Infringement of the trademark: the risk of association - Law Firm Psarakis & Kefalas

Legal Insight

October 2021

Ioannis Psarakis, Lecturer, LL.M (III), PhD Cand.

(Republished from epixeiro.gr)

Introduction - a few words for understanding

In a previous article (see here) we described the concept of risk of confusion, set out the basic criteria by which it is diagnosed and explained the reasons why it is very common for a layperson to believe - honestly and reasonably - that there is no risk of confusion, but that this impression is wrong. In conclusion, we have indicated that the main reason why this may be the case is that the likelihood of confusion - that is to say, that which third parties ought to avoid - is 'implanted' in law with another concept which extends the protective reach of the signatory: that of 'likelihood of association'.

In simpler words, if we wish to market a product under a sign, we should pay particular attention not only to the possibility that the consumer public (at least a not insignificant part of it, as required by case law - by case law we mean the decisions of the courts) may consider that the goods in question come from another undertaking with whose sign our sign will be similar (risk of confusion), but also to the possibility that the signs may be considered to belong to different undertakings, but which are not the same as our sign (risk of confusion).

In the latter case, then, we are talking about the likelihood of association, a - to put it more simply - subcategory of the risk of confusion. Trade mark law protects the earlier proprietor against this possibility as well.

For example, a very frequent reference to the likelihood of association is found in Polo Ralph Lauren's litigation, particularly with importers who market - in particular - clothing that bears indications referring to the sport of polo with horses, or sometimes simply depicting horses with a rider. In those cases, the judgement of the Courts and of the EUIPO (European Union Intellectual Property Office) departments is that even if the consumer does not consider that the importer is marketing goods originating from Polo Ralph Lauren (so there will be no likelihood of confusion, in the strict sense of the term), he may consider that - precisely because of this albeit nebulous connection between the two indications - there is a relationship of cooperation between Polo Ralph Lauren and the undertaking which manufactures the goods in question. In particular, the phrase which is frequently found in judicial decisions and in EUIPO decisions is as follows: "[...] it is considered that the relevant public might be led to believe that the identical goods come from the same or economically-linked undertakings". In this way it is easier to provide protection; protection is granted even if no likelihood of confusion is found, as long as there is simply a likelihood of association.

A footnote is necessary here: in cases like that of Polo Ralph Lauren, we will usually talk about "reputation" brands; in a forthcoming article we will introduce this crucial concept. What we can hold for the moment is this: in reputation marks the scope of protection is even broader. However, in order for this protection to be granted, it must be shown that it is indeed a trade mark of reputation. This, of course, requires the production of evidence, its examination and assessment by the Court of Justice or the competent authority (e.g. the Opposition Division of EUIPO). Therefore, because the assessment that a mark is a trade mark of reputation requires additional effort and creates further grounds for appeal against the decision which will be based on a 'reputation' mark (e.g. the other party will be able to argue and prove that it is not a 'reputation mark' and therefore not entitled to the corresponding broader protection), adjudicators, even in reputation mark cases - if a risk of association is certainly identified - tend to formulate a rationale that can be largely summarised in the following phrase: 'I do not consider whether it is a reputation mark because even if it is merely a 'common' mark, a likelihood of association is established and therefore, in any event, the protection sought is afforded'. This saves time and reduces the chances of the decision being overturned by a higher authority.

But to be consistent - and returning to the subject of this article - we should note the following: legally, when we talk about likelihood of confusion, we are referring to both likelihood of confusion and likelihood of association. As both Directive 2436/2015 EU (the EU Directive on the approximation of the laws of the Member States relating to national trade marks, i.e. marks which confer protection only within a particular Member State) and Regulation 2017/1001 EU (the EU Regulation on the EU trade mark, i.e. a mark which confers protection within the whole of the EU) emphasise, "the likelihood of confusion includes the likelihood of association with the earlier mark".

However, the perfectly logical thing, linguistically, would be for the concepts to be distinguished. The confusion of the concepts, legally, under the risk of confusion, has been made more for historical and diplomatic reasons and goes back to the conditions of protection that applied, on the one hand, in the Benelux countries and, on the other hand, in the other EU countries. In other words, it was an attempt to bridge the gap between some Member States which considered the risk of association (Benelux countries) to be a critical factor and the others which considered the risk of confusion to be such a factor. In order to avoid different judgements, it was therefore defined that the confusion risk includes the correlation risk. In this way, the protection of the trade mark within the EU and between Member States was achieved under the same conditions.

In this article, however, in order to better understand the concept of likelihood of association, we will refer to it exclusively.

The concept of correlation risk

According to the case law, a risk of association exists when a non-negligible part of the relevant public is given the impression that there is an 'economic, organisational or even any other kind of link between the undertakings (this is, for example, the wording of the recent decision of the Athens Court of Appeal No. 2757/2020). In general, it is crucial to create the impression of a relationship of cooperation between two undertakings (as held by the Thessaloniki Court of Appeal in its also recent decision No. 2213/2019). We understand, already from this wording, that the concept of risk of association has a potentially wide scope and can cover a large number of cases. Indeed, the risk of association exists even in cases of doubt; that is to say, in those cases in which the consumer cannot be certain of the existence or otherwise of a cooperation relationship between undertakings. A necessary condition, of course, is that the relationship does not actually exist. Because if it does exist, there will be no confusion; on the contrary, there will be a perception of reality. This was held by the CJEU on 23 April 2020 in Case C 736/18 P (Gugler).

The concept of correlation risk

In general, it is crucial to create the impression of a cooperative relationship between two undertakings (as held by the Thessaloniki Court of Appeal in the also recent decision no. 2213/2019). We understand, already from this wording, that the concept of risk of association has a potentially wide scope and can cover a large number of cases. Indeed, the risk of association exists even in cases of doubt; that is to say, in those cases in which the consumer cannot be certain of the existence or otherwise of a cooperation relationship between undertakings. A necessary condition, of course, is that the relationship does not actually exist. Because if it does exist, there will be no confusion; on the contrary, there will be a perception of reality. This was held by the CJEU on 23 April 2020 in Case C 736/18 P (Gugler).

A risk of confusion will also be deemed to exist where there is a possibility (risk) that a non-negligible part of the public may assume that there is a possibility (direct, indirect or even consequential) of controlling (by the earlier marker) the quality of the products marketed and on which the new or 'would-be' marker applies its mark. This has been consistently accepted by the Court of Justice of the European Union (CJEU), most recently in its judgment of 20 December 2017 in Case C 291/16 (Schweppes). If the public assumes this, a likelihood of association is established and therefore the protection of the signatory is triggered. This requires an examination of each case on substantive criteria and not formalistic ones.

Finally, in practice, an intermediate category could be the case where, due to basic common elements between the two signs, the (false) impression is created that the beneficiary of both signs is the same undertaking. That is, for example, either that the two signs are "series marks" (e.g. McFlurry, McNuggets - marks of the McDonalds restaurant chain) or that the later sign is in any case a variant use of the original mark, but by the same undertaking. According to the aforementioned Thessaloniki Court of Appeal decision 2213/2019, such a risk is caused "when the above impression is not due to the similarity of the marks, but to the finding that one mark is a variation or evolution of the other. A risk of confusion in a broad sense is also considered to exist where, because of the similarity of the marks of two different undertakings, the false impression is created that there is an economic or other link between those undertakings".

Conclusion

After all this, it is easy to understand that the wide protective range of trademarks (and distinctive signs) is what makes the assistance of an expert necessary when a specific sign is chosen for the company's activity in the market. This is because there is a risk - even unintentionally - that a third party's rights may be infringed. The infringer may face, in addition to civil consequences (e.g. payment of compensation or destruction of products already illegally marked and marketed), criminal consequences. Equally important, however, is the following fact: any building on a particular sign is "demolished" since a court order will now prohibit the use of that particular sign. Building will have to start again from scratch, on a new sign which does not infringe on the rights of a third party.

And in the reverse direction, however, the above makes clear the beneficial aspect and the great protection that the sign holder enjoys if - after a proper study - he registers his mark. We emphasise the correct study, because although the registration of a trade mark is a first safeguard, it does not put the signatory in the clear: third parties who consider that they have an earlier right which is being infringed can bring an application for a declaration of invalidity and, of course, an action, claiming that the later sign creates a likelihood of confusion (or even association) with their sign.

For indeed, even if, for example, the Trademark Division accepted a particular application for a trademark registration, this does not mean that the sign is not "similar" to a third party sign which distinguishes similar goods. In fact, under the new law. 4679/2020 (which replaced the previous provisions of Law 4072/2012), the Trademark Directorate no longer examines ex officio issues of likelihood of confusion and/or association. In order to do so, an opposition must be filed by a third party. However, if no opposition is filed within a certain period of time from the submission of the application (this period is 3 months from the day after the publication on the website of the Ministry of Development and Investment of the decision that the decision finds that there are no "absolutely unacceptable" circumstances - such is not the likelihood of confusion/association), the indication will be registered and there will be a "mark".

In this way, a third party may have succeeded in registering their mark, but unless the proper legal scrutiny has been done beforehand, there is a visible risk that "that's not saying much". Any third party who considers that he has an earlier right (indication) which is similar to the registered trade mark, even to the extent of a risk of association, can overturn the facts of the - otherwise - trade mark proprietor. For this reason, in all cases a good preliminary examination is necessary which will result in sound legal advice.

And if a dispute arises, a solid knowledge of, in particular, the case law of the CJEU and the CJEU and the use of the right and appropriate arguments will ensure the best possible outcome of the case.