On March 14, 2019, the fifth chamber of the Court of Justice of the European Union (“CJEU”) issued its judgment in Case C-21/18 Textilis Ltd, Ozgur Keskin v Svenskt Tenn AB, providing important clarifications on the correct interpretation of Article 7(1)(e) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trademark (“CTMR”). In particular, the Court was asked to rule on the meaning of the wording “consist exclusively of the shape” used in both the original text of the CTMR provision concerning one of the absolute grounds for refusal of a trademark registration and its version, as later amended by EU Regulation No 2015/2424 (“CTMR as amended”), as well as on the temporal scope of application of the new aside to such provision on “another characteristic”, introduced by CTMR as amended, which entered into force on March 23, 2016.
The decision follows in the footsteps of Case C-163/16 Louboutin and Christian Louboutin Sas v van Haren Schoenen BV, but in a sense, goes even further.
Svenskt Tenn is a Swedish interior design company that manufactures and sells furniture and other accessories, such as furnishing fabrics, distinguished by the presence of various decorative patterns inspired by maps of famous cities, among other things. During the 1940s, the famous architect Josef Frank designed a pattern for Svenskt Tenn called “MANHATTAN”, which the Swedish company markets and sells and for which it claims to be the copyright holder.
On January 4, 2012, Svenskt Tenn filed an application for registration of an EU trademark with the European Union Intellectual Property Office (“EUIPO”). That figurative trademark (no. 010540268), designated as “MANHATTAN”, was registered for goods and services in Classes 11, 16, 20, 21, 24, 27 and 35 of the Nice Agreement, including various houseware and other items (“Trademark”).
Textilis is an English company, owned by Mr. Ozgur Keskin, that markets fabrics and goods for interior decoration, some of which bear patterns that resemble those of the Trademark.
In this context, Svenskt Tenn brought an action for infringement of the Trademark as well as an action for copyright infringement against Textilis and Mr. Keskin before the Stockholms tingsrätt (the District Court of Stockholm, Sweden). Textilis and Mr. Keskin responded by submitting a counterclaim for the invalidation of the afore-mentioned Trademark on the basis of both its alleged lack of distinctive character and the fact that, with regard to the way it is used, it can be said to consist of a shape “which gives substantial value to the goods”, within the meaning of Article 7(1)(e)(iii) of CTMR.
The Stockholms tingsrätt dismissed the counterclaim, finding that i) pursuant to Article 4 EUTMR, all signs that can be represented graphically may be EU trademarks, in particular drawings – such as the one covered by the Trademark – provided that they are distinctive; and ii) the Trademark is not “a shape” within the meaning of Article 7(1)(e)(iii) of CTMR. Consequently, the Swedish Court ruled that Textilis and Mr. Keskin had infringed the Trademark as well as Svenskt Tenn’s copyright on the drawings.
Textilis and Mr. Keskin then appealed that decision before the Svea hovrätt, Patent- och marknadsöverdomstolen (the Svea Court of Appeal, Patents and Market division, in Stockholm), insisting for a declaration of invalidity of the Trademark by claiming that a sign consisting of the pattern on a fabric cannot be registered as a trademark, as it would circumvent the principle of limitation in time of copyright protection. According to the appellants, this is the reason why Article 7(1)(e)(iii) of CTMR inhibits the registration of signs “which consist exclusively of a shape which gives substantial value to the goods” as trademarks.
The Svea Court of Appeal decided to stay the main proceedings and ask the CJEU:
1. whether Article 7(1)(e)(iii) of CTMR as amended applies to trademarks registered before the entry into force of the amended regulation;
2. whether Article 7(1)(e)(iii) of CTMR, in the applicable version, is to be interpreted as meaning that its scope encompasses a sign consisting of the two-dimensional representation of a two-dimensional product, such as the fabric decorated with the sign in question in the main proceedings;
3. if the answer to question number two is yes, according to which criteria is the wording “signs which consist exclusively of the shape (or another characteristic) [as set forth in CTMR as amended] which gives substantial value to the goods” to be interpreted in a situation such as the one in question, where the registration covers a wide range of classes and the sign can be affixed in many different ways to the goods. If the assessment is to be made using objective criteria, that is to say, without taking into account the way the trademark holder may de facto have affixed the sign to the goods.
With regard to the first question, the CJEU recalled its settled case-law according to which the substantive provisions of EU law must be interpreted as applying retroactively only insofar as it clearly follows from their terms, objectives, or general scheme that such an effect must be given to them. This is to preserve the principles of legal certainty and the protection of legitimate expectations. In the case at stake in the main proceedings, it is uncontested that Regulation No 2015/2424 does not explicitly provide for the retroactive application of the new wording of Article 7(1)(e)(iii) of CTMR, nor can such a conclusion be drawn from the general scheme and purpose of the CTMR as amended.
The CJEU stated that it follows that Article 7(1)(e)(iii) of CTMR as amended does not apply to the case at hand, considering that the Trademark has been registered prior to the entry into force of Regulation No 2015/2424.
Moving to the second question, the CJEU observed that, since the CTMR does not provide any definition of the term “shape”, its meaning must be established with reference to its usual meaning in everyday language, while also considering the context in which it occurs and the purposes of the rules to which it belongs.
As the CJEU recently recalled in the Louboutin case[1], the term “shape”, within the context of EU trademark law, is usually intended as “a set of lines or contours that outline the product at issue”. In that case, the CJEU established that the application of a particular color to a specific location of a product does not mean that the sign in question consists of a “shape” within the meaning of Article 3(1)(e)(iii) of Directive 2008/95, whose wording is similar to that of Article 7(1)(e)(iii) of CTMR. This is because what the applicants intended to protect through the trademark registration in Louboutin was not the form of the product or part of the product on which it may be affixed, but only the positioning of that color in that exact location.
Similarly, in Textilis the CJEU now stated that it cannot be upheld that a sign consisting of two-dimensional decorative motifs is indissociable from the shape of the goods on which that sign is represented, such as fabric or paper, the form of which differs from those decorative motifs. The Court also added that the fact that the drawings covered by the Trademark enjoy copyright protection does not affect this finding in any way. Therefore, the CJEU concluded that the exclusion from registration established in Article 7(1)(e)(iii) of CTMR is not applicable to the sign at issue in the main proceedings on the grounds that “the sign under consideration represents shapes which are formed by the external outline of drawings representing, in a stylised manner, parts of geographical maps, the fact remains that, apart from those shapes, that sign contains decorative elements which are situated both inside and outside those outlines”[2].
In view of the answer given to the second question, it was not necessary for the Court to reply to the third and last question. However, it would have been interesting to see whether the Luxembourg judges would have come to a different conclusion in the event that the new CTMR as amended provision on “another characteristic” would apply.
[1] CJEU, judgment of 12 June 2018, Louboutin, Case C‑163/16.
[2] CJEU, judgment of 14 March 2019, Textilis, Case C 21/18, paragraph 40.
