Don’t Just Give it Away: Unless a Product is Sold, European Law Recognizes No Genuine Trademark Use

By Steven Abreu.

February 2009 IP Update

In a decision that sounds a warning to all registered trademark owners in Europe, the European Court of Justice (ECJ) has recently held that use of a mark solely on promotional items does not amount to “genuine use” of the mark as required by European Community trademark law, leaving affected classes of the registration vulnerable to cancellation.

In reaching its decision in Maselli v. Silberquelle, the ECJ engaged in a deep analysis of why trademarks are afforded legal protection in the first place, weighing the ‘source identification’ theory of trademark registration against the ‘outlet for goods and services’ theory.

Ultimately, the ECJ adopts the view that trademark registrations are granted to foster competition by creating an outlet in which the goods and services will be sold. In other words, trademarks create and occupy a commercial space. Thus, a registered trademark must do more than signify the source of a good or service or serve simply as a property interest of its owner.

The adoption of this view of trademark protection may have lasting effects in European trademark law, particularly in actions to revoke a mark for non-use. The practical implication of this decision for registered trademark holders in Europe is that use of the mark on promotional items, without more, is not enough to sustain a trademark registration.

Maselli v. Silberquelle involves an Austrian clothing manufacturer and seller (Maselli) that owns an Austrian trademark registration for the mark WELLNESS in connection with printed matter in Class 16, clothing in Class 25, and soft drinks in Class 32. Maselli sold clothing bearing the mark, but gave purchasers a free soft drink labeled WELLNESS-DRINK as a gift. Maselli did not offer WELLNESS-DRINK for sale separately.

Silberquelle, an Austrian beverage company, moved to cancel Maselli’s trademark registration for WELLNESS in Class 32, on the basis that use of the mark on soft drinks (as promotional items) did not amount to genuine use.

European trademark law requires that every registered mark be used on the goods or services for which it is registered within five years after the date of registration and must be used at least at some point in every five-year period thereafter.

The European standard for proving use of a trademark is “genuine use,” which is a heightened requirement relative to US law, and requires that something more than internal or token use of the mark be demonstrated.
In both Europe and the United States, an essential function of a trademark is to identify the source of a product by enabling the consumer, without confusion, to distinguish the goods and services from others. Satisfying this criterion, however, is not enough to qualify a trademark for protection under European law.

Genuine use, according to Maselli, requires that the sale of the goods bearing the mark also bestow some economic benefit on the mark owner. In the words of the ECJ, genuine use requires that a mark serve “the aim of creating or preserving an outlet for the goods and services” for which the mark is registered.

The economic benefit of the trademark must be related to the class of goods or services for which registration is sought. “Genuine use,” according to the ECJ, does not entail a mere “gesture to increase the consumer’s loyalty to the mark” in a different sector, such as use on free soft drinks given to reward purchases of clothing.

Thus, the ECJ ruled that Maselli’s use of the mark on a promotional soft drink was not a “genuine use,” opening the way for partial revocation of the registration of the mark: a victory for Silberquelle.

This decision complicates attempts by mark owners to extend trademark protection to promotional items, such as pens, water bottles, notebooks, or other things given away as a means to promote a different product. Should a registered trademark owner in Europe find protection of the mark in these classes to be absolutely vital, a nominal fee (at least to certain consumers) should be levied before the promotional item is distributed.

In the United States, the act of delivering or transporting soft drinks bearing the mark WELLNESS in interstate commerce would be sufficient use of the mark (even if the goods are later given away), such that trademark protection is acquired. Thus, Maselli will have no effect in the United States.
For the scholar, Maselli provides a conceptual basis for the protection of trademarks in Europe. For owners of registered marks, however, the decision establishes a new basis for revocation of marks because of nonuse.