The suggestion may seem extraordinary, but such thoughts must be running through the minds of the design team at Bang & Olufsen, the Danish manufacturer of stylish audio, video and multimedia products.
The Danish firm built its reputation on innovative design, but recently lost its bid to protect a highly distinctive speaker shape as a CTM (Bang & Olufsen A/S v OHIM, Case T-508/08). The General Court found that the highly unusual shape was so striking as to give substantial value to the goods, sounding the death knell for the Danes’ claim to trademark protection. This sobering judgment has turned heads in all industries that depend on innovative design.
Can You Hear Me
Bang & Olufsen had applied to register the shape shown opposite in respect of inter alia "loudspeakers" in Class 9 and "musical furniture" in Class 20. The shape was that of a speaker, and was, by the General Court’s later admission, striking and memorable. In spite of this, the examiner and later OHIM’s First Board of Appeal rejected the mark as devoid of distinctiveness, despite possessing "unusual features". OHIM further held that evidence filed in support of the application was insufficient to show that the shape had acquired distinctiveness through use.
The Danes appealed but the case took an unexpected turn. The General Court agreed that the shape in question departed "significantly" from the norms of the relevant market sector and that it was likely "to retain the attention of the public concerned and enable it to distinguish the goods covered…from those of another commercial origin." Whether or not the shape was dictated by aesthetic considerations was irrelevant to distinctiveness. The case was remitted back to the First Board of Appeal. It was here that the Danes’ case began to unravel.
The case as remitted concerned distinctiveness and, after the General Court’s ruling, the finding on that could not but favour the Danes. However, the Board sensed an opportunity in another quarter. It accepted that the shape might be inherently distinctive, but held that the Board, as part of the Office, could nonetheless review the acceptability of the mark under other absolute grounds, even ones that had not been raised by the examiner.
Consequently, the Board maintained its refusal, this time on the basis that the mark consisted exclusively of a shape that gave substantial value to the goods under Article 7 (1) (e) (iii) of the CTM Regulation. This surprising turn of events prompted Bang & Olufsen to appeal again. A Note of Discord Before the General Court, subtle issues of public policy turned the tide against the Danes. The Court affirmed that the Board of Appeal had been not only entitled, but was in fact obliged to re-open the examination of the mark when the case had been remitted, even if that meant raising new grounds of objection if the reexamination showed they were relevant. An examiner at first instance would not necessarily raise all relevant objections, since a single ground was sufficient to justify refusal. Therefore, the reexamination was necessary to ensure that registrability had been considered from all appropriate angles.
The Court accepted that it was generally preferable for OHIM to examine shape marks under Article 7 (1) (e) first, since objections under that section could not be overcome through evidence of acquired distinctiveness, in contrast to distinctiveness and descriptiveness objections. Section 7 (1)(e) bars the registration of:
(e) signs which consist exclusively of:
(i) the shape which results from the nature of the goods themselves;
(ii) the shape of goods which is necessary to obtain a technical result;
(iii) the shape which gives substantial value to the goods.
Had the Section 7 (1) (e) objection been raised at first instance, Bang & Olufsen would not have invested substantial sums in preparing evidence of acquired distinctiveness, since such evidence could never have availed it. Nonetheless, the acquired distinctiveness point was not before the Court, and it expressed only indirect criticism of the order in which OHIM had examined the mark.
Having found that the Board had been right to re-examine the mark, the Court upheld the new objection. It noted that Article 7 (1) (e) had been drafted with the intention of blocking the grant of indefinitely renewable trademark monopolies on "technical solutions or functional characteristics of a product which a user is likely to seek in the products of competitors…since the registration of the shapes is likely to allow the proprietor...to prevent other undertakings not only from using the same shapes, but also from using similar shapes." Although this rationale was more obviously relevant to Article 7 (1) (e) (ii), the Court saw no reason why it should not apply equally to shapes that were essentially dictated by aesthetic functions. In its view, the purpose of the prohibition on the registration of shapes that give substantial value to the goods was "to prevent the exclusive and permanent right which a trade mark confers from serving to extend the life of other rights which the legislature has sought to make subject to ‘limited periods’." In other words, it was not in the public interest to grant a perpetual monopoly on a fashionable or eye-catching design, whose visual form motivates consumer choice. Such innovations were more properly the subject of registered design protection or design right, which was time limited and whose scope of protection was narrower.
The Court accepted that consumers buying the Danish speakers would not necessarily be motivated solely by the product shape, and that they might well take other characteristics of the goods into account. However, the fact that the design was itself "an essential element of [the Applicant’s] branding" which "increases the appeal of the product" was enough, in its view, to show that the shape gave substantial value to the goods, and was therefore ineligible for trademark registration.
Was Bang & Olufsen’s case really so unsound? Many would say it was not. Applications for shape marks before OHIM have failed time and time again for lack of distinctiveness, for failing to differ substantially from the norms of the market sector concerned. Yet, here was a mark that manifestly did differ and by the Court’s own admission was both striking and memorable, and it seemed to fail for exactly those reasons. What went wrong?
Bang & Olufsen appears to suggest that there are shape marks that are distinctive enough to merit trademark protection, and others whose distinctiveness is so strong that it is not in the public interest to grant a wide and potentially indefinite trademark monopoly. The line between the two is a fine one indeed, and this case does little to show where the chips in any future case are likely to fall.
The Court seemed influenced in this case by the Danes’ advertising, which naturally extolled the attractiveness of the speaker design as "pure, slender, timeless sculpture for music reproduction" and held it out as a key element of branding. But it was incumbent on them to teach consumers to associate the speaker design with the Bang & Olufsen brand, and few other brand owners who invest in visually innovative designs would do differently. The wisdom of this decision is widely debated, and brand owners who seek broad protection for innovative product shapes appear to be in a cleft stick. Too plain a design and it will be non-distinctive, too striking and its value may be too great to allow a perpetually renewable monopoly. Low-key advertising without reference to the shape may fail to mould consumer awareness of it as part of the brand. But too great an emphasis runs the risk of spooking OHIM and the courts into finding that the design gives substantial value to the goods, and should not therefore be registered as a trademark. Some argue that the Court’s approach puts the cart very much before the horse and undermines the value of commercial investment in innovative design.
For those seeking to protect innovative and visually appealing product design, this case signals the importance of covering all bases when seeking protection. Brand owners and designers should file registered design applications either before first disclosure or within the one-year grace period following it, regardless whether they are also seeking trademark protection. Registered design protection is cheap, easily and swiftly granted, and although it is time-limited it is at least immune to challenge on the basis that the design gives substantial value to the goods.
Trademark protection should be sought in appropriate cases, too, for its broader and longer-lasting protection, but as Bang & Olufsen and others have found to their cost, such protection is often harder to secure where shapes are concerned. Putting all one’s eggs in the trademark basket can run out the clock on the registered design option and leave a brand owner with no protection at all.
One further point arises from this case, which is the inherent risk in all appeals on registrability that an issue not raised at first instance may arise later if the appeal succeeds and the case is remitted. An appeal on registrability is in that sense like spinning the roulette wheel. Preparation only takes one so far; one has to hope for good luck too.