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In 2012 Member States and the European Parliament agreed on the "patent package" - a legislative initiative consisting of two...

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Toymakers, Take Note: Judging Whether Replicas Infringe

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Most of us have seen or even owned model cars from childhood up. However, model cars represent just one facet of a replica industry that shrinks into perfect miniature almost every successful consumer product imaginable. The use of brand names and logos on models and replicas has rarely been seriously questioned, in part because the brand owners are not in the replica industry and have perhaps been flattered by toy-makers’ imitations.

All that may now be changing following a challenge by German car-maker Adam Opel AG to a toy car bearing one of its logos, produced by Autec AG. In a recent decision in that case (Adam Opel AG v Autec AG, Case C-48/05), the ECJ held that the use of another’s brand on a toy replica could amount to trade mark infringement if the use was capable of affecting the essential function of the mark, namely to guarantee the commercial origin of the goods bearing it.

Toy Cars Challenged

Autec made and marketed remote-controlled scale model cars under the brand CARTRONIC in Germany. One of its 2004 models replicated the Opel Astra V8 coupé. The Opel logo appeared on the radiator grille of the model, just as it did on the original.

Adam Opel sued for infringement of its registered logo mark, which was protected inter alia for toys. Autec retorted that its use could not infringe because it was not trade mark use. The German court sought the ECJ’s guidance on whether use of a trade mark registered for toys could amount to infringing use if the use was in respect of a scale model or replica of the brand owner’s real car.

Assuming such use could infringe, the German court also sought the ECJ’s advice on whether such use could amount to an indication of kind or quality within the meaning of Article 6 (1) (b) of the Trademarks Harmonisation Directive, and was therefore within the scope of the “descriptiveness” defence.

A Model Decision

The ECJ noted that Autec’s use was indisputably commercial and without consent. It was in relation to goods identical to those for which Adam Opel’s mark was protected. The ECJ noted that it had already found such use capable of infringing in Arsenal Football Club (Case C-206/01, [2002] ECR I-10273).

Following that decision, the ECJ ruled that use of a trade mark registered for toys could amount to infringing use if the use was on a scale model or replica of the brand owner’s real car, provided the use was capable of affecting the essential, origin-indicating function of the mark.

The Court noted that if the relevant public did not perceive the logo as an indication that the scale model cars came from Adam Opel or an economically-linked undertaking, the German court would have to find that the use was not capable of affecting the essential function of the mark. However, this was a factual issue for the German court.

The ECJ was sceptical on whether such use, if infringing, could have a descriptiveness defence. In its view, the affixing of a mark to a scale model was not intended to denote a characteristic of the goods, but was rather just another element in the faithful reproduction of the original.

Comment

This case is of special interest for model and replica makers.

The value of a model or replica is wrapped up in its being seen as a visual miniature of a well-known product. The public may associate some design elements with the original, but the strongest visual cues are usually the brand name and logo. Their use is often essential to models and replicas being seen as such, rather than as mere toys.

Model and replica makers may therefore greet this decision with concern. The finding that the use of others’ brands on toys or replicas can infringe if the use can affect the essential function of the trade mark leaves it wide open to the German national court to find that Autec’s models infringe. It is not hard to envisage a court reasoning that the public connects the logo with Adam Opel and may assume that Autec is authorized by Adam Opel to produce the miniatures. In practice, the remarks of the German court point away from this on the basis that German consumers are resistant to such confusion where models are concerned. However, until a decision is handed down uncertainty will reign.

Model makers might observe that their use only enables consumers to see that the model is in fact a model rather than a toy. It does not suggest that the model actually emanates from the brand owner, and a model may in fact be part of a wide range of models of many different branded products, from many different sources. As such, the use of a brand to denote that a model is a model should be perfectly poised to grasp the defence of honest descriptive use.

The ECJ’s dismissal of such a possibility, however, makes it unlikely that such an argument would succeed. It is difficult to understand the Court’s reasoning given that one of the most fundamental characteristics of a replica is its representation of the original, and the use of a brand name or logo describes that characteristic directly. Arguably, if model makers are to fall foul of intellectual property laws at all, their activities should trigger the laws of design and copyright infringement, rather than trade mark infringement.

The ramifications of this decision stretch far beyond the toy industry. Use of brand names are central to fan memorabilia as well, and use of a rival’s brand to refer to his goods or services is often an essential element of effective comparative advertising, too. The fan memorabilia industry was hit hard by the ECJ’s decision in Arsenal that such use could affect the essential function of a mark, and whether use of another’s mark in comparative advertising can fall within the descriptiveness defence is now also before the ECJ in O2 Holdings Ltd. and Another v. Hutchison 3G Ltd. ([2006] EWCA Civ 1656). Ultimately it will fall to national courts to apply the ECJ’s guidance with pragmatic wisdom.

If national courts begin to take the model makers apart, the replica industry may need to find new ways to hawk its wares. In a commercial landscape where consumers are increasingly cued into brands as visual identifiers, this could prove tough indeed.