The EU General Court's ruling in the TESTAROSSA cases (cases T-1103/23 and T-1104/23) clarifies how genuine use of a trade mark can be established for second-hand sales, potentially lowering the bar for proving genuine use of a trade mark.
What has happened?
- The General Court annulled the decision of the EUIPO Board of Appeal to revoke the EU registrations for Ferrari's TESTAROSSA trade mark on the grounds of non-use.
- It is established law that a trade mark is capable of being put to genuine use by its proprietor when that proprietor resells second-hand goods put on the market under that mark in the EU. However, in this particular case, the Board of Appeal had held that Ferrari had not acquired or sold any second-hand Testarossa cars itself or expressly consented to any such sales by its licensees to enable the sales to count as genuine use. On appeal, the General Court has now held that Ferrari had impliedly consented to such sales so they counted towards genuine use of the mark.
- The decision is important as it suggests the bar for second-hand sales has been lowered.
- It is also established law that genuine use for specific goods can be established by showing use of the mark for services which are directly connected with the goods and intended to meet the needs of customers of those goods. Again, the General Court overturned the earlier Board of Appeal ruling, holding that services offered by Ferrari in the EU to certify that a car (offered for sale by an authorised dealer) is a genuine Testarossa constituted genuine use for the car itself.
- Finally, it is established law that the use of a mark for replacement parts forming an integral part of the goods covered by that mark is capable of constituting genuine use not only for the replacement parts but also for the goods for which the replacement parts are intended. The General Court remitted back to the Board of Appeal the question of whether the sale by Ferrari (and others) of Testarossa spare parts constituted genuine use for the product itself (ie cars) as well as spare parts. The Board of Appeal's decision (holding that such use did not count) was vitiated by failure to state reasons and by errors of assessment.
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Background
In 2006, Ferrari registered the trade mark 'TESTAROSSA' in the EU in class 12 and class 28 in relation to its famous Testarossa car. The trade mark registrations covered goods such as vehicles, structural and replacement parts, components and accessories, scale toy vehicles and construction toys.
In 2015, an application for revocation of the 'TESTAROSSA' trade mark was filed on grounds of non-use. The relevant period under consideration was between 2010 to 2015. The revocation application was granted and later upheld by the EUIPO Board of Appeal. Ferrari appealed the decision to the General Court.
Existing law
It is established law (Ferrari v DU) that a trade mark is capable of being put to genuine use for particular goods by:
- The resale by the trade mark owner or with its consent of second-hand versions of those goods.
- The offering by the trade mark owner or with its consent of services directly connected with the goods and intended to meet the needs of customers of those goods. Such use can constitute genuine use for both the services and the relevant goods (here, cars).
- The sale by the trade mark owner or with its consent of replacement parts forming an integral part of the goods covered by the mark (unless it is apparent from the relevant facts and evidence that a consumer who wishes to purchase replacement parts will perceive them as an independent subcategory of the category of goods in respect of which the mark concerned was registered). Again, such use can constitute genuine use for the replacement parts as well as the relevant goods (here, cars).
Second-hand sales
One of the key issues before the General Court was whether the sale of second-hand Testarossa cars through authorised dealers constituted genuine use of the registered trade mark by Ferrari (or with its consent). Ferrari ceased to sell new Testarossa cars in 1996. However, the car continued to be sold second-hand through approved networks of Ferrari authorised dealers.
In this particular case, the Board of Appeal had held that Ferrari had not acquired or sold any second-hand Testarossa cars itself or through any licensees. Rather, second-hand sales had been made by third party authorised dealers. Ferrari was not actively involved in such third-party sales and could probably not even object to or control such sales (under the exhaustion of rights principle). These sales therefore did not constitute genuine use of the TESTAROSSA mark by Ferrari.
On appeal, the General Court has now held that Ferrari had impliedly consented to such sales. The contractual link between Ferrari and the authorised dealers included at least implied consent to the use of Ferrari’s trade marks, even though the dealership agreements did not expressly mention the ‘TESTAROSSA’ trade mark.
In their reasoning, the judges emphasised the distinction between sales by independent third parties and sales by authorised dealers and noted the unique nature of the second-hand car sales market, particularly as concerns vintage, collectible and high-end cars such as the Testarossa car model. The sale of such cars by dealers authorised by trade mark owners can be understood to indicate, and reassure customers of, the car's commercial origin (ie that the car is genuine).
Services
The Board of Appeal had held that evidence from Ferrari that it had offered services in the EU to certify that a car is a genuine Testarossa did not constitute genuine use. It particularly did not like the fact that the certificate contained the name Ferrari as opposed to Testarossa.
Again, the General Court held that the Board had been wrong to come to that conclusion, noting that the TESTAROSSA mark appeared on invoices relating to the certification service. The General Court further noted that that there was no requirement under EU trade mark law for proprietors to use their marks independently of each other and, as such, the use of the an earlier mark jointly with a contested mark did not undermine the ability of the contested mark to prove genuine use, provided that the contested mark when used in conjunction with another mark continued to be perceived as an indicator of origin. In this case, the General Court highlighted that cars are commonly marketed under two trade marks: one indicating the manufacturer and another indicating the car model. Here, the use of the two marks together, the FERRARI mark and the TESTAROSSA mark, on the invoices relating to the certification service served to designate the particular Ferrari model and was consistent with industry practice. The certification service therefore also constitutes genuine use for the cars themselves.
Spare parts
Ferrari (and others) had sold Testarossa spare parts and argued that this constituted genuine use for the product itself (ie cars) as well as spare parts. However, the Board of Appeal held that the evidence was not sufficient to constitute genuine use by Ferrari for cars or spare parts. The General Court held that the Board's decision was vitiated by failure to state reasons and by errors of assessment. It is likely that this aspect of the decision will be reversed when reconsidered by the Board.
The outcome
The Board's decision has therefore been annulled in its entirety. The case will be remitted back to the Board, which will have to implement the General Court's findings on second-hand sales and the provision of services and reassess sales of spare parts.
What does this mean for you?
- The decision suggests the bar for proving genuine use of a mark through second-hand sales has been lowered.
- Second-hand sales by authorised dealers with an economic and contractual link with the trade mark owner can be sufficient to demonstrate genuine use of a trade mark.
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