WEDNESDAY, 31 DECEMBER 2008
RAW: not enough Intel-DNA for G-Star?

While wearing a Nudie Jeans and enjoying a small glass of Castelmaure I resumed writing to this posting again about denim ‘fashionistaG-Star – G-Star International B.V. and the Hungary based company G-Star Raw Denim KFT - and PepsiCo, parties to trade mark infringement summary proceedings before the Presiding Judge of the District Court of The Hague (G.R.B. van Peursem). The hearing took place on December 1, 2008 – just a few days after the ECJ decided the Intel case – and the decision was given on December 15, 2008. Paramount to the proceedings was the alleged infringement by PepsiCo of G-Star's 'Raw' trade marks, a huge collection of trade marks, varying from the trade mark 'Raw' as such (CTM 4743225, registered on October 15, 2008) to for example (the origins of that trade mark) 'Raw Denim' (Benelux 606761 - November 1, November 1, 1997), 'Raw Essentials' (Benelux 618182 – June 1, 1998) and to 'G-Star Raw' variations ('G-Star Raw Denim', 'G-Star Raw Originals Raw Denim', 'Raw Denim 3301 by G-Star'). G-Star placed also some other derivative 'Raw' trade marks in position: 'Rawsecco', 'Continental Raw', 'Legendary Raw', 'G-Store Raw', 'Raw Footwear', 'Raw Shoes').

The case was born after the introduction of the soft drink ‘Pepsi Raw’ by PepsiCo on the UK market early 2008. The sign ‘Pepsi Raw’ is used on bottles and furthermore promoted by PepsiCo on the website www.pepsiraw.co.uk and on ‘Raw’ parties organized by PepsiCo in the UK. The parties first tried to settle the matter – after G-Star sent cease and desist letters to PepsiCo in March 2008 - but apparently failed to do so. G-Star rejected a letter of comfort from PepsiCo including a declaration from PepsiCo – confirmed by a contractual penalty - to refrain from the use of the sign ‘Pepsi Raw’ in Europe outside the UK, and furthermore an undertaking to give a 3 months preceding notice to G-Star in case PepsiCo would want to introduce ‘Pepsi Raw’ in Europe outside the UK in the future.

Claims

G-Star claimed an injunction against PepsiCo to refrain in the Community, the Benelux or the Netherlands from infringing G-Star’s ‘Raw’ CTM and other ‘Raw’ trade marks on which G-Star relied, subject to a certain penalty, and an order to pay the costs. G-Star referred to art. 9 par. 1 under c CTMR and art. 2.20 par 1 under c of the Benelux Convention on Intellectual Property. Furthermore G-Star argued that PepsiCo acted unlawful by latching on to the reputation of G-Star and its ‘RAW’ concept.

Sufficient urgent interest?

After establishing jurisdiction the Presiding Judge had to investigate whether G-Star had a sufficient urgent interest to obtain an injunction against PepsiCo, because PepsiCo disputed this, relying on the letter of comfort and the preceding-notification-to-introduction declaration included therein. Furthermore PepsiCo argued that G-Star had failed to take action against Pepsi Raw in the UK where the soft drink was introduced some nine months ago. The Presiding Judge furthermore added that although the parties agreed that according to rules of procedure in the UK G-Star had no urgent interest to obtain an injunction similar to the one as claimed by G-Star with effect for the UK, the Presiding Judge decided that the issue of urgent interest should be dealt with according to the rules of Dutch civil procedure (being the so called lex fori). In accordance with these rules the Presiding Judge concludes that the letter of comfort deprives the urgent interest needed to obtain the injunction anyhow for the other countries outside the UK, because there is no threat of trade mark infringement in those other countries. The Presiding Judge establishes and weighs the fact that the website www.pepsiraw.co.uk is not aimed at the public outside the UK. A market survey prepared under the authority of third party (Seven Up Nederland B.V.) – filed by G-Star - in which Pepsi Raw was mentioned quite shortly amongst other cola trade marks (Coca-Cola, Pepsi, Freeway) could not constitute the required urgent interest, especially not in view of the comfort letter which was obtained after the market survey was completed. Accordingly the Presiding Judge decides that G-Star’s claims can already be dismissed as far as based on the Benelux because of a lack of the required urgent interest.

The Presiding Judge furthermore disregards on the same grounds G-Star’s submission that G-Star Raw Denim KFT had an urgent interest to obtain an injunction because of a threatening trade mark infringement in the Netherlands. The Presiding Judge does not want to prelude on the danger outlined by G-Star that the 3 months notice system could be abused by PepsiCo, for example by introducing Pepsi Raw on the German market first, waiting 3 months, followed by introduction on the French market, thus G-Star depriving of the possibility of summary proceedings in the Netherlands. Whether in such situations a sufficient urgent interest is present should be dealt with taking into account all circumstances of the case as soon as it arises.

As regards the contents of the case

But that’s not where this story ends, because as the Presiding Judge continues: ‘As far as the UK is concerned the situation is different’. However: ‘Even if it would be right in law that there is already a sufficient urgent interest for obtaining a cross-border measure in the specific (party-) circumstances of the case because of the continuing infringements in the UK, from an interest balancing approach in these summary proceedings follows that a cross-border measure (with substantially at least for the present exclusive effect in the UK would be too far reaching, because of the prognosis of the outcome of the case in proceedings on the merits)’. The Presiding Judge emphasizes that the theory of forum non conveniens cannot be applied within the legal framework of art. 93 par. 2 and art. 99 par. 2 CTMR.

The Presiding Judge’s prognosis is that G-Star would probably lose the case in such proceedings on the merits: after establishing that this case only deals with art. 9 par. 1 under c CTMR the Presiding Judge faces the Intel decision and does not mince the matter: ‘the requirements for a successful appeal to art. 9 par. 1 under c CTMR are strict.’ According to the Presiding Judge a prognosis of the outcome of the case in proceedings on the merits contains that based on the evidence available in the summary proceedings it is not likely that G-Star has a probable chance of obtaining an infringement injunction based on art. 9 par. 1 under c CTMR, which prompts the Presiding Judge to dismiss the claims.

First of all the Presiding Judge points out that it is questionable whether (proof of) reputation in a relatively small country as the Netherlands is enough to assume that a trade mark is one with a reputation as mentioned in art. 9 par. 1 under c CTMR. This is not clear yet. The Presiding Judge refers to the Pago case which is still pending before the ECJ (C-301/07). ‘That G-Star (…) is a trade mark with a reputation is another question. The question whether Raw (alone) is such a trade mark is another one.’ From the reputation surveys that the parties filed the Presiding Judge can not derive that the trade mark RAW is a trade mark with a reputation in the UK (‘a huge Member State though’), although it might be such a trade mark in the Netherlands. ‘It is to be expected that after the decision in the Pago case it will become clear whether it is possible to obtain an injunction based on art. 9 par. 1 under c CTMR if a trade mark has a reputation in state A, but not in state B, with effect in state B. For the present this is doubtful.

Secondly the Presiding Judge considered that ‘raw’ in English is a normal adjective with a more or less fashionable (secondary) meaning that is also projected as such in for example the Netherlands. To the Presiding Judge's preliminary judgment the extent of distinctiveness of the G-Star Raw trade marks is not as such that the trade mark can be considered to be in essence unique trade marks in the sense of paragraph 56 of the Intel decision. The Presiding Judge furthermore holds that it has not been evidenced that PepsiCo in the sign Pepsi Raw uses the adjective Raw in the usual adjective and therefore descriptive sense of raw, pure, natural, or even "cool". G-Star's argument that PepsiCo uses mainly Raw, even with the effect that the trade mark Pepsi is pushed in the background, is rejected. The Presiding Judge derives from the first page of the Pepsi Raw website – depicted on the top of this posting – that the sign Raw is derived from the letters R, A and W contained in the ingredients mentioned on this first page ('natural extRacts', 'cane sugAr' and 'sparkling Water'). 'The product fits in the fashion trend for more naturalness in different (lifestyle) areas of these days.'

Also against this background the Presiding Judge concludes that it has not been evidenced that G-Star will be able to prove in proceedings on the merits that the relevant public makes a connection between the G-Star trade marks and the Pepsi Raw sign as used by PepsiCo. Such connection is not evident the more so as the products involved are clearly not similar. The Presiding Judges refers to paragraphs 49 to 55 of the Intel decision. G-Star's argument of 'crossovers – co-branding' (cooperation with others trade mark owner resulting in for example RAW Cannondale bikes, RAW Defenders Landrovers, RAW Secco Prosecco) is not considered to be evidence for the required connection since the existence of such connection needs to be appreciated globally taking into account all relevant circumstances of each particular case (paragraph 62 Intel case). The Presiding Judge refers to paragraph 31 of the Intel case: in the absence of such a link in the mind of the public, the use of the later mark is not likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier mark, in others words in such a case there is not an infringement according to art. 9 par 1 under c CTMR. But even if such a connection would be evident taking into account the co-branding and other circumstances of this case, the connection as such is not enough for a successful appeal to art. 9 par. 1 under c CTMR.

The Presiding Judge finds that it has not been evidenced by G-Star that PepsiCo's use of Pepsi Raw takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the G-Star trade marks (referring to paragraphs 32, 37, 38, 71 and 79 of the Intel decision). The Presiding Judge derives from Intel that the ECJ apparently raises a high standard where it clarifies that the following elements are not enough evidence to conclude that a third party use of an identical or similar sign takes unfair advantage of, or such use is detrimental to, the distinctive character or the repute of the earlier trade mark:

a) that the earlier trade mark has a huge reputation for certain products (denim in this case;
b) that these products are not (to a great extent) similar to the products for which the sign under attack are used (soft drink); and
c) that the earlier trade mark is unique for any product whatsoever (which is not the case as far as 'raw' is concerned; and
d) the sign under attack brings the earlier trade mark to mind.

An absolute minimum to establish unfair advantage is evidence - the Presiding Judge refers to par. 38 and 39 of the Intel decision – of the existence of elements from which a clear risk of future infringements can be derived. The Presiding Judge finds that G-Star has not advanced such elements. That the element RAW is the 'DNA for G-Star' and that G-Star in reality equals RAW is only relevant in the sense that what is relevant is the public's perception thereof: 'It has not been evidenced sufficiently that the relevant public with regard to this element will take such a view as advanced by G-Star that it will push the ordinary meaning of the adjective 'raw' to the background in the context of the sign Pepsi Raw, in such a way that with that the required serious risk is evidenced.' But for the Presiding Judge G-Star has not presented such evidence: 'One should keep in mind that G-Star has not a monopoly to address a young (a therefore partly fashionable and non-conformist) public. That is already since a long time a constant in well-known (and publicly via the internet accessible) advertisements of Pepsi, with striking examples like "Now It's Pepsi, for Those Who think Young' (early sixties), "Pepsi, the Choice of A New Generation' (1984) and "GeneratioNEXT' (1997).'

In so far as detriment to the distinctive character is the 'hat rack' for G-Star's claim the Presiding Judge refers to paragraph 77 of the Intel decision: evidence is needed of a change in the economic behavior of the average consumer of the goods or services for which the earlier mark was registered consequent on the use of the later mark, or a serious likelihood that such a change will occur in the future. The Presiding Judge finds insufficient real indications in that direction.

That apart from the alleged trade mark infringement PepsiCo acted unlawful by latching on to the reputation of G-Star and its ‘RAW’ concept is rejected by the Presiding Judge: G-Star rebutted insuffiently that the adjective 'raw' is an accepted descriptive meaning in modern trendy language.

On all these grounds the Presiding Judge rejects the claims of G-Star and orders G-Star to pay Pepsico's costs (€ 15.000).

Posted by: Gino Van Roeyen @ 00.22
Tags: Benelux case law, Community trade mark courts, community trade mark infringement, G-Star, Intel, PepsiCo, Raw,
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