Trademarks, virtual products and Homer Simpson's favourite beer - International Law Office

Trademark infringement
Copyright infringement
Unfair competition
Comment

A few months ago the Brussels Commercial Court annulled two DUFF BEER Community trademarks owned by Twentieth Century Fox. The court held that both trademarks were misleading because, contrary to the normal implication of the word 'beer', they were not registered for goods or services related to beer or alcoholic beverages. The court referred to Article 7(1)(g) of the EU Community Trademark Regulation (207/2009), which prohibits the registration as a Community trademark of a sign that is capable of misleading consumers.

Trademark infringement

Fox argued that one of the trademarks in question was registered for beer glasses, among other things, and therefore could not be considered misleading. However, this argument was rejected by the court, since Fox had stated in its trial brief that it had never intended to commercialise alcoholic beverages under its DUFF BEER trademarks because it did not want to encourage young people to consume alcohol. This reasoning is surprising, as in the context of the examination of absolute grounds for refusal, the misleading character of a trademark must, in principle, be assessed in light of the goods and services for which the trademark is registered, not in light of its actual (or intended) use.

The court also rejected Fox's argument that the word 'beer' can be used in relation to non-alcoholic beverages. It held that in such contexts the word is combined with the name of a fruit or vegetable, which was not the case in this instance.

The court concluded that, in any event, the trademark owner had not proven normal use of the trademarks on the EU market, with the result that they had lapsed. Fox's reference to a website on which various products were offered for sale under the DUFF BEER trademark was disregarded. The court held that the website was primarily aimed at US consumers, as the prices were quoted in US dollars.

In considering the sub-paragraphs of Article 9(1) of the regulation, which define the exclusive rights of a trademark owner, the court found that none entitled Fox to prevent the defendants' use of the DUFF BEER trademark for beer:

• Paragraph 9(1)(a) stipulates that a trademark owner can prohibit use by a third party of an identical sign in relation to identical goods or services. This provision was not infringed, as the so-called 'double identity' requirement (ie, the existence of identical signs and identical goods or services) was not met.
• Paragraph 9(1)(b) allows a trademark owner to prohibit use by a third party of an identical or similar sign in relation to identical or similar goods or services when such use gives rise to a risk of confusion in the mind of the relevant public. Referring to EU case law,(1) the court concluded that the goods in question were neither identical nor similar. Fox's trademarks were registered for, among other things, calendars, mirrors, drinking glasses, coasters, thermo cans, bags, wallets, puzzles and toys, whereas the defendants used the sign in connection with beer.
• Paragraph 9(1)(c) stipulates that the owner of a trademark with a reputation can prohibit use by a third party of an identical or similar sign in relation to goods or services which are not similar when such use takes unfair advantage of, or is detrimental to, the reputation or distinctive character of the mark. Fox failed to prove that the DUFF BEER trademarks enjoyed a reputation in respect of the goods for which they were registered. The court ruled that although these trademarks might have a reputation for (virtual) beer in the television series The Simpsons, it did not follow that they had a reputation for the goods for which they were registered. Surprisingly, the court added that for the purposes of Article 9(1)(c), a trademark owner must prove that use of the disputed sign has affected the relevant public's behaviour in a commercial context, so that such behaviour has changed or is very likely to change as a consequence of the use of the sign. The court concluded that this had not occurred in this case.

Copyright infringement

Apart from the trademark-related arguments, Fox argued in vain that its copyright in the name 'Duff Beer', the 'Duff Beer' logo and the 'Duff Beer' label had been infringed by the commercialisation of the beer in question.

According to the Copyright Act, copyright initially accrues to the author of the work. In this case, the court held that Fox had failed to show that the creator of The Simpsons had assigned copyright in the label, logo and name to Fox. Hence, Fox was not entitled to rely on copyright. Although the act states that anyone whose name is mentioned in a work (or a reproduction or public communication thereof) is considered the author in the absence of proof to the contrary, and the bottles bore no indication of the creator of Duff Beer, the court concluded that Fox could not rely on this presumption because the author of the work was known in this case.

Finally, the court stated that the defendants could not have committed copyright infringement, since they were mere intermediaries. However, it oddly chose to reach this conclusion with reference to Article 86(3) of the act, which states that injunctive relief can be imposed on intermediaries whose services are used by third parties that commit copyright infringement.

Unfair competition

At first sight, it seems unfair that the owner of a trademark which is well known in relation to products from a virtual world remains unprotected against third parties which try to reap the benefit of the owner's investment. Regrettably, it seems that the Community trademark system is ineffective in cases involving such virtual trademarks. However, trademark owners may be able to rely on unfair competition law to protect their goodwill.

It is at least arguable that the commercialisation of a real product that is identical to a virtual product conceived of by another party, under a trademark which is identical or similar to that of the virtual product, may be considered 'unfair competition' within the meaning of the Market Practices Act. The act prohibits all unfair trade practices which cause harm (or are capable of causing harm) to the professional interests of another market player.

Anyone may, in principle, copy another person's creations if they do not qualify for protection under IP law; however, not every copy of such a creation is necessarily legitimate. For example, the Court of Justice of the European Union recently ruled that although the famous Lego building bricks are no longer protected under trademark law in the European Union, this does not mean that the imitation of such bricks by competitors can never be contrary to unfair competition law.(2)

In Belgium, the Supreme Court has held that a competitor's product can be copied unless the copy infringes an IP right or unless the product is copied in circumstances that are contrary to fair trade practices - this condition potentially covers not only the risk of confusion, but also any form of parasitic behaviour.(3)

Copying may be considered a form of parasitic behaviour when an undertaking free-rides on the reputation or goodwill of another undertaking and reaps the benefit of the latter's investments. Such behaviour is prohibited under Belgian unfair competition law if:

• the copied creation for which protection is sought has a definable economic value and is the result of a genuine investment; and
• the person that copies the creation has not sought to distinguish the product or performance from the latter and takes direct advantage of the other party's investments in any form.

On December 23 2010 the Benelux Court of Justice held that the owner of a revoked trademark cannot enjoy protection against the use of an identical sign under unfair competition law when such use, in itself, gives rise to a likelihood of confusion. However, when the risk of confusion is the result of broader or more general unfair behaviour (ie, in view of the specific circumstances surrounding the use of the trademark), such behaviour may be prohibited under unfair competition law.(4)

Comment

The real-world notoriety of the virtual trademark DUFF BEER is undeniable, and it is likely that when the relevant public is confronted with the concept, the bottle and the label in the real world, it will associate them with the virtual product from The Simpsons. Third parties that put beer on the market under the DUFF BEER trademark would thus be free-riding on Fox's investment. Assuming that a company in Fox's position can prove that such real-world commercialisation is being pursued in circumstances that amount to parasitic behaviour, it should be entitled to oppose use of its trademarks in Belgium under unfair competition law.

For further information on this topic please contact Olivier Vrins or Katia de Clercq at ALTIUS by telephone (+32 2 426 1414), fax (+32 2 426 2030) or email (olivier.vrins@altius.com or katia.declercq@altius.com).

Endnotes

(1) Court of First Instance in Lindenhof (T-296/02) on February 15 2005 and Mezzopane (T-171/06), June 18 2008.

(2) Lego v Mega Brands, C-48/09P, September 14 2010.

(3) Supreme Court, May 29 2009, NJW 2010, No 217, 151.

(4) Benelux Court of Justice, A 2009/3, December 23 2010.