Nicolas Clarembeaux, Vice-Chair of the MARQUES Geographical Indications Team, summarises the recent judgment of the EU General Court in Case T-239/23, Nero Champagne.

Background

On 19 February 2019, the Italian company Nero Lifestyle filed an application for registration of the word sign NERO CHAMPAGNE as an EU trade mark for products in class 33 and services in classes 35 and 41.

The Comité interprofessionnel du vin de Champagne (CIVC) and the Institut national de l’origine et de la qualité (INAO) objected to registration on the basis of exploitation of reputation of the Protected Designation of Origin (PDO) Champagne under Article 103(2)(a)(ii) Regulation No 1308/2013 and false or misleading indications as to the nature or essential qualities of the product under Article 103(2)(c) of the Regulation.

Following the EUIPO’s Opposition Division, the Board of Appeal (BoA) upheld the exploitation of reputation for goods that did not comply with the specifications of the PDO “Champagne” as well as for services unrelated to Champagne wine. Exploitation of reputation was however rejected for goods which complied with the PDO specifications and services which related to such compliant goods.

CIVC and INAO appealed the BoA’s decision before the EU General Court. Their appeal was supported by oriGIn and by the French and Italian governments.

Annulment

The General Court held that the BoA’s decision must be annulled further to an error in law and a failure to state reasons.

The crux of the dispute related to the so-called “limitation theory”. According to that theory it is presumed that a trade mark that includes a PDO cannot as a matter of principle exploit the reputation of that PDO when that mark is exclusively registered in respect of products complying with the specifications of that PDO or in respect of services referring to such compliant products.

The General court restated that the theory originates in EUIPO’s guidelines for examination which presume that where a trade mark application is limited “to goods in conformity with the specification of the relevant PDO the function of the PDO in question is safeguarded” that “consequently, an opposition against a trade mark application that has been appropriately limited will not succeed”.

In that respect the General Court notes that the BoA’s decision lacks clarity in its application of that “limitation theory” as it enables two readings.

According to the first reading, the “limitation theory” constitutes in essence a non-rebuttable presumption that the reputation of the PDO is not exploited when designating compliant products and related services. Pursuant to the second reading, it constitutes a rebuttable presumption in that respect.

According to the General Court the latter may be overturned on the basis of concrete, substantiated and consistent elements capable of demonstrating that the use of the mark is likely to exploit the reputation of the PDO.

The first reading amounted to an error in law. Regarding the second reading, the General Court held that the mere fact that products comply with the PDO specifications and services relate to compliant products is not sufficient ab initio to conclude that a trade mark registered in respect of such products or services is not capable of taking unfair advantage of the reputation of the PDO without having specifically examined “the particular characteristics of that mark and all the relevant circumstances of the case”.

The General Court lists various elements that may have been relevant in that respect, including the outstanding reputation of the PDO Champagne, the fact that the contested trade mark is a word mark and can therefore be used in many different ways on the market, including in a manner contrary to the objectives of the PDO and the fact that the term “nero” qualifies the term “champagne”.

The failure to state reasons was withheld as the Board of Appeal did not (sufficiently) examine those circumstances.

Alteration

Finally the General Court held that the BoA was required to find, following a global assessment of the evidence, that the evidence submitted by CIVC and INAO was sufficient to demonstrate that the word “nero” could be perceived as evoking either the champagne grape variety or its colour, with the result that, for at least a part of the relevant public, the mark applied for could be perceived as conveying a false or misleading indication within the meaning of Article 103(2)(c) of Regulation No 1308/2013.

Reference was made to the term “nero” which is used in several well-known Italian grape varieties such as “Nero d’Avola” and “Nero Buono”, and is even included in the name of Italian PDOs such as “Pinot Nero dell’Oltrepò Pavese” and “Castel del Monte Bombino Nero” and to the fact that the word “nero” will be understood by the Italian-speaking public as meaning “black” by reference to the colour of the wine and that the public may therefore think that the product is a new variety of Champagne, namely “black Champagne” even though, under the specifications of the PDO, a champagne can only be white or rosé.

The General Court altered the BoA’s decision along those lines and annulled the Opposition Division’s decision insofar as it rejected the opposition.

Comment and take-aways for trade mark applicants

The decision can be appealed before the Court of Justice of the European Union on points of law.

The key takeaway of the decision for trade mark applicants is that the inclusion of GIs in trade mark applications entail risks of objections and conflicts, even if registration is sought only for products complying with the GI specifications.

It is also worth noting that the presumption that compliance with GI specifications will not amount to an “exploitation of reputation” is in particular susceptible of being rebutted where:

• the GI is used in a trade mark function rather than in a GI function, as already referred to by the General Court in its judgment in Case T‑700/20 Steirisches Kürbiskernöl: “An operator marketing goods [meeting the conditions of a GI] may use the geographical indication at issue, [but that] does not, however, entitle him or her to use such an indication as a trade mark”;
• the incorporation of a GI in a trade mark is liable to give rise to false or misleading situations, such as those referred to in Article 26(c) and (d) of Regulation 2024/1143.

Nicolas Clarembeaux is counsel with ALTIUS in Belgium and a member of the MARQUES GI Team