BriffaWay – What has the EU ever done for IP? Chapter 3

In this chapter we explore the manner in which the European Court of Justice has expanded the scope of protection enjoyed by trade mark owners beyond all recognition, made the law difficult to understand and apply and by so doing provided jobs for life for trade mark lawyers.

Once upon a time the function of a registered trade mark was as a badge of origin. The idea was that a consumer could rely on goods or services being from an authentic source by recognising your trade mark. Here’s an example: I see a Watney’s Pale Ale label and I am reassured that what I am about to drink will taste as good as all the other Watney Pale Ales I have consumed because I know it has come from the same brewery.

So far so good. Then in the late 1990’s one well-known football club going by the name of Arsenal picked a fight with a lifelong fan and street trader Matthew Reed and started the ball rolling on what is now a settled line of European case law in which trade mark protection goes beyond mere indications of trade origin and extends the monopoly rights given to trade mark owners by blurring the boundaries between trade mark law and competition law.  Final score trade mark Owner 4 Consumer 0.

Here’s how the play went.

Matthew Reed was a well known personality round the old Arsenal football ground. A fan since 1963 he had run a stall selling unofficial merchandise for around 30 years when in 1998 he was approached by officials from the club who asked him to stop selling goods bearing the Arsenal badge. Other traders were also threatened with legal action and avoided trouble by purchasing official merchandise from the club. Reed claims he tried to purchase official merchandise but was blacklisted. As Reed persisted, Arsenal sued him for trade mark infringement and passing off claiming that members of the public may be misled into the belief that, because goods bear one or more Arsenal signs, they are official Arsenal products. Even if Arsenal could show that as a result of Mr Reed’s actions there had been actual damage to Arsenal or the goodwill associated with official Arsenal merchandise. None of this was going to be easy for Arsenal, least of all because Mr Reed’s stall had a sign saying that his products were unofficial.

The case came before the late Mr Justice Laddie who quite sensibly found that potential buyers were not confused as to what was and was not official merchandise and refused to accept that Reed was passing off. The use of the trade marks was not use in the trade mark sense as an indication of origin but simply as a badge of allegiance and no more.

Now for the thing that has caused all the mischief. Mr Justice Laddie had a wobble. He referred the question as to the scope of protection afforded to trade mark owners to the European Court of Justice (ECJ) for clarification of the Trade Mark Directive on which our own UK’s 1994 Act is based. Initially no-one was too concerned. At that time Arsenal hadn’t won a European Competition on the pitch since 1994. Further Mr Justice Laddie had already decided that, in Reed’s, case the use of Arsenal words and signs was not trade mark use. All the ECJ had to decide is whether non-trademark use of a trade mark can count as infringement. To the surprise of Matthew Reed and a good few other people including some people who know rather a lot about trade mark law the European Court of Justice held that it was immaterial what Mr Reed’s sign was perceived by football fans as a badge support for or loyalty to Arsenal Football Club, Arsenal Football Club was entitled to prevent its use nonetheless.

Here is the imagined conversation in The Gunners a public house on Blackstock Road N5 after the decision.

Reg: Ere Matt you doing your stand for the match against ‘Ammers Saturday

Matthew: Naaa mate

Reg: Why not

Matthew: Got mega bother with some European Court shit

Reg; Yeh like what

Matthew: Well aint read it meself cos it’s in this judgement thing which is like the longest book you never read in your whole life but me brief says if you go to page 364 it says I can’t do the stand no more

Reg: You jokes, what

Matthew Naaa mate – ‘pparently even though everyone knows the stuff ain’t offish like,  Arsenal can stop me anyhows cos of their trade marks.

In the 10 years that followed Matthew Reed by all accounts continued to support Arsenal and follow the clubs fortunes through good times and bad. Meanwhile trade mark lawyers were left uncertain as to whether trade mark law was supposed to protect consumers, trade mark owners, or third-party competitors or all of them, all equally or not equally? Then the European Court of Justice had another go at tackling the same question, this time in the glamourous world of perfumery and still we have no clear answer to this very important question.

L’Oreal is a corporation requiring little introduction. Think hair, bath, body, beauty and perfume. They picked a fight with Bellure a small company creating cheap fragrances. Using comparative charts Bellure marketed their ‘smell-a-like’ perfumes as cheaper than L’Oreal whilst being of the same high quality. Like Mr Reed in the Arsenal case Bellure were very upfront about their goods not being connected with L’Oreal. Like the Arsenal v Reed case, the knotty issue of the function of a trade mark was referred to the European Court of Justice and like in the Matthew Reed case the court delivered yet another curve ball by ruling:-

“Trade mark functions include not only the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services, but also its other functions, in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising.”

What may seem to the lay reader as a small, almost off-hand comment from the court, has roused legal circles ever since. All businesses will have invested in their product, advertised their product, and used it as a tool for communication. This expansion, therefore, widens considerably the protection afforded to trade mark owners, as potentially any use at all of the trade mark will infringe on one of these functions.

Far from adding clarity to the law following Arsenal v Reed, the European Court of Justice messed up again and achieved quite the opposite by opening all avenues to future litigation.

When the case was referred back to the UK Court the outspoken Mr Justice Jacob did not mince his words in expressing his dissatisfaction with the decision stating:-

“Consumers are not stupid. They will not see the cheap copy as being the same in quality as the original. They will see it for what it is and no more…” My own strong predilection, free from the opinion of the ECJ, would be to hold that trade mark law did not prevent traders from making honest statements about their products where those products are themselves lawful.

At the moment we are bound to follow the ruling of the European Court of Justice as European Law is superior to UK law. Once we have exited the European Union, the case law that has been developed by the European Court can be considered should a court believe it is any use.

My strong prediction based on all the above is that once we have exited the EU our courts will lean towards free speech and against the expansion of trade mark owner rights. In doing so we may start to see a divergence in approach with freer competition on the UK and decisions which favour the consumer far more than in protectionist continental Europe.

Written by Margaret Briffa