Lidl, the German discount supermarket, has had its trade mark application for the mark "Deluxe" rejected on the basis that it is devoid of distinctive character. Although the decision is not particularly surprising, this case serves as a good reminder for all brand owners when creating new brand names to give careful consideration to ensuring they are original and indicate the trade origin of the goods and services.
Lidl filed a trade mark application for a Community trade mark.
Lidl sought to register the mark in a number of classes, namely 5, 29, 30, 31, 32 and 33. The Office for Harmonisation in the Internal Market ("OHIM") rejected the trade mark in all classes on the grounds that it lacked distinctive character. Lidl appealed the decision, but its appeal was rejected on 6 March 2014 by the Board of Appeal of OHIM.
Lidl appealed to the General Court, contending that the Board of Appeal applied the test (lack of distinctive character of the mark) too strictly. On 17 December 2014, the General Court refused Lidl's appeal (T-344/14 - Lidl Stiftung v OHIM (Deluxe), decision not yet available in English).
In the meantime, the mark has been featured on Lidl's Deluxe range of goods, which aims to provide customers with low-price, high-quality food. In 2014, Lidl's Deluxe range of goods won the Own Brand Range of the Year at the Oracle Retail Week Awards. In light of this, Lidl's consistent motivation to appeal is clear.
The Decision and the Law
The General Court upheld the earlier decisions of OHIM and also cited lack of distinctiveness as its reason for refusing Lidl's appeal. Article 7, paragraph 1(b) of Regulation No 207/2009 sets out the law in relation to trade marks which are deemed incapable of performing the essential function of the trade mark, namely marks which fail to identify the commercial origin of the goods or services to which they applied.
The General Court confirmed that distinctiveness should be assessed first in relation to the class of goods or services for which registration is sought, and secondly in relation to the perception of the relevant public.
In assessing the position, the General Court stated that the word "Deluxe" is a widely accepted term for luxury and superiority, and that the relevant public would understand the meaning of this term.
The court considered that the goods in issue were (despite the different classes applied for) mainly food and drink products. In the food and drink industry descriptive phrases are often used as slogans, or to identify different ranges of goods. Most supermarkets boast a luxury own range such as Sainsbury's "Taste the Difference", Asda's "Extra Special" and Tesco's "Finest". These descriptions denote quality in comparison to other products, adding to their appeal and often higher cost.
The court was of the opinion that the term "Deluxe" would simply be perceived by consumers as a promotional tool or advertising slogan to indicate that the goods were of better quality than competing products, and not as an indication of trade origin.
Lidl argued that "Deluxe" was an unusual word in advertising, but the court rejected this argument, explaining that the meaning of the term (as understood on an international basis) contradicted this. Therefore, the court decided that the word "Deluxe" simply suggested a higher quality item and did not distinguish Lidl's goods from those of other undertakings.
Lidl contended, and the court agreed, that Lidl's application for the mark should not be excluded merely because the mark was composed of a sign or indication that was also used as an advertising slogan. A word with positive connotations can still indicate the origin of the goods or services, as long as the average consumer would see it in that way. So, provided consumers perceive the mark as an indication of origin, the fact that it is also understood as an advertising slogan would be irrelevant in terms of distinctiveness.
In order to decide this issue, the court had to determine who the average consumer of the relevant goods was.
Noting that the test would be different for the different classes of goods included in Lidl's trade mark application, the court assessed the average consumer to be a normally informed and reasonably observant and circumspect person. The court agreed with OHIM that the average consumer would primarily notice the word "Deluxe", thereby recognising it as an indication of outstanding quality. The prominence of the term within the trade mark meant the average consumer would not notice the promotional aspect alongside the origin, but would focus merely on the word "Deluxe" in its advertising capacity.
The trade mark as a whole
The court also agreed with OHIM that a finding of lack of distinctiveness required an analysis of the whole of the trade mark rather than just the word "Deluxe". As seen above, the mark as a whole consisted of a black background, the word "Deluxe" in italics and white text, with the D and X joined. It has a rectangular curved lower side, and a silver curved band across the black background which is positioned under the verbal element.
The court referred to the decision in the Best Buy case (T-476/08 - Media-Saturn v OHIM, also not available in English) and considered that the graphical representation of the mark only served to further emphasise the promotional meaning of the word "Deluxe".
The court considered that, despite the overall appearance of the mark, the focus of the mark was clearly on the word "Deluxe". In addition to the above, the graphical representation of the mark and its typography were found not to be sufficiently unique to give the mark distinctiveness as a whole.
The font and graphics were found to be fairly standard, merely outlining the laudatory nature of the word "Deluxe". In fact, the court stated that the "elegant and refined" appearance of the mark added to the promotional nature of the mark, and the idea of quality.
This decision could have a significant impact on trade marks which double up as advertising slogans and/or promotional tools because, according to the court, graphical arrangements to a slogan will not be sufficient to satisfy the distinctiveness test.
Consequently, slogan marks that fail to inform consumers of the trade origin of the goods and services will fail, however stylised they may be. Brand owners who use slogans marks to simply attract the attention of consumers may therefore find themselves in difficulty when the time comes to secure trade mark protection for the mark.