Enforcement of Community Trademarks in Germany Against Infringing Company Names - a Gap in Protection?

by Jan Zecher

by Jan A. Zecher, Munich

More than ten years after the first trademark application was filed with the Community trademark office (OHIM), Community trademarks are very popular among international trademark owners because they offer protection in 27 European countries with a single filing. Community trademarks are generally seen as “best practice” for fast, efficient and cost-effective cross-border trademark protection in a market of nearly 500 million people. However, a recent decision of the German Federal Court of Justice (Bundesgerichtshof – BGH) casts doubt as to whether it is recommended to rely on Community trademarks alone for protecting one’s trademarks in the largest of these 27 countries, Germany.

In a September 13, 2007 judgment, which was fully published only in January 2008, Germany’s supreme court in trademark matters held that Community trademarks are not protected against third-party use as a mere company name. In the case decided by the court, the judges refused protection for a stylized Community trademark, “THE HOME DEPOT” for, among other things, typical do-it-yourself goods against use of a company name “THE HOME STORE” in a similar design for do-it-yourself markets (BGH, file no. I ZR 33/05 – THE HOME STORE). The case was remanded to the Hamburg Court of Appeals to examine whether “THE HOME STORE” had also been used by the defendant in connection with goods or services offered, i.e., as a trademark.

In their decision, the German federal judges referred to the Céline decision of the European Court of Justice (ECJ), which was issued two days earlier (Case C-17/06). In this decision, the ECJ had held that the use of a company name, trade name or shop name, where limited to identifying a company or designating a business, could not be considered as being a use “in relation to goods or services” (i.e., a use as a trademark) within the meaning of Article 5 (1) of the EC Trademarks Directive (INTA Bulletin Vol. 63 No. 6 (March 15, 2008)).

The BGH held that the same had to apply for Article 9 (1) of the EC Trademark Regulation (CTMR). Use of a Community trademark merely to identify a company or to designate a business would not qualify as a use of the trademark within the meaning of the CTMR. Under Article 5 (5) of the EC Trademarks Directive, which is the basis for the harmonized domestic trademark laws in the EC member states, the national legislatures have the right to protect domestic trademarks against a use other than to distinguish goods or services. This does not apply to Community trademarks, however, which are governed solely by the CTMR. Consequently, the BGH, as did the ECJ, held that Community trademarks are not protected against use as a mere company name. The BGH has not shown a way out of this dilemma by allowing for claims based on unfair competition or tort law, either, as suggested by some scholars in the past.

It has been the understanding in German case law and among scholars for a long time that national German trademarks are generally protected against use as a company name. The BGH has not given up this case law with its recent decision. To the contrary, it pointed out that the scope of protection of trademarks under national trademark law can be broader than the scope of protection of Community trademarks. This is in line with previous decisions of the BGH that suggest a similar understanding of German trademark law (see BGH, decision of October 9, 2003, file no. I ZR 65/00 – Leysieffer).

For Community trademark owners, the recent decision is disappointing. When enforcing Community trademarks, it will be necessary to show that the trademark is actually used by the infringer in relation to goods and services and not merely as a company name, trade name or shop name. In particular as regards services, it might prove difficult to draw this line. This is unsatisfactory particularly because there can be no doubt that using a third party’s trademark as a company name in the same area of trade can result in both a confusion in the market and an unfair exploitation of the trademark owner’s investments in the trademark. Besides, the decision seems to be somehow inconsistent under a legal perspective with a view to, among others,

• the possibility of basing an opposition to a Community trademark application on a “sign used in the course of trade” under Article 8 (4) CTMR;
• the possibility of converting a Community trademark application into a national trademark application under Article 108 (1) CTMR; and
• the equality of Community trademarks and German trademarks as regard claims for, among other things, damages under section 125b no. 2 of the German Trademark Act.

To be on the safe side, trademark owners may wish to file German trademark applications, in addition to CTM applications, for their more important trademarks. In particular, this is recommended where the trademarks are not also used as a company name in Germany. If the designation in question is used as a company name in Germany, it is possible to bring an action under the German Trademark Act for infringement of the company name. If a foreign company does not have a German affiliate or office, or if the designation in question is not part of the company name in the first place, the gap in protection that has now been defined in concert by the ECJ and the BGH can only be closed by domestic protection of the mark with the German Patent and Trademark Office (or by designating Germany as a country of protection in an international registration).