When a Louis Vuitton (“LV”) trademark, duly registered in the European Union, is subject to a declaration of invalidity and therefore cancelled, it is a worthwhile exercise to determine what went wrong; a legal post mortem. This is not a question of schadenfreude for a respected brand and design but a question of what went legally awry and how to avoid any mistakes identified by the European General Court (“EGC”).
A Community Trademark is a unitary trademark for the EU as constituted at the time of trademark application and for subsequent accession countries. On September 18, 1996, LV filed an application to register as a Community Trademark its famous, but as we shall see not distinctive, checkerboard design. At the time of the LV application, there were 15 constituent units of the EU and today there are 28. The application was granted by the Office of Internal Harmonization (“OIHM”) on August 27, 1998. Eleven years later on September 28, 2009, Nanu-Nana of Germany intervened to have the application declared invalid, in effect to have the OIHM overruled, and to cancel the trademark registration.
The EGC on April 21, 2015, affirmed the decision of the OIHM’s First Board of Appeal to grant the declaration of invalidity. While the decision itself may not have surprised (or disappointed) many observers, the breadth of the decision was stunning. Simply put, the EGC gave no succor to LV’s claims that the checkerboard as used by LV in connection with leather goods was either (a) inherently distinctive or (b) had acquired distinctiveness through use.
The findings on inherent distinctiveness, was conventional. The EGC focused on identification of origin or source and asked fundamentally a simple question: does the brown and beige checkerboard, with the weft and warp structures, have inherent distinctiveness? While the court appears to have placed a greater burden of proof on three dimensional marks as opposed to marks based on a graphic or word element, it did so for good reason. The average consumer is most likely to associate a product source with a word or logo as opposed to a shape or design. Particular designers may have a look and feel, the consumer will always have a reservation of doubt as to who or what is the actual producer of a particular product unless it is blatantly spelled out via words or unique graphics.
It is possible to perceive that underlying this analysis — as evidenced by the broad language of the findings — was a distrust of using trademark law to protect a design. The EGC was borderline insulting to the LV trademark. The design was deemed to be “basic and commonplace”; there was no “notable variation” in relation to conventional checkerboards; and probably most damming the design was no different from other checkerboard designs due to its great “simplicity.”
The EGC unequivocally held, although as a composite trademark of several possible distinctive elements, when viewed in its totality, it was not distinctive; if it’s not distinctive it cannot stand as an identifier of source. While the EGC did appear to protest too much, clearly it felt comfortable enough that LV did not carry its burden of proof that as of the date of its application the checkerboard was not distinctive enough to differentiate LV sourced goods from others.
The second claim presented a more prosaic issue: from the time of the application to the date intervenor Nanu-Nana appeared, did LV acquire the requisite distinctiveness by mere use? The door was wide open for the EGC to find for LV. Article 52(2) of EU Regulation No. 207/2009 specifically states that even if registration was erroneously granted by the OIHM for a trademark lacking inherent distinctiveness, would not be subject to invalidation, cancellation, if it had acquired distinctiveness through use. As noted above the time period of use was eleven years. It is safe to say, via a neutral term, that the checkerboard in tan and brown with weft and warp structures was and is an iconic design; but for the EGC even 11 years of continued, open, notorious and EU wide use was insufficient to sustain acquired distinctiveness .
Evidence of such use may include the amount of market share, the intensity, breadth and long standing use, the amounts invested in promoting the trademark, surveys showing the proportion of relevant persons identifying the trademark as being from a particular source, statements from chambers of commerce and opinion polls. LV submitted 8 exhibits worth of evidence as well as a survey. The exhibits showed what one would expect namely extensive, continued and consistent use.
The post mortem shows the EGC laser like focus on the issue of acquired distinctive use. LV appears to have erred in connection with the above mentioned evidence by claiming that it reflected “increased” inherent distinctiveness as opposed to “acquired distinctiveness.” Clearly not the cleanest of arguments and yet the same would not ordinarily cause a court to turn its back from such clear evidence of acquired distinctiveness.
The court also argued that of the 15 member nations of the EU at the time of application there was inadequate proof of acquired distinctiveness in Denmark, Portugal, Finland and Sweden. Since the Community trademark is a unitary mark the acquired distinctiveness argument must carry in the jurisdictions of the EU existent as of the time of the original application. The court held there was inadequate evidence to support the claim in Denmark, Portugal, Finland and Sweden.
The EGC also took LV to task over the quality of its survey stating it was faulty since it covered consumers of luxury goods and not the “average consumer” in the EU. This is on its face a stretch. The average consumer to have relevance must be the typical consumer in the particular channel of distribution.
While often times reading opinions in much like reading tea leave for future guidance, it is clear that the EGC did not merely hold against LV, it created significant hurdles to using trademarks to protect a design. The checkerboard is iconic but should a design be elevated to a source identifier no matter how iconic? While many have focused on what appears to be the technical flaws in LV’s position as identified by the court, the strategic message is simply that designs have significant and material hurdles to be afforded trademark status and the various attempts to elevate design to trademark are facing pushback.