Impact of earlier rights in case of trademark conflicts – an EU Court decision

The European Court has ruled in case C‑112/21 X BV срещу Classic Coach Company vof which concerns an interpretation of earlier rights under Article 6(2) of Directive 2008/95/EC in cases of trademark conflicts.

Between 1968 and 1977, two brothers were partners of a general partnership, established in Amersfoort (Netherlands), engaged in passenger transport by coach, under the name ‘Reis- en Touringcarbedrijf Amersfoort’s Bloei’. Until 1971, occasional coach transport services were provided by their father, who had been engaged in that activity since 1935.

In 1975, one of those brothers (‘brother 1’) created X, which used, from 1975 or 1978, two trade names, one of which corresponded, in part, to the surname of those brothers.

In 1977, following brother 1’s departure from the company created in 1968, the other brother (‘brother 2’) continued that company’s activity with his wife as a joint partner, in the form of a limited liability company, while retaining the same company name as that of the company established in 1968.

In 1991, for tax reasons, brother 2 also formed, with his wife, a general partnership The two companies belonging to brother 2 and his wife coexisted and both displayed signs on their coaches containing a name corresponding to brother 2’s name.

In 1995, after the death of brother 2, his activity was continued by his two sons, Y and Z, who created, for that purpose, Classic Coach, also established in the Netherlands. For a number of years, the Classic Coach coaches have carried a sign on the back of the coach displaying, inter alia, brother 2’s name, or, more precisely, the initial of his first name followed by his surname.

Furthermore, X is the proprietor of a Benelux word mark, which was registered on 15 January 2008, for, inter alia, services in Class 39, including services provided by a coach company. That mark corresponds to the surname common to brothers 1 and 2.

In those circumstances, X brought an action before the District Court, The Hague, Netherlands, seeking, inter alia, an order that the defendants in the main proceedings definitively cease all infringement of its Benelux word mark and of its trade names.

X based its action on the fact that, by using the sign corresponding to the name of brother 2, the defendants in the main proceedings had infringed its trademark rights, as referred to in Article 2.20(1)(b) and (d) of the Benelux Convention, and its trade name rights, as referred to in Article 5 of the Law on trade names.

The defendants in the main proceedings contested the alleged infringement, relying, in particular, on Article 6(2) of Directive 2008/95. Furthermore, the defendants in the main proceedings objected to the alleged trade name infringement by, inter alia, invoking estoppel.

By judgment of 10 May 2017, the District Court, The Hague upheld X’s action but, by judgment of 12 February 2019, the Court of Appeal, The Hague, Netherlands set aside that judgment and dismissed X’s appeal.

X appealed on a point of law against that judgment to the Supreme Court, Netherlands, which states that it has doubts about the answer to the question of what constitutes an ‘earlier right’ within the meaning of Article 6(2) of Directive 2008/95.

In that regard, according to that court, it is conceivable that the assumption of an earlier right would require that that right be capable, under the applicable national legislation, of prohibiting the trademark holder’s use of the mark. It is apparent from the legislative history of that provision that wording appearing in the initial proposal and extending its scope to earlier rights of local significance which can no longer be relied on against the later registered mark was ultimately not adopted.

Moreover, it is also conceivable that, in order to assume the existence of an earlier right of a third party, it is important whether the trademark holder has an even earlier right, recognised by the legislation of the Member State concerned, with regard to the sign filed as a trade mark and, if so, whether the use of the alleged earlier right of that third party can be prohibited on the basis of that even earlier right.

In the present case, the Court of Appeal, The Hague held that X, the proprietor of the Benelux trademark, had even earlier trade name rights than those of the defendants in the main proceedings in respect of the sign which is registered as a trade mark. However, according to that court, X, as a result of limitation in consequence of acquiescence, lost its right to prohibit, on the basis of those earlier trade name rights, the use by the defendants in the main proceedings of the trade name corresponding to brother 2’s name. Thus, X finds itself in a situation in which it cannot prohibit the use by the defendants in the main proceedings of that trade name on the basis of its even earlier trade name rights.

The assessment of the merits of the appeal on a point of law brought against that assessment of the Court of Appeal, The Hague would depend on the scope of the concept of ‘earlier right’ in Article 6(2) of Directive 2008/95. In that regard, the Supreme Court, Netherlands states that it must be assumed that all the trade names at issue in the main proceedings are rights recognised in the Netherlands for the purpose of that article 6(2).

In those circumstances, the Supreme Court, Netherlands decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) For the purposes of determining whether there is an ‘earlier right’ of a third party as referred to in Article 6(2) of [Directive 2008/95],

(a)  is it sufficient that, prior to the filing of the trademark, that third party had made use in the course of trade of a right which is recognised by the laws of the Member State in question; or

(b) is there a requirement that that third party, on the basis of that earlier right, under the applicable national legislation, is entitled to prohibit the use of the trademark by the trademark holder?

(2) In answering Question 1, is it also relevant whether the trademark holder has an even earlier right (recognised by the laws of the Member State in question) in relation to the sign registered as a trademark and, if so, is it relevant whether the trade mark holder may, on the basis of that even earlier recognised right, prohibit the use by the third party of the alleged “earlier right”?’

The Court’s decision:

1. Article 6(2) of Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks must be interpreted as meaning that, for the purposes of establishing the existence of an ‘earlier right’ within the meaning of that provision, there is no requirement that the proprietor of that right must be able to prohibit the use of the later mark by the proprietor of that mark.

2. Article 6(2) of Directive 2008/95 must be interpreted as meaning that an ‘earlier right’ within the meaning of that provision may be granted to a third party in a situation in which the proprietor of the later trademark has an even earlier right recognised by the laws of the Member State in question over the sign registered as a trade mark to the extent that, under those laws, the proprietor of the trade mark and of the even earlier right may no longer, on the basis of its even earlier right, prohibit the use by the third party of its more recent right.

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