In recent years, the need to strike a proper balance between expanding trade mark rights and fundamental freedoms, such as freedom of expression and freedom of competition, has been emphasized in various academic publications (see here, here and here). There is a widely-shared view in the academic community that trade mark protection, while constituting a central instrument to ensure market transparency and the proper functioning of markets in a more general sense, needs to be balanced against other core values, such as free speech that enhances consumer information and consumer choice, and free competition preventing unnecessary market entry barriers for competitors, in particular small- and medium-sized enterprises.
With harmonized EU trade mark law absorbing more and more national unfair competition law, and EU trade mark proprietors enjoying broader protection of goodwill functions and growing control over “referential” (nominative) use, this need for an appropriate balance between trade mark protection and competing freedoms has become particularly pressing in the EU. Against this background, it is not surprising that the academic community has taken an initiative to bring this need for an appropriate balance to the attention of EU policy makers and to summarize the main findings of research undertaken in recent years in a concise advice document. Drafted in late August during a workshop held at the VU University Amsterdam and first published on September 17 2014, the Recommendation on Measures to Safeguard Freedom of Expression and Undistorted Competition in EU Trade Mark Law has now been signed by 38 academics across the EU.
The Recommendation could hardly be more timely. With the legislative process for new EU trade mark legislation entering the final stage of trilogue discussions between the Parliament, the Council and the Commission this month, a clear signal became indispensable. This is not to say that clear indications were missing in the past. In the case Google/Louis Vuitton, Advocate General Poiares Maduro (pictured below) had already pointed out before the Court of Justice of the EU that
whatever the protection afforded to innovation and investment, it is never absolute. It must always be balanced against other interests, in the same way as trade mark protection itself is balanced against them. I believe that the present cases call for such a balance as regards freedom of expression and freedom of commerce.
While supporting broad trade mark rights to further harmonize trademark law in the EU and prevent a mosaic unfair competition approach, the study by the Max Planck Institute on the Overall Functioning of the European Trade Mark System – the main preparatory work carried out for the new trade mark legislation – had also highlighted the need for appropriate counterbalances and proposed the combination of a general fair use clause with several more specific provisions.
In spite of these clear articulations of the need to take competing fundamental freedoms into account, the present debate in the EU Parliament and the Council gives rise to the question whether EU policy makers devote sufficient attention to limitations of trade mark protection that can serve as a counterbalance for continuously expanding exclusive rights. The text proposals tabled by the Parliament and the Council support the enhanced protection of goodwill functions covering trade mark-based investment, advertising and communication. On this point, the Parliament and the Council depart from the initial Commission proposal which sought to limit trade mark protection to the traditional understanding of trade marks as a badge of origin at least in cases where a sign identical with the mark is used for the same goods and services. The envisaged new legislation would also provide for control over private orderings of infringing goods from traders outside the EU and goods being in transit in the EU.
…But few corresponding limitations
The limitation infrastructure, however, has not been updated and broadened in a comparable way. Assuming that protection could be limited to the traditional origin function in several cases, the Commission saw no need to follow the advice given in the preparatory Max Planck Study and broaden the presently limited scope of the open-ended “due cause” defence in EU trade mark law. Traditionally, this “due cause” defence was only available in the area of protection of marks with a reputation against dilution. It served as a central safeguard for artistic, political and commercial freedom of speech in this context. Instead of broadening its scope, the Commission only proposed a defence for the aforementioned “referential” use, covering use for the purpose of “identifying or referring to goods or services as those of the proprietor of the trade mark”, with the long-standing exemption of use for indicating a product’s intended purpose constituting a specific example.
The present Parliament proposal for new trade mark legislation seeks to further clarify this concept of “referential” use by providing additional examples, such as comparative advertising, information about the resale of genuine goods after the exhaustion of trade mark rights and trade mark parody. The Council, by contrast, refrained from any further steps in the area of limitations. Regardless of the expansion of protection, it kept the referential use exemption as proposed by the Commission. The serious need for appropriate counterbalances in EU trade mark law thus seems to have been overlooked by EU member states.
A further point is worrisome. In the present text proposals for new legislation, the limitations of trade mark protection have to be further scrutinized in the light of an honest practices proviso with conditions that largely resemble the infringement criteria applied to establish infringement in the first place. But how can a defence be effective in practice if its application depends on criteria similar to those used to find infringement? The very purpose of a defence is to provide room for counterarguments potentially justifying the allegedly infringing use. As these limitations serve the purpose of reconciling trade mark protection with other fundamental guarantees – freedom of expression and freedom of competition – it is difficult to understand why policy makers do not attach more attention to the proper functioning of limitations of trade mark protection and ensure that the new legislation provides a balanced and effective framework for court decisions to come.
In other words, the Parliament, the Council and the Commission still have lots of work to do in the trilogue discussions. The Recommendation on Measures to Safeguard Freedom of Expression and Undistorted Competition in EU Trade Mark Law can serve as a guideline for the establishment of an appropriate limitation infrastructure in this context.
Martin Senftleben is Professor of Intellectual Property and director of the Kooijmans Institute for Law and Governance at VU University Amsterdam.