Country: EU
Tribunal: European Court of Justice (ECJ)
Case No.: C-102/07
Parties: Adidas AG v Marca Mode CV
Design: Citation(s):
Author: , R G C Jenkins & Co
First published: Make Your Mark newsletter, Autumn 2008, R G C Jenkins & Co

The ECJ here considered whether the widespread use of stripe motifs and the argument that they must remain available as decoration should limit Adidas' ability to act. The case was referred to the ECJ by the Dutch courts, following a trade mark infringement action by Adidas against Marca Mode and others. Adidas relied on registrations for its famous three-stripe motif against a background of contrasting colour. Marca Mode's motif comprised two parallel stripes against a background of contrasting colour. At first instance, Adidas prevailed, but it was reversed on appeal. The appellate court reasoned that the Adidas three-stripe motif was distinctive owing to Adidas' investment in use and advertising, and that since stripe motifs should in general remain available for use by all, Adidas should only enjoy protection against other three-stripe motifs. Adidas appealed again and argued that the public interest in keeping certain signs free for use by all was relevant to whether rights should be granted, but was not relevant to the question of infringement once rights had already been conferred.

The Dutch court referred the issue to the ECJ for guidance, together with a request for guidance on whether it was relevant to infringement if the average consumer perceived a later mark as merely decorative.

Need for Availability
On the need for availability, the ECJ concurred with Adidas. It held that the public policy need to keep certain signs free for use by all traders was important in determining whether to grant trade mark protection. However, once protection was granted, the "need for availability" had a much narrower purview.

In the Court's view, a likelihood of confusion was the specific requirement for infringement where marks were, as in this case, similar and the goods were identical or similar. Whether competitors had a justifiable need to use a particular sign was irrelevant to whether their use of it would create a likelihood of confusion. Allowing the so-called "need for availability" to limit a mark owner's ability to enforce its rights would undermine the general principle that infringement under Article 5 (1) (b) of the Directive is determined by whether there is a likelihood of confusion.

Likewise, the need for availability was irrelevant to whether use of a later mark infringed under Article 5 (2) of the Directive, involving a registered mark with a reputation. Here the mischief that the law aimed to remedy was unfair advantage or detriment and the need for availability was extraneous to whether the use of a later mark would lead to one of these outcomes.

Decorative Use
The ECJ agreed that whether the use of Marca Mode's two-stripe motif created a likelihood of confusion would depend on how the public perceived it. However, even use that was intended to be decorative could infringe where the later mark was so similar to the registered mark that the average consumer would assume that the goods emanated from the same trade source.

The Court acknowledged that whether there was a likelihood of confusion was a question of fact for the national court, and that the answer might be affected by the extent to which the market had been flooded with other similar marks, such that the average consumer had begun to see them merely as embellishments. However, if the evidence pointed to a likelihood of confusion, then the mere fact that the use was also decorative would not, on its own, provide a defence to infringement.

The ECJ noted that decorative use was in some respects evocative of the descriptive use permitted under Article 6 (1) (b) of the Directive, which permitted the honest use of designations denoting kind, quality and other characteristics of goods or services. The need for availability underpinned that defence, since purely descriptive indicators should indeed be free for all traders to use. However, decoration was not directly comparable to description of a characteristic, and in the Court's opinion Marca Mode's marks might be many things, but they were not descriptive.

The sports and fashion apparel industries absorbed this case with interest. Adidas is likely indeed to give copycat designers and lookalike merchants pause.

Copycats can still beat back an infringement claim by proving that a challenged motif or emblem will be seen purely decoratively, but they will bear the burden of showing that the use has no other meaning. In practice, if an emblem or motif is so similar to a registered mark that a likelihood of confusion seems probable, it will be difficult to persuade a court that use of the emblem or motif will not cause confusion simply because it is decorative, without evidence that the average consumer will perceive it so.

Ultimately how a mark is perceived is a question for evidence, and lookalike vendors will probably turn to survey evidence designed to target a helpful sample of witnesses who will say that they attributed no origin-indicating function to a motif. Likewise relevant would be evidence that the market is so full of similar marks that the average consumer has ceased to see them as denoting origin.

The success of companies like Adidas and Nike mean, however, that it is now rather difficult to persuade a court that stripes, swooshes and the like do not convey brand meaning, at least when adorning footwear. In a recent U.K. case, D. Jacobson & Sons Ltd. v Globe GB Ltd. [2008] EWHC 88 (Ch), the High Court found that the average consumer had become accustomed to stripe motifs on athletic shoes as denoting trade origin. Arguing that stripes have only a decorative function, therefore, is likely to be an uphill struggle in the U.K.

For brand owners, the warning is clear: although the courts may instinctively recoil at look-alikes, they cannot find contrary to the evidence in the case. Following Adidas, lookalike vendors will be trying much harder to prove their defence on the facts, and, in particular, that stripes and other motifs are likely to be perceived as pure embellishment due to widespread use. The importance of policing the market cannot, therefore, be understated. Failure to stop the use of similar marks by others can ultimately lead to serious consequences later, in the form of a more restricted ability to take action against conflicting marks. Allowing just a few competitors to get close may form the tip of a very damaging iceberg.