Distinctive character of an EU trademark - to be demonstrated in every EU member state?

Today, the European Court of Justice is dealing with an important issue for all trademark owners. Must the distinctive character of an EU trademark be demonstrated in each EU Member State? This is the decisive conclusion of a long-standing dispute between Nestlé and Mondelez.

Background of the disput

In July 2006, Nestlé SA was registered as an EU Community trade mark as a three-dimensional trade mark (four identical trapezoidal trapezoidal sheets arranged on a rectangular base) in Class 30 for the goods “confectionery, bakery, pastry, biscuits, cakes and waffles”. EUIPO objected to the registration as “Chocolate, chocolate products, confectionery, sweets”, but published Nestlé’s desired application in the Community Trade Marks Bulletin No. 3/2006.

In March 2007 Cadbury Schweppes plc (now Mondelez UK Holdings & Services) filed an application for a declaration of invalidity of the trademark granted. The Cancellation Division of EUIPO approved the application and declared the mark invalid in January 2011.

Nestlé appealed against the decision and was right to do so: in December 2012, the EUIPO Second Board of Appeal annulled the decision.

In turn, Mondelez did not agree with this and the case came before the European Court of Justice. In December 2016, a judgment was delivered before the ECJ in this case: The ECJ annulled the decision of the Board of Appeal and Nestlé was defeated in court.

Disputed issue is proof of distinctive character in the EU Member States

At the centre of today’s hearing, as well as in the judgment of 2016, is the question as to whether the contested mark has acquired distinctive character through use in the European Union. It was found that the contested mark had acquired distinctive character through its use in Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland, Sweden and the United Kingdom. However, this is not enough to prove the point, the European Court of Justice argued as early as 2016, because although almost 90% of the European population lives in the above-mentioned EU countries, only 10 of the 28 countries are taken into account. Therefore, in 2016, the Board of Appeal had committed an error of law when it confirmed the distinctive character of the contested mark.

In today’s case, Nestlé appeals the judgment of December 2016 and refers to a violation of Art. 7 (3) and 52 (2) of the Union Trademark Regulation. Specifically,”Nestlé is opposed to the Court of First Instance’s decision that as regards the scope of the territory in which a distinctive character obtained through the use of a trade mark must be demonstrated, the distinctive character acquired through the use of the trade mark must be demonstrated throughout the territory of the European Union, i. e. in all the Member States concerned”, the Official Journal of the ECJ states in this case (C-84/17 P).

Since this is a hearing before the court, it is not expected that a verdict will be delivered immediately. However, the verdict can be awaited with suspense. The question of whether or not the distinctive character of a trademark has to be proven in all EU member states is important for many trademark owners.