“The power of a trade mark monopoly should not be granted where it would require honest men to look for a defence to an infringement action.” - A Critical Discussion


Essay, 2011
9 Pages, Grade: 1,3

Excerpt

1. Introduction

One of the main functions of trade mark law is to reconcile conflicting interests of trade mark owners and third parties. The present essay identifies those conflicting interests and sheds light on how the legal framework attempts to strike a balance between preserving the rights of trade mark owners and securing the interests of third parties. The legal framework seeks to balance the interests of trade mark owners and other stakeholders such as the direct competitor, the consumer or the public at large. The first section of the essay outlines the tensions of trade mark law. Firstly, it focuses on the wide powers conferred upon the proprietor of a registered trade mark. Consequently, it identifies when the law provides for limitations of the monopolistic character of trade marks. The concept of ‘honest practices in industrial and commercial matters’ is identified also in the first section. The second section of the present essay looks more closely at the trade mark defences under Section 11 of the Trade Mark Act 1994.

2. The Tensions of Trade Mark law

The rationale behind trade mark law is designed to serve two main purposes. Firstly, a registered trade mark is an item of property designed to protect business reputation. Trade marks have long been used by traders to identify their goods and distinguish them from the goods of other traders. Thus, on one side a registered trade mark is a property right which serve to protect the interests of traders. Secondly, as a form of consumer protection, trade mark law has been an effective tool against counterfeit and inferior goods. In this case, trade marks are seen to serve as a ‘badge of origin’. Distinctiveness as to the business source is an essential function of a trade mark in order for consumers to recognise the origins of goods and services.

In legal terms, a trade mark indicates that there is an economic connection between all products bearing the same sign and one particular undertaking and that this undertaking is responsible for the presence of these products on the relevant market. However, its functions in modern commercial life can go far beyond this. It has long been recognised that as trade marks become more familiar to consumers, they can play a more active role in stimulating demand for the products with which they are used. Merely indicating trade origin, so as to differentiate one product on the market from its competitors, is a relatively passive function for which a trade mark's inherent ability to differentiate should be the key determinant of its likely effectiveness.[1]

Trade mark law confers upon the proprietor of a registered trade mark a wide power over other traders in relation to his trade mark. Since the enactment of the Trade Mark Act in 1994 and the Community Trade Mark Regulation (CTMR), one of the most notable aspects in the recent development of trade mark law has been the expansion of the scope of the rights conferred on the proprietor. Arguably, the rights granted to the owners of registered trade marks have been extended to an extent that it could be said that they now confer a form of quasi-copyright protection which protects traders rather than consumers.[2] The Trade Mark Act contains a presumption in favour of registration, and the Registrar no longer enjoys a wide discretion when considering when to grant or refuse an application.[3] As with patents and registered designs, liability for trade mark infringement is strict as the monopoly is an absolute one. There is no need for a trade mark owner to demonstrate damage. For infringement, there is no requirement for knowledge, intention or derivation on the part of the defendant. The immunity conferred by registration acts as an incentive for traders to apply for trade mark registration.[4] Additionally, registered trade marks have an increasing importance due to their potential of lasting perpetually. Thus, trade marks give many benefits to potential owners. Similar to other forms of intellectual property, trade marks can be viewed as conferring an economic monopoly on their owners and as a property right.

However, in relation to certain uses, the trade mark proprietor is powerless to prevent other traders from registering identical or similar trademarks. Section 11 of the Trade Mark Act provides for the limits of effects of registered trade marks. Trade mark law tolerates several different categories of use. Some of these uses are based on commercial imperatives – such as a trader’s need to inform - the so-called information function. Other uses are justified by considerations of honesty and fairness, for example where an economic agent seeks to trade under his own name similar to an earlier registered trade mark.[5] The legal framework seeks to balance the interests of trade mark owners and other stakeholders such as the direct competitor, the consumer or the public at large. Striking a balance between preserving the rights of trade mark owners and securing the interests of third parties is a main feature of trade mark law. Article 17 of TRIPs Agreement identifies possible exceptions to trade mark protection. The Article postulates: ‘Members may provide limited exceptions to the rights conferred by a trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trademark and of third parties. ’[6]

In Anheuser – Busch Inc v Budejovicky Budvar case, the ECJ makes a specific reference to Article 17 of TRIPs: ‘The exceptions provided for in Article 17 of the TRIPs Agreement are intended to enable a third party to use a sign which is identical or similar to a trade mark to indicate his trade name, provided that such use is in accordance with honest practices in industrial or commercial matters.’[7] Thus, the exclusive use of a trade mark by its proprietor is not an inflexible privilege. Limitations to the monopolistic character of trademarks aim at ensuring more effective competition. However, a duty to protect the core of trade mark rights is identified in term of an obligation to avoid any use that is not in accordance with honest practices in industrial or commercial matters. For example, the third party gives an impression that there is a connection between the third party and the trade mark owner, or affects the value of the trade mark by taking unfair advantage of its reputation, or it amounts to the denigration of the trade mark.

The concept of a standard of ‘honest practices in industrial and commercial matters’ derives from unfair competition law.[8] The concept comes from the Paris Convention and defines a non-exhaustive list of activities that amount to unfair competition. In Gerolsteiner the ECJ stated that honest practices express 'a duty to act fairly in relation to the legitimate interests of the trade mark owner’.[9] Therefore, many property rights are exposed to exceptions or limitations in favour of third parties, even when the property right owner reserves his authorisation. However, the law explicitly states that this is so only with the provision of honest practices.

3. Trade Mark Defences

Section 11(2) of the Trade Mark Act provides for the situations in which a trade mark is not infringed by the use of another registered trade mark in relation to goods and services for which the latter mark is registered: ‘(a) the use by a person of his own name or address, (b) the use of indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics of goods or services, or (c)the use of the trade mark where it is necessary to indicate the intended purpose of a product or service (in particular, as accessories or spare parts), provided the use is in accordance with honest practices in industrial or commercial matters.’ Defences focus on the nature of the trader’s mark, where specific categories of use are expressly permitted.

Previously, trade marks were seen as: ‘capable of placing severe limitations on the freedom of other traders and therefore to be awarded only if strict conditions were satisfied to counter this danger.‘[10] The legal framework did not allow to register trade marks consisting merely of place names, surnames, or common descriptive and laudatory words. Griffiths argue that the current trade mark system in place is a modern system, which is simpler, more flexible and requires less regulation.[11] In turn, the substantial harmonisation of trade mark law in the UK and throughout the European Union has led to a new approach.

3.1. Use of own name and address

The first limitation on the effects of a trade mark allows a person to use his own name and address. The fact that there is an own name limitation under Article 11 (2) (a) (Article 6 (1) (a)) of the CTMR does not affect an assessment as to whether a trademark is devoid of any distinctive character. In Anheuser-Busch, the ECJ provided guidance on the interpretation of Article 6 (1) (a) in terms of when such use would be in accordance with honest practices. The ECJ cited three factors referring to the duty to act ‘fairly towards the trade mark owner’. Firstly, the extent to which consumers will understand the connection of the trade mark with the economic agent providing the goods or services. The greater the degree of confusion, the more likely that the use will be regarded as infringing. Secondly, the Court considered the extent to which the defendant was aware of the likelihood of confusion. Thirdly, it was considered whether the claimant had a reputation from which the defendant was likely to profit from. These factors shed light on the interpretation of honest practices.

3.2. Descriptive uses

Regarding descriptive terms, the registration process is no longer concerned with preventing the enclosure of the common language and can focus on whether a potential trade mark is likely to be perceived by consumers as a trade mark and can therefore perform its intended function. Advocate-General Jacobs described this transformation in his opinion to the ECJ in the Baby-Dry case: ‘In the modern approach, there is thus only one criterion - a trade mark must be capable of being perceived by the public as indicating that the goods are those of a given undertaking.‘ Thus, as the Baby-Dry case demonstrates, just because a trade mark is descriptive it does not follow that it cannot be distinctive of the goods of a particular undertaking.[12] If a descriptive term becomes registrable as it has acquired a secondary meaning, Section 11(2) (b) defence ensures that the rights conferred on the owner of the trade mark do not limit other economic agents from using the same word or sign to describe goods or services. Thus, the defence restricts the degree to which a descriptive word can be taken from the public domain.

The Baby-Dry judgment sheds light on two of the criteria governing the registrability of a proposed mark – the distinctive character requirement and the descriptive term bar. Firstly, a potential mark must not be registered if it is ‘devoid of any distinctive character’ and which in effect enforces a positive obligation that a trade mark must have an element of distinctive character. 'Distinctive character is the quality which enables consumers to perceive a proposed mark as a trade mark and will therefore enable it to function as a trade mark in practice.'[13] Secondly, a proposed mark must not be registered if it consists 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 or service. As mentioned in the previous section, it is not in the public interest for one trader to appropriate and gain a monopoly over some uses of the trade mark such as descriptive terms. Trade mark law has to resolve two conflicting pressures in its regulation of applications to register proposed marks consisting of or including descriptive terms. The first pressure comes from those applicants who wish to register and use trade marks that are mainly apt for the products in question and which may therefore suggest to the qualities and characteristics of the products (for example, case Colgate-Palmolive v Erven Lucas). The second pressure comes from traders who expect to be able to use ordinary descriptive and laudatory terms without restriction in promoting and marketing of their own products. They expect to have continued and unhindered access to ordinary language and terminology and for it not to be monopolised by one trader. In the Baby-Dry case, the ECJ had to consider the role of the descriptive terms bar in striking the balance between these two conflicting pressures.

[...]


[1] Loughan p.468

[2] Bently and Sherman p.915

[3] Bainbridge p.619

[4] Bently and Sherman p.932

[5] Phillips p.13

[6] TRIPs Agreement Article 17

[7] Anheuser – Busch Inc v Budejovicky Budvar

[8] Phillips p.12

[9] Gerolsteiner Brunnen GmbH &Co. v Putsch GmbH, Case C-100/02 {2004} ECJ

[10] Griffiths p.1

[11] Griffiths p.6

[12] Procter & Gamble Co v Office for Harmonisation in the Internal Market (Trade Marks and Designs)(OHIM) (C-383/99 P) [2001] E.C.R. I-6251 (ECJ)

[13] Griffiths p.8

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Details

Title
“The power of a trade mark monopoly should not be granted where it would require honest men to look for a defence to an infringement action.” - A Critical Discussion
College
University of Reading
Course
Intellectual property rights
Grade
1,3
Author
Year
2011
Pages
9
Catalog Number
V179306
ISBN (eBook)
9783656016502
ISBN (Book)
9783656016649
File size
480 KB
Language
English
Tags
trade mark, infringment
Quote paper
Veronika Minkova (Author), 2011, “The power of a trade mark monopoly should not be granted where it would require honest men to look for a defence to an infringement action.” - A Critical Discussion, Munich, GRIN Verlag, https://www.grin.com/document/179306

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