Case C-409/12, Backaldrin Österreich The Kornspitz Company – when the name of a bread roll is common for consumers but uncommon for traders [judgment 2014, ECLI:EU:C:2014:130]

According to Article 12(2)(a) of the EU trade mark Directive 2008/95/EC, a trade mark can be revoked when it has become the common name for a product or service. But at what point in time does a mark become a common name? Is it when a word is commonly used by consumers? Or must a mark linger on until the word has also become common amongst traders?

Facts

Backaldrin Österreich The Kornspitz Company is the right holder to the Austrian word mark ‘Kornspitz’. The mark is registered for goods falling within Class 30. Despite the breadth of food staples falling within that Class, the company really only produces a baking mixture which is sold to bakers. The bakers then process it into bread rolls with a specific form and taste. Those in the baking and food processing trade use the word ‘Kornspitz’ with the trademark holder’s consent.

However, a rival company, Pfahnl Backmittel, sought to have Backaldrin’s trade mark registration revoked. In its petition to the Austrian Patent Office, Pfahnl Backmittel submitted that the word’ Kornspitz’ was just the common name for a bread roll made from dark flour with two pointed ends. As such, Backaldrin’s mark was no longer suitable to distinguish the products of the right holder from those made by any other supplier. Pfahnl Backmittel recalled the wording of Article 12(2)(a) of the Trade Mark Directive: a mark may be revoked ‘if, after the date on which it was registered: (a) in consequence of acts or inactivity of the proprietor, it has become the common name in the trade for a product or service in respect of which it is registered’.

The Austrian Patent Office held that ‘Kornspitz’ was perceived by most end-users to be a sort of bakery product and not one originating from a particular company. Because bakers regularly failed to indicate that the bread had in fact been made from a baking mixture bought from another company (the right holder), this situation had arisen, in part, because of the acts or inactivity of the proprietor. The Austrian Patent Office therefore revoked the registration.

Appealing to the Austrian Oberster Patent- und Markensenat (the OPMS), Backaldrin acknowledged that Austrian case law allowed a mark to be revoked once suppliers, and particularly traders, no longer saw an indication of origin. However, that was not the case here. Bakers and intermediaries were aware that the word’ Kornspitz’ indicated origin from a specific company; Kornspitz supplied the traders with the basic ingredients or the product in its not-quite-final form. As such, Kornspitz was not a common name among traders and suppliers. Consequently, the OPMS decided to revisit the declaration that the registration was void.

The OPMS acknowledged the Austrian Patent Office’s finding that when it came to bakery products everyday customers were mainly the users, and that the word ‘Kornspitz’ had indeed become a common name – users no longer saw ‘Kornspitz’ as an indication of origin. The OPMS added that from the wording of Article 12(2)(a) of the Directive, a mark can only be revoked once the producers and intermediaries perceive the mark as a genus or type. This in effect rendered the perception of the end user irrelevant: most of the bakers and traders were aware that the bakery products were trade marked and could only be used in connection with the basic ingredients bought from the right holder.

The OPMS turned to the only the judgment of the CJEU that deals with this situation, namely, the ‘Bostongurka’ Case C-371/02, Björnekulla Fruktindustrier. Accordingly, the OPMS took as its starting point the fact that a mark denotes origin. From this it could be inferred that the perception of intermediaries would only be relevant where this had an effect on the purchasing decision of the end-user, such as when medicines were purchased after extensive discussion.

If that approach was right, then the perception of the user would be the only one which was relevant. However, it was common knowledge that bakers would have absolutely no desire to disclose to consumers that the bread prepared in their shop was in fact constituted from industrially-produced, pre-made baking-mixtures and dough-balls bought from a factory or intermediaries. Nor would bakers have any wish to tell consumers that the basic ingredients were trade marked and that they could only describe the bread in a specific way. Telling the consumer this would rent asunder the carefully-cultivated romantic advertising images linking bread to traditional, artisan bakers. Seen this way, the existence of the word mark ‘Kornspitz’ exerts absolutely no effect on the purchasing decision or the perceptions of the relevant end-user. As such, the CJEU’s ruling in Björnekulla Fruktindustrier could be used to support the argument that no account need be taken of the perception of traders, bakers and intermediaries.

A contrary interpretation could however justify the attachment of a legal relevance to the perception of those in the trade. That argument would take as its starting point the tendency of end-users to use well-known marks generically so that a word starts to cover a genus or type of goods. Very successful marks would run the risk of having their marks declared null and void. Furthermore, in this case, the market had a distinguishing feature: if the perception of end-users would be decisive then this would have consequences for findings related to trade-mark relevant issues of ‘inactivity’ by the right holder (Question 2), and the lack of an alternative name (Question 3). Taking traders’ perceptions into account would also have the advantage of leaving the mark intact on the basic ingredients and the interim products of flour, baking-mixtures and dough-balls. Otherwise, the value of the mark would diminish – and would that really be compatible with the constitutional protection given to intellectual property and Article 17(2) of the EU Charter?

On the issue of whether a name had become common because of the acts or inactivity of the proprietor, the OPMS wondered whether it was a relevant ‘inactivity’ that the right holder had not imposed any obligations on its customers to maintain the mark and that when it came to the advertising, the mark had not been presented as an indication of origin. These were the considerations behind Question 2.

The OPMS explained that Question 3 was designed to deal with the situation where a name must be used because there are no equivalent alternatives. Austrian case law allows a trade mark to continue to exist where traders appreciate the mark indicates origin; however for reasons of public policy, it will allow a trade mark to be revoked once there are no equivalent alternatives for those in the trade. The OPMS admits that the literal wording of Article 12(2)(a) of the Trade Mark Directive provides no direct legal support for this limitation. However, the CJEU has already weighed competing interests in Case C-145/05, Levi Strauss, paragraph 29. Accordingly, the OPMS felt that it was appropriate to balance on the one hand the interests of the right holder in maintaining the mark; and on the other, the interests of other economic operators in having signs capable of denoting their products and services.

Questions Referred

According to the website of the UK Intellectual Property Office, the Austrian OPMS has asked:

1. Has a trade mark become ‘the common name … for a product or service’ within the meaning of Article 12(2)(a) of Directive 2008/95/EC, where

(a) although traders know that the mark constitutes an indication of origin they do not generally disclose this to end consumers, and

(b) (inter alia) on those grounds, end consumers no longer understand the trade mark as an indication of origin but as the common name for goods or services, in respect of which the trade mark is registered?

2. Can the conduct of a proprietor be regarded as ‘inactivity’ for the purposes of Article 12(2)(a) of Directive 2008/95/EC simply if the proprietor of the trade mark remains inactive notwithstanding the fact that traders do not inform customers that the name is a registered trade mark?

3. If, as a consequence of acts or inactivity of the proprietor, a trade mark has become a common name for end consumers, but not in the trade, is that trade mark liable to be revoked if, and only if, end consumers have to use this name because there are no equivalent alternatives?