Backstory behind Ferrari SpA v DU
DU sought the cancelation of Ferrari’s two TESTAROSSA trade marks, for various goods in class 12 including “motor cars and parts thereof,” on the grounds of non-use. Ferrari had sold the TESTAROSSA sports cars between 1984-1991 and introduced a new model in 1996. Beyond 1996 Ferrari continued to sell replacement parts and accessories and also offered maintenance services for these models, achieving an approximate turnover of €17,000 in relation to the sale of replacement parts between 2011-2016. Ferrari also sold used luxury TESTAROSSA models after inspecting and repairing the cars themselves.
The Lower Regional Court in Düsseldorf did not find these uses sufficient to constitute genuine use and cancelled the TESTAROSSA marks. Ferrari appealed the decision to the Higher Regional Court of Düsseldorf who referred the matter to the CJEU for a preliminary ruling.
What constitutes Genuine Use?
The CJEU first set out the established principles in the decision of Ansul BV v Ajax Brandebeveiliging BV, C-40/01. In the Ansul case, the owner of the MINIMAX mark had stopped selling fire extinguishers under that trade mark but had continued to maintain, check and repair the equipment bearing the mark and support the maintenance of previously installed MINIMAX fire extinguishers. These activities involved the use of the MINIMAX mark in relation to the sale of component parts, on invoices for services, and on stickers to be used on the fire extinguishers to show that they had been serviced.
In Ansul, the CJEU held that for the use to be “genuine” it must be:
In accordance with the essential function of a trade mark which is to guarantee the identity of the origin of the goods and services for which it is registered
Use must be by way of real commercial exploitation on the market for the relevant goods and services; exploitation that is aimed at creating and maintaining a market share/outlet for the goods and services
Genuine use does not include ‘token’ use for the sole purpose of preserving the rights conferred by the mark
All the relevant market factors must be taken into account in this assessment particularly the:
(i) nature of the goods or services;
(ii) the characteristics of the market and;
(iii) the scale and frequency of the use of the mark
The CJEU held that use of the trade mark on replacement component parts was genuine use if these parts were integral to the make-up or structure of such goods or used in relation to goods or services directly connected with the goods previously sold and intended to meet the needs of customers of those goods.
The CJEU’s decision in Ferrari
The CJEU first established that the use of the TESTAROSSA marks in the relation to very high priced luxury sports cars and replacement parts for the same, was genuine use of “motor vehicles and parts thereof.” The CJEU did not consider Ferrari’s luxury sports cars to be an independent sub-category of “motor vehicles” as they were not only capable of being used in motorsports activities, but also, like for all cars, for transport on the road.
The CJEU however found the very high price of the sports cars relevant to whether the TESTAROSSA marks had been put to genuine use. Despite the relatively low number of replacement parts sold under the mark due to the price point of the goods, the use had not been “token” but constituted use of the trade mark in accordance with its essential function to guarantee origin, and could therefore be classified as genuine use.
Furthermore, the CJEU held that whilst the resale as such of a second hand product bearing a trade mark does not generally constitute genuine use of that trade mark, if the proprietor actually uses the mark in accordance with its essential function then the resale of the second hand goods under the mark does constitute genuine use.
AIWA - when sales of second hand goods is not enough
In relation to the genuine use of trade marks in the sale of second hand goods the CJEU’s decision can be contrasted with the UK High Court’s decision in Aiwa Co ltd v Aiwa Corp  EWHC 3496 (Ch).
Backstory behind Aiwa Co. Ltd Vs Aiwa Corp.
AIWA, the consumer electronics brand was founded in 1951 and, in its heyday, was a globally renown brand of several audio products such as speakers and stereo systems. Purchased by Sony in 2003, it’s success waned and there had not been any retail sales of new goods using the AIWA mark since 2008, although the AIWA mark was still used in relation to third party sales of spare parts and second hand goods.
In 2016, Hale Devices Inc. acquired the AIWA trade marks for the US, changed its name to Aiwa Corporation and marketed a speaker under the AIWA brand. The following year the Japanese company Towada Audio acquired the rest of Sony's AIWA trade mark portfolio (including its UK marks) and changed its name to Aiwa Co. Ltd in an attempt to re-establish the brand.
Immediately after acquisition Aiwa Co. Ltd opposed Aiwa Corporation’s attempt to apply to register an AIWA trade mark in the UK. In response Aiwa Corporation commenced revocation for non-use of Aiwa Co. Ltd's registered marks.
Decision of the UKIPO Hearing Officer
Aiwa Co. Ltd’s three trade marks consisted of the word “AIWA” in various styles. The marks were registered in relation to audio, radio and television apparatus, and other electronic apparatus. Aiwa Co. Ltd filed evidence of second hand sales and spares by third party traders claiming that plans were in motion to revive the AIWA brand.
The Hearing Officer came to the conclusion that the sale of second hand goods via third party platforms such as eBay and Amazon did not constitute genuine use with the consent of the owner of the marks, Aiwa Co. Ltd. The Hearing Officer revoked Aiwa Co. Ltd’s marks and dismissed the opposition to the registration of Aiwa Corporation’s new mark.
Aiwa Co. Ltd. appealed the Hearing Officer’s decision to the High Court. Mann J upheld the Hearing Officer’s decision, emphasising however that each case had to be determined on its facts and in accordance with the multifactorial test set by Arnold J in London Taxi Corporation Limited v Frazer Nash Research Limited  EWHC 52 (Ch) (based on the CJEU’s Ansul test for genuine use).
Whilst he accepted that the use of the AIWA trade marks in relation to the resale of goods was capable of performing its essential function of guaranteeing origin, this was not enough. If it were, “it would mean that virtually any second hand sale without more, was a genuine use of the mark… something more is required.” Mann J noted that the involvement of the proprietor of the marks in the resale of second hand goods might be the additional factor capable of moving the use in the direction fulfilling the London Taxi criteria, and therefore establishing genuine use. This was because the proprietor has a “real interest”, which may have pointed to the conclusion that the mark was being used to maintain a market or preserve an outlet for the goods bearing the mark. There was no such proprietorial involvement in relation to the resale of the AIWA goods.
In addition, Mann J found that the actual evidence of second hand sales was very thin. He was consequently unable to find that the level and nature of activity generated in relation to second hand sales was capable of maintaining a market share for goods bearing the mark, or of preserving an outlet for these goods. The level of sale of second hands did not support the existence of genuine use.
Genuine Use of trade marks in second hand sales - recognising the importance of the proprietor’s involvement
The CJEU held that the resale of second hand goods bearing a trade mark does not generally constitute genuine use, but that it was possible, as in the case of Ferrari’s sale of second hand TESTAROSSA cars, for the proprietor to actually use the mark in accordance of its essential function of guaranteeing origin, and in these circumstances for the resale of second hand goods under the mark to constitute genuine use.
The UK High Court held that whilst the use of the AIWA trade mark in relation to the resale of second hand goods was capable of performing its essential function of guaranteeing the origin of these goods, this was not enough to constitute genuine use. The sales of the second hand goods in this case were via third party retailers such as Amazon and eBay. The proprietor’s involvement was however a factor that could result in this being genuine use, another being the existence of sufficient second hand sales that were capable of maintaining a market share of goods and preserving an outlet for the goods bearing the trade mark.
Although the reasonings of the CJEU and the UK High Court are different both recognise the importance of the proprietor’s involvement in the sale of second hand goods if genuine use is to be found.
Please contact Lorraine Lowell Neale or your usual Kilburn & Strode trade mark advisor, for more information.