Leidseplein Beheer and de Vries v Red Bull GmbH and Red Bull Nederland BV, European Court of Justice
The European Court of Justice (ECJ) has ruled on the application of the “due cause” concept in European Union trade mark cases. Article 5(2) of the EU’s Trade Marks Directive allows a trade mark owner to prevent third parties from using an identical or similar sign for dissimilar goods or services where the use of that sign “without due cause” takes unfair advantage of, or is detrimental to, the trade mark’s distinctive character or repute.
The facts of the case were as follows. Red Bull registered the trade mark “RED BULL KRATING-DAENG” under class 32 for non-alcoholic drinks in the Benelux countries; Red Bull enjoyed a certain reputation in those countries. Red Bull issued proceedings for infringement of its trade mark by Mr de Vries for using the trade mark “THE BULLDOG” in relation to hotel, restaurant and café services involving the sale of drinks. Mr de Vries claimed that even though his trade mark had been registered only a few days after Red Bull’s trade mark, he had been using the sign since 1975 and therefore had a right to continue using the trade mark.
The initial Dutch court dismissed Red Bull’s claim but allowed Red Bull to appeal on the basis that its trade mark enjoyed a certain reputation and Mr de Vries’ trade mark could be taking unfair advantage of that reputation. On appeal, the court found in favour of Red Bull as it considered that Mr de Vries had been using the trade mark “without due cause”. Mr de Vries appealed and the ECJ was asked for an opinion on the following question: “Is Article 5(2) of the Trade Mark Directive to be interpreted as meaning that there can be due cause within the meaning of that provision also where the sign that is identical or similar to the trade mark with a reputation was already being used in good faith by the third party/parties concerned before that trade mark was filed?”
The ECJ concluded that the owner of a trade mark with a reputation may be obliged, under the “due cause” concept, to tolerate the use by a third party of a sign similar to that mark in relation to a product which is identical to that for which that mark was registered. It would, however, be necessary to demonstrate that the sign was being used before that trade mark was filed and that the use of that sign in relation to the identical product was in good faith. The ECJ gave the national courts the following guidance on what to look for when making such a determination:
• How that sign has been accepted by, and what its reputation is with, the relevant public;
• The degree of proximity between the goods and services for which that sign was originally used and the product for which the mark with a reputation was registered; and
• The economic and commercial significance of the use for that product of the sign which is similar to that mark.
“Due cause” could look at not only objective reasons, but also subjective intentions of the user of the mark. If a third party tries to ride on the coat-tails of the mark to benefit from its power of attraction, reputation and prestige and exploit, without paying any compensation, the marketing effort of the trade mark owner, the advantage obtained must be considered to be unfair.
A further complication arises where there is an extension of the goods or services, as happened here. On the facts of this case, the ECJ thought that it would be acceptable as an extension of the use of the mark for hotel, restaurant and café services including the sale of drinks there, for Mr de Vries then to use the trade mark in connection with the sale of energy drinks in their own packaging.
