those identified for the purpose of assessing infringement under Article 5, yet the CJEU appears to have suggested this as a possibility.
Shapes of substantial value
The second question asked whether subsection (iii) should apply only to shapes which "constitute the main or predominant value [of goods] in comparison with other values (such as, in the case of high chairs for children, safety, comfort and reliability)", or whether the ground could extend to signs consisting of shapes which give goods substantial value even if, "in addition to that value, other values of the goods exist which are also considered to be substantial".
The Supreme Court also asked if "substantial value" refers to "the motives underlying the public's opinion to purchase". If so, is it the opinion of the majority, or just a portion, of the public that should be taken into account when determining if the value of a feature is substantial?
The CJEU ruled that the ground for refusal in subsection (iii) of Article 3(1)(e) can apply to "a sign which consists exclusively of the shape of a product with several characteristics each of which may give that product substantial value. The target public's perception of the shape of the product is only one of the assessment criteria which may be used to determine whether that ground for refusal is applicable".
More on essential characteristics
In explaining its ruling, the CJEU stated that, if the ground for refusal extended only to products deriving value predominantly from their shape, a shape mark could be used to gain a monopoly over the other essential characteristics of a product, which would not allow the objective of subsection (iii) to be fully realised.
This seems somewhat circular - if the value of the essential features of a product results other than from that product's shape (or part of it), it is difficult to see how a monopoly over the shape would be equivalent to a monopoly over the essential features. If, on the other hand, the value of the essential characteristics does result from the product's shape, Article 3(1)(e) will apply and the sign will not be registrable.
In fact, the CJEU's rationale would only seem applicable in a situation where the essential characteristics are assessed differently for infringement (i.e. in determining the scope of the monopoly) than they are for registrability (i.e. in determining whether a monopoly should be granted), which may be telling given the above discussion.
That said, the ruling is not surprising in its conclusion. It would be illogical to interpret subsection (iii) in a way that meant that the functional characteristics of a product could allow a proprietor to sidestep Article 3(1)(e) in circumstances where the value of those functional characteristics derived other than from their shape. If that were the case, the Directive could pave the way for trade mark owners to monopolise a shape of intrinsic and substantial aesthetic value - a design for example - by incorporating functional features independent of shape.
Should the Article 3(1)(e) grounds be viewed in combination?
The third question asked whether subsections (i) - (iii) of Article 3(1)(e) should be viewed independently or in combination. The CJEU re-iterated that a shape cannot be registered as a trade mark if it satisfies any one or more of the Article 3(1)(e) subsections, and added that the subsections cannot be considered in combination, meaning registration should not be refused under Article 3(1)(e) unless at least one of the grounds is fully applicable.