On 28 June 2019 the Dutch Supreme Court (Hoge Raad) has rejected the appeal in cassation of Capri Sun AG (CS) against the Amsterdam Court of Appeal decision of 19 December 2017 in which the Court of Appeal confirmed the findings of the Amsterdam District Court of 24 December 2014 that CS’s international trade mark registration for its pouch shape was invalid for the Benelux and that Riha Wesergold Getränke GmbH & Co KG (defendant in the case, hereinafter referred to as Riha) did not commit an act of unfair competition (‘slaafse nabootsing’) by launching a pouch against which CS objected.
The Hoge Raad rejected first of all CS’s complaints with regard to the finding of the Court of Appeal that the shape mark of CS is invalid because all essential characteristics of the pouch are technically/functionally determined. The assessment by the Hoge Raad of these complaints started with (the text of) article 2.1 par. 2 of the Benelux Convention on Intellectual Property (BCIP), as from 1 March 2019, article 2.2bis par. 1 under e, ii BCIP. According to this provision signs consisting exclusively of the shape (of goods) which is necessary to obtain a technical result, shall not be registered as a trade mark. With regard to the interpretation and the scope of application of this provision the Hoge Raad sets out the following framework.
The rationale of the absolute refusal and invalidity grounds for shape marks is to prevent that, as a consequence of the protection of a trade mark right, the trade mark owner is granted a monopoly for technical solutions or characteristics of use of a product, which consumers might look for in products of competitors. The provision aims at preventing that the exclusive and renawable right which is granted by a trade mark (registration) can be used for immortalisation, without any time limits, of other rights which the legislator in the EU intented to subject to a time limitation.
With regard to goods which do not have an intrinsic shape and which can only be marketed in packaging, like liquids, the CJ EU has held that the packaging which is chosen indicates the shape of the goods and that in such cases this packaging should be considered to be equal to the shape of the goods when assessing an application of said packaging as a trade mark (CJ EU 12 February 2004, case C-218/01, Henkel).
With regard to the so called ‘technique exception’ - article 3 par. 1 under e), ii) of EU Directive 2008/95/EC, in conformity with which art. 2.1 par. 2 BCIP should be interpreted - the CJ EU has held that a sign which exclusively consists of the shape of a product cannot be registered as a trade mark, if it can be demonstrated that the essential functional characteristics of said shape can be exclusively attributed to the technical result. Moreover the evidence that different shapes exist with which the same technical result can be obtained, cannot set aside the technique exception. This is justified by the public interest that a shape of which the essential characteristics coincide with a technical function and were chosen for the fulfilment of this function, can be used freely by everybody, which interest precludes that such signs on the basis of a trade mark registration are reserved to one company (CJ EU 18 June 2002, case C-299/99, Philips/Remington).
The Hoge Raad furthermore relies on the Lego Juris decision of the CJEU (14 June 2010, case C-48/09) with regard to the interpretation of article 7 par. 1 under e), ii) of the CTMR (40/94), a provision similar to article 3 par. 1 under e), ii) of EU Directive 2008/95/EC and article 2.1 par. 2 BCIP: the technique exception is only applicable if all essential characteristics of the sign are functional. The identification of the essential - namely the most important elements of the sign - characteristics should take place on a case by case basis. The competent authority can either rely directly on the overall impression invoked by the sign, or firstly investigate consecutively each component of the sign. As soon as the essential characteristics of the sign are assessed, it should be verified if all these characteristics meet the technical function of the involved product.
With this framework in the back the Hoge Raad disagrees with CS’s first complaint that the Court of Appeal considered the straight edges of the pouch to be an essential characteristic, but subsequently did not attribute a technical function to this characteristic. Thus - so argued CS - the Court of Appeal ignored that the technique exception is only applicable if all essential characteristics of a shape are determined by technique. If the Court of Appeal considered the straight sides of the pouch functional, because the pouch accordingly is compact and can be stored without loss of space in for example a bread bin, the Court of Appeal did not motivate well its decision, so argued CS.
According to the Hoge Raad these complaints are based on wrong reading of the Court of Appeal’s decision and thus fail. With reference to the trade mark registration the Court of Appeal apparently identified the (more or less) rectangular shape which the pouch has when it is laid down flat and is filled, and the (slightly) tapered shape it has when the filled pouch is placed upright, as essential characteristics. Thereby the Court of Appeal mentioned the straight sides of the pouch as part of the description CS used in appeal of the (slightly) tapered shape. It cannot be derived from the presentation of this description that the Court of Appeal considered the straight sides of the pouch - within the to be held essential (more or less) rectangular respectively (slightly) tapered shape of the pouch - as a separate, essential characteristic which should be verified on its own.
CS raised a second complaint against the rejection by the Court of Appeal of CS’ appeal to the possibility of making pouches with a different shape. According to this complaint the Court of Appeal’s finding that it was not shown that pouches with an alternative shape result to the same extent in the advantages of use as established by the Court of Appeal with regard to the shape trade marked by CS. According to the Hoge Raad this complaint cannot succeed because the rejection by the Court of Appeal of CS’ appeal to alternative design is backed independently by its finding that the existence of alternatives with which a same result can be obtained, does not set aside the technique exception.
Subsequently - in a second part of its second complaint - CS argued that the technique exception is not applicable if an infinite amount of alternatives are available for a shape, as is the case (so argued CS with regard to shapeless products, namely in this case a pouch for a drink). In such a case the risk of a monopoly of a technical solution is non-existent according to CS and thus the rationale of the technique exception is not at stake. For the Hoge Raad CS argued based on its own wording in the complaint a refinement of the rule of law given by the CJ EU in the Lego Juris decision, at least for shapeless products. Apparently CS relied on decisions of the CJ EU with regard to the technique exception in design law.
The Hoge Raad also rejects this part of the complaint. First the Hoge Raad establishes that the CJ EU has interpreted the technique exception as follows: (i) if it has been proven that the essential functional characteristics of the shape of a product are to be attributed exclusively to the technical result, said shape can not be protected by trade mark law, and (ii) the existence of alternative design with which an identical technical result can be obtained cannot said aside the technique exception. For the Hoge Raad this is a so called ‘acte éclairé’ and accordingly the Hoge Raad sees no ground for a preliminary ruling by the CJ EU.
The decision by the CJ EU in the Doceram case (CJ EU 8 March 2018, case C-395/16) in which it was held that the existence of alternative designs with which an indentical function can be obtained, can be taken into account, does not give rise to any doubt according to the Hoge Raad: trade mark law and design law differ in terms of function and duration of protection. Furthermore the technique exception in design law is of a different nature as the technique exception in trade mark law: in design law the technique exception is not a ground for invalidity, but a ground for restriction of the scope of protection. Accordingly the Doceram decision does not allow findings as such with regard to the scope of application of the technique exception in trade mark law. More importantly, so rules the Hoge Raad, said finding in the Doceram case relates to the question how to establish whether an external characteristic of a product (design) is determined exclusively by the technical function of said product (design). From this finding does not follow that if it is established that an external characteristic is determined by the technical function of the product (as did the Court of Appeal in this case with regard to all essential characteristics of the CS pouch), the technique exception does nevertheless not apply if there are sufficient alternatives to obtain the same technical result. The Hoge Raad furthermore finds that the CJ EU has decided that art. 3 par. 1 under e) of the EU Directive 2008/95/EC is also applicable to shapeless goods.
CS also raised a complaint against the unfair competition (‘slaafse nabootsing’) findings of the Court of Appeal. The Hoge Raad also rejects this complaint and first points out its own standing case law with regard to the reproduction of a tangible product which is not protected (any longer) by an intellectual property right: such reproduction (imitation) is allowed in principle, unless - and this is an exception to the principle - this reproduction causes confusion at the public and the reproducing competitor fails to comply with the obligation to do everything which is reasonably possible and can be reasonably required in the process of reproduction, without detriment to the soundness or usability of his product, to prevent that by the identity of the products a risk of confusion comes into existence. The Hoge Raad establishes that the Court of Appeal was correct in its finding that the alternative shapes for a pouch as indicated by CS are not equal to the CS pouch in terms of soundness and usability. Furthermore the Hoge Raad rejected CS’ argument that the Court of Appeal erred in taking into account the different imprint used by Riha on its pouches. The Hoge Raad ruled that if it should be taken as a starting point, as in this case it should, that if there are no reasonable possibilities to prevent confusion in a different way, without detriment to the soundness or usability of the product, it can suffice to keep a distance from the external characteristics (color and name mentioning) of the reproduced product.