Trade marks can offer very powerful complementary and long-lasting benefits for companies once their patents expire. The term of protection of a patent can give its owner a precious period in which to nurture the name (or other distinctive features) of the product that competitors can’t exploit, which in turn creates customer loyalty over a trade mark that, unlike patents, can last indefinitely (with adequate maintenance and protection).
However, less conventional types of marks, such as 3D marks that represent patented products, can face significant registrability hurdles, if not be entirely unsuitable for trade mark protection (and logically so, since patents and trade marks are complementary rights, but do not overlap). This brings us to an interesting referral from the French Supreme Court to the CJEU in a case involving the validity of various 3D EUTMs, and for which Advocate General (AG) Biondi has released his Opinion (which can be found here).
Background
CeramTec filed various EUTMs for different types of marks (including a 3D mark represented below) shortly after its European Patent for the ceramic matrix composite expired, and then brought infringement proceedings in France against its competitor Coorstek relying on these marks. As part of its defence strategy, Coorstek eventually filed a counterclaim for invalidity against the 3D EUTM (amongst others).
(see EUTM here – and for the curious readers, a previous torpedo filed against it and subsequently withdrawn here).
The matter is particularly fascinating because, besides the fact that it is part of a longstanding dispute (spanning across multiple jurisdictions), it deals with the validity of a 3D mark through different (but not exclusive) lenses: “functionality” and “bad faith”.
Functionality and Bad Faith
Functionality is typically assessed in invalidity actions involving 3D marks, since signs which consist exclusively of the shape which is necessary to obtain a technical result, should not be registered (and if they are, they should be declared invalid). This was one of the grounds for invalidity brought by Coorstek in its counterclaim, pursuant to Art. 52(1)(a) in conjunction with Article 7(1)(e)(ii) Regulation 207/2009 (the old regulation). However, the Paris Court of Appeal found a second ground for invalidity brought by Coorstek more pertinent. It considered that CeramTec had filed the trade marks in bad faith, and so it should be declared invalid in accordance with Art. 52(1)(b) of Regulation 207/2009.
The main reason for this was that CeramTec must have filed its trade mark knowing that chromium oxide (which gives rise to the pink colour) affected the hardness and resistance of the ceramic beads used in the composition of medical prostheses (being the product represented in the mark in question). Therefore, the Court inferred from this that CeramTec must have intended to extend its monopoly on the technical solution, which had previously been protected by a patent (now expired), and to continue to prevent competitors from entering the market which it dominated by virtue of that patent. CeramTec therefore intended to obtain an exclusive right for purposes other than those falling within the function of a trade mark.
CeramTec appealed the Paris Court decision to the French Supreme Court (Cour de Cassation). It argued, that the Court should not have conflated the grounds under Articles 7(1)(e)(ii) and Art. 52(1)(a) on the one hand (the 1st lens), and 52(1)(b) on the other (the 2nd lens). According to CeramTec, the issue with finding that the EUTM was filed in bad faith, without it being shown that the right in that mark actually ensures or perpetuates the protection of such a technical solution, was that this undermined the very ground for refusal set under Article 7(1)(e)(ii) and disregarded the respective fields of application of those two provisions. It also argued that it learnt, after the expiry of its patent and the filing of the contested marks, that the chromium oxide (which made the product pink), did not in fact have any technical effect. In those circumstances, the contested marks could not, in their view, have been filed contrary to the purposes of trade mark law.
The French Supreme Court considered this a novel issue (also because different Courts appear to have been taking diverging positions on the matter) and therefore asked the CJEU the following questions (in simpler terms):
i. Are the grounds for invalidity under Art. 52(1)(a) in conjunction with 7(1)(e)(ii) (1st lens - functionality) and 52(1)(b) (2nd lens – bad faith) of the (old) Regulation No 207/2009 autonomous, or even exclusive?
ii. If the answer to the first question is negative, can the applicant’s bad faith be assessed independently from Art. 7(1)(e)(ii) Regulation 207/2009, even if it is not found that the trade mark consists exclusively of the shape of goods which is necessary to obtain a technical result?
iii. Can bad faith be excluded when it is subsequently discovered that there was no link between the technical solution in question and the signs constituting the registered trade mark?
The AG’s opinion to the 1st question: The two grounds for invalidity are indeed autonomous (since they pursue different objectives), but not exclusive. One is a technical exclusion from protection (which stems from an entirely objective assessment), whilst the other deals with the applicant’s intentions (and whether they are participating fairly in competition). However, they are not exclusive, as it may well be that both grounds apply (even if it’s sufficient just for one to apply) depending on the circumstances of the case.
The AG’s answer to the 2nd question: If the two grounds for invalidity are autonomous, then it is possible that a trade mark is invalidated on grounds of bad faith even if is not established that the mark in question falls under a functional exclusion. The same applies by inverse analogy: a trade mark can be invalidated for consisting of a shape that is necessary to obtain a technical result, even if it was not applied for in bad faith. That does not preclude the fact that certain considerations arising from the analysis of one ground (i.e. the nature of the mark or its characteristics, which represented a previously patented product), cannot influence another. However:
… in circumstances such as those I have just described, bad faith cannot, in my view, be inferred from the mere fact that registration of the sign at issue was sought for the purpose of protecting features of appearance of a product protected by a previous patent, where it is found that that sign does not fall within the scope of Article 7, (1)(e)(ii) of Regulation No 207/2009. Other relevant elements must then support the allegation that the applicant acted not with the aim of participating fairly in competition, but with dishonest intent.”
(machine translation, paragraph 56)
This goes to the core of the Paris Court decision, since it inferred, mainly from the nature and features of the 3D mark, that CeramTec must have acted in bad faith. Instead, AG Biondi encouraged a more comprehensive assessment of the case, which would also entail factors such as the origin of the protected sign and its use since its creation, the scope of the patent and the chronology of events (and not just the appearance or characteristics of the sign).
So overall, whilst the AG did not seem convinced that all the factors for a finding of bad faith have been fully established in the case at hand, or that the invalidity of the trade mark could be established on the basis of the conclusions of the Paris Court, he did not rule out either that, subject to a more comprehensive assessment, bad faith may be established in the case at hand.
On that note, and although the AG did not explicitly provide his opinion in reply to the 3rd question (per the CJEU’s request), he briefly mentioned in passing (at paragraph 58) that if there are enough indicia of bad faith, these would not be offset by the mere fact that the owner learnt, after the date the EUTM was filed, that the technical solution (which was subject to the expired patent) did not have any effect.
Takeaways
This Opinion serves as a useful reminder that the assessment of bad faith is often complex, and entails a comprehensive analysis of various factors (one of which may well be the nature and features of the mark, but perhaps not the only one). The element of novelty here (no pun intended) is the close interplay between the contested trade mark and the previous patent owned by CeramTec, which in turn results in an unusual assessment where various factors involving the two forms of IP are considered under a single (and very wide-encompassing) ground for invalidity.
We’ll eagerly await the CJEU’s final position in this matter.
If you have any questions relating to this topic, please get in touch with Carol Nyahasha, Fernando Di Blasi or your usual Kilburn & Strode advisor.