C-303/97

VERBRAUCHERSCHUTZVEREIN v SEKTKELLEREI KESSLER

OPINION OF ADVOCATE GENERAL FENNELLY delivered on 29 September 1998 *

1. This case concerns an allegation of confu- sation, has objected to the use of the word sion in the labelling of German wines. Is the 'Hochgewächs' on the labelling of the Kessler continued use of an established trade mark Sekt, claiming that it is likely to mislead the for Sekt, 'Kessler Hochgewächs', prohibited consumer into thinking that the base wine because of an abstract risk of confusion with used for preparation of the cuvée of the Sekt the name, 'Riesling-Hochgewächs', reserved was a Riesling-Hochgewächs wine, as defined in both Community and national law for in Article 8a of the German Weinverordnung wines made exclusively from Riesling grapes? (Wine Regulations, hereinafter 'the Wein VO'), 1under which quality white wines may only be described as 'Riesling-Hochgewächs' if, inter alia, they are made exclusively from grapes of the Riesling variety. Since Kessler did not use any Riesling wines for the cuvée I — The factual and legal context of its Sekt, but, rather, mostly French wines of the Chardonnay grape variety, its use of the contested description was alleged to breach both Council Regulation (EEC) N o 2333/92 of 13 July 1992 laying down general rules for A — Background the description and presentation of sparkling wines and aerated sparkling wines (hereinaf- ter 'the sparkling-wine regulation') 2 and Para- graph 3 of the German Gesetz gegen den unlauteren Wettbewerb (Law against Unfair Competition). The plaintiff ultimately sought 2. Sektkellerei G. C. Kessler G m b H & C o . an order prohibiting Kessler from putting its (hereinafter 'Kessler') produces and markets Sekt on the market under the description sparkling wines. For about 60 years it has 'Hochgewächs'. marketed its top-range Sekt under the name 'Kessler Hochgewächs', a description pro- tected in Germany as a trade mark (No 615 242) since 7 June 1950.

it does not use the dual term 'Riesling- production' of the wine may also be pro- Hochgewächs' and, secondly, those involved vided. The 1989 Regulation has been imple- in the trade would not draw inferences as to mented by Commission Regulation (EEC) the base wine used from the description of a N o 3201/90 of 16 October 1990 laying down Sekt. Alternatively, Kessler asserts that the detailed rules for the description and presen- application for an injunction should be dis- tation of wines and grape musts. 4 missed since it had acquired valuable prop- Article 14(3)(a) of Regulation N o 3201/90 erty rights in the description 'Kessler Hoch- gives recognition in Community law to the gewächs' and the interpretation of the description 'Riesling-Hochgewächs', by listing sparkling-wine regulation should not result in it among the 'only terms' which may be used those rights being undermined. to describe a quality German Riesling wine psr and satisfying the relevant requirements of German law.

B — The relevant Community legislation

3 — OJ 1989 L 232 p. 13. 4 — OJ 1990 L 309 p. 1.

I - 516

VERBRAUCHERSCHUTZVEREIN v SEKTKELLEREI KESSLER

sions are Article 6(8) and 6(11). Under the (b) are liable to be confused with all or part former, 'reference to superior quality shall of the description of a table wine, a quality only be allowed in the case of, inter alia, "a wine produced in a specified region, quality sparkling wine psr" or "a quality including a quality sparkling wine psr or sparkling wine", whereas the latter permits an imported wine whose description is the use of the terms "Premium" or "Reserve" governed by Community provisions or as supplements to, among others, the term with the description of any other product "quality sparkling wines'". referred to in Article 1(1), or are identical to the description of any such product, unless the products used for constituting the cuvée of the sparkling wine in ques- tion are entitled to such description or presentation'.

7. The central provisions of the sparkling- wine regulation for the purposes of the present case are, however, contained in Article 13. Article 13(1) imposes a general requirement that 'the description and presentation of [spar- kling wines] and any form of advertising for such products must not be incorrect or likely Finally, the first subparagraph of Article 13(3) to cause confusion or to mislead the persons provides that: to whom they are addressed ...'.

9. The observations submitted in the present case also refer, for the purpose of interpreting Article 13 of the sparkling-wine regulation, to the second, eighth and eighteenth recitals in the preamble to the regulation. The third recital is also, to my mind, relevant. Those four recitals are worded, respectively, as fol- lows: Whereas, in order to facilitate the marketing of the said products, it should be left to the parties concerned to choose which optional information they wish to include, without provision of an exhaustive Ust; whereas the choice of optional information should never- theless be restricted to details which are not 'Whereas the purposes of description and inaccurate or liable to create confusion in the presentation should always be to provide minds of final consumers or others for whom potential final consumers and public bodies the information is intended; responsible for organising and supervising the marketing of the products concerned with sufficiently clear and accurate information to enable them to form an opinion of the prod- ucts; whereas rules should therefore be drawn up to ensure that this purpose is served;

Whereas, in the case of descriptive items, a distinction should be made between manda- Whereas, in order to establish conditions for tory information needed to identify a spar- fair competition between the various spar- kling or aerated sparkling wine and optional kling wines and aerated sparkling wines, any- information designed mainly to indicate the thing in the description or presentation of intrinsic qualities of a product or to distin- such wines likely to confuse or mislead those for whom the information is intended should be prohibited; whereas similar prohibitions should be laid down for brand names used to 5 — Council Regulation (EEC) No 823/87 of 16 March 1987Uying describe sparkling wines or aerated sparkling down special provisions relating to quality wines produced in specified regions; OJ 1987 L 84 p. 59. •wines.'

11. The plaintiff appealed on a point of law '(a) Does it suffice for the prohibition in ('Revision') to the Bundesgerichtshof (Fed- Article 13(2)(b) of the [sparkling-wine] eral Court of Justice, hereinafter 'the national regulation to be applicable that a word in court'). The national court has taken the view a brand name used to describe the spar- that the 'Kessler Hochgewächs' brand name kling wine (in this case "Hochgewächs") could be confused, for the purposes of the may be confused with part of the descrip- first alternative of Article 13(2)(b) of the tion of a wine (in this case "Riesling- sparkling-wine regulation, with the protected Hochgewächs") not used for constituting description 'Riesling-Hochgewächs' only if, in the absence of a specific finding of confu- sion, an abstract possibility of confusion were sufficient. It notes that the interpretation of 6 — OJ1984L 250, p. 17.

I - 519

OPINION OF MR FENNELLY — CASE C-303/97

the cuvée of the sparkling wine, even if it III — Analysis is not the case that a substantial propor- tion of consumers form mistaken impres- sions as to the composition of the cuvée which influence their purchases, and there is no intent to deceive on the part of the owner of the brand?

13. Since it is clear from the order for refer- ence that no specific finding of confusion has been established by the appellate court, the plaintiffs appeal in the main proceedings can only succeed if its submissions regarding the scope of the prohibition contained in Article 13(2)(b) of the sparkling-wine regula- (b) If so, may the industrial property which tion are upheld, and the second question does the owner of the brand has acquired by not arise unless they are. reason of the traditional undisturbed use of his description in Germany, as a higher- ranking interest deserving protection, pre- clude the application of the prohibition of descriptions in Article 13(2)(b) of the said regulation?'

former. Article 13(2)(a) prohibits, inter alia, the sparkling-wine regulation. The plaintiff the use of 'words' in brand names which 'are contrasts the expression 'likely to confuse or likely to cause confusion or mislead the per- mislead' in Article 13(2)(a) with the mere ref- sons to whom they are addressed'. erence to being 'liable to be confused' in Article 13(2)(b) is more specifically concerned Article 13(2)(b) as showing that mere risk of with the components of brand names which confusion suffices for the application of the 'are liable to be confused' with all or part of latter. This is, in substance, a textual argu- defined wine descriptions. It is the interpreta- ment, but it contains two elements. Firstly, it tion of that provision which is the subject- creates a distinction between 'misleading' and matter of the first question. 'confusion' and claims that Article 13(2)(b) concerns only the latter. Secondly, it considers that, in so far as that provision concerns 'con- fusion', it regards a mere risk as being suffi- cient for its application.

I - 521

OPINION OF MR FENNELLY — CASE C-303/97

in Article 13(1), which is concerned with the name, with a defined range of reserved names 'description and presentation' of wine prod- — in this case 'Riesling-Hochgewächs'. None ucts, in particular with concrete information of this concludes the issue of confusion, the regarding the type of wine and such matters extent of proof required or, in particular, as its composition, alcoholic strength, vintage whether a mere abstract risk, as distinct from year and identification of its provenance and a likelihood, is sufficient. While 'misleading' its producers. In rules governing these mat- and 'confusion' are overlapping terms, they ters, the prohibition is broad enough to cover have distinct meanings. Confusion is the misleading statements, where the consumer appropriate term when considering, in respect may be the recipient, deliberately or other- of Article 13(2), the effect on consumers of a wise, of false information, but also confusion, claimed similar mark. The issue is, as always, where the term conveys something less defi- how to establish to the required level of proof nite than deception but still relates to the that one mark is liable to be confused with substantive information provided about the another. product.

(iii) The extent of confusion required

I-522

VERBRAUCHERSCHUTZVEREIN v SEKTKELLEREI KESSLER

the plaintiff, such a requirement would jeop- continued use in wine labelling. I agree with ardise the harmonising objective underlying the Commission that, by adopting Article 13 the sparkling-wine regulation, since its appli- of the sparkling-wine regulation, the Com- cation would then be dependent on the views munity legislature has engaged in a balancing of specific sections of the population in dif- exercise between the pursuit of the consumer- ferent Member States. protection and fair-competition objectives on the one hand, and the need to respect the intellectual property rights in brand names on the other. In support of this view, the Com- mission, supported by Germany, refers to the eighth and eighteenth recitals in the preamble to the sparkling-wine regulation (quoted in 20. France submits that the objective of the paragraph 9 above). These recitals manifest a sparkling-wine regulation is to ensure that concern to balance the obligations of provi- consumers are furnished with comprehensive sion of information about the intrinsic quali- information on the wines that they purchase. ties of products, their distinctiveness from Only the compulsory or optional informa- competing products, effective marketing and tion for which the regulation provides is per- competition and avoidance of confusion. As missible. It follows, in its view, that poten- the Commission rightly contends, the balance tially misleading references in trade marks, sought by Article 13 would be seriously under- however unintentional, must not be permitted. mined if a mere abstract risk of confusion were enough to preclude the use of a brand name, protected as a trade mark.

the continued use of such a brand name in regulation to indicate that its authors intended the case of identity between the name and the that the use of quality references in respect of protected description, while prohibiting the sparkling wines, which they expressly autho- use of brand names that only partially corre- rised in Article 6(8) and (11), would be sub- spond to protected descriptions whenever an ject to prohibition if they were merely theo- abstract risk of confusion arises. retically capable of causing confusion as to the characteristics of the base wine used in the cuvée. The use of such references in brand names should not be subject to any more onerous requirements, particularly given the property interest involved. O n the basis of the terms of these provisions and, in par- 24. A further reason for rejecting the suffi- ticular, of the important function reserved for ciency of a mere abstract possibility of confu- brand names, I do not consider that a mere sion emerges from the submissions made by abstract risk of confusion suffices for the Germany, supported by Kessler, regarding the application of Article 13(2)(b) of the sparkling- anomaly that would then arise between, wine regulation. respectively, the use on labels of brand names and 'references to superior quality'. Since the use of quality references is expressly per- mitted by Article 6(8) of the sparkling-wine regulation, a sparkling-wine producer may utilise terms like 'Hochgewächs' on its label, instead of the terms 'Premium' or 'Reserve' recognised by Article 6(11), to supplement a reference to its product's superior quality. Although such a reference might be abstractly capable of inducing certain consumers into assuming that the sparkling wine in question was produced from a cuvée that would satisfy the requirements for the 'Riesling- Hochgewächs' description, since it would not 25. Secondly, I shall review some of the in such a case be part of a brand name, its use Court's case-law concerning comparable pro- would be subject not to Article 13(2) but, hibitions in other Community legislation, and instead, to the general provisions of Arti- in particular in the largely similar 1989 Regu- cles 4(1) and 13(1). I agree with Germany that lation. In Langguth 9the Court was con- the use of such quality references in isolation cerned with the use of the terms 'Kabinett', on labels of sparkling wines cannot be subject 'Spätlese' 'Auslese' and 'Weissherbst' as part to a different legal standard from that applied of the brand names of certain quality still to their use as part of brand names. Indeed, wines psr. These terms (other than 'Weiss- it is arguable, as Germany contends, that herbst', whose use is optional) are necessary where they are clearly used in brand names, in the description of German quality wines as opposed to appearing independently on ('Qualitätswein mit Prädikat') but they labels, the risk of confusion is diminished because consumers can see that the reference is part of a brand name and, thus, not neces- sarily to be treated as information about the product. To my mind, there is nothing in the 9 — Case C-456/93 [1995] ECR I-1737.

'[T]he fact that a brand name is presented in a conspicuous manner does not mean that it is likely to cause confusion or mislead the 26. It is undisputed that Kessler has been using the disputed brand name for around persons to whom it is addressed, even if it 60 years. To my mind, having regard both to contains a word that has been designated by Article 222 of the Treaty and the general prin- the rules in question as information which ciples of Community law under which 'both the right to property and the freedom to pursue a trade or business' 13 are assured, the germane question to ask is rather whether the exercise by Kessler of its property rights has 10 — In Case C-46/94 Voirine [1995] ECR I-1859, the Court sated (paragraph 28) that 'the conditions laid down in Article 40(2) been curtailed in the interests of avoiding the of the [1989 Regulation]... are substantively similar to the conditions laid down in Articles 4(1) and 13 of Regulation N o 3309/85 concerning quality sparkling wines psr' (Coun- cil Regulation (EEC) N o 3309/85 of 18 November 1985 laying down general rules for the description and presenta- tion of sparkling wines and aerated sparkling wines; 11 — Langguth, l o c cit., paragraph 28. OJ 1985 L 320 p. 9), which latter regulation was consoli- 12 — Paragraph 29. dated by the sparkling-wine regulation that is at issue in the 13 — See, among others. Case C-280/93 Germany v Council [1994] present case. ECR I-4973, paragraph 78.

I - 525

O P I N I O N O F MR FENNELLY — CASE C-303/97

risk of confusion posed by the disputed brand in my view, emphasised that it is for the name. Viewed in that light, I consider that the national court to determine whether a term is appropriate inference to be drawn from Lang- likely to mislead or confuse consumers. guth, for the purpose of construing Arti- cle 13(2) of the sparkling-wine regulation, is that, before the bona fide use of a brand name should be regarded as 'likely to cause confu- sion or mislead the persons to whom it is addressed' (my emphasis), the national court responsible for deciding the facts must be sat- isfied that there is a real risk of confusion. 14

I-526

VERBRAUCHERSCHUTZVEREIN v SEKTKELLEREI KESSLER

substance, the Court decided only that label­ tion and, on the other hand, that fact would ling of the kind at issue came within the defi­ have deterred a significant number of cus­ nition of labelling on the basis, inter alia, that tomers from making a purchase, had they it was capable of misleading consumers as to known it'. 20

the origin of the wine. It was left to the national court to apply it to the particular case and the Court did not, in that case, have to consider the issue of confusion caused by 17 the use of brand names.

20 — Ibid., paragraph 15. 17 — Advocate General Elmer also took the view that the relevant 21 — See Case C-470/93 Verein gegen Unwesen in Handel und decorations were covered by Article 38(1) of the 1989 Regu­ Gewerbe Köln v Mars [1995] ECR I-1923, paragraph 24. lation; see paragraph 12 of his Opinion. He went on to con­ The Court was concerned with the compatibility with sider whether such labelling could cause confusion for the Article 30 of prohibiting the marketing of imported ice­ purposes of Article 40(2) of that regulation. While satisfied cream snacks because, inter alia, of a potentially misleading that the information they conveyed could cause confusion, presentation on the wrappers of the extra size of the snacks he found it 'extremely difficult to lay down general guide­ during a publicity campaign; the coloured part announcing lines as to what information might be misleading or give rise the ' + 1 0 % ' represented more than 10% of the total surface to confusion and what would not' and, consequently, he area of the wrapper. It had litde difficulty rejecting the claim considered that the determination should ultimately 'hinge that 'a not insignificant number of consumers' would be on a factual assessment of the circumstances of the indi­ 'induced' by such wrapping into 'believing ... that the increase vidual case'; paragraph 14. is larger than that represented' (paragraph 22) and, accord­ ingly, held that: 'Reasonably circumspect consumers may be 18 — The definition of misleadiną advertising set out in Article 2(2) deemed to know that there is not necessarily a link between of that directive is quoted m footnote 8 above. the size of publicity markings relating to an increase in a 19 — Case C-373/90 [1992] ECR I-131. product's quantity and the size of that increase'.

marks, the Court, in IHT Internationale Heiz- courts in the present case — imposes any technik v Ideal Standard, 22 recalling its ear- undue burden. lier statement in Deutsche Renault v Audi 23 that 'Community law does not lay down any criterion requiring a strict interpretation of the risk of confusion', held that there would be an arbitrary restriction on trade between Member States 'if [a] national court were to conduct an arbitrary assessment of the simi- 32. Support for this approach also emerges larity of products'. 24 from the Court's interpretation of the trade- marks directive. 25 In Sabel v Puma, 26 although the Court was dealing with confu- sion as between different trade marks, it is significant that it held that the 'likelihood of confusion' must be 'appreciated globally, taking into account all factors relevant to the circumstances of the case'. 27 Referring to Article 4(1)(b), which speaks of '... a likeli- hood of confusion on the part of the public', the Court viewed it as showing 'that the per- ception of marks in the mind of the average consumer of the type of goods or services in question plays a decisive role in the global 31. The plaintiff, however, submits that a appreciation of the likelihood of confusion'. 28 requirement of concrete proof of confusion Moreover, such a consumer, the Court also would be unduly onerous and should not be declared, 'normally perceives a mark as a applied to the interpretation of Article 13(2)(b) whole and does not proceed to analyse its of the sparkling-wine regulation. Read as a various details'. 29 whole and in the light of the 18th recital in the preamble to the regulation, Article 13(2) is, in my view, concerned with avoiding any- thing in the description or presentation of sparkling wines which is likely to mislead or confuse those to whom the label is addressed. An inference of risk of confusion may be drawn from the comparison of labels made 33. The recent judgment in Gut Springen- by the national court based on its own appre- heide, which concerned allegedly misleading ciation of the issue of their similarity. This information contained in both a trade mark may or may not be supplemented by evi- used on and a notice supplied inside the dence in the form of market or consumer packaging of eggs, confirms the Court's ten- studies or the like. I do not consider that dency to take a consistent approach to mis- such a pragmatic approach — which is, in substance, the one adopted by the German 25 — First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, OJ 1989 L 40, p. 1. 22 — Case C-9/93 [1994] ECR I-2789 (hereinafter 'Ideal Stan- 26 — Case C-251/95 [1997] ECR I-6191. dard"). 27 — Ibid., paragraph 22. 23 — Case C-317/91 [1993] ECR I-6227, paragraph 32. 28 — Paragraph 23. 24 — Ideal Standards paragraph 19. 29 — Ibid.

'Either the misleading nature of the state- ments in question is to be assessed in the light of the actual expectations of consumers, in which case those expectations ought, if neces- sary, to be ascertained by means of a survey 35. I see no reason why the same approach should not apply in the present case. The appropriate national court must determine 30 — Case C-210/96 Cut Springenheide and Others v Ober- whether, notwithstanding the abstract risk of kreisdirektor des Kreises Steinfurt — Amt für Lebensmitte- lüberwachung and Otiers [1998] ECR I-4657 (hereinafter confusion posed by the continued use of the 'Gut Springenheide'). 31 — See Article 10(2)(e) of Council Regulation (EEC) No 1907/90 of 26 June 1990 on certain marketing standards for eggs; OJ 1990 L 173, p. 5. 32 — Gut Springenheide, paragraph 14. 33 — Ibid., paragraph 31.

I-529

OPINION OF MR FENNELLY — CASE C-303/97

37. It follows, in my view, that an abstract risk of confusion arising from the use of a brand name on bottles of sparkling wine does not, in itself, suffice to render applicable the 36. In the present case, it is noteworthy, as prohibition in Article 13(2)(b) of the counsel for Kessler pointed out at the hearing, sparkling-wine regulation. that in German law the courts may decide that it is not necessary for proof of confusion to be established if judges are capable of determining whether a genuine risk of confu- sion or error arises. This would particularly be the case where the judges are themselves amongst the potential consumers addressed B — Question 2 by the allegedly misleading or confusing infor- mation. The information before the Court in the present case would, however, tend to sug- gest that, outside of trade circles, awareness of the significance of the 'Riesling- Hochgewächs' description is limited. In those circumstances, it is hardly surprising that the 38. In the light of the answer which I pro- pose in respect of the first question referred, 34 — Case C-313/94 [1996] ECR I-6039. I do not think it necessary to address the 35 — Ibid., paragraph 22. second question.

I-530

VERBRAUCHERSCHUTZVEREIN v SEKTKELLEREI KESSLER

IV — Conclusion

39. Accordingly, I recommend that the Court answer the first question referred by the Bundesgerichtshof as follows:

It does not suffice for the prohibition in Article 13(2)(b) of Council Regulation (EEC) N o 2333/92 of 13 July 1993 laying down general rules for the description and presentation of sparkling wines and aerated sparkling wines to be applicable that a word in a brand name used to describe a sparkling wine (in this case 'Hochgewächs') may, in the abstract, be capable of being confused with part of the description of a wine (in this case 'Riesling-Hochgewächs') not used for constituting the cuvée of the sparkling wine at issue.