PAGO: good news for Benelux TM owners?

01 March 2010

Several months after the ECJ gave its decision in PAGO International GmbH v Tirolmilch Registrierte Genossenschaft mbH (October 6 2009; C-301/07), most of the dust it has kicked up has now settled.

As is known, the ECJ ruled that a single member state (Austria) is capable, in the circumstances of that case, of being a "substantial part of the territory of the European Community" for the purposes of the protection of a mark having a reputation under article 9 (1) (c) of Council Regulation number 40/94.

It was not only the dictum as such that caused quite a stir (Austria represents less than 1.7% of the total population of the European Union), but also the ECJ's setting aside of Advocate General Sharpston's opinion in the matter and the fact that a number of issues involved have remained open or unclear.

In the PAGO decision, the ECJ applied by analogy the judgment it delivered a decade before in General Motors Corporation v Yplon SA (decision of September 14 1999; C-375/97, generally known as the Chevy case), where it concluded that for Benelux trade marks, it is sufficient that the mark enjoys a reputation in one country or even in part of one of the Benelux countries.

Part of the controversy arose from some commentators arguing that the ECJ had been indolent in referring mutatis mutandis to the Chevy case, as the latter concerned a Benelux situation: the Benelux is a far smaller territory than the European Community and therefore a Benelux country (or even part of it) is more likely to be considered a substantial part of the Benelux than an EU member state is likely to form a substantial part of the European Community.

While such an objection certainly has its merits, the guidance given by the ECJ in the Pago decision is that for the purposes of claiming reputation in the Community, a reputation within a single member state may in theory suffice.

In other words, it seems that Pago has set a benchmark for assessing situations where the reputation in a Community member state may, "in view of the facts of the main proceedings", be considered as sufficient for having a reputation in the Community.

In that respect, it is interesting to note that although the Austrian population is less than 1.7% of the Community's, the country ranks 15th on a list of the 27 member states by population. Certain major countries have fewer possible consumers, such as Bulgaria (1.5%), Denmark (1.1%) and Ireland (0.9%). Therefore, it is doubtful whether these countries would satisfy the Pago test under any circumstances.

Looking at the larger member states, there is little doubt that a Community trade mark's reputation in countries such as Germany (16.7% of the population in the Community) and France (13%) would in theory be sufficient to qualify for having a reputation in the Community (although there may be circumstances where this is not the case).

As for the Benelux territory, taken as a whole, it represents about 5.6% of the Community's population and therefore it must also be considered to constitute "a substantial part of the Community". Within the Benelux, the Netherlands and Belgium represent 3.4% and 2.1%, respectively, of the Community population, which is still more than the Pago benchmark of 1.7%.

Taking the argument one step further and referring, as the ECJ has done, to the Chevy doctrine (where it was stated that reputation may consist in part of the Benelux countries), could it not be argued that a CTM with a reputation in a (major) part of Belgium is deemed to have a reputation throughout the European Union? Possible examples are a well-known newspaper that is distributed and read throughout Flanders or a chain of supermarket stores that has various establishments, but they are located only in Wallonia.

Although a combined reading of the Chevy and Pago decisions could be interpreted as providing an affirmative answer to this question, this is probably a bridge too far.