Gift mark, about restriction on the exercise of a trademark right.

In the recent judgment in Case C-361/22, Industria de Diseño Textil SA (Inditex) - owner of the trademark rights of ZARA - against Buongiorno Myalert SA, the Court addressed the scope of the restriction on the exercise of trademark rights arising from Article 6(1)(C) of Directive 2008/95/EC (Directive 2008). And although the provisions analysed by the Court have not been in force for years, they have a significant impact on the current state of the law as captured in Directive (EU) 2015/2436 (Directive 2015).

Background to the dispute

In 2010, Buongiorno, a company providing information services via the Internet and mobile phone networks, ran an advertising campaign for a subscription to a multimedia content service via SMS called 'Club Blinko'. As part of the campaign, users could enter a lottery in which one of the possible prizes to be won was a ZARA gift card worth EUR 1,000. On the organiser’s website, when the user clicked on the banner enabling them to take part in the lottery, they were shown the designation 'ZARA' framed by a rectangle resembling the format of gift cards.

Inditex, the owner of the rights to the ZARA trademarks, brought an action against Buongiorno, claiming the existence of a risk of confusion among the relevant public and, alleging that the company had taken advantage of the reputation of the trademark and had acted to the detriment of that reputation (that is, an infringement of Article 34(2)(b) and (c) of Spanish Law 17/2001 on trademarks, Ley 17/2001 de Marcas). Buongiorno, defending its position, denied the infringement of the rights of the ZARA trademark and pointed out that the use of the trademark was not in the nature of a trademark, but only to indicate a possible prize to be won, which fell, according to Buongiorno, within the scope of "reference title" use (according to Polish terminology, this is "informative use") pursuant to Article 37 of the Trade Mark Law.

Position of the national courts

Inditex's allegations against Buongiorno did not find recognition in the courtroom. The court of first instance dismissed Inditex's claims, finding that although Buongiorno's use of the ZARA trademark did not fall within the so-called reference use, the conditions for infringement of Article 34(2)(b) and (c) of the Trade Mark Act were not met, and therefore the use neither led to a risk of confusion among the relevant public nor unduly drew on the reputation of the mark.

Inditex appealed against the first instance judgment, limiting its appeal only to the plea under Article 34(2)(c) of the Trade Marks Act, relating to the issue of reputation. At second instance, however, the court agreed with the findings made by the court of first instance and held that there had been no infringement of the reputation of the ZARA trademark or undue advantage taken of that reputation.

Inditex, disagreeing with the position of the court of second instance, brought an appeal in cassation before the Spanish Supreme Court (Tribunal Supremo), which then referred a question to the Court for a preliminary ruling.

Question for a preliminary ruling and proceedings before the Court

Although only the provision relating to the infringement of the reputation of a trademark was invoked both at second instance and in the proceedings before the Supreme Court, the Supreme Court considered it reasonable to refer a question to the Court relating to the use of the trademark 'by reference title'. Assuming that an infringement of the reputation of the trademark could be established in the course of the proceedings, the Court wanted to determine what the criteria would be for excluding the possibility of claiming protection from the trademark. The Supreme Court's doubts regarding the interpretation of Article 6(1)(c) of Directive 89/104 as implemented into Spanish law arose from the wording of the current Article 14(1)(c) of Directive 2015/2436, which appears to have a broader scope of exclusion than had been the case in Directive 89/104 and then its successor Directive 2008/95. The question posed by the Tribunal Supremo was whether Article 6(1)(c) of Directive 2008/95 to be interpreted as covering any use made in the course of trade by a third party in order to indicate or refer to the goods or services of the proprietor of the trademark, in accordance with honest practices in industrial or commercial matters, or only use of the trademark which is necessary to indicate the intended purpose of the goods marketed by the third party or of the service offered by it.

In order to better understand the background of the case, it is worth referring to the opinion of Advocate General Maciej Szpunar drawn up in the present proceedings. He cites the Commission's proposal for Directive 2015, which considers that it is necessary [...] to provide [...] for an explicit restriction covering use consisting of a 'broad' reference to a product or service. As the Advocate General notes, the use of the word 'should' in the proposal indicates a desire to modify the regulations contained in the existing legislation, rather than to clarify them. Moreover, recital 25 to the Directive indicates that the trademark proprietor is not entitled to prevent the general use of the mark in a fair and honest manner in order to designate or refer to the goods and services in question as the goods and services of the proprietor in question. This is therefore, on a literal interpretation, far broader than Article 6 of Directive 2008/95, which expressly provides for the need to indicate the intended purpose of the goods and services.

The Advocate General pointed out that this perception of the scope of Article 6 of Directive 2008/95 and Article 14 of Directive 2015/2436 also appears to be confirmed by the Court's earlier case law, including the judgments of 17 March 2005, Gilette Company and Gilette Group Finland, C-228/03, and 8 July 2010, Portakabin, C-558/08.

Analysing both the Advocate General's opinion and previous case law, the Court unequivocally concluded that the scope of Article 6(1)(c) of Directive 2008/95 covers the use of a trademark to indicate or refer to goods or services as goods or services of the proprietor of the trademark concerned only if that use is limited to a situation where that use is in accordance with honest practices in trade and industry and, moreover, necessary to indicate the intended purpose of the goods sold by the third party or of the service offered by it. However, in the context of Article 14(1)(c) of Directive 2015/2436, such a situation corresponds to only one of the cases in which the trademark proprietor cannot prohibit its use. At present, any use of the trademark with purpose to indicate or refer to the goods or services as the goods or services of the trademark is permitted.

Summary

Judgment C-361/22 is undoubtedly a thing of the past, which is no longer relevant to current disputes. However, it perfectly illustrates how trademarks are linked to the market in which they operate. The ever-changing reality around us - businesses and consumers, the dynamic economy and political situation - requires flexibility so that the law operating in this reality can be properly enforced.

While at the time of the determination of the content of Article 6 of Directive 89/104 and then Directive 2008/95, it may have been justified to include such a narrow formulation of the situations in which use of a trademark without the owner's consent was allowed, in the current market reality this restriction would be too restrictive. - The ways in which trademarks are used are now so varied that only an open catalogue of restrictions on the effects of a trademark can simultaneously protect the holder without blocking the functioning of the market. Today, therefore, Buongiorno Myalert SA's action would probably not raise discussion or lead to proceedings all the way to the Court level. It is therefore to be rejoiced that the European legislator recognises the need to make regulations in such a specific field as intellectual property more flexible and tries to ensure that the regulations in force are consistent with the needs of the market.  

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