Impact of revocation for non-use on an infringement action based on the revoked trademark

The complex trademark SAINT GERMAIN was registered in France on May 12, 2006 by the company AR for alcoholic beverages, ciders, digestives, wines and spirits. For its part, the company COOPER International Spirits distributed, under the name “St-Germain”, a liqueur manufactured by the companies St Dalfour and Etablissements Gabriel Boudier.

On June 8, 2012, AR sued these three companies for trademark infringement before the Paris court of first instance. However, in parallel proceedings, the Nanterre court of first instance ruled that AR’s rights to the complex SAINT GERMAIN trademark would be revoked for non-use as of May 13, 2011, first day following the grace period. The owner of the revoked registration nevertheless maintained its infringement action targeting now acts committed during the period prior to revocation, i.e., between June 8, 2009 and May 13, 2011, a period during which the mark was not yet subject to prove use.

In 2015, all its claims were dismissed by the Paris court of first instance; the judgment was upheld by the Paris Court of Appeal, on September 13, 2016. The Court held that AR could not claim infringement of the SAINT GERMAIN trademark by an identical sign in competition with it, while it did not present any probative evidence of the trademark’s genuine use. The judges therefore seem to have subordinated the potential conviction for infringement to the proof, missing here, that its owner was exploiting it, even though the five-year period for starting the use of the trademark was still running.

The French supreme court, before which a writ of certiorari was filed, decided to stay proceedings and to refer the matter to the Court of Justice of the European Union (CJEU) for a preliminary ruling. In essence, the question referred to the CJEU was to determine whether the owner of a trademark which has been revoked due to a lack of genuine use, nevertheless retains the right to claim compensation for damages suffered as a result of the use by a third party – prior to the effective date of revocation – of a similar sign which creates a likelihood of confusion with its trademark.

• Possibility of compensation for damages prior to the effective date of revocation for non-use

The Court points out first of all that, according to its own case-law, the owner of a trademark which has not yet been put to genuine use – that is to say, before the end of the five-year period following its registration – may very well bring an infringement action on the basis of the goods and services designated, without having to prove that it is using its trademark (CJEU, 21 December 2016, Länsförsäkringar, C-654/15).

However, the situation is different in the present case. The difficulty lies precisely in the scope of the owner’s rights on the trademark at the end of the period of grace, even though the revocation has already been ordered. In a nutshell, can such a revocation affect the owner’s ability to claim for damages, after the expiration of the period of grace, for infringements of its trademark during that period?

The CJEU gives a positive response, holding that the Member States have“the option of allowing the proprietor of a trade mark whose rights in that mark have been revoked on expiry of the five-year period from its registration because he or she failed to make genuine use of the mark in the Member State concerned in connection with the goods or services for which it was registered to retain the right to claim compensation for the injury sustained as a result of the use by a third party, before the date on which the revocation took effect, of a similar sign in connection with identical or similar goods or services that is liable to be confused with his or her trade mark”.

Indeed, it recalls that Directive 2008/95  left it to the Member States to determine the extent of the effects of the revocation of a trademark and that the French lawmaker has chosen to make the revocation effective as from the expiration of the grace period and not earlier. France has therefore not chosen to allow the alleged infringer to raise the objection of lack of use during the grace period to exempt itself from liability for acts of infringement.

Thus, the owner of a mark which has been revoked for lack of genuine use retains the right to claim compensation for the damages suffered as a result of the use, by a third party, prior to the effective date of revocation, of a similar sign creating a confusion with its mark.

• Considering the lack of genuine use during the grace period in the calculation of the damages

The CJEU then specifies the scope of its own decision, stating that the lack of genuine use during the grace period is still an “an important factor to be taken into account in determining the existence and, as the case may be, the extent of the injury sustained by the proprietor and, accordingly, the amount of damages that he or she might claim”.

Thus, the prejudice suffered by the owner of a trademark that does not use it is restricted to the infringement to the right of ownership and excludes compensation for loss of earnings and for unfair profits. Moral damages are equally relative.

Taking into account the lack of use takes its last ammunition from the owner of a revoked trademark. If French law allows it to assert its trademark for acts anterior to the effective date of revocation, it would indeed be inappropriate for the owner to be able to claim substantial damages. This would indeed amount to the legitimization of the practice of “trademark trolls“, those trademark owners that do not exploit their portfolios and use them only to extort money from third parties wishing to use them, through licensing agreements or infringement actions.

The clarification of the EUCJ tempers its answer to the preliminary ruling request and allows to sanction such practices: the owner of a revoked trademark may claim compensation for acts infringing its trademark before the date on which the revocation took effect but, if it did not exploit it, its compensation will be limited.

Synthia TIENTCHEU TCHEUKO
Trainee Attorney

Jérémie LEROY-RINGUET
Attorney-at-law

Reference and date: Court of Justice of the European Union, March 26, 2020, C‑622/18

Read the decision on Curia