C-2/00

HÖLTERHOFF

OPINION OF ADVOCATE GENERAL JACOBS delivered on 20 September 2001 1

1. Where a person owns a national trade and Article 6 concerns 'Limitation of the mark in the form of a name for goods effects of a trade mark'. possessing certain characteristics, does the Trade Marks Directive 2 entitle him to prevent another person from using that name in the course of trade in order to indicate characteristics of other similar goods which that other person is offering 3. Article 5(1) provides: for sale but where the goods offered are not produced by the trade mark proprietor and the seller makes no claim to that effect and there can be no confusion as to their origin? That is the tenor of the question raised by the Oberlandesgericht (Higher Regional 'The registered trade mark shall confer on Court) Düsseldorf in the present case. the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:

(a) any sign which is identical with the The Trade Marks Directive trade mark in relation to goods or services which are identical with those for which the trade mark is registered;

2. The provision on which that court seeks a ruling is Article 5(1) of the Trade Marks Directive. However, several other provi­ (b) any sign where, because of its identity sions of that article have also been referred with, or similarity to, the trade mark to, together with Article 6(1). Article 5 is and the identity or similarity of the entitled 'Rights conferred by a trade mark' goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of 1 — Original language: English. the public, which includes the likeli­ 2 — First Council Directive 89/104/EEC of 21 December 1988 hood of association between the sign to approximate the laws of the Member States relating to trade marks, OJ 1989 L 40, p. 1. and the trade mark.'

'The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade,

(b) offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder; (a) his own name or address;

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(b) indications concerning the kind, The circumstances of the main proceedings quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services; 9. Dr Ulrich Freiesleben produces and sells diamonds and, via a licensee, coloured gemstones. He is the owner of the two German registered trade marks in issue in the national proceedings. They are 'Spirit Sun', registered in respect of 'diamonds for further processing as jewellery', and 'Con­ text Cut', for 'precious stones for further (c) the trade mark where it is necessary to processing as jewellery'. indicate the intended purpose of a product or service, in particular as accessories or spare parts;

10. Dr Freiesleben also holds patents for two specific forms of gemstone cut and confines his use of the trade marks to those respective cuts. 'Spirit Sun' is used for a provided he uses them in accordance with round cut with facets radiating from the honest practices in industrial or commercial centre and 'Context Cut' for a square cut matters.' with a tapering diagonal cross.

12. What is not common ground is the precise way in which those terms were used in relation to the gems offered for sale and the extent to which such use was permis­ sible. Dr Freiesleben claimed in the main 14. It further finds that Mr Hölterhoff used proceedings that the gems were not pro­ the designations in such a way that there duced by him or his licensee but that Mr was no indication that the gems offered for Hölterhoff fraudulently asserted that they sale were from Dr Freiesleben's own or were. Mr Hölterhoff contended that the licensee's firm; it was clear, and Ms gems were originals produced by Dr Freies­ Haverkamp understood, that they came leben or his licensee and purchased in from Mr Hölterhoff himself. Nor was there France with the result that Dr Freiesleben's any use of the term 'Spirit Sun' on any trade mark rights had been exhausted. packaging, invoice or other document relat­ ing to the gems sold that could have misled any third party on that score. Indeed, it appears that the only instance of the term's use in writing in connection with the negotiations or the sale was by Ms Haverk­ amp in her faxed order for two garnets 'in the Spirit Sun cut'.

13. The Oberlandesgericht, however, essentially accepts neither of those versions but has made its own, apparently very different, findings based on evidence given by Ms Haverkamp. It has found that Mr Hölterhoff did not present the gems sold as originating from Dr Freiesleben or his licensee but as produced by his own cutter in the 'Spirit Sun' cut, which he claimed was an old cut in use since time immem­ 15. The Oberlandesgericht has decided to orial and to which Dr Freiesleben did not stay the proceedings before it — in which have exclusive rights. In addition, he Dr Freiesleben is seeking various remedies referred to 'Context Cut'; although Ms against Mr Hölterhoff, including a restrain­ Haverkamp could not state with certainty ing order and an award of damages — and

16. The Oberlandesgericht indicates that the point in issue is the subject of some dispute in legal circles in Germany. 19. Written observations have been sub­ mitted by the parties to the main proceed­ ings, the French and United Kingdom Governments and the Commission. Dr Freiesleben, the French Government and 17. One view is that a trade mark is the Commission presented oral argument at infringed only where a sign capable of the hearing. being confused with the mark is used as a means of distinction. As regards origin, that arises only where use of the mark might lead a not inconsiderable section of the relevant public to assume that it indicates the firm of origin. Where (but only where) the sign clearly cannot be perceived as a 20. Mr Hölterhoff concludes from the text commercial mark of origin, it is not used as of the Trade Marks Directive that there can a means of distinction. On that view there be no question of infringement unless the is no infringement in the present case, since Mr Hölterhoff used the trade marks to denote a specific cut and not a specific 5 — It may be noted that, in any event, such uses are not normally 'in the course of trade' and thus cannot be origin. prevented under Article 5(1) or (2).

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mark is used as such — that is to say in law before the transposition of the Trade order to distinguish goods or services by Marks Directive) or is any use now suffi­ their origin, but not where, as here, the cient and (b) must there be a likelihood of mark is merely mentioned as an indication its being taken as a guarantee of origin? of characteristics of the goods and there is no possibility of its being taken to identify their origin.

7 — BMW, paragraph 52 of the judgment, and Case C-10/89 6 — Case C-63/97 BMW [1999] ECR I-905, paragraph 38 of the CNL-SUCAL v HAG (ΉAG II') [1990] ECR I-3711, judgment. paragraph 14.

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infringed. In this case, there is use of an the risk of confusion may be obviated by identical sign in relation to goods which are words such as 'in the style of...' etc. The either identical to those covered by the uses listed in Article 6, as exceptions to the trade mark or sufficiently similar to give exclusive right conferred by Article 5(1), rise to a likelihood of confusion on the part must be deemed to be exhaustive. The of the public. At the very least, Dr Freies­ circumstances described by the referring leben should be given the opportunity to court appear to involve not a necessary use demonstrate that, in accordance with the of words to describe a particular cut but German provision implementing rather the use of an identical mark to Article 5(2) of the directive, his trade designate identical products, clearly pro­ marks have a reputation in Germany and hibited by Article 5(1)(a). Any other inter­ that their use by Mr Hölterhoff took unfair pretation of that provision would deprive it advantage of or was detrimental to their of its effect and might even lead to a distinctive character or repute. situation in which the trade mark could be revoked under Article 12(2)(a) of the direc­ tive because 'in consequence of acts or inactivity of the proprietor, it has become the common name in the trade for a product or service in respect of which it is registered'.

therefore, there must be trade mark use. 29. At the hearing, however, the Commis­ This view is best reached by interpretation sion stated that it had changed its position of Article 6 but may also be reached on the scope of Article 5(1). It cited the through Article 5, following BMW. In any case of the registration of a sign consisting event, the precise result in each case will simply of a question mark as a trade mark 8 depend on the assessment by the national in respect of magazines. Clearly, it rea­ court of whether there is honest descriptive soned, the owner of such a mark cannot be use and/or a real risk of confusion in the entitled to prevent the use of question mind of the reasonably well-informed, marks, even for purely grammatical pur­ observant and circumspect consumer. poses, on the covers of other magazines. Yet there is no relevant limitation in Article 6(1) or elsewhere which would preclude him from doing so if Article 5(1) is interpreted as granting him the right in principle to prevent any use of his trade mark. Article 5(1) should therefore be construed as conferring only an entitlement to prevent use indicating or intended to indicate trade origin, and Article 6(1) as clarifying certain consequences of that inherent limitation.

facts found by the national court conflict Article 5(1) of the Trade Marks Directive with the versions alleged by both of the parties to the proceedings before it. In such circumstances in particular, it is preferable to confine consideration of the issue to the framework set out in the national court's question itself. 33. The first sentence of that provision states that a registered trade mark confers exclusive rights on the proprietor. The remainder of the paragraph, to which the national court's question explicitly relates, is expressed essentially in negative terms, in 31. The factual situation to which that that it specifies what the trade mark question refers presents three features: proprietor may prevent others from doing. However, such negative rights of preven­ tion should in my view be considered in the light of the positive rights inherent in ownership of a trade mark, from which they are inseparable. — A uses a sign, in respect of which B enjoys trade-mark protection, when offering his own goods for sale; how­ ever,

34. A trader registers or acquires a trade mark primarily not in order to prevent others from using it but in order to use it — A makes it clear that he produced those himself (although exclusivity of use is of goods and there is no question of the course a necessary corollary). Use by the sign's being perceived in trade as indi­ proprietor is indeed a central and essential cating their origin; and element of ownership, as may be seen from Articles 10 to 12 of the Trade Marks Directive, under which rights may lapse or be unenforceable in the event of non-use.

10th recital in the preamble to the Trade tial function, however, it is much more Marks Directive 9speaks of guaranteeing difficult to see why the proprietor should the trade mark as an indication of origin. be entitled to prevent such use. And, as has The same idea is inherent in the definition been pointed out in the observations to the 10 in Article 2, which states that in order to Court, both the wording of Article 5(5) of constitute a trade mark, signs must be the Trade Marks Directive and the judg­ 12 'capable of distinguishing the goods or ment in BMW support the view that the services of one undertaking from those of use which may be prevented under other undertakings'. Moreover, the Court Article 5(1) or (2) is confined to use for has consistently held, both before and since the purposes of distinguishing goods or the adoption of the Trade Marks Directive, services. Perhaps even more cogently, the that the essential function of a trade mark Commission drew attention at the hearing is to guarantee the origin of a product to the existence of situations in which it vis-à-vis the consumer or end user by would clearly be inequitable to allow the enabling him to distinguish it without risk trade mark proprietor to prevent use by of confusion from products of different third parties yet where the Trade Marks 11 origin. Directive contains no provision precluding him from doing so if his right is taken to extend to all forms of use, including use which cannot and does not purport to indicate the origin of supplies.

36. Clearly, the exclusive aspect of the right conferred by a trade mark on its proprietor means being able to prevent others from using the mark to identify their goods or services, since that would negate its essential function.

court finds as facts in the main proceedings 41. Nor is it significant in my view that that the terms 'Spirit Sun' and 'Context Article 5(1)(a) (which might be relevant if Cut' were used exclusively in oral dis­ Mr Hölterhoff referred to either trade mark cussion between two traders, who were in relation to the type of gems in respect of both fully aware that those terms were not which it was registered) contains no refer­ intended to indicate the origin of the goods ence to the likelihood of confusion. On the offered for sale, and that the terms were contrary, its absence is consistent with the never attached in written form to those view that the paragraph concerns only use goods, thus precluding any possibility that for the purpose of indicating origin. Where a subsequent purchaser might be misled. a sign used to indicate the origin of goods is identical to a registered trade mark and the goods are identical to those in respect of which the mark is registered, confusion as to origin is by definition not only likely but practically inevitable. Where there is only similarity, however, there may not always be a danger of confusion — all the circum­ stances must be taken into account — and 39. Use of that kind is in my view simply it was thus necessary to include the proviso too far removed from the essential function in Article 5(1)(b). of a trade mark to entitle a trade mark proprietor to prevent it under Article 5(1) of the Trade Marks Directive.

44. First, Dr Freiesleben has argued that he should be entitled to prevent the contested use under the German legislation imple­ 46. Finally, I would stress that the view menting Article 5(2) of the directive. None reached here should not be taken to of the other parties has submitted any prejudge the issue in other factual circum­ observations on that point, on which the stances. The reasoning might apply differ­ national court does not, in any event, seek ently if, for example, the sign were in a guidance. In those circumstances, and since more permanent form or were in some way the question is raised in Case C-292/00 attached to the goods. In that event, Davidoff — a request for a preliminary making it clear at one stage in the trading ruling from the Bundesgerichtshof in which chain that the sign in no way indicated a hearing has yet to take place — whether origin might not be sufficient to preclude Article 5(2) applies only (in accordance such use at a later stage. However, circum­ with its literal wording) where the goods stances apparently of that kind are to be in question are not similar to those for considered by the Court in a request for a which the trade mark is registered, I shall preliminary ruling from the High Court of refrain from expressing any view in the Justice of England and Wales, in Case context of this case. C-206/01 Arsenal Football Club, and again I do not think it appropriate to express a view here.

45. Next, the French Government has voiced the concern that if a trade mark Article 6(1) of the Trade Marks Directive proprietor were unable to prohibit use in the circumstances of the national court's question, he might be unable to prevent revocation of his mark under Article 12(2)(a) of the Trade Marks Direc­ tive if, through repeated use of that kind, it 47. If the Court agrees with my view that were to become the common name in the the use of a sign in the way described by the

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freely provided they do not infringe A's them in ordinary language. It does not seem intellectual property rights. That will reasonable to impose the rules of a parlour normally be the case as long as they can game on sales talks where a simpler form of produce comparable features without communication is available — always pro­ infringing any patent A may have and as vided that use of the trade marks cannot long as they do not attempt to market their and does not entail any confusion between goods under A's trade mark or in a way in the origin of the goods offered for sale and which confusion may arise between their that of the goods referred to as exemp­ goods and A's. Merely pointing out simi­ lifying the relevant characteristics. larities between their goods and A's does not fall within that category, particularly where it is stressed that their goods do not originate from A.

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facts found Mr Hölterhoff would have been the relevant characteristics. I do not see any in principle entitled under Article 6(1 )(b) to justification for such an absolute rule, but use the terms 'Spirit Sun' and 'Context Cut' cases in which a trader chooses to make use to indicate the cut of his own gemstones, of a competitor's mark rather than a which is one of their characteristics. familiar generic alternative may well dis­ play features which are not in accordance with honest practices.

— Proviso governing the limits on the right to prevent use

57. The precise delimitation of 'honest practices' is of course not given in the Trade Marks Directive. By its very nature, such a concept must allow of a certain flexibility. Its detailed contours may vary 55. However, Article 6(1) contains an from time to time and according to circum­ important proviso. Such use escapes pro­ stances, and will be determined in part by hibition by the trade mark proprietor only various rules of law which may themselves if it is in accordance with honest practices change, as well as by changing perceptions in industrial or commercial matters. of what is acceptable. However, there is a large and clear shared core concept of what constitutes honest conduct in trade, which may be applied by the courts without great difficulty and without any excessive danger of greatly diverging interpretations.

56. That proviso, I consider, goes a long way to answer Dr Freiesleben's fears that it might otherwise be impossible to prevent the most blatant piracy. Honest commer­ cial practices do not include pillaging the 14 designs and brand names of another. It may also be relevant to the French Govern­ ment's concern that use of trade marks for descriptive purposes should be permitted 15 only where such use is necessary to indicate 58. In BMW, the Court described the concept as expressing a duty to act fairly in

16 — Of 20 March 1883, as revised at Brussels on 14 December 1900, at Washington on 2 June 1911, at The Hague on 6 November 1925, at London on 2 June 1934, at Lisbon on 31 October 1958, and at Stockholm on 14 July 1967 (United Nations Treaty Series No 11851, vol. 828, pp. 305 61. First, if Mr Hölterhoff infringed Dr to 388). Freiesleben's patents in producing the gems

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he was offering for sale, then I do not that stage or subsequently, as indicating the consider that his use of the trade marks in origin of the goods offered for sale. that context can be described as 'in accord­ ance with honest practices'. Second, if Mr Hölterhoff did indeed claim that the 'Spirit Sun' cut had been used from time immem­ orial and that the rights to it were not held exclusively by Dr Freiesleben, and if those 63. However, in other circumstances in statements were untrue, then again I con­ which Article 5(1) does give the trade mark sider he cannot be said to have acted in proprietor a right to prevent use, that right accordance with honest practices. In either cannot be exercised if the use is for the case, he would not be entitled to rely on purpose of indicating characteristics of the Article 6(1)(b) of the Trade Marks Direc­ goods in question, unless such use is not in tive. accordance with honest practices in indus­ trial or commercial matters.

Comparative advertising

Conclusion on the Trade Marks Directive 64. That conclusion may perhaps be cor­ roborated through a rather different approach.

17 — The question of patent infringement does not appear to be ín issue in the national proceedings which gave rise to the 18 —Council Directive 84/450/EEC of 10 September 1984 order for reference and it might be thought unlikely that relating to the approximation of the laws, regulations Dr Freiesleben should bring trade mark proceedings if he and administrative provisions of the Member States could establish such an infringement. It is moreover stated concerning misleading advertising, OJ 1984 L 250, p. 17. that the number of facets on the gems sold to Ms 19 — Directive 97/55/EC of the European Parliament and of the Haverkamp was greater than the number specified in the Council of 6 October 1997 amending Directive patent held by Dr Freiesleben. None of those facts, 84/450/EEC concerning misleading advertising so as to however, entirely precludes a possible patent infringement. include comparative advertising, OJ 1997 L 290, p. 18.

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amended directive as 'the Advertising 69. Under Article 3a(1), such advertising is Directive'), which refers to the Trade permitted, as far as the comparison is Marks Directive in its preamble. concerned, where

'(a) it is not misleading...;

66. Before looking at its provisions, how­ ever, I would stress first that I am not suggesting that the Trade Marks Directive should be interpreted by reference to the Advertising Directive and second that the (b) it compares goods or services meeting relevant provisions of the latter were not in the same needs or intended for the force at the time of the use complained of in same purpose; the main proceedings.

(g) it does not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a 72. Had they been in force then, the competitor or of the designation of national court might have had to examine origin of competing products; whether Mr Hölterhoff's representations complied with the conditions in Article 3a(1). In this context also, it might perhaps have been required to make more detailed findings of fact for that purpose, but the facts which it has found, as related to the Court, do not appear to fall foul of Article 3a of the Advertising Directive any (h) it does not present goods or services as more or less than they do of the proviso in imitations or replicas of goods or Article 6(1) of the Trade Marks Directive. services bearing a protected trade mark The possibility of a concomitant patent or trade name'. infringement or of an untruthful denial of Dr Freiesleben's exclusive right to the trade marks might well be considered to discredit or denigrate those marks, take unfair advantage of their reputation or present goods as imitations or replicas, just as they would fall outside the concept of 'honest practices in industrial or commercial 70. In accordance with Article 7(2), matters'. Member States may not provide more extensive protection against comparative advertising, as far as the comparison is concerned.

71. Those amendments to the Advertising 73. Despite the fact that those rules were Directive were published on 6 October not in force at the material time their 1997 and were to be implemented in subsequent enactment is fully consistent national law by 23 April 2000. They were with and tends to confirm the interpre-

76. It may further be noted that in their joint statements entered in the minutes of the Council meeting at which the Commu­ 75. The relevant recitals in the preamble to nity Trade Mark Regulation was adopted Directive 97/55 are numbered 13 to 15: on 20 December 1993 the Council and the Commission considered that the reference to advertising in Article 9(2)(d) (Ar­ ticle 9(2) of the Trade Mark Regulation is essentially identical to Article 5(3) of the Trade Marks Directive) did not cover the use of a Community trade mark in com­ '... Article 5 of [the Trade Marks Directive] parative advertising. Thus, in their view the confers exclusive rights on the proprietor of use of a competitor's trade mark in com­ a registered trade mark, including the right parative advertising is not something which to prevent all third parties from using, in can be prohibited by the trade mark owner. the course of trade, any sign which is identical with, or similar to, the trade mark in relation to identical goods or services or even, where appropriate, other goods;

77. Indeed, since Directive 97/55 did not ... it may, however, be indispensable, in amend the Trade Marks Directive, the order to make comparative advertising latter must have permitted such com­ effective, to identify the goods or services parative advertising at the material time of a competitor, making reference to a in the present case, unless the two directives trade mark or trade name of which the are incompatible, and I suggest that there is latter is the proprietor; no reason to consider that to be the case.

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