Date: 21 May 2018
On August 6, 2003, national German trademarks were registered showing three dimensional representations of Dextro Energy’s well-known product, “grape sugar”,
(application no. 397 55 314, filed on November 19, 1997) and its usual packaging form
(application no. 398 04 308, filed on January 29, 1998). The registrations were based on the fact that Dextro Energy had shown the trademarks had become established in the participating trade circles as a result of its use for the pertinent goods.
On September 24, 2012, a competitor of Dextro Energy, Germany-based CA Vetriebsgesellschaft, filed requests for cancellation of both trademarks. In the requests, CA Vertriebsgesellschaft claimed that the trademarks consist exclusively of a shape necessary for obtaining a technical result, which would render the trademarks ineligible for protection according to section 3 (2) No. 2 of the German trademark law, regardless of whether the trademarks have become established as a result of their respective use.
Both the German Patent and Trademark Office and, in appeal proceedings, the Federal Patent Court of Germany (Bundespatentgericht) decided that indeed both trademarks should be cancelled as all essential features of the trademarks can be attributed a technical function.
The Patent Court admitted an appeal on the grounds of law before the Federal Court of Justice of Germany (Bundesgerichtshof) in both cases.
Grounds for Appeal
In its appeal, Dextro Energy argued that
1) Section 3 (2) No. 2 of the German Trademark law must not be applied as the respective shapes of the trademarks cannot be covered by a technical protective right and
2) Not all essential features of the trademarks are necessary to achieve a technical function.
Exclusion of technical features and patentability
As for item 1 above, Dextro Energy essentially argued that Section 3 (2) No. 2 of the Germany Trademark law, which excludes signs consisting exclusively of a shape necessary to achieve a technical function from protection as a trademark, is not applicable to the trademarks of the cases as it is not possible to achieve technical protection rights, and therefore the temporal limitations of technical protection rights cannot be bypassed by (temporally unlimited) trademark protection rights.
The Federal Court of Justice confirmed the view of the Patent Court, that there is a danger of creating a monopoly based on trademark law for technical solutions, which are embodied in the shape of a product, irrespective of whether or not that shape can be protected by a technical protective right. In particular, if a technical solution is not or cannot be protected by a technical protective right, these should remain accessible for free use to all competing participants. This applies all the more to cases where the conditions for obtaining a technical protective right are not met, and hence where not even a temporally limited monopolization can be achieved.
As for item 2 above, the Federal Court of Justice first had to determine what the essential features of the trademarks are.
In this regard, the Court approved the approach of the Patent Court, that the essential features may be determined with respect to the perception of the relevant average consumer of the goods in question.
The Court confirmed the view held by the previous instances that the trademarks have three and four essential features, respectively. Accordingly, the essential features of the first trademark are the choice of a flat cuboid with bevelled corners and edges, wherein the cuboid’s large faces show a centrical indentation in the manner of a predetermined breaking point, and, in the case of the second trademark, the arrangement of eight such cuboids in a stack. However, the Court accepted Dextro Energy’s argument that the Patent Court did not base its observations on the signs as registered. Instead, the Patent Court had reduced the signs to an abstract basic shape without considering their concrete features in the required manner. In particular, when the Patent Court looked at the shape of a cuboid as an essential feature, it did not consider that the centrical V-shaped indentation divides the large face optically into two rectangles. Moreover, the Federal Court of Justice pointed out that the graphical representation of the signs clearly shows that the edges are not rounded, as stated by the Patent Court, but slanted on the upper and lower faces so that protruding rectangles are formed on the smaller faces of the cuboid. Further, although the corners are indeed rounded, they show additional bevels that are set off against the bevels of the edges. Lastly, the centrical indentation is not just a cut but – by means of two intersecting slopes – has a V-shaped form. Hence, the Federal Court of Justice concluded, the shapes give a complex geometric impression. Moreover, in the case of the second trademark, arranging a stack of eight cuboids creates another complex geometric form.
The opponent, CA Vertriebsgesellschaft, argued that for the relevant average consumer this detailed description has no meaning as the goods of the trademarks are every-day products of low value intended for immediate consumption. The Federal Court of Justice, however, pointed out that the Patent Court did not find that the consumer will indeed reduce the signs as registered to the basic shape as described. Nor did it find that the consumer will disregard the stack arrangement and look at the individual shape of the cuboids instead.
Achieving a technical function
When determining the technical function of a feature, the Federal Court of Justice firstly pointed out that this has to be done in an objective manner rather than from the point of view of an average consumer.
Secondly, in assessing whether or not a feature is necessary to achieve a certain technical result, it is irrelevant whether or not there are alternatives that achieve the same technical result.
The Federal Court of Justice confirmed that the shape of a cuboid has the technical function of being able to arrange portions in a stack.
Also, the Federal Court of Justice agreed to the finding of the precious instance, that the V-shaped indentation has the technical effect of defining a breaking point.
However, concerning the slanted edges and rounded corners, the Federal Court of Justice held that these features do not have a technical effect.
In this respect, the Patent Court had stated that avoiding sharp edges and corners serves the aim of making the consumption of grape sugar portions easier and making the intake in the mouth more enjoyable. However, as the Federal Court of Justice points out, a feature of a shape is excluded from trademark protection only if its effect is of a technical nature. If its effect is to achieve a certain taste or to convey a certain sensory – be it optical or haptic – perception, it will not fall under the exception from trademark protection.
The opponent provided a registered patent, which describes that for tablets it is advantageous to have rounded edges in order to avoid cutting injuries of the oral mucosa. Here, the Patent Court has left open the question of whether shaped grape sugar may have edges and corners sharp enough to cause injuries, in particular given the speed at which it dissolves in the mouth. Therefore, the Federal Court of Justice assumed for the benefit of the appellant, Dextro Energy, that it would be possible to consume portions of grape sugar with sharp edges and corners.
The Federal Court of Justice has set aside the decisions of the Patent Court without deciding the cases. Therefore, the cases were sent back to the Patent Court for further consideration.
In doing so, as is customary, the Federal Court of Justice gave “sailing instructions” to be observed by the Patent Court: Firstly, the Patent Court will have to determine whether having sharp edges and corners indeed would result in a risk of causing injuries. Again the Federal Court of Justice points out that merely creating a more pleasant feeling in the mouth during consumption will not be sufficient to establish a technical function.
Secondly, the Federal Court of Justice points out that in the current state of the cases, the Patent Court is not entitled to consider the exclusion of signs consisting of a shape, which results from the nature of the goods themselves.
Thirdly, if the Patent Court arrives at the conclusion that the cancellation of the trademarks cannot be based on their shapes, which consist exclusively of features that are necessary to achieve a technical result, it will have to consider the remaining ground for cancellation, which is lack of distinctiveness. Here, the Patent Court will have to examine whether the trademark has become established. To this end, the Federal Court of Justice concluded that the Patent Court will have to consider ordering a public opinion poll, which the trademark proprietor has already requested.
Three dimensional trademarks have been a topic of lively discussion for some time. While it seems fair to say that the EUIPO has taken quite a restrictive stance towards this topic, it is too early to say whether the decision of the Federal Court of Justice will mark a turning point in the relevant German case law. The sailing instructions in the referral seem to leave only little room for the Patent Court to cancel the trademarks, given that Dextro Energy already demonstrated during prosecution that its trademarks have become established by their use.
These cases show, however, that it can make sense to go all the way up to the highest instance. This is because the Federal Court of Justice seems to take on an in-dubio-pro-reo position that is hesitant in destroying acquired rights. Notably, the Federal Court of Justice assumed for the benefit of the proprietor that a certain essential feature of a three dimensional shape is not necessary to achieve a technical result until it can be proven otherwise. However, the previous instances seem to be less restrictive in their application of the law in order to cancel (three dimensional) trademarks. As it is up to the Patent Court to admit an appeal on the grounds of law, it will be important to thoroughly prepare and provide the Patent Court with arguments as to why such an appeal should be admitted.
In addition, these cases indicate that it makes sense to have parallel union trademarks and national trademarks for valuable assets in order to avoid placing all eggs in one basket. The question of whether or not the Federal Court of Justice of Germany is trying to develop – under the radar of the ECJ – a model that – compared to the EU trend – is less formal and takes the time to thoroughly consider the merits of the individual cases will most probably remain a matter of gossip and speculation.