In whose interests?
Applications for trademarks that are devoid of distinctive character are normally rejected, while those that are approved are often open to challenge. But this approach is the product of a misguided wish to protect consumers and many such marks should be allowed to thrive or fail on their own merits, says Steinar Lie.
There are two main reasons why trademarks are refused: because the marks are devoid of distinctive character; or because they are descriptive marks. This is somewhat tediously worded in the Trademarks Directive Article 3 and in Regulation 40/94 Article 7, which states that the following shall not be registered or if registered shall be liable to be declared invalid: "trademarks which are devoid of any distinctive character; and marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, or the time of production of the goods or of rendering of the service, or other characteristics of the goods."
There is, of course, every reason to refuse marks that fall under the definition given in Article 7(1)(c). This notes that marks (mostly words and expressions) that may hinder free competition in business if owned by one person or organisation could harm competitors by impairing their ability to communicate with consumers. This may give an unfair advantage to some businesses.
Further, we know from the case law of the European Court of Justice (ECJ) that descriptive marks are also devoid of distinctive character within the meaning of Article 7(1)(b). In that sense, Article 7(1)(c) may be regarded as lex specialis and Article 7(1)(b) as lex generalis. But what about marks that are refused on the grounds that they are devoid of distinctive character even if they may not be used in trade to describe the relevant goods/services or their essential characteristics?
The ECJ has held that each of the grounds for refusal to register listed in Article 7(1) of Regulation 40/94 is independent of the others and calls for separate examination and that the various grounds for refusal must be interpreted in the light of the general interest underlying each of them. It was pointed out that the notion of general interest underlying Article 7(1)(b) is "indissociable from the essential function of a trade mark, which is to guarantee the identity of the origin of the marked product or service to the consumer or end-user by enabling him, without any possibility of confusion, to distinguish the product or service from others which have another origin". Recently, in Case T-471/07 (TAME IT), the Court of First Instance (post Lisbon Treaty, the General Court) referred to well-established case law when it stated that the marks referred to in Article 7(1)(b) are those that are regarded as incapable of performing the essential function of a trademark, namely that of identifying the commercial origin of the goods or services in question, thus enabling the consumer who acquired them to repeat the experience if it proves to be positive or to avoid it if it proves to be negative .
So the provision in Article 7(1)(b) is drafted out of consideration for the consumers' best interests. But what is the consumer's' best interest doing in a directive, a regulation or in comparable national trademarks acts designed to regulate the use and registration of trademarks? There are of course also provisions in Article 7 concerning deceptive marks and public interest, but in reality, trademark law does not actually protect consumers.
Nobody can go to the authorities and claim compensation because the cereal they hated was marketed under a trademark so utterly devoid of distinctive character that they accidently bought that same cereal again. There is no law against the actual use in the market of signs devoid of distinctive character. Indeed, once a non-distinctive sign has been used to a sufficient degree, distinctive character is considered to be acquired and the mark is welcomed on board the registry. Trademark law has no business minding consumers' best interests. It is there to protect the economic interests of the holders of trademarks and to regulate the market so that no one gets an unfair advantage.
There are good reasons to refuse certain marks that are not descriptive. The ECJ has, justifiably, refused many marks consisting of the shape of the product (figurative or three-dimensional marks) under 7(1)(b), the rule that seemingly protects the consumer. According to the court, the average consumer does not make assumptions about the origin of products on the basis of their shape or the shape of their packaging. But that does not prevent three-dimensional marks from being registered. The test is simply whether or not the shape in question departs significantly from the norm of the sector.
It is not difficult to spot the real reason why these marks are refused. If the shape resembles other shapes on the market, its use by a single company or individual would give that entity an unfair advantage. This of course is in the public interest. In the well-known Libertel decision (2003), the ECJ held that in assessing the potential distinctiveness of a given colour as a trademark (under 7(1)(b)), regard must be given to the general interest in not unduly restricting the availability of colours for the other traders who offer goods or services of the same type. This real and important general interest would also explain the administrative practice followed by most jurisdictions to refuse marks consisting of single letters or single numbers-the options are simply too limited to go around.
This accounts for many refusals based on 7(1)(b)-and most would agree that no one should be afforded exclusive rights to something legitimately required by other traders. But why are trademarks that are devoid of intrinsic distinctive character refused out of consideration for the consumer? The fact is that once one introduces something as illusive as "the perception of the average consumer", every reasonable degree of predictability is cast to the wind. In practice, the decision-taker in these cases, whether an examiner or a judge, makes a more or less qualified guess as to how a given mark will be perceived among consumers. It is a guess because the assessment of marks that are devoid of distinctive character is not tangible or concrete. With descriptive marks, it is relatively easy to find examples where a word or a combination of words is used as a generic term. With non-descriptive signs that are devoid of distinctive character, no such references can be made. The result is decisions that are frequently quite poorly reasoned and that often seem random. In effect, refusals of this kind are based to a large extent on ‘gut feeling', of personal likes and dislikes, and this is clearly unacceptable to trademark holders, applicants and representatives alike.
One large group of non-descriptive marks that are refused under 7(1)(b) are slogans. In the Das Prinzip der Bequemlichkeit decision of the ECJ, a phrase used about three-dimensional marks was applied to slogans as well: they are registerable as such, but the average consumer is not in the habit of making assumptions about the origin of products on the basis of them. That is probably nonsense; I believe that the average consumer is in precisely that habit. This is, however, beside the point, which is that these marks are refused protection out of a misunderstood consideration for the consumer.
It is obvious that a trademark that is completely devoid of distinctive character may well be inferior. It may not catch the eye of consumers in the same way as other marks would; in fact, it may not catch the eye of consumers at all. It may be hard to remember and hard to recognise, and it may therefore prove more difficult to work into a solid brand name or famous slogan.
But as long as there is no quality criterion in trademark law, why should trademark examiners or the courts be the judge of whether a mark ‘deserves' to be registered or not, based on the assumed interest of some imaginary consumer? Why is this decision not left to those who are prepared to spend good money to secure their exclusive rights to a given trademark? If there is no current or future need to keep that mark free for the use of other undertakings, the ‘first come, first served' rule should prevail. Is the mark difficult to memorise? Is it negligible? Is it just off-beat and strange? Who cares? It either works on the market or it does not. And after all, it is but the applicant who stands to lose if the mark turns out to be useless.
In my view, therefore, concern for consumers' best interests simply does not belong in trademark law. Not even the provisions that cover deceptive marks and marks that go against public interest belong there. Consumers are already protected in other acts of law under which they can actually make substantiated claims-acts governed by other authorities more competent in assessing consumer rights. There is no need to include a token consideration for their (or our) well-being in an act of law designed, essentially, to regulate who gets to monopolise what sign.
By Steinar Lie, Attorney-at-law, Bryn Aarflot AS
Published in World Intellectual Property Review - WIPR - Digest 2009.
