Ferrari slams the breaks on trade mark revocation as the CJEU hands down a significant ruling on luxury goods and 'genuine use'

The European Court of Justice (CJEU) recently ruled that the use of an EU trade mark for sales of second-hand goods or spare parts can constitute 'genuine use' for the purposes of European trade mark law. The CJEU also found that where a mark is registered for a broad category of goods (in this case, "vehicles and their parts"), its use in respect of high-priced luxury sports cars and their spare parts only constitutes 'genuine use' for the entire category. The decision will be welcomed by luxury brand owners, in particular, those seeking to protect legacy or discontinued product lines.

In 1987, the Mark was registered as an international trade mark for goods in class 12 ("Vehicles"). Three years later, the Mark was registered in Germany, for the same class of goods. From 1991 onwards, Ferrari mainly used the Mark to identify spare and replacement parts for Testarossa models and to sell vehicles from that range. 

Under Article 19 of the Trade Mark Directive (Directive (EU) 2015/2436), a trade mark is liable to be revoked if, within a continuous period of five years, it has not been put to 'genuine use' in connection with the goods for which it is registered. In 2017, an individual successfully applied to the Düsseldorf Court for the revocation of the German trade mark registration, on grounds that Ferrari had fallen foul of the 'use it or lose it principle'. 
 
Ferrari appealed the decision, and the appellate court referred the following questions to the CJEU (amongst others): 

1. When assessing genuine use in relation to a trade mark that is registered for a broad category of goods, can you take into account the fact that those goods are only used in respect of a particular market segment as opposed to the overall market? 
   
   
2. Does the sale of used goods, which have already been released onto the EEA market by the trade mark owner, constitute genuine use of the trade mark?
   
   
3. If a trade mark is registered not only for a product, but also for parts relating to that product, do sales of trade marked spare and replacement parts for previously sold products constitute 'genuine use'?
   
   
4. Should consideration be given to whether the trade mark proprietor offers services which are targeted at previously sold goods, which bore the relevant marks, even if the services themselves do not use the marks? 

Decision

Questions 1 and 3

In respect of the first and third questions, the CJEU found that the fact that the products in question were sold at a particularly high price point did not mean that they could be regarded as an independent subcategory of the broader class of "motor cars" for which the Mark was registered. 

Similarly, the mere fact that the relevant cars were referred to as "sports cars" did not mean that they belonged to an independent subcategory of cars. This was because their use for motor sports was only one of their intended purposes (they were also capable of being used like any other everyday car). 

The CJEU reiterated that the key question was whether the use of the Mark was in accordance with its essential function, as opposed to token use. It followed that only Ferrari's use of the Mark for high-priced luxury sports cars (or their replacement parts) could constitute 'genuine use' for the entire category of goods for which the Mark was registered.

Question 2

The CJEU held that even if a trade mark owner has 'exhausted its rights' by putting goods bearing the mark onto the EEA market, that does not mean that no further 'genuine use' of the mark itself can be made. The resale of second-hand goods by a trade mark owner can therefore constitute 'genuine use', even if the relevant rights have been exhausted. 

Question 4

In relation to the fourth question, the CJEU held that the provision of services by a trade mark owner in respect of goods previously sold under their mark, can only constitute 'genuine use' if the services are also provided under that mark. 

Comment

This is an important decision, particularly for car manufacturers, who may want to seek to preserve trade marks which relate to discontinued models. The decision is particularly pertinent given the recent trend of relaunching older models which have since cultivated 'vintage' or 'cult' status. The decision will also be welcomed by luxury brands in general, whose iconic goods typically remain in circulation long after production stops. A further coup for luxury brands is the finding that the re-sale of second-hand goods by brand owners will likewise constitute 'genuine use', thereby contributing towards continued trade mark protection. With the resale of luxury goods online and in luxury department stores now commonplace, the impact of the decision should not be underestimated. 

The ECJ's ruling can be read, in full, here.