2011/10 > Trade Mark and design: a break-up or a developing relationship?

A ruling of the ECFI dated October 6th, 2011 just ended the Bang & Olufsen saga that has opposed this company to the OHIM since 2003 regarding the registration, as a three-dimensional trademark, of its well-known BeoLab 8000 loudspeaker’s shape (opposite).

In a decision dated September 22th, 2005, the first board of appeal of OHIM confirmed a rejection of the trademark application made by the company Bang & Olufsen A/S, on the grounds that the shape was devoid of any inherent distinctive character because it was essentially inspired by aesthetic considerations. It was judged that the applicant had not demonstrated that the shape was distinctive and therefore performed a trade mark function. The rejection was also confirmed on the ground that the body of evidence provided by the applicant was not sufficient to demonstrate distinctiveness of the mark acquired through use.

By a judgment dated 10 October 2007 (PDF), the Court upheld Bang & Olufsen’s appeal, considering that the fact the shape of the product is essentially dictated by aesthetic considerations does not mean it cannot perform a trade mark function. It suffices that the relevant public perceives the sign as an indication of the commercial origin of the product, the fact that it serves simultaneously a purpose other than that of indicating commercial origin is immaterial to its distinctive character.

The case was then reallocated to the First Board of Appeal. By a decision dated September 10th, 2008 (PDF), it annulled the examiner’s rejection decision insofar as it held that the mark applied for was devoid of any distinctive character. However, it rejected the trademark application, considering the sign at issue to consist exclusively of the shape which gives substantial value to the product within the meaning of Article 7(1)(e)(iii) of Regulation n°40/94 (PDF)  on the Community Trade Mark (nowadays Regulation n°207/2009).

Bang & Olufsen did not lose heart and lodged a new appeal against this decision. It asserted two main lines of arguments. First, it claimed it is not possible to re-examine the trademark on the basis of new absolute grounds for refusal because this examination has already been performed and this ground had not been raised. Second, it submitted that the substantial value of a product must result from all the elements of its shape and, if this value comes from factors other than shape – such as technical specifications of the product, its branding and how it is promoted – those elements must be taken into account. Bang & Olufsen argued that the notion of “substantial value of the product” could not apply to shapes only because they have striking design because, in such cases, only products with commonplace shapes would be able to be registered as Community trademarks.

The ECFI has now rejected these arguments. Regarding the first, the procedural argument, the decision states that the Court’s annulment of the OHIM decision refusing registration of the mark on basis of an absolute ground for refusal shall necessarily lead OHIM to reopen the procedure for the examination of the mark in question and to reject it where it considers that the sign in question is covered by another absolute ground for refusal. Furthermore, although the examination of the “substantial value of the shape” may lead to an impossibility to register certain marks, which cannot be “re-acquired”, according to the Court this does not mean that the examination of “substantial value” must be considered as a preliminary matter to decide on, even if beginning by considering “substantial value” would present an advantage. Each of the grounds for refusal to register is independent from the others and calls for separate examination.

Thus, the ECFI has now decided that the Board of Appeal did not commit any error of law in the present case by examining the sign under a new absolute ground for refusal.

Considering the merits of the case, the ECFI considers that, for the product at issue, the design is an element which will be very important in the consumer’s choice even if the consumer also takes other characteristics of the product into account; that this design is an essential element of its branding and increases the appeal of the product at issue; and that, therefore, it appears the Board of Appeal did not commit any error in holding that the shape gives substantial value to the product concerned.

It is well known that this exception to registration as a mark of a shape which gives a substantial value to a product, enacted by Article 7(1)(e)(iii) of the Regulation, was planned to create a borderline between trademark and design protection.

Nevertheless, this borderline is extremely difficult to understand and to apply. Indeed, according to the position adopted by the Court in this case, the fact that a product has a striking and easy to remember design cannot allow its registration as a trade mark but on the contrary leads to its rejection. We face a complicated situation: to be considered as distinctive, the shape of a product must differ enough from pre-existent shapes, but if it does, it will lose the possibility to be protected as a trade mark because the “substantial value” of the product will result from this “so-distinctive shape”.

This is the reason why the Max Planck Institute, in its Study on the Overall Functioning of the European Trade Mark System (PDF), purely and simply suggests the removal of this ground for refusal of trademark registration. We will see if this proposition will find a place in the future amendments of the Regulation on the Community Trade Mark.