CANCELLATION No C 46 236 (INVALIDITY) 

 

Free, 8, rue de la Ville l'Evêque, 75008 Paris, France (applicant), represented by Coursin Charlier Avocats, 49 rue Galilée, 75116 Paris, France (professional representative)

 

a g a i n s t

 

Tiinlab Acoustic Technology (Shenzhen) Co., Ltd., Tianliao Building 1407, Tianliao Industrial Area A, Taoyuan Street, Nanshan District, null Shenzhen, China  (EUTM proprietor), represented by RMW&C Mietzel Wohlnick & Calheiros Partnerschaft mbB, Graf-Adolf-Straße 14, 40212 Düsseldorf, Germany (professional representative).

On 14/04/2021, the Cancellation Division takes the following

 

 

DECISION

  

1.	The application for a declaration of invalidity is upheld.
2.	European Union trade mark No 15 615 024 is declared invalid for all the contested goods, namely: Class 9: Magnetic encoded identification bracelets; wearable activity trackers; blanck integrated circuit cards (blank smart cards); smartwatches (data processing); cases adapted for mobile phones; earphones; headphones; cabinets for loudspeakers; batteries, electric.

 

3.	The European Union trade mark remains registered for all the uncontested goods, namely:    Class 9: Pedometers.
4.	The EUTM proprietor bears the costs, fixed at EUR 1 080.

 

REASONS

 

On 01/09/2020, the applicant filed a request for a declaration of invalidity against European Union trade mark No 15 615 024 (figurative mark) (the EUTM). The request is directed against some of the goods covered by the EUTM, namely against some of the goods in Class 9. The application is based on French national trade mark registrations No 1 734 391 ‘FREE’, No 99 785 839   and No 3 679 804 ‘FREE’. In relation to these earlier rights, the applicant invoked Article 60(1)(a) EUTMR in conjunction with Article 8(1)(b) and 8(5) EUTMR. Moreover, the application is also based on French trade name and company name ‘FREE’, in relation to which the applicant invoked Article 60(1)(c) EUTMR in conjunction with Article 8(4) EUTMR.

 

  

SUMMARY OF THE PARTIES’ ARGUMENTS

  

The applicant argues that the marks are similar as the element ‘FREE’ is totally included in the contested mark. The contested goods are identical or similar to the goods and services of the earlier marks. Moreover, according to the applicant, the earlier marks have reputation in the mobile phone sector, internet provision, television and landline phone sector. The applicant describes the history of the company’s activities and its entering the French market as an internet service provider in 1999. It emphasizes that it distributes telecommunication equipment to be used for provision of the company’s services. It also explains its activities as a mobile phone operator with more than 13 million subscribers. It submits arguments and evidence to show that the earlier marks have large market share and millions of users and are reputed in the mentioned fields. It mentions its advertising campaigns which cost millions to hundreds of millions of Euro yearly. It refers to numerous surveys, studies and articles in press that refer to the mark ‘FREE’ and argues that the marks transmits the notion of quality and attractive rates. It refers to a number of decisions of the Office and of French courts that recognized the reputation of the marks ‘FREE’ and that concluded similarity between the earlier marks and other marks that included the element ‘FREE’. In conclusion, the applicant states that due to the similarity of the marks, the high distinctiveness of the earlier marks and the identity or similarity of the goods and services in question, there is a likelihood of confusion between the marks.

Regarding Article 8(5) EUTMR, the applicant emphasizes the high reputation and recognition on the market of the earlier marks and claims that the relevant goods and services belong to the same or neighbouring markets. Overall, the applicant considers that there is a link between the marks and the goods and services in question. Therefore, the consumers could be attracted by the contested mark and purchase the contested goods because of the positive image they hold of the earlier marks. The use of the contested mark would thus take unfair advantage of the distinctiveness and reputation of the earlier marks. The use of the contested mark would also be detrimental to the distinctive character of the earlier marks since they would no longer be capable of evoking the goods and services they cover in the minds of the public.

Finally, as regards Article 8(4) EUTMR, the applicant argues that the invoked rights were used in France in the course of trade of more than mere local significance, provides some information about the French law and case-law and claims that there is a likelihood of confusion between the earlier rights and the contested mark.

 

The EUTM proprietor did not file any observations despite having been duly invited to do so by the Office.

 

REPUTATION – ARTICLE 60(1)(a) EUTMR IN CONJUNCTION WITH ARTICLE 8(5) EUTMR

The application is based on more than one earlier trade mark. The Cancellation Division finds it appropriate to first examine the application in relation to the applicant’s French trade mark registration No 3 679 804 ‘FREE’.

The applicant claimed that this earlier mark has a reputation in France in relation to telecommunication and communication apparatus and equipment for telephony, radio, telematic in Class 9 and for telecommunication, communication services; cellular telephone communication; broadcasting and provision of television programs on all communication media in Class 38.

 

According to Article 60(1)(a) EUTMR, a European Union trade mark will be declared invalid on application to the Office where there is an earlier mark, as referred to in Article 8(2) EUTMR, and the conditions set out in Article 8(1) or (5) EUTMR are fulfilled.

 

According to Article 8(5) EUTMR, upon opposition by the proprietor of an earlier registered trade mark within the meaning of Article 8(2) EUTMR, the contested trade mark will not be registered where it is identical with, or similar to, an earlier trade mark, irrespective of whether the goods or services for which registration is sought are identical with, similar to or not similar to those for which the earlier trade mark is registered, where, in the case of an earlier European Union trade mark, the trade mark has a reputation in the Union or, in the case of an earlier national trade mark, the trade mark has a reputation in the Member State concerned and where use without due cause of the contested trade mark would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark.

 

Therefore, the grounds of refusal of Article 8(5) EUTMR are applicable in the context of invalidity proceedings only when the following conditions are met.

 

(a) The signs must be either identical or similar. 

 

(b) The earlier trade mark must have a reputation. The reputation must be prior to the filing of the contested trade mark and must still exist at the time of filing of the invalidity request; it must exist in the territory concerned and for the goods and/or services on which the application for a declaration of invalidity is based. 

 

(c) Encroachment upon reputation: the use of the contested trade mark would take unfair advantage of, or be detrimental to, the distinctive character or repute of the earlier trade mark. 

 

The abovementioned requirements are cumulative and, therefore, the absence of any one of them will lead to the rejection of the application for declaration of invalidity under Article 60(1)(a) EUTMR in conjunction with Article 8(5) EUTMR (16/12/2010, T‑345/08 & T‑357/08, Botolist / Botocyl, EU:T:2010:529, § 41).

 

a) The signs

 

FREE
Earlier trade mark	Contested sign

 

 

The relevant territory is France.

 

The global appreciation of the visual, aural or conceptual similarity of the marks in question must be based on the overall impression given by the marks, bearing in mind, in particular, their distinctive and dominant components (11/11/1997, C-251/95, Sabèl, EU:C:1997:528, § 23).

 

The earlier mark is a word mark formed of the four-letter word ‘FREE’.

The contested sign is a figurative mark, composed of the word element ‘iBFree’, written in standard characters.

 

The marks have no elements that could be viewed as more visually dominant than others.

The General Court has held that the word ‘FREE’ is widely used not only amongst the English-speaking public, but also amongst all other people with a basic knowledge of English such as a part of the relevant public in the present case (French public at large) (04/02/2014, T-127/12, Freevolution, EU:T:2014:51, § 41; see also 22/09/2017, R 2322/2016-2, FREESOUND, § 25 or 22/09/2017, R 2286/2016-2, FREE TOURING, § 24). Given that ‘free’ can be perceived as ‘libre’ or ‘gratuit’ (essentially ‘free of charge’), in relation to the goods and services on which the application is based the term has a low degree of distinctiveness, as it will denote that these goods and services can be accessed in an unlimited way or free of charge. For those consumers who are unaware of the above mentioned meanings the word is meaningless and normally distinctive. However, this applies to a minority of the relevant public and the Cancellation Division will focus on those who understand the meaning of this word, which is the best case scenario for the EUTM proprietor.

Although the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details, the fact remains that, when perceiving a word sign, they will break it down into elements that, for them, suggest a specific meaning or that resemble words they know (13/02/2007, T-256/04, Respicur, EU:T:2007:46, § 57). The contested mark is, moreover, visually separated by the use of capital and lower case letters into elements ‘i’, ‘B’ and ‘Free’. Therefore, it is highly likely that the consumers will immediately perceive the term ‘free’ in the contested mark. Regarding the distinctiveness of this element, the same that has been stated for the earlier trade mark applies for the contested mark. As far as the initial letter ‘i’ is concerned, it is established case law that this letter, placed at the beginning of a word, can be perceived as ‘intelligent’ or refer to ‘information technology’ (17/10/2018, T-822/17, iGrill, ECLI:EU:T:2018:693, § 25 and case law cited). Given that the contested goods are technological products and their accessories, this letter is non-distinctive in relation to them. Consequently, the most distinctive element of the contested mark is the letter ‘B’, which has no meaning in relation to the contested goods.

The marks coincide in the word ‘free’ and they differ in the additional letters ‘iB’ of the contested mark. It is true that the differing part lays at the beginning of the sign in the contested mark, which is the part of a word mark that is likely to retain the consumer’s attention more than the parts that follow (17/03/2004, T-183/02 & T-184/02, Mundicor, EU:T:2004:79, § 81; 16/03/2005, T-112/03, Flexi Air, EU:T:2005:102, §§ 64 and 65). However, that consideration cannot apply in all cases and it cannot, in any event, undermine the principle that the examination of the similarity between the marks must take account of the overall impression given by them, since the average consumer normally perceives a mark as a whole and does not examine its individual details (09/04/2014, T-501/12, Octasa, EU:T:2014:194, § 58). This applies to the contested mark, where it is unlikely that the attention of the public will focus solely on ‘iB’ and ignore ‘free’, in particular as the latter forms the largest part of the sign. Although the common element ‘free’ is of low distinctiveness, the first letter of the differing part is non-distinctive and the single letter ‘B’, the only distinctive difference between the marks, cannot alone erase all similarity between them. Consequently, the marks are similar, visually and aurally, at least to a low degree.

Conceptually, the marks coincide in the meaning of ‘free’ and they differ in the additional meaning conveyed by the letter ‘i’ in the contested marks. These meanings are lowly distinctive or non-distinctive, respectively, and, therefore, the coincidence can only lead to a low similarity between the marks.

Taking into account the above, there is at least a low degree of similarity between the marks overall and, therefore, the examination of the application based on Article 8(5) EUTMR will proceed.

 

b) Reputation of the earlier trade mark

 

Reputation implies a knowledge threshold that is reached only when the earlier mark is known by a significant part of the relevant public for the goods or services it covers. The relevant public is, depending on the goods or services marketed, either the public at large or a more specialised public.

 

In invalidity proceedings, an invalidity applicant relying on reputation must prove that its earlier right has acquired reputation by the filing date of the contested EUTM, taking account, where appropriate, of any priority claimed (Article 60(1) EUTMR, second subparagraph).

 

In addition, the reputation of the earlier mark must still exist at the time when the decision on the invalidity request is taken, given that the conditions set out in the first subparagraph of Article 60(1) EUTMR are formulated in the present tense. Therefore, the applicant should also prove the reputation of the earlier mark at the time of filing of the invalidity request, in which case, and unless there is proof to the contrary, the Cancellation Division will assume that it continues to exist at the time when the decision on invalidity is taken.

 

The contested trade mark was filed on 05/07/2016. Therefore, the applicant was required to prove that the trade mark on which the application is based had acquired a reputation in France prior to that date and that it continued to exist at the time of filing of the invalidity request, that is, on 01/09/2020. The evidence must also prove that the reputation was acquired for the goods and services for which the applicant has claimed reputation, which were listed above.

 

In order to determine the mark’s level of reputation, all the relevant facts of the case must be taken into consideration, including, in particular, the market share held by the trade mark, the intensity, geographical extent and duration of its use, and the size of the investment made by the undertaking in promoting it.

 

On 04/09/2020 the applicant submitted large amount of evidence (199 exhibits). The Cancellation Division will list in this section only those submitted with a view to demonstrating the reputation of the earlier marks and not the previous decisions, the documents relating to the particulars of the applicant company, the earlier marks and to the applicant’s claims under Article 8(4) EUTMR, and from those, only the most relevant ones.

 Appendix 12: a copy of a part of GFK survey from January 2012, in which 97% of the respondents answered that they have heard of FREE mobile phone offer.

 Appendix 13: an article from Le Monde, dated in 2013 entitled ‘FREE blew up the French mobile phone market’, saying, for example: ‘in reality, with its low cost offer, Free makes more than stimulate the market, it blew it up’.

 Appendix 14: an article from Les Echos, published in 2014, entitled ‘The arrival of FREE has lowered the mobile invoice by 30%’ and from ‘Que Choisir’, also published in 2014, entitled ‘The Great Transformation’, showing ‘FREE’ as a ball knocking down the pins labelled with the marks of the current operators and assessing the arrival of FREE on the mobile market as having undoubtedly positive consequences. Article from www.industrie-techno.com, from 2014, including sentences such as ‘The Nobel for Free which revolutionized the fixed line’.

 Appendix 15 and 16: financial press releases dated May 2016 and 2020, mentioning nearly 12 million mobile phone subscribers, in 2020 more than 13 million.

 Appendix 25: digital channel guide 2018, according to which there are five main players on the market for the distribution of pay television services in the metropolitan France, FREE is one of them.

 Appendices 26, 27 and 28: financial press release 2012, excerpts from www.journaldunet.com including articles from 2013 and 2018, according to which FREE is second in market share among internet providers with 22.5% of the market (23.1% in 2018).

 Appendix 60: Figures for advertising campaigns recorded by Secodip-Taylor Nelson Sofres Media Intelligence – Kantar Media from 1999 to 2017, indicating amounts spent on advertising between several million Euro in 1999 to more than 100 million Euro in 2017.

 Appendix 61: top 10 of the strongest marks in all fields, selected by Brand Finance, 2019, ‘free’ is number two, and it is in the 42^nd position in the list of top 100 most valuable French trade marks.

 Appendix 62: an article from Que Choisir, 2018, according to which high percent (83%) of consumers are satisfied with the internet provider services, ‘Free’ comes first for its quality of service and efficiency of customer care.

 Appendix 63: an article from Capital, dated in 2017, in which ‘FREE box’ is ranked number 1 in operators and telephony and advantages in comparison to competition are listed.

 Appendix 64: comparative study published in ‘60 millions de consommateurs’ in November 2016, in which the four big operators were tested: ‘FREE’ comes first in the satisfaction with the services, with the image of the operator who revolutionized the service while smashing prices in fixed internet and mobile phones. According to the study, in which 6000 consumers responded, part of the consumers shows a true, almost sentimental, attachment to the operator.

 Appendix 65: an article published in TERRE de SIENNE in September 2016, according to which ‘FREE’ is 22^nd in the ranking of most useful companies.

 Appendix 66: an article from www.silicon.fr, dated in 2015, commenting on the fact that the magazine FORBES ranked FREE at 49^th position in the ranking of the world’s top 100 most innovative companies and on the fact that the applicant’s competitor, Orange, is not present on the list at all.

 Appendix 67: press articles dated in 2015, from Le Monde Economie, 20Minutes and L’Express, containing phrases such as ‘a good performance, which is notably explained by the reputation of the trade mark Free’ (Le Monde Economie) or ‘Free: The Operator is one the most trusted by the French’ (www.20minutes.fr).

 Appendix 68: an article from CHALLENGES, published in 2015, internet survey among 5500 people regarding their favorite trade marks, ‘FREE’ is in the first position in the field of telecommunication, with a unique ‘sympathy capital’, and it is compared to Zorro, because of its low prices and its putting the historically largest brands to ridicule.

 Appendix 69: Taylor Nelson Sofres survey, 2014 showing that ‘FREE’ is known to 96% of the French public.

 Appendix 70: comparative study published in Que Choisir in 2014, ‘FREE’ comes as first among the telecommunication operators.

 Appendix 71: a survey published in Strategies in 2014, in which lists of the top ten influential trade marks for the French consumers, from different perspectives, are published. FREE features in most of them, as the only telecommunication trade mark.

 Appendix 72: Que Choisir survey of 2013, showing that 94% of consumers are satisfied with ‘FREE’ as an internet provider.

 Appendix 73: 01.NET survey, 2013, 15% of the respondents answered ‘FREE’ to the question ‘among these trade marks, which symbolize internet the best?’. Only Google obtained a higher percentage, while for example Facebook, Orange and Amazon received less.

 Appendices 84 to 98: press articles, containing for example the following statements: ‘Free is considered one of the most dynamic mobile operators in Europe (meilleurmobile.com, 2018), ‘Free Mobile just entered the 2018 ranking of the top 50 telecom operators in the world, directed by Brand France’ (phonandroid.com, 2018), ‘Eight out of ten French ready to migrate to Free’ (Aujourd’hui, 2012), ‘Free is jostling the mobile market by launching a package of 19,99 Euros per month. Free is making a sensational entrance in the market, considering the prices as well as the content.’ (Le Nouvel Observateur, 2012).

Having evaluated all the documents listed above, the Cancellation Division concludes that the earlier trade mark has a large reputation in France for at least some of the services on which the application is based.

The notable amount of evidence submitted by the applicant, mostly originating from independent sources, leaves no doubt that the earlier French trade mark has been subject to a very intensive use and is generally known in the market of telecommunications as the name of an internet access provider and mobile phone services provider. The mark enjoys a consolidated position among the leading brands and often it is the leading brand itself, as has been attested by various independent sources. The mark possesses a very significant market share of more than 20% and it was the second operator of the high speed and very high speed internet market in France in 2013 and 2018 (Appendices 27 and 28). The brand studies and surveys carried out by various agencies or media show not only high recognition levels surpassing 90% of population (e.g. Appendix 69) but also high levels of satisfaction (e.g. Appendix 62) and there are even indications of brand loyalty among certain consumers (e.g. Appendix 64). The brand is not only known by a significant part of the relevant public but it is also highly popular and it competes in popularity, significance and value not only in its own market sector, but with a world renown trade marks of all fields (e.g. Appendix 61 or 66). It is associated with quality service and low prices and expressions such as ‘it revolutionized the market’ were used by the press already at the time short after its entrance into the mobile phone market (Appendix 14). The mark was already renown at the time of filing of the contested mark (05/07/2016), as many of the documents, articles and surveys demonstrating the public recognition are dated in the years directly preceding this relevant date. Moreover, the reputation still existed at the time of filing of the cancellation request (01/09/2020), as shown by the press articles dated in 2018 and 2019 (e.g. Appendix 61) and financial reports showing an increase in an already impressive number of subscribers in 2020 (appendix 16).

On the basis of the above, the Cancellation Division concludes that the earlier trade mark has a high degree of reputation in France, at least for telecommunication, communication services; cellular telephone communication in Class 38.

 

c) The ‘link’ between the signs

 

As seen above, the earlier mark is reputed and the signs are similar to some extent.  In order to establish the existence of a risk of injury, it is necessary to demonstrate that, given all the relevant factors, the relevant public will establish a link (or association) between the signs. The necessity of such a ‘link’ between the conflicting marks in consumers’ minds is not explicitly mentioned in Article 8(5) EUTMR but has been confirmed by several judgments (23/10/2003, C-408/01, Adidas, EU:C:2003:582, § 29, 31; 27/11/2008, C-252/07, Intel, EU:C:2008:655, § 66). It is not an additional requirement but merely reflects the need to determine whether the association that the public might establish between the signs is such that either detriment or unfair advantage is likely to occur after all of the factors that are relevant to the particular case have been assessed.

 

Possible relevant factors for the examination of a ‘link’ include (27/11/2008, C-252/07, Intel, EU:C:2008:655, § 42):

 

 the degree of similarity between the signs;

 

 the nature of the goods and services, including the degree of similarity or dissimilarity between those goods or services, and the relevant public;

 

 the strength of the earlier mark’s reputation;

 

 the degree of the earlier mark’s distinctive character, whether inherent or acquired through use;

 

 the existence of likelihood of confusion on the part of the public.

 

This list is not exhaustive and other criteria may be relevant depending on the particular circumstances. Moreover, the existence of a ‘link’ may be established on the basis of only some of these criteria.

 

In the present case, the signs have been found to be similar to the extent that they have the element 'FREE' in common. On account of the low degree of inherent distinctiveness of this element, the degree of similarity found between the marks is only low. It must be remembered that the degree of similarity of the signs required under Article 8(5) EUTMR differs from the one required under Article 8(1)(b) EUTMR. Thus, whereas the protection provided for under Article 8(1)(b) EUTMR is conditional upon a finding of a degree of similarity between the marks at issue such that there is a likelihood of confusion between them on the part of the relevant section of the public, the existence of such a likelihood is not

necessary for the protection conferred by Article 8(5) EUTMR. Accordingly, the types of injury referred to in Article 8(5) EUTMR may result from a lesser degree of similarity between the marks in question, provided that it is sufficient for the relevant section of the public to make a connection between those marks, that is to say, to establish a link between them (24/03/2011, C-552/09 P, TiMi KINDERJOGHURT, ECLI:EU:C:2011:177, § 53 and the case-law cited therein). Furthermore, in the present case, the low degree of inherent distinctiveness of the word ‘free’, which represents the entirety of the earlier mark, is offset by the large reputation that the earlier mark enjoys in France, as seen above.

Moreover, there is sufficient proximity between the contested goods and the services for which the earlier mark is reputed.

The application is directed against the following goods: 

Class 9: Magnetic encoded identification bracelets; wearable activity trackers; blanck integrated circuit cards (blank smart cards); smartwatches (data processing); cases adapted for mobile phones; earphones; headphones; cabinets for loudspeakers; batteries, electric.

The earlier mark is reputed at least for telecommunication, communication services; cellular telephone communication in Class 38.

The telecommunication services and provision of mobile phone services are connected to the contested goods in Class 9 as those goods belong to the technological sector, are used for wireless communication or are directly associated with mobile phones (e.g. smartwatches and some wearable activity trackers), which are goods complementary to the services for which the earlier mark is reputed. Some of the contested goods are accessories to goods used for telecommunication, such as earphones, headphones, cabinets for loudspeakers and batteries. All these kinds of peripheral devices fall, broadly speaking, also in the electronic equipment field and they could belong to neighbouring market sectors. The contested goods and the services for which the earlier mark is reputed also coincide in the relevant public, which is public at large. All kinds of technological apparatus, information technology equipment, peripheral devices, etc., are made to acquire, store, process and transmit information, this through telecommunications. Furthermore, the applicant provided evidence that it supplies, together with its telecommunication services, also goods necessary for the use of the services. Therefore, consumers are used to the fact that the applicant also provides telecommunication goods under its mark and, considering the high degree of reputation of the earlier mark, the earlier mark may come to their minds upon seeing another trade mark containing the word ‘free’ on other goods related to telecommunications and technology or their accessories.

Therefore, taking into account and weighing up all the relevant factors of the present case, it must be concluded that, when encountering the contested mark, the relevant consumers will be likely to associate it with the earlier sign, that is to say, establish a mental ‘link’ between the signs. However, although a ‘link’ between the signs is a necessary condition for further assessing whether detriment or unfair advantage are likely, the existence of such a link is not sufficient, in itself, for a finding that there may be one of the forms of damage referred to in Article 8(5) EUTMR (26/09/2012, T-301/09, Citigate, EU:T:2012:473, § 96).

 

d) Risk of injury

 

Use of the contested mark will fall under Article 8(5) EUTMR when any of the following situations arise:

 

 it takes unfair advantage of the distinctive character or the repute of the earlier mark;

 

 it is detrimental to the repute of the earlier mark;

 it is detrimental to the distinctive character of the earlier mark

  

Although detriment or unfair advantage may be only potential in invalidity proceedings, a mere possibility is not sufficient for Article 8(5) EUTMR to be applicable. While the proprietor of the earlier mark is not required to demonstrate actual and present harm to its mark, it must ‘adduce prima facie evidence of a future risk, which is not hypothetical, of unfair advantage or detriment’ (06/07/2012, T‑60/10, Royal Shakespeare, EU:T:2012:348, § 53).

 

It follows that the applicant must establish that detriment or unfair advantage is probable, in the sense that it is foreseeable in the ordinary course of events. For that purpose, the applicant should file evidence, or at least put forward a coherent line of argument demonstrating what the detriment or unfair advantage would consist of and how it would occur, that could lead to the prima facie conclusion that such an event is indeed likely in the ordinary course of events.

 

The applicant claims that the earlier mark is associated with quality and affordable services and that this image will be transferred to the contested goods labelled with the contested mark. In other words, the applicant claims that the contested trade mark would take unfair advantage of the distinctive character or repute of the earlier trade mark. It also claims that the contested mark would be detrimental to the distinctive character of the earlier trade mark.

 

 

Unfair advantage (free-riding)

 

Unfair advantage in the context of Article 8(5) EUTMR covers cases where there is clear exploitation and ‘free-riding on the coat-tails’ of a famous mark or an attempt to trade upon its reputation. In other words, there is a risk that the image of the mark with a reputation or the characteristics which it projects are transferred to the goods and services covered by the contested trade mark, with the result that the marketing of those goods and services is made easier by their association with the earlier mark with a reputation (06/07/2012, T-60/10, Royal Shakespeare, EU:T:2012:348, § 48; 22/03/2007, T-215/03, Vips, EU:T:2007:93, § 40).

 

The applicant bases its claim on the following:

 the earlier mark possesses an exceptional reputation;

 the similarity between the signs is such that the public could very easily associate them and wrongfully believe that the conflicting goods and services are provided by related companies;

 the conflicting goods and services are similar;

 it is natural that companies extend their brands to cover identical or at least neighbouring markets, and, accordingly, the relevant public may easily come to the conclusion that such brand extension has taken place, and the likelihood of association is, therefore, much higher;

 in view of its special attractiveness, the earlier mark may be exploited even outside its natural market sector;

 the average French consumer could very well attribute the good image of the earlier mark ‘FREE’ (innovation, quality and affordable prices) to the contested goods.

In the present case, the earlier mark has obtained a strong reputation among the relevant public in relation to at least telecommunication, communication services; cellular telephone communication. It has become an attractive and powerful brand in the French market. As can be seen in the evidence provided by the applicant, the mark 'FREE' is subject of a high consumer satisfaction and it repeatedly outperformed its competitors in consumer satisfaction in the quality of service and customer care. It can also be considered that it has an image of innovative brand, as can be inferred from the fact that the owner of the earlier mark appeared on the Forbes’ list of most innovative companies, among worldwide companies of different fields, and that the press compared its entrance on the market of mobile phone operators to a revolution. In one of the customer surveys carried out by a magazine it was concluded that some of the clients using the services under the earlier mark have a high degree of customer fidelity and emotional affiliation to the mark, in another article, FREE was compared to Zorro and gained a special ‘capital of likebility’ among consumers, putting its competitors to ‘ridicule’. The evidence also puts emphasis on the low prices for which the services are offered. It is clear that the earlier mark is not only known and recognized among the consumers but it is also well liked and it is associated with a number of positive characteristics such as keeping affordable prices while providing good quality service. It appears that the mark gained consumers’ sympathy when it entered an oligopolistic market as an underdog and despite this position it quickly succeeded in gaining a very significant market share by offering quality services for prices much lower than the competition. All this is an extremely positive image that can be transferred to the goods labelled with the contested mark on account of the link that will be created between the marks in the minds of the consumers, as explained above. The consumers, upon encountering the contested mark, are likely to be reminded of the earlier mark and of all the positive images and emotions that it evokes in them, and this may be transferred to the contested goods, labelled with a similar mark, thus making their purchase more likely. In other words, the contested mark can obtain an undue advantage, just by being associated to the earlier reputed mark.

Overall, taking into account the strong reputation of the earlier mark, the similarities between the marks and the fact that the conflicting goods and services belong to the same or neighbouring markets, it is concluded that the relevant public will make a connection between the marks, an association that will produce a commercial benefit for the EUTM proprietor. There is a high probability that the use of the contested mark may lead to free-riding, that is to say, it would take unfair advantage of the well-established reputation and positive image of the earlier mark and the considerable investments undertaken by the applicant to achieve that reputation and good image.

 

Other types of injury

 

The applicant also argues that use of the contested trade mark would be detrimental to the distinctive character of the earlier trade mark.

 

As seen above, the existence of a risk of injury is an essential condition for Article 8(5) EUTMR to apply. The risk of injury may be of three different types. For an invalidity request to be well founded in this respect, it is sufficient that only one of these types is found to exist. As seen above, the Cancellation Division has already concluded that the contested trade mark would take unfair advantage of the distinctive character or repute of the earlier trade mark. It follows that there is no need to examine whether other types of injury also apply.

 

 

e) Due cause

 

As seen above, the requirements of identity or similarity of the signs, reputation of the earlier mark, and a risk of injury have all been met. However, fulfilment of all the abovementioned conditions may not be sufficient. The application may still fail if the EUTM proprietor establishes due cause for the use of the contested trade mark.

 

In the present case, the EUTM proprietor did not claim to have due cause for using the contested mark. Therefore, in the absence of any indications to the contrary, it must be assumed that no due cause exists.

 

f) Conclusion

 

Considering all the above, all the conditions stipulated by Article 8(5) EUTMR are fulfilled in the present case and the application is well founded under Article 60(1)(a) EUTMR in conjunction with Article 8(5) EUTMR on the basis of French trade mark registration No 3 679 804 ‘FREE’. Therefore, the contested trade mark must be declared invalid for all the contested goods.

 

Given that the application is entirely successful under Article 8(5) EUTMR, it is not necessary to examine the remaining grounds and earlier rights on which the application was based.

 

COSTS

 

According to Article 109(1) EUTMR, the losing party in cancellation proceedings must bear the fees and costs incurred by the other party.

 

Since the EUTM proprietor is the losing party, it must bear the cancellation fee as well as the costs incurred by the applicant in the course of these proceedings.

 

According to Article 109(7) EUTMR and Article 18(1)(c)(ii) EUTMIR, the costs to be paid to the applicant are the cancellation fee and the representation costs, which are to be fixed on the basis of the maximum rate set therein.

 

 

The Cancellation Division

 

Martin LENZ

Michaela SIMANDLOVA

Judit NÉMETH

 

According to Article 67 EUTMR, any party adversely affected by this decision has a right to appeal against this decision. According to Article 68 EUTMR, notice of appeal must be filed in writing at the Office within two months of the date of notification of this decision. It must be filed in the language of the proceedings in which the decision subject to appeal was taken. Furthermore, a written statement of the grounds of appeal must be filed within four months of the same date. The notice of appeal will be deemed to be filed only when the appeal fee of EUR 720 has been paid.