Background
Back in 2001, Pirelli Tyre SpA applied to the European Union Intellectual Property Office (EUIPO) to register the following sign as a European Union figurative mark:
In 2002 the sign was registered in Class 12 for "tires, rubber tires, rims as well as solid tires, vehicle wheels of all kinds", among other items.
In 2012, The Yokohama Rubber Co. Ltd applied to the EUIPO for a declaration of invalidity of the mark for the goods "tires, solid rubber semi-pneumatic and pneumatic tires for vehicle wheels of all kinds", among other items on absolute grounds for refusal under Article 7(1)(b) , as well as Article 7(1)(e) of Regulation (EC) 40/94 as amended at that time. While the former provision covers the lack of distinctiveness, the latter provision renders ineligible for registration such signs which "consist exclusively of the shape dictated by the nature of the goods, which is necessary to obtain a technical result or which gives substantial value to the goods".
The Cancellation Division of the EUIPO followed the request and even went further by declaring the contested mark invalid also for "rims and solid tires for vehicles of all kinds". Pirelli appealed against this, but was only successful with regard to "rims and solid tires for vehicles of all kinds", as these goods were not covered by Yokohama’s application. In all other respects, the Board of Appeal upheld the decision of the Cancellation Division. Pirelli appealed against this decision to the General Court (GC).
Judgment of the GC (24.10.2018, T-447/16)
The GC essentially confirmed Pirelli's legal opinion and ruled that the sign at issue was not subject to an absolute ground for refusal based on any technical effect of its shape. From the point of view of the court, the EUIPO thus erred in law in assuming a ground for invalidity under Art. 7(1)(e) of Regulation (EC) 40/94, which is why it annulled the decisions of the EUIPO.
In this regard, the court first stated that this ground for invalidity was based on the interest in preventing the monopolization of technical solutions for an unlimited period of time via the route of trademark protection. At the same time, according to the court, the "legislator, by limiting the ground for refusal under Article 7(1)(e)(ii) of Regulation (EC) 40/94 to signs consisting 'exclusively' of the shape of the product which is 'necessary' to obtain a technical result, had duly taken into account that every shape of a product is functional to a certain extent and that it would therefore be unreasonable to exclude a shape of a product from registration as a trade mark merely because it has utility properties".
From the point of view of the court, the EUIPO applied this standard incorrectly in law by classifying the sign in dispute as a "representation of a type of tread", with the result that it covered the most important part of the goods in dispute, at least from a technical point of view. The GC countered this understanding by pointing out that the contested sign does not in itself represent either the shape of a tire or the shape of a tire tread. Rather, it was a single groove and thus a very small part of another part, namely a tread, which itself consisted of many other elements. In the context of its examination, the EUIPO may not add elements to the sign at issue which are not themselves part of the sign at issue, i.e. which lie outside the sign or are foreign to it.
According to the GC, a groove does not constitute a product, since it does not form an element separable from a tire. Thus, the contested sign does not consist exclusively of the shape of the goods in question, nor of a shape which, as such, constitutes an essential part of those goods in quantitative and qualitative terms. Moreover, a single groove in the shape of the sign at issue is not capable of producing the technical effect assumed by the Cancellation Division. Rather, it is the combination and interplay of the various components of a tread that gives rise to such an effect. The action was thus upheld and the declaration of invalidity set aside.
Yokohama and the EUIPO appealed against the judgment of the GC to the CJEU, which were consolidated.
Judgment of the CJEU (3.6.2021, C-818/18 P and C-6/19 P)
The CJEU first points out that the appeal is limited to legal considerations only. In contrast, a large part of Yokohama's grounds of appeal relate to the GC's assessment of the facts or evaluation of the evidence. In particular, Yokohama's argument that the GC erred in law by interpreting the essential characteristics of the sign as a groove and thus as a component of the tread, which in turn is merely a component of a tire, failed to convince the Court. In the CJEU's view, the GC was rather correct in assuming that the EUIPO, in its examination of the sign, had taken into account characteristics which were not directly to be inferred from the sign itself.
Both appellants further argued that the CJEU had misinterpreted Article 7(1)(e)(ii) of Regulation No 40/94 by holding that a sign falls within the ground for refusal of that provision only if the part of a product represented by the sign constitutes, in quantitative and qualitative terms, an essential part of that product.
In the Court's view, however, the appellants had already failed to adduce evidence to show that a single groove in the shape at issue was capable of producing a technical effect at all, so that an erroneous interpretation of the provision would in any event have had no effect on the outcome. Moreover, the free assessment of evidence by the CJEU could not be challenged on appeal.
As a result, the CJEU thus confirmed the legal opinion of the GC and dismissed the appeals of Yokohama and EUIPO against the GC judgment in their entirety.
Consequences
As both the GC and now the CJEU explicitly emphasize, the continued existence of the mark as a result of the judgment does not entail a risk of monopolization of the groove as a technical solution for tires:
"[T]he registration of the sign at issue, the protection of which is limited to the shape of what it represents, [is] not liable to prevent [...] competitors [...] from manufacturing and marketing tires incorporating a shape identical or similar to that represented by the sign at issue, where that identical or similar shape is combined with other components of a tread and forms with them a shape which is different from the individual components - considered in isolation."
In its ruling, the CJEU confirms the correct assessment of the GC, which succeeded in striking a balance between the interests embodied in the text of the regulation. In particular, the interest in avoiding a monopolization of a technical solution is sufficiently taken into account. At the same time, such an interpretation of the regulation also allows for extensive protection of signs as trademarks.
It must be taken into account, however, that the judgment directly concerns only the outdated version of Regulation (EC) 40/94. Thus, the question arises whether the content of the judgment can be applied to situations where the sign at issue has been registered since the entry into force of the new version. Regulation (EU) 2017/1001 in Art. 7(1)(b)(ii), in addition to the shape of the goods, also names "another characteristic feature of the goods" as a criterion to be taken into account for achieving a technical effect of the sign.
There are indications that the ruling will remain valid even in view of the current wording of the regulation. Thus, it can be assumed that in comparable cases in which the sign does not represent an essential part of a product in qualitative and quantitative terms and a fortiori does not represent an independent product, an absolute ground for refusal must still not be assumed, provided that the sign does not assume an overriding technical function in its abstract perception (without taking into account further partial elements of the product).
Authored by Thorsten Klinger
