M/S. Indeutsch International v European Union Intellectual Property Office (T-20/16)

Contents

Judgment Of the General Court (Fifth Chamber)21 June 2017^note(EU trade mark — Invalidity proceedings — EU figurative mark representing chevrons between two parallel lines — Distinctive character — Article 7(1)(b) of Regulation (EC) No 207/2009 — Examination of the mark as registered)In Case T‑20/16,M/S. Indeutsch International, established in Noida (India), represented initially by D. Stone, D. Meale, A. Dykes, Solicitors, and S. Malynicz QC, subsequently by D. Stone and S. Malynicz and lastly by D. Stone, S. Malynicz and M. Siddiqui, Solicitor,vOffice of the European Union for Intellectual Property (EUIPO), represented by D. Gája, acting as Agent,the other party to the proceedings before the Board of Appeal of EUIPO, intervener before the General Court, beingCrafts Americana Group, Inc., established in Vancouver, Washington (United States), represented by J. Fish and V. Leitch, Solicitors and A. Bryson, Barrister,THE GENERAL COURT (Fifth Chamber),composed of D. Gratsias (Rapporteur), President, I. Labucka and I. Ulloa Rubio, Judges,Registrar: I. Dragan, Administrator,having regard to the application lodged at the Court Registry on 21 January 2016,having regard to the response of EUIPO lodged at the Court Registry on 4 April 2016,having regard to the response of the intervener lodged at the Court Registry on 12 April 2016,having regard to the Court’s written question to the parties,further to the hearing on 12 January 2017,having regard to the order of 2 February 2017 reopening the oral part of the procedure,gives the following

Judgment

Background to the dispute

1On 15 February 2010, the applicant, M/S. Indeutsch International, filed an application for registration of an EU trade mark with the European Union Intellectual Property Office (EUIPO) pursuant to Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78, p. 1).

2Registration as a mark was sought for the following figurative sign:

3That sign was accompanied by the following description:‘the mark consists of a repeated geometric design.’

4That registration of that mark was sought in respect of ‘knitting needles’ and ‘crochet hooks’ in Class 26 of the Nice Agreement concerning the International Classification of Goods and Services for the purposes of the Registration of Marks, of 15 June 1957, as revised and amended.

5The mark in question was registered on 10 August 2010.

6On 9 January 2013, the intervener, Crafts Americana Group, Inc., filed an application for a declaration of invalidity with EUIPO in respect of the mark at issue under Article 52(1)(a) of Regulation No 207/2009 read in conjunction with Article 7(1)(a) and (b) of that regulation.

7By decision of 7 May 2014, the Cancellation Division rejected the application for a declaration of invalidity. The Cancellation Division considered, in particular, that the graphic representation of the mark at issue was clear, precise, self-contained, easily accessible, intelligible, durable and objective, so that it satisfied the requirements of Article 7(1)(a) of Regulation No 207/2009. In addition, with regard to the application of Article 7(1)(b) of Regulation No 207/2009, the Cancellation Division considered that the mark at issue had distinctive character. In that regard, the Cancellation Division emphasised that the mark in question was not a three-dimensional mark and did not represent the appearance of goods covered by its registration.

8On 14 July 2014 the intervener filed a notice of appeal with EUIPO, pursuant to Articles 58 to 64 of Regulation No 207/2009, against the decision of the Cancellation Division.

9By decision of 5 November 2015 (‘the contested decision’), the Board of Appeal annulled the decision of the Cancellation Division on the ground that the mark at issue lacked distinctive character within the meaning of Article 7(1)(b) of Regulation No 207/2009.

10The Board of Appeal considered, in particular, that the mark at issue, referred to by its proprietor as the ‘chevron mark’, represented a pattern placed on part of the goods or covering the whole of their surface. On the basis of that finding, the Board of Appeal took into account photographs and samples of the goods marketed by the applicant at the time of filing the trade mark application, in order to identify its essential characteristics. In that context, the Board of Appeal considered that the ornamental appearance of the mark at issue would lead the relevant public, composed of average consumers of knitting needles and crochet hooks, to perceive that mark as a decoration of those goods. According to the Board of Appeal, the relevant public is accustomed to the manufacturing practice of decorating the goods covered by the mark at issue, so that it will perceive that mark, as applied to the surface of the goods concerned, as a variation of the decoration present on the market, from which it does not significantly depart. In the alternative, the Board of Appeal took the view that the relevant public would perceive that mark as having the appearance of wood grain, the material from which the goods concerned are made, and not as an indication of commercial origin. It followed, according to the Board of Appeal, that the mark at issue did not have the distinctive character required by Article 7(1)(b) of Regulation No 207/2009 in order to fulfil the function of a trade mark.

11Against that background, the Board of Appeal annulled the decision of the Cancellation Division without examining whether the mark at issue fell within the scope of Article 7(1)(a) of Regulation No 207/2009. In addition, since the applicant had argued before the Cancellation Division that the mark at issue had, in any event, acquired distinctive character as a consequence of the use that had been made of it, in accordance with Article 7(3) of that regulation, the Board of Appeal decided to remit the case to the Cancellation Division to allow the latter to decide on that issue.

Forms of order sought

12The applicant claims that the Court should:— annul the contested decision;— order EUIPO to pay the costs.

13EUIPO and the intervener contend that the Court should:— dismiss the application;— order the applicant to pay the costs.

Law

14In support of its action, the applicant puts forward five pleas in law, all alleging, in essence, infringement of Article 7(1)(b) of Regulation No 207/2009. In particular, the first plea alleges that the mark at issue departs significantly from the practices that are common in the sector to which the goods covered by the application belong. The second plea alleges infringement of the rules governing the burden of proof. The third plea alleges an incorrect assessment of the decorative nature of the mark at issue. The fourth plea alleges errors concerning the appearance of the mark at issue and, lastly, the fifth plea alleges an error concerning the relevant public’s perception of the mark at issue.

15More specifically, the applicant argues, first, that, as is apparent from the evidence available to the Board of Appeal, the goods covered by the trade mark application do not usually have striking patterns on their surface, with the result that the Board of Appeal erred in considering that the patterns represented by the mark at issue, which were the result of a complex manufacturing process, were variations of the usual outward appearance of such goods. Secondly, in considering, on the basis of evidence produced by the applicant, that the mark at issue lacked distinctive character, the Board of Appeal infringed the rule governing the burden of proof in this regard. Thirdly, the applicant argues that in the absence of an established practice of ornamenting the goods covered by the mark at issue, the relevant public will perceive the patterns represented by that mark as indications of commercial origin. Fourthly, it is argued that the Board of Appeal erred in considering that the pattern of which the mark at issue is composed represented wood grain, since the latter has an asymmetrical and irregular appearance, unlike the pattern in question, which will be perceived as artificial. Fifthly and lastly, the applicant argues that the average consumer who makes up the relevant public, especially a knitting novice, will be struck by the pattern represented by the mark at issue, with the result that he will interpret it as an indication of the commercial origin of the knitting needles and crochet hooks.

Preliminary observations

16The present dispute concerns the issue whether the mark at issue, reproduced in paragraph 2 above, has distinctive character within the meaning of Article 7(1)(b) of Regulation No 207/2009. As set out in greater detail below, it is apparent from the contested decision that the Board of Appeal’s assessment on that issue was not actually based on the characteristics of that mark as registered, but on the characteristics of the outward appearance of the applicant’s goods, which, according to the Board of Appeal, indicates the manner in which that mark was used.

17The applicant, however, submits that the Board of Appeal’s assessment is vitiated by errors which constitute an infringement of Article 7(1)(b) of Regulation No 207/2009. It is therefore necessary to assess the lawfulness of the contested decision in the light of that provision.

The Board of Appeal’s reasoning

18As can be seen from paragraphs 21, 22 and 30 to 34 of the contested decision, the Board of Appeal considered that the mark at issue represented a chevron pattern applied to the surface of knitting needles and crochet hooks and that, accordingly, its distinctive character had to be assessed in view of the rules applicable to figurative marks consisting of a part of the shape of the product that they cover. According to the Board of Appeal, decorating those surfaces with intense colours is commonplace in the sector of the goods in question, with the result that the decoration represented by the mark at issue, as applied to surface of knitting needles and crochet hooks, does not depart significantly from the norm of that sector. In those circumstances, having regard to the rules applicable to a figurative mark consisting of a part of the shape of the product that it covers, set out in paragraphs 23 to 26 of the contested decision, the Board of Appeal concluded that the mark at issue was devoid of distinctive character.

19In particular, in paragraph 21 of the contested decision, the Board of Appeal stated that ‘as the [proprietor of the mark at issue] itself stressed [in its observations of 12 June 2013] and as can clearly be seen from the [photographs and product samples in the file], the [mark at issue] represents a pattern placed on part of the goods or covering the whole of their surface’.

20That assessment is based, inter alia, on the following representation of the applicant’s goods, as set out in paragraph 21 of the contested decision:

21In addition, in paragraph 21 of the contested decision, the Board of Appeal also refers, without reproducing them, to the photographs annexed to the witness statement of a business partner of the applicant, which the latter had submitted before the Cancellation Division.

22In that context, the Board of Appeal observed, in paragraph 22 of the contested decision, that ‘since ... the pattern at issue cover[ed] to a greater or lesser extent [the surface of the goods] and thus correspond[ed] to the outward appearance of the goods, the distinctive character of the contested mark need[ed] to be assessedbased on the principles applicable to (bi-dimensional or three-dimensional) marks consisting in the appearance of the goods themselves, or part thereof’.

23After noting the rules in question, the Board of Appeal emphasised, in paragraph 28 of the contested decision, that, in accordance with those rules, it could carry out a detailed examination that took into account material relevant to identifying appropriately the essential characteristics of a sign, in addition to the graphic representation and any descriptions filed at the time of the application for registration. Thus, according to paragraph 29 of the contested decision, the Board of Appeal, while assessing the essential characteristics of the mark at issue, took into consideration the photographs and samples of the goods concerned which the applicant had submitted before the Cancellation Division and, in particular, the fact that these goods were actually marketed by the applicant at the date of the application for registration of the mark.

24Moreover, in paragraph 30 of the contested decision, the Board of Appeal emphasises that ‘it is clear from the ... representation [of the mark at issue] and its description supported by the representations of the [applicant’s] products, that the contested mark consists of a pattern applied to the surface of the concerned goods, namely knitting needles and crochet hooks’. It states that, ‘moreover, the pattern as registered and used by the [applicant] resembles the appearance of the grain of the wood itself, of which the goods concerned may be and in fact are made’. Furthermore, in paragraph 34 of the contested decision, the Board of Appeal describes the mark at issue as being ‘a simple design applied to the surface of the goods concerned’.

25In addition, as can be seen from paragraphs 33 and 34 of the contested decision, the Board of Appeal relied on the colour decoration of the crochet hooks reproduced below:

26On the basis of that photograph, which is one of the pieces of evidence produced by the applicant and which shows crochet hooks produced by other manufacturers, the Board of Appeal concluded that the decoration of the applicant’s goods with a coloured chevron pattern did not have distinctive character within the meaning of Article 7(1)(b) of Regulation No 207/2009. The Board of Appeal considered, in that respect, that the mark at issue consisted of a coloured decoration of the knitting needles and crochet hooks produced by the applicant and therefore constituted, as such, a mere variation of the decorations, in the form of coloured surfaces, of knitting needles and crochet hooks available on the market, as demonstrated by the photograph in paragraph 25 above. No form of decoration other than the coloured surface of those crochet hooks was invoked by the Board of Appeal in order to justify that conclusion, which is confirmed in paragraph 49 of EUIPO’s response.

27The position adopted by EUIPO at the hearing, that the Board of Appeal merely took account of the appearance of the applicant’s goods, while actually assessing the distinctive character of the mark at issue as registered, cannot be accepted. The question of the specific sign whose distinctive character is assessed by the Board of Appeal must receive an answer based on objective and verifiable evidence. As can be seen from paragraphs 18 to 26 above, the Board of Appeal assessed the distinctive character of the mark at issue by referring, first, to the coloured outward appearance of the applicant’s goods and, secondly, to the coloured surface of the crochet hooks shown in paragraph 25 above. Since, in its registered form, the mark at issue is in black and white and the accompanying description does not refer to multicoloured versions, it must be found that the Board of Appeal essentially based its assessment on the appearance of the applicant’s goods as included in the EUIPO file in the form of physical samples and colour photographs.

28For its part, EUIPO repeatedly refers to the specific ‘application’ or ‘use’ of the mark at issue on the surface of the applicant’s goods (see paragraphs 21, 51, 52, 55 and 58 of EUIPO’s response). It is precisely that specific application which, according to EUIPO, is a mere variant of the application of a striking colour to the surface of the goods concerned (see paragraph 58 of EUIPO’s response).

Lawfulness of the Board of Appeal’s reasoning

29It must be borne in mind that the applicant raises several complaints, all intended to establish that the Board of Appeal infringed Article 7(1)(b) of Regulation No 207/2009 as a result of errors in relation to the assessment of the distinctive character of the mark at issue. Thus, in the context of the first and third pleas in law, the applicant disputes the Board of Appeal’s assessment of the distinctive character of the mark at issue, in view of the customs of the sector concerned and the perception of the relevant public. In addition, the fourth plea in law concerns the perception of ‘the pattern shown in the mark’ as wood grain. In order to examine that plea in law, the Court must deal with the issue of whether the Board of Appeal could validly rely, not on the mark at issue as registered, but on the forms in which the Board of Appeal considered that the mark at issue was actually used. Although it is true that, in the context of the fourth plea in law, that issue is raised in the specific context of the Board of Appeal’s assessment in relation to the perception of the mark at issue as wood grain, it is nevertheless the case that the possibility for the Board of Appeal of basing its reasoning on the forms in which it considered that the mark at issue was actually used constitutes the necessary premiss for the findings in the contested decision on the distinctive character of the mark at issue.

30In that respect, it must be recalled that, although it must rule only on the application of the parties, whose task it is to define the scope of the dispute, the Court is not to be bound merely by the arguments relied upon by the parties in support of their claims, since it would then be forced, in some circumstances, to base its decisions on erroneous legal considerations (order of 13 June 2006, Mancini v Commission, C‑172/05 P, EU:C:2006:393, paragraph 41, and judgment of 11 December 2014, Sherwin-Williams Sweden v OHIM — Akzo Nobel Coatings International (ARTI), T‑12/13, not published, EU:T:2014:1054, paragraph 34).

31In that context, it must be emphasised that the question whether the mark at issue consists of a part of the shape of the product that it covers was discussed both before the Cancellation Division and before the Board of Appeal (see paragraphs 7 and 10 above) and the parties were asked to comment on that part of the contested decision at the hearing. Thus, it is necessary to examine the legal validity of the cornerstone of the Board of Appeal’s reasoning in relation to the application of Article 7(1)(b) of Regulation No 207/2009, and to do so from a broader perspective than that raised in the fourth plea in law. A judgment confirming or rejecting the assessment of the distinctive character of the mark at issue in a form other than that in which it was registered would mean, implicitly but necessarily, that that character could lawfully be assessed by taking account of that other form. However, if that question of law should be answered in the negative, the entirety of the Board of Appeal’s reasoning would constitute an infringement of Article 7(1)(b) of Regulation No 207/2009.

32As can be seen from paragraph 1 of the contested decision and from the registration certificate on page 11 of the EUIPO file, the mark at issue as registered consists in the following figurative sign:

33It that respect, it must be borne in mind that the registration of a mark in a public register has the aim of making it accessible to the competent authorities and to the public, particularly to economic operators. Thus, that registration allows the competent authorities to know with clarity and precision the nature of the signs of which a mark consists, so that they are able to fulfil their obligations in relation to the prior examination of registration applications, and it allows users of the registry to access the graphic representation of the mark determining its precise nature (see, to that effect, judgment of 12 December 2002, Sieckmann, C‑273/00, EU:C:2002:748, paragraphs 49, 50 and 52).

34In addition, the function of the graphic representation in the register is, in particular, to define the mark itself in order to determine the precise subject of the protection afforded to its proprietor (judgment of 6 March 2014, Pi-Design and Others v Yoshida Metal Industry, C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129, paragraph 57). The register therefore allows economic operators to acquaint themselves, with clarity and precision, with registrations or applications for registration made by their actual or potential competitors, and thus to obtain relevant information about the rights of third parties (judgment of 19 June 2012, Chartered Institute of Patent Attorneys, C‑307/10, EU:C:2012:361, paragraph 48).

35The distinctive character of a mark must therefore be assessed as it was registered or as it appears in the trade mark application, regardless of how it is used (see, to that effect, judgments of 18 October 2007, AMS v OHIM — American Medical Systems (AMS Advanced Medical Services), T‑425/03, EU:T:2007:311, paragraph 91; of 9 April 2014, Pico Food v OHIM — Sobieraj (MILANÓWEK CREAM FUDGE), T‑623/11, EU:T:2014:199, paragraph 38; and of 7 May 2015, Cosmowell v OHIM — Haw Par (GELENKGOLD), T‑599/13, EU:T:2015:262, paragraph 35).

36That rule follows from the imperative needs of legal certainty safeguarded by the existence of the European Union Trade Mark Register provided for in Article 87 of Regulation No 207/2009. To apply Articles 7 and 8 of Regulation No 207/2009 by taking into account, not EU trade marks as applied for or registered, but as used, would negate the function of that register as a guarantor of the certainty that must surround the precise nature of the rights that it is supposed to protect (see paragraph 33 above).

37In the light of those considerations, where the mark applied for or registered consists in a two-dimensional or three-dimensional representation of the product that it covers, its distinctive character depends on whether it departs significantly from the norm or customs of the sector and thereby fulfils its essential function of indicating the origin of the product (judgment of 23 May 2007, Procter & Gamble v OHIM (Square white tablet with coloured floral design), T‑241/05, T‑262/05 to T‑264/05, T‑346/05, T‑347/05 and T‑29/06 to T‑31/06, EU:T:2007:151, paragraph 44).

38That is also the case, as the Board of Appeal states in paragraph 26 of the contested decision, where the mark consists of a part of the shape of the product that it represents, inasmuch as the relevant public will immediately and without further thought perceive it as a representation of a detail or an aspect of the product in question (judgment of 19 September 2012, Fraas v OHIM (Tartan pattern in dark grey, light grey, black, beige, dark red and light red), T‑50/11, not published, EU:T:2012:442, paragraph 43). In such a situation, the decisive element is not the categorisation of the sign in question as a figurative sign, be it three-dimensional or otherwise, but rather the fact that it is indissociable from the appearance of the product designated (judgment of 9 November 2016, Birkenstock Sales v EUIPO (Representation of a pattern of wavy, crisscrossing lines), T‑579/14, under appeal, EU:T:2016:650, paragraph 28).

39If, in such a case, the assessment of the distinctive character of the mark were not carried out by reference to the extent to which it departs from the norms or customs of the sector of the goods concerned, it would be enough to request the registration of a sign immediately perceivable as a part of the product covered in order to increase the possibility of that mark being registered and thus giving, nearly automatically, protection to the appearance or shape of the product itself. Since the average consumer is not in the habit of making assumptions about the origin of products on the basis of their appearance or shape (judgment of 6 September 2012, Storck v OHIM, C‑96/11 P, not published, EU:C:2012:537, paragraph 35), that possibility presents a significant risk of circumventing Article 7(1)(b) of Regulation No 207/2009 and would therefore undermine the public interest safeguarded by that provision.

40In addition, as regards marks consisting of the shape of the product that they cover, the competent authority may identify their essential characteristics by examining the product itself. Such an examination must be carried out where the identification of an essential characteristic of the mark is necessary in order to determine the specific nature of the elements that form part of the graphic representation and any descriptions filed at the time of application for registration, and thus safeguard the public interest underlying Article 7(1)(e)(ii) of Regulation No 207/2009. That interest consists in ensuring that an economic operator cannot improperly appropriate for itself a sign consisting of the shape of the product and incorporating a technical solution (see, to that effect, judgment of 6 March 2014, Pi-Design and Others v Yoshida Metal Industry, C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129, paragraphs 50 and 54 to 56). That problem arises, by definition, in a case involving a mark consisting of the shape of an actual product and not of an abstract shape (judgment of 10 November 2016, Simba Toys v EUIPO, C‑30/15 P, EU:C:2016:849, paragraph 47).

41In the present case, as the Cancellation Division observed (see paragraph 7 above), it cannot validly be maintained that the mark at issue (see paragraph 32 above) will immediately and without further reflection be perceived as a representation of a detail or an aspect of the goods that it covers and even less that it consists of the shape of the knitting needles and crochet hooks produced by the applicant.

42Some examples of the goods in question from the EUIPO file are reproduced below:

43It can be seen from the samples and photographs of those goods, which all form part of the EUIPO file, that the patterns on the goods in question differ from that mark in non-negligible ways. In particular, the patterns in question are coloured, they are distributed at irregular intervals, the colouring within each surface in the form of a chevron is not homogeneous, there is no clear line marking the transition from colour to colour and the succession of colours is random. Those characteristics are also present in the beige needles shown in paragraph 21 of the contested decision, with the exception of the multitude of different colours, which is replaced by variations of beige.

44By contrast, the mark at issue as registered has the characteristics of an abstract geometric shape composed of a repetitive design consisting of two parallel lines enclosing clearly delineated chevrons, all in black and white.

45Consequently, contrary to the Board of Appeal’s view, to rely, in the circumstances of the present case, on the fact that a pattern in the form of multicoloured chevrons appears on the surface of the applicant’s goods in order to examine the distinctive character of the appearance of those goods for the purpose of Article 7(1)(b) of Regulation No 207/2009 instead of basing that examination on the mark at issue as registered does not form part of a process of identifying the essential characteristics of that mark, but rather constitutes a significant alteration of those characteristics. That alteration has the effect of transforming a mark registered as an abstract shape and therefore afforded protection determined by that shape (judgment of 6 March 2014, Pi-Design and Others v Yoshida Metal Industry, C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129, paragraph 57), into a mark consisting of the specific shape of the goods that it covers. The extent to which that alteration was decisive is demonstrated by the fact that it is precisely the colour decoration of the crochet hooks shown in paragraph 25 above that the Board of Appeal relied on in order to conclude that the patterns on the surface of the applicant’s goods lacked distinctive character and, in that way, to transpose that conclusion to the mark at issue.

46The applicant’s statement, mentioned by the Board of Appeal in paragraph 21 of the contested decision, according to which it had intended to apply the chevron pattern along the surface of the knitting needles and crochet hooks, is not capable of changing those conclusions. As can be seen from paragraphs 33 and 34 above, the entry of a mark in the register is intended to allow the Board of Appeal to exercise its powers and to safeguard the interests of the parties to a dispute, but also to inform third parties of the specific nature of the registered rights and therefore to determine the subject of the protection afforded. Consequently, even if the applicant’s statement could be understood as implying that it does not oppose the Board of Appeal examining the distinctive character of the mark at issue by taking account of the appearance of the goods indicated in paragraph 21 of the contested decision, it is irrelevant in the present case. Equally irrelevant is, in any event, the circumstance, raised by the applicant at the hearing, that the applicant probably affixed the mark at issue, in its registered form, to the packaging of goods which it marketed. In that respect, it suffices to point out that the Board of Appeal did not assess the distinctive character of the mark at issue in view of that registered form. The lawfulness of the contested decision is to be assessed in view only of the reasons supporting its operative part.

47It follows that examining the distinctive character of the mark at issue by taking account of substantially altered characteristics of that mark constitutes an infringement of Article 7(1)(b) of Regulation No 207/2009. Therefore, as the applicant submits, the Board of Appeal infringed that provision by assessing the distinctive character of the mark at issue on the basis of the patterns on the surface of the knitting needles and crochet hooks produced by the applicant, with the result that the contested decision must be annulled.

Costs

48Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since EUIPO has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the applicant.

49In accordance with Article 138(3) of the Rules of Procedure, the intervener must bear its own costs.

Operative part

On those grounds,THE GENERAL COURT (Fifth Chamber),hereby:

1.Annuls the decision of the First Board of Appeal of the European Union Intellectual Property Office (EUIPO) of 5 November 2015 (Case R 1814/2014-1);

2.Orders EUIPO to pay the costs of M/S. Indeutsch International;

3.Orders Crafts Americana Group, Inc. to pay its own costs.

Delivered in open court in Luxembourg on 21 June 2017.