The Court of Justice of the European Union (CJEU) has recently handed down a rare judgment concerning the circumstances in which a trade mark can be found to have become the generic name of a product. In Case C-409/12 Backaldrin Osterreich The Kornspitz Company GmbH v Pfahnl Backmittel GmbH, 6 March 2014, the CJEU found that it is the perception of the end consumer, rather than intermediaries within the supply chain, which is determinative. If these consumers recognise a sign as the name of the product, rather than an indication of its trade origin, then the mark has become generic, irrespective of whether those in the trade continue to perceive the sign as a brand name.
A number of terms which are now commonly understood as product names started out as trade marks, such as aspirin, escalator and kerosene. All of these names became so closely associated with the products which they were intended to market that they ceased to designate a specific trade origin and instead became the dictionary terms for these goods. Trade marks are at greatest risk of becoming generic where they are coined in respect of novel goods for which no specific descriptor exists. In all of these cases, the onus falls on the brand owner to choose an appropriate description for the goods and ensure that the brand name is consistently used in conjunction with this descriptive term, e.g. HOOVER vacuum cleaner.
Backaldrin Osterreich The Kornspitz Company GmbH (Backaldrin) registered the trade mark KORNSPITZ for goods in Class 30 including ‘flour and preparations made from cereals; bakery goods; baking agents, pastry confectionery, also prepared for baking; pre-formed dough … for the manufacture of pastry confectionery’.
Backaldrin marketed a baking mix under the KORNSPITZ brand which they supplied primarily to bakers, who made the mix into an oblong shaped bread roll. Pfahnl Backmittel GmbH (Pfahnl), which was a competitor of Backaldrin, applied to revoke the KORNSPITZ mark on the grounds that it had become the common name of these oblong shaped bread rolls. This claim was based on the fact that the bakers using the mix supplied by Backaldrin did not generally inform their customers either that KORNSPITZ had been registered as a trade mark or that the bread rolls were produced using that mix. The application was granted and the mark revoked in respect of all of the goods for which it had been protected. Backaldrin appealed to the Obster Patent-und Markensenat (Supreme Patent and Trade Mark Court).
Article 12 of the Trade Mark Directive 2008/95 states:
The Austrian Appeal court stayed the proceedings and sought an opinion from the CJEU in response to the following questions:
The Court stressed that the essential function of a trade mark was to distinguish the goods and services of one undertaking from those of another undertaking. Whether a trade mark had become the common name of a good or service was to be assessed not only in the light of the perception of consumers or end users but also, depending on the features of the market concerned, in the light of the perception of intermediaries in the trade, such as retailers. However, the Court stressed that, in general terms, the consumer’s perception of the mark would play a decisive role. Where they perceived the sign as the common name of the goods, its recognition as a trade mark by intermediaries in the trade would not be sufficient to save it from revocation.
In response to the second question, the Court found that where a trade mark owner did not take any initiative to inform sellers of the finished product for which it provided the constituent material that the name of that product was a registered trade mark or to encourage these sellers to make use of the trade mark, this could be classed as “inactivity”, although it would be for the Austrian courts to decide whether Backaldrin took any such initiative.
In answering the final question, the Court ruled that the existence of equivalent names for the product was irrelevant to an assessment of whether a trade mark could be revoked for becoming generic.
This decision will serve as a warning to brand owners whose products are subject to further processing prior to their retail sale that they should provide, ideally by way of a licence, for retailers to refer to their brand as a trade mark rather than the generic name of the finished product. It also serves as a reminder to brand owners to ensure that their brands are always used correctly by licensees or others who deal in their goods so as to avoid any allegation that they have become generic. Trade marks should be used as adjectives followed by a description of the goods, e.g. THERMOS flask and, where possible, in conjunction with the ® sign for registered marks and the ™ sign for unregistered marks.
The case will now be referred back to the Austrian Courts for a decision, which is likely to provide that while Backaldrin will be able to enforce its KORNSPITZ trade mark against third parties seeking to market a baking mix to bakers under the brand, it will not be able to prevent bakers making a comparable product and describing it as a “Kornspitz” roll.