Austria: Are European Union trade marks for small businesses?

February 24 2016

When an EU trade mark (EUTM, formerly known as CTM) is registered its owner has five years to use it in a sufficiently broad way within the European Union. If he does not exceed his mere local use of his EUTM within this time slot, his EUTM is not only open to cancellation but he can also not derive rights from it to forbid others to use this mark and similar marks. This is what teaches us the following case.

In London's district Mayfair there exists a high class restaurant called Cecconi's. Its owner (the plaintiff in a recent Austrian case) had registered in 2008 the word mark Cecconi's as an EUTM (number 6751283) in class 43 for "services for providing food and drinks; restaurant, bar and catering". The restaurant was advertised on the Internet under www.cecconis.co.uk. It could not be ascertained in the course of the court proceedings that its owner – the plaintiff – runs a further restaurant under this name within the European Union or that he uses this sign for other goods or services. Likewise it could not be ascertained that this EU trade mark has a higher level of knowledge in the public outside London-Mayfair.

The first defendant is a company conducting a restaurant in the city of Salzburg (Austria) likewise of high class with the name Ceconi's. That name comes from the architect Jakob Ceconis who built the house. The company advertises its restaurant under www.ceconis.at. The second defendant is a 50 % owner of the company running the restaurant. It owns the Austrian trade mark (number 273443) for Ceconi's and the Austrian word and design mark (number 273444) including the word Ceconi's for "providing food and drink and lodging for guests". The first defendant uses these marks with the consent of the second defendant.

The English plaintiff sought an injunction with a preliminary ruling and requested to forbid the first defendant to use the sign Ceconi's, a design mark containing this sign or another sign similar to his EUTM Cecconi's in connection with services of a restaurant or bar. He further requested to forbid the second defendant to leave his Austrian trade marks to any third party for use for such services.

The complaint was rejected by the first and second instance courts because the five-year grace period for use had already run out. The entertainment of a website, the listing in a London restaurant guide and the fact that the plaintiff operates a restaurant which is known only in a part of London without being able to show intensive broad advertising does not support a finding of genuine use of the EUTM within the Community in the sense of Article 15 paragraph 1 of the EUTM Regulation.

The Austrian Supreme Court as third instance upheld the decisions of the lower courts in view of prior decisions of the Court of Justice of the EU. It referred to a bunch of decisions of the CJEU and especially to the Onel case (C-149/11). All circumstances of the specific case have to be taken into account. The court has to consider among other facts the specifics of the pertinent market and the kind of services, the quantitative size of use and its area, the frequency and regularity of use. The size of the area of use is therefore to be considered. Only recently the Court of Justice of the EU has pronounced its decision in Reber/OHIM (Walzertraum – C-141/13p) in which it denied genuine use within the EU because, among other reasons, the local limitation of sales irrespective of advertising on the internet. The lower courts have not only based their decision on the limited area in London in which the trade mark was used. They also have considered whether other activities (advertising, on the web and in a restaurant guide) were such as to support genuine use in the Community but found those which were undertaken were insufficient. Therefore, their decisions respect fully the present law and practice and are to be upheld.

Originally CTMs were promoted as a valid alternative to national trade marks and many feared that national trade marks would not be able to survive alongside CTMs. And for national trade marks the philosophy was that they were instruments for everyone doing business. The size and extent of the business was not important. Most specialists extended that philosophy also to the CTM. It is true that everyone can register an EUTM but apparently only with use of that trade mark to a larger scale the owner can keep it and derive its exclusive rights. Earlier the CJEU pronounced that use must be earnest to uphold a CTM (EUTM) – the opposite being fake use only for the purpose to secure the EUTM. And Cecconi's use was factual and earnest and had lasted for decades. Now the CJEU says (for example in "Walzertraum") that factual, earnest use is not sufficient for upholding an EUTM – there must be more – without enlightening us what that more is. According to the Austrian courts Cecconi's would have had to open up more restaurants especially in other regions – English courts even demand in other countries which Austrian courts do not – and at least to spend a lot of money for advertising to a large extent. So is an EU trade mark suitable for protecting small businesses?