In a judgment dated 19 March 2015, the CJEU handed down its decision on an appeal brought by MEGA Brands International regarding the refusal of its application for the Community trade mark "MAGNEXT". This appeal followed the decision of the General Court of the European Union (General Court) (T‑292/12) that the Office for Harmonisation in the Internal Market (OHIM) had been right to refuse registration of "MAGNEXT" on the basis of an earlier Spanish trade mark held by Diset S.A., "MAGNET 4".The CJEU has now found the General Court's decision lacked proper reasoning.

Background

MEGA Brands is a toy manufacturer perhaps best known for Mega Bloks, a rival to Lego. Magnext is another such construction-based toy produced by MEGA Brands, and consists of plastic building pieces that can be connected to each other using neodymium magnets.

On 21 January 2008, MEGA Brands filed an application to register as a community trade mark the figurative sign (the "Figurative Mark"):

On 29 March 2010, MEGA Brands also applied for a community trade mark for the words (the "Word Mark"):

MAGNEXT

Diset's Mark

Meanwhile, Diset S.A., a Spanish-based toy company, held a Spanish trade mark for the words ("Diset's Mark"):

MAGNET 4

Diset therefore opposed both of MEGA Brands' applications under Article 8(1)(b) of the Community Trade Mark Regulation (No. 207/2009) on the basis that both the Figurative Mark and the Word Mark were similar to Diset's Mark and that there was a likelihood of confusion between them.

Diset's Mark had been registered on 9 December 2003 and covered some of the same uses as MEGA Brands' two marks.

On 19 July 2010 and 21 June 2011, the opposition division of OHIM upheld these oppositions. MEGA Brands appealed, but on 27 September 2011 and 24 April 2012, the Fourth Appeal Board of OHIM dismissed those appeals.

MEGA Brands then applied to the General Court to annul the decisions of OHIM.

Decision of the General Court

The General Court held that OHIM had been wrong to uphold the opposition in respect of the Figurative Mark. The Figurative Mark was clearly divided into two parts, "mag" and "next", and did not feature the figure "4". The overall impressions of these marks were sufficiently different.

In contrast, the only difference between the Word Mark and dominant element of Diset's Mark, "magnet", was the addition of the letter "X". The General Court therefore upheld OHIM's decision to uphold the opposition against the Word Mark.

Appeal to the CJEU

MEGA Brands appealed the decision of the General Court in respect of the Word Mark to the CJEU.

MEGA Brands argued that the General Court had erred both in categorising "magnet" as the dominant element of Diset's Mark and in failing to properly consider the presence of the figure "4" in Diset's Mark.

The CJEU began by reminding us that assessment of confusion between marks must take into account their distinctive and dominant components. However:

"The assessment of the similarity between two marks means more than taking just one component of a composite trade mark and comparing it with another mark. On the contrary, the comparison must be made by examining each of the marks in question as a whole."

MEGA Brands tried, but failed, in its argument that it was incompatible for the element "magnet" to be both dominant and also descriptive of magnetic properties, but:

"even if a verbal element should be considered to have a purely descriptive character, that character does not preclude that element from being acknowledged as dominant for the purposes of assessing the similarity of the signs at issue."

However, the CJEU agreed with MEGA Brands that the General Court had failed to properly consider the figure "4" present in Diset's Mark:

"in some circumstances, the assessment of the similarity may be made solely on the basis of the dominant element of a composite mark. However, that case law concerns only exceptional situations […], and it is only if all the other components of the mark are negligible in the overall impression conveyed by it that the assessment of the similarity can be carried out solely on the basis of the dominant element […]."

The General Court had given no analysis of the significance of the presence of the figure "4", merely confirming that the element "magnet" was dominant. Accordingly, the General Court had erred in law by not considering the marks in issue in their entirety.

Furthermore, the General Court had also failed to provide any proper reasoning to make it possible to understand why the element "magnet" was determined to be dominant in Diset's Mark.

While the General Court was not under a duty to exhaustively account for all of the arguments put in the case, it did have to give sufficient reasoning to enable the parties to know why their arguments had not been upheld and to enable the CJEU to properly review the case. In this respect, the General Court had failed.

Consequently, the CJEU set aside the decision of the General Court and referred the case back to it for further consideration.

This case reminds us that even on appeal the courts must always give their reasoning in an intelligible manner. Even very senior courts can miss points; and the CJEU can and will step in if they do.

A copy of the CJEU's decision is available here.