Matteo Gragnani , 20 avril 2011

On  March 29, 2011, the Court of Justice of the European Union set aside in part the judgment of the General Court in case C-96/09 issuing a new decision in the context of the never-ending saga between the Czech brewer Budějovický Budvar and the American brewing company Anheuser-Busch.

Since 1975, the Czech brewer Budějovický Budvarhas brewed and sold at the international level, a beer called «Budweiser Budvar» or «Bud». In 1975, the corresponding appellation of origin «Bud» was registered at the World Intellectual Property Organization (WIPO) under the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration, adopted on 31 October 1958 . According to Article 1(2) of the Lisbon Agreement, the parties undertake to protect on their territories the appellations of origin of the other countries which are registered at the International bureau of WIPO. Since 1875, the American company Anheuser-Busch has produced and sold in the United States a beer under the trademarks «Budweiser» and «Bud».

This landmark dispute on the field of Trademarks and Geographical Indications was originated from the decision of Anheuser-Busch to use in the European market the trademark «Bud», thus, taking advantage of the reputation of its Czech competitor. In recent years, several national jurisdictions have ruled on this issue. The solutions provided by national courts show a substantial balance between the invalidation of the Czech appellation «Bud» and the refusal to register the corresponding American trademark.

From 1996 to 2000, Anheuser-Busch applied to the OHIM (Office for Harmonization in the Internal Market) to register as a Community trade mark the word and figurative sign “BUD” for certain kinds of goods, including beer.

According to Article 8(4) of Regulation No 40/94 of 20 December 1993 on the Community trade mark, the owner of a “sign used in the course of trade of more than mere local significance” may prevent the registration of a trade mark when rights to that sign were acquired prior to the date of application and if that sign confers on its owner the right to prohibit the use of a subsequent trade mark.

The Czech company Budĕjovický Budvar filed to the OHIM an opposition against the registration of “BUD” relying on the appellation of origin «Bud», registered  and protected as such in France, Italy and Portugal under the above mentioned Lisbon Agreement and protected in Austria under a bilateral agreement with the Czech Republic. The Opposition Division of the OHIM, first, and the Board of Appeal, later, rejected these objections stating that the grounds for refusal laid down in Article 8(4) were not satisfied by the appellation of origin “Bud”.

Against the Board of Appeal’s decision Budĕjovický Budvar brought actions before the Court of First Instance (now General Court) assuming that the condition of Article 8 (4), in relation to an opposition based on the existence of an earlier sign of more than merely local significance, was satisfied.

In accordance with the principle that the Community trade mark law does not replace national trade mark laws of the Member States (Case Atomic Austria v OHIM), the General Court considered that the OHIM must take into account prior rights protected at national level when examining the conditions laid down by Regulation 40/94 for the registration of a Community trade mark. Accordingly, the Board of Appeal of the OHIM should have considered the relevant national law, i.e. the effects,in the concerned EU Member States, of the registration of the appellation of origin “Bud”by virtue of Article 1(2) of the Lisbon Agreement. In fact, according to Article 1(2) of the Lisbon Agreement, the parties, including those EU Member States which are parties to that agreement, undertake to protect on their territories the appellations of origin of the other countries. Therefore, in the General Court’s view, the Board of Appeal ​​erred in questioning the alleged earlier rights without analyzing the scope and the extent of these rights. Thus, this decision of the General Court implicitly acknowledged the juridical effectiveness, in the context of the EU intellectual property law, of the rights descending from the appellations of origin protected in a number of EU Member States by virtue of the Lisbon Agreement.

Anheuser-Busch appealed this judgment before the European Court of Justice alleging infringement of Article 8 (4) of Regulation No 40/94. The Court of Justice was of the view that the General Court has made errors of law.

First of all, the General Court erred in interpreting the first condition laid-down in Article 8(4)of Regulation No 40/94. According to the latter, the earlier right on which the opposition relies must concern a sign “used in the course of trade of more than mere local significance”. As regards this requirement, the Court of Justice held that it must be evaluated whether the use of the sign in the territory of protection is more than merely local, whereas it is not sufficient to assess only the geographical extent of its protection, as the General Court did. Otherwise, an earlier sign whose protection is not merely local could prevent the registration of a Community trade mark even though the sign is used only to a very restricted extent in the course of trade. Consequently, the General Court made an error of law restricting its evaluation exclusively to the fact that the appellation of origin “Bud” was protected in many countries, without establishing whether the sign “Bud” was used in a significant manner in the course of trade.

Moreover, the General Court made an error of law in considering that Article 8(4) does not require that the earlier sign is used in the territory of protection. More in detail, the General Court erred in holding that an use in a territory other than the territory of protection may be sufficient to prevent registration of a new Community trade mark, even when there is no use at all in the territory of protection. The European Court of Justice held that the only relevant territory for that purpose is the territory in which the sign is protected. In fact, it is only in that territory that the applicable law confers on the sign exclusive rights which may enter into conflict with the new Community trade mark.

Finally, the European Court of Justice set aside in part the judgment of the General Court provided that the judgment had made errors of law in its evaluation of the conditions set out in Article 8(4). Hence, the Court of Justice referred the case back to the General Court.

As regards article 8(4) of Regulation No 40/94, the European Court of Justice is correct in observing that the General Court’s interpretation is contra legem; in fact, the General Court misunderstood the requirement of the use in the territory of protection. On the other hand, it has to be noted that the interpretation of the General Court had the merit to safeguard those appellations of origin whose legal effectiveness prescinds from the requirement of the use. In conclusion, it seems that the condition set-out in article 8 (4), requiring a "use in the course of trade of more than mere local significance” has been conceived assuming that the earlier right, on which the opponent founds its claim against the registration, may consist only in a trade mark. However, it is evident that this wording may cause a number of problems when the prior right is instead an appellation of origin, protected in a EU Member State under an international treaty, the Lisbon agreement, irrespective of the fact that the sign is used in the concerned state.

Reproduction autorisée avec l’indication: Gragnani Matteo, "The Budweiser case, a never ending case", www.ceje.ch, actualité du 20/04/2011.