Champagne branding case provides lessons for trade mark owners

The case, which was considered by the EU’s General Court, involved supermarket chain Lidl and concerned champagne branding.

The court’s ruling in the case, handed down earlier this year, provides helpful clarification on both the type and quality of evidence trade mark owners will need to adduce where they find themselves needing to demonstrate that their marks have ‘acquired distinctiveness’ in use.

The court’s guidance is particularly pertinent to brand owners that own trade marks for colours, which are arguably more likely than other types of marks to be considered not to be inherently distinctive.

Why is acquired distinctiveness important in EU trade mark law?

Brand owners are prohibited, under EU – and UK – trade mark law, from registering marks which are devoid of distinctive character. However, where a mark that is not inherently distinctive has been registered as a trade mark, the trade mark does not necessarily have to be revoked.

Where proceedings for a declaration of invalidity of a mark on the basis of a lack of distinctiveness are raised, the burden rests on the trade mark owner to prove either that that mark had acquired distinctive character owing to the use that had been made of it prior to the date the trade mark application was filed, or that it had acquired such character due to use made of it between the date it was registered as a trade mark and the date the application for a declaration of invalidity was filed. 

The case before the General Court

The General Court considered what evidence is required to show ‘acquired distinctiveness’ in the context of an EU trade mark used by MHCS as part of the Veuve Clicquot champagne branding. The mark in question was a colour mark for a shade of orange – the Veuve Clicquot champagne branding has consisted of an orange label since 1877.

In its application to the General Court, Lidl sought a declaration that the MHCS colour mark was invalid. It asked the court to annul an earlier decision by the EU Intellectual Property Office (EUIPO) Board of Appeal which had rejected Lidl’s claims that the mark should be revoked on the basis that it lacked distinctiveness, determining that there was sufficient evidence that the mark had acquired distinctiveness through use.

Before the General Court, Lidl argued otherwise and claimed that the Board of Appeal adopted legally incorrect reasoning in its decision. In particular, Lidl argued that the evidence relating to the mark’s use in Ireland, Greece, Luxembourg and Portugal was limited and insufficient to demonstrate that the mark had acquired distinctive character through use.

The need for ‘direct evidence’

In its ruling, the General Court restated, and then clarified, EU case law on the question of how ‘acquired distinctiveness’ through use of the mark can be evidenced.

The basic starting point, according to the court, is that the evidence must show that the mark identifies the goods as originating from a particular undertaking – this will not be the case if the goods cannot be distinguished from goods that other undertakings offer.

The court said a range of evidence can be taken into account, but it highlighted how some evidence will be of greater probative value than others and stated that ‘direct evidence’ “is necessary in order to demonstrate that a mark has acquired distinctive character through use”.

‘Direct evidence’, according to the court, includes surveys, market studies and statements from professional bodies or the specialised public.

In contrast, sales figures and marketing evidence are to be considered ‘secondary evidence’ and, in any event, on the basis of established EU case law, cannot on their own constitute sufficient proof of distinctive character acquired through use, the court said.

The mere fact that a mark has been used in the EU for some time will also, on its own, not be sufficient to show that the public targeted by the goods perceives it as an indication of commercial origin, the court added.

The evidence in this case

The General Court was not in a position to assess whether the MHCS mark had acquired distinctive character through use during the period between the application for registration and the invalidity proceedings, because this had not been examined by the Board of Appeal. Its focus therefore was on whether the mark had acquired distinctive character owing to the use that had been made of it prior to the date the trade mark application was filed.

In the terms of how the quality of evidence should be assessed, the General Court explained that the relevant criteria is its credibility, taking into account from whom the document originates, the circumstances in which it came into being, to whom it is addressed, and whether on its face the document appears sound and reliable. In particular, in relation to publications, it stated that consideration must be given to whether the publication is an informative article or promotional publication.

The General Court found fault with the direct evidence MHCS sought to rely on in this case.

The court also took issue with what could be deduced from a statement from trade body the Comité interprofessionnel du vin de Champagne (CIVC), which cited that MHCS was the only producer of champagne wines to use the shade of orange in question. The court considered such as assertion to be “insufficient to demonstrate that the relevant public perceives the mark at issue as a trade mark” and so said that it cannot be inferred from such evidence that a mark has acquired distinctive character through use – it is merely potentially supporting evidence, the court said.

Statements from MHCS employees submitted in evidence were also described by the court as not credible direct evidence, though it did state it could possibly support other direct evidence.

The General Court also said that evidence of decisions from the national courts of member states be regarded as direct evidence. In this regard, the General Court said courts in France and Belgium had acknowledged evidence of consumer perception of the mark.

However, the General Court considered that the Board of Appeal had failed to properly consider how the decisions of the courts in Belgium and France were relevant for other member states. It held that the evidence from Belgium and France only counted, at best, as supporting evidence in respect of demonstrating acquired distinctiveness from use of the mark in other EU countries.

The General Court added that the evidence submitted in respect of Portugal and Greece was “particularly insufficient” and did not constitute “direct evidence of the acquisition of distinctive character through use”. In this regard, the court considered that information submitted on sales volumes, market shares and promotional budgets, as well as advertising and promotional material in magazines, did not directly show that the mark had become such as to identify the champagne as originating from a particular undertaking.

The court found that the Board of Appeal’s decision in favour of MHCS’s claims of acquired distinctiveness through use at the time the trade mark application was filed “is vitiated by an error of assessment”. It has referred the case back to the Board of Appeal for it to reconsider.

Lessons for brand owners

The decision shows that establishing acquired distinctiveness across the EU is a high hurdle. It reminds brand owners of the importance of adducing robust evidence to show that their mark has attained distinctive character through use, either prior to the filing of the trade mark application, or between the date of registration and filing of invalidity application. If the owner of the contested trade mark can show acquired distinctiveness on either date, the invalidity application fails.