Trademark Protection – a rewarding investment?

‘Trademark protection aims at both rewarding investments made by commercial enterprises and allowing consumers to make educated purchase choices.’ 

Comment on this statement. 

Section 1(1) of the Trade marks Act 1994 defines a trade mark as ‘any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings. Registration a trade mark confers on the proprietor exclusive rights to use that sign for specified commercial activities. The use of trademarks has several functions which both protect the trademark owner and consumers using that brand. This essay aims at assessing those functions and expanding on any other important functions of trademarks.

Under s 5 of the Trademark Act 1994, there are several grounds for refusal of registering a TM. Section 5(2) states that a Trademark will not be registered if it is similar to an earlier sign and there is a likelihood of confusion on the part of the public. This both protects the commercial enterprise as well as the consumer. In particular it links to the most important function of trademarks which is indication of origin. Trademarks allow consumers to distinguish goods and services of a company from those of another company. It protects consumers from being misled into buying the wrong product.

In addition to this, it encourages commercial enterprises to produce high quality goods so as to defeat any confusion which might occur. A-G Colomer in Arsenal FC v Reed stated that experience teaches that the user is unaware of the producer of the goods he is using. Instead, the trademark acquires a life of its own, making a statement about quality, reputation and even a way of seeing life.

The registration of a Trademark will be prohibited if there is similarity with an earlier Trademark which is likely to cause confusion. This was assessed in the Sabel v Puma case. Puma was the registered proprietor of two German trademarks made up of bounding puma and leaping puma devices. Puma opposed the registration of Sabel’s sign of a bounding cheetah in the same market. The ECJ considered how the likelihood of confusion should be assessed. It stated that it must be appreciated globally, taking into account various factors, including, the recognition of the trademark on the market, the association which can be made between the registered mark and the sign, the degree of similarity between the mark and the sign and the goods and the services. In considering this, the court is to consider the ‘visual, aural or conceptual similarity of the marks in question.’ For example, where there are two similar words which might appear to be different but they sound similar such as ‘ibuprofen and ibuproven.’ These are similar words and the use of one different letter will not distinguish the sound of the word.

The court will therefore reject the registration of a trademark which is likely to cause confusion which protects consumers to allow them to make educated purchase choices. They want to reliably choose the brand with confidence that that product belongs to a particular brand. For example, if they buy a bag which is marked ‘abc’ then consumers would trust that all bags marked ‘abc’ are from the same proprietor and not from any other enterprise.

In addition to the above ground for refusal, under s 5(3), the Act protects well known trademarks from being using in unfair advantage or if it would be detrimental or effect its reputation. This therefore allows commercial enterprises to feel the reward of their investment into registering their trademark. Questions arise as to what is a well known trademark and what would effect its ‘reputation.’ Well known trademarks are given stronger protection as opposed to those which are less known. This is because they spend time, money and effort to make their brand well known. So trademarks aim to reward such investments.

In General Motors v Yplon SA, Yplon had registered Chevy for cleaning products. GM wanted to restrain such use on the ground that it diluted the reputation of Chevy for cars and damaged its advertising function. Yplon responded that the claimant had not shown that it had a reputation in the specific countries. The ECJ held that s 5(2) applies where it is shown that a significant part of the public were aware of the brand and had sufficient knowledge of it. The ECJ went on and stated that the factors relevant to assess whether the earlier mark has a reputation are the relevant public with whom the mark must have acquired a reputation is the public ‘concerned with the trademark.’ This will depend on the product, by either the general public or a more specified public.

In addition, there must be an unfair advantage and detriment. In Adidas Salomon v Fitnessworld, Adidas claimed that that marketing of clothing with two stripes creates a likelihood of confusion on the part of the public, since the public might associate that clothing with Adidas’ sports and leisure clothing which bears three stripes, and Fitnessworld will take advantage of the reputation of the Adidas mark. The exclusivity of that mark could thereby be impaired.

To prove infringement of a well-known trademark, there is no requirement of confusion but a link between the two signs. In Intel v CPM, the claimant’s mark, Intel, had a huge reputation for computers and computer-linked products. CPM had a registered trademark, Intelmark, for marking so Intel argued that this would be detrimental to the distinctiveness of its own trademark. For it to be detrimental, there must be a link between the two marks, which would cause consumers to mentally associate them with each other. In this case, the court of appeal accepted tat Intel was an invented word, with a unique and huge reputation in the UK for computers. The ECJ stated whether there was a relevant link must be assessed globally taking into account all relevant factors. So the link must have effect on the economic behaviour of consumers. This then links back to the aim of trademark protection, namely that consumers should not be confused as to which brand to buy when making an educated choice.

In the Beetles case, OHIM rejected the application of the registration of ‘Beatles,’ finding that, because of the similarity of the signs, the considerable and long-standing reputation of the earlier marks and the overlap of the relevant public, it was likely that the subsequent mark would take unfair advantage of the repute and the consistent selling power of the mark. OHIM therefore concluded that there was a serious risk that detriment to the earlier marks, of which Apple Corps is the proprietor, would occur.

In Facebook v Parobook, the court made it clear that in order to assess whether marks are confusingly similar or not, various factors need to be taken into account. On the one hand side, the specific goods and services of the applied for mark and the earlier sign need to be evaluated. On the other hand, OHIM has to compare the script, sound and meaning of the two trademarks and also take the distinctiveness and reputation of the earlier sign into account. Here, the well-known trademark “Facebook” filed an opposition against the Community Trademark Application “Parobook”. Both designations are design creations. Facebook is of the opinion that “Parobook” is too similar to Facebook, especially because “Facebook” has gained a high reputation – even outside the field of social networking.

Alongside unfair advantage, detriment has to be proven. In Hollywood v Souza Cruz, there was an application in regards to ‘Hollywood’ a tobacco company with the same name of a chewing gum company. The latter argued that its brand image would be tarnished and jeopardised by such use because consumers might start to attach a negative image of smoking with their fresh and healthy image of chewing gum. This links to the psychological message function which trademarks provide.

In Intel v CPM, A-G Sharpston stressed that trademarks ‘frequently perform functions which go beyond linking goods or services to a uniform source. They present ‘a powerful image of quality, exclusivity, youth, fun, luxury, adventure, glamour or other reputedly desirable lifestyle attributes, not necessarily associated with specific products but capable of presenting a strong marketing message in itself.’ This links to the second function of trademarks, which is conveyor of psychological messages. This is connected to the brand image of the trademark. For example, in crowded markets, such as clothing, consumers would choose what to purchase based on the brand image of the mark.

In addition, the ECJ considered unfair advantage in L’Oreal v Bellure, where the claimants were producers and marketers of expensive perfumes. The defendants sold some perfumes in bottles which the claimants argued were very similar to their own brand. However, in the court of Appeal, Jacob LJ stated that the packaging used by the defendants was not sufficiently similar to the claimants so that it would lead the consumers to be confused. Nor were the claimants’ marks blurred or tarnished. The ECJ decided differently that for ‘unfair advantage’ of the reputation of a registered mark, there does not have to be likelihood of confusion. The advantage arises from the use of a sign with a reputation that would cause them to ‘ride on the coat-tails’ of the mark with a reputation to benefit from the power of attraction, the reputation and prestige of that mark and exploit the marketing effort created by the commercial enterprise.

The ECJ expanded on further functions of trademarks, stating that ‘trademarks guarantee the quality of the goods or services in question and those of communication, investment or advertising.’ However, it did not go on to explain these functions so there is some confusion as to what they actually mean.

To conclude, it can stated that trademark clearly serve different functions. We can see that the most important function is the indication of origin which protects both commercial enterprises and consumers by enabling consumers to not be misled into buying the wrong products. This does link to the relative grounds for refusing trademark registration since the court will refuse any marks which try to exploit or tarnish the reputation of an earlier, stronger trademark.

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