Max Planck Institute for Intellectual Property and Competition Law

Max Planck Institute for Intellectual Property and Competition Law

Max Planck Institute for Intellectual Property and Competition Law Research Paper No. 11-16

Annette Kur TOO PRETTY TO PROTECT? TRADE MARK LAW AND THE ENIGMA OF AESTHETIC FUNCTIONALITY

Max Planck Institute for Intellectual Property and Competition Law Research Paper Series


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Annette Kur: Too pretty to protect?

Too pretty to protect? Trade mark law and the enigma of aesthetic functionality (also a comment on T-508/08 – Bang & Olufsen)*

Annette Kur**

Abstract Under European trade mark law, ‘functional’ signs, i.e. signs exclusively consisting of shapes which result from the nature of the product, are necessary to achieve a technical result, or give substantial value to the goods, are barred from trade mark protection with absolute and permanent effect, without the possibility to establish acquired distinctiveness. While the rule may appear sound as such, its application in practice is problematic, in particular as regards the third ground for exclusion, which is often referred to as ‘aesthetic functionality’: the dangerous implications of that rule for particularly attractive design have become obvious in the recent decision by the General Court, T-508/08 – Bang & Olufsen. The article traces the origins of that rule in US case law and screens its application in Europe. It is argued that the original aim of the functionality doctrine in its various forms, namely to foster and maintain efficient competition, has been lost out of sight. Instead of embarking on an analysis of competitive concerns, courts tend to focus their attention on elements of largely accidental character, like the attractiveness of shapes in the early stage of marketing. Against that, the position is endorsed that it should not be precluded forever that a shape, initially attracting customers by its pleasant appearance, will become a valid sign at a later stage. Instead of focusing on how the public, at a given point in time, perceives and evaluates a certain shape, the crucial test should consist of an analysis of the competitive potential of the shape *

This article was originally written as a contribution to J. Drexl, R.M. Hilty, L. Boy, Ch. Godt & B. Remiche, Technology and Competition/Technologie et concurrence, contributions in honour of/mélanges en honneur de Hanns Ullrich, Brussels, Larcier 2009, p. 139-159. It has been revised and enlarged so as to encompass recent developments, in particular the General Court’s Judgment in case T-508/08 – Bang & Olufsen v OHIM. ** Prof. Dr., Senior Researcher at the Max Planck Institute for Intellectual Property and Competition Law (Munich), Honorary Professor at the University of Munich.



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at stake, considering to what extent its assignment to one particular right holder would be liable to impede, or even exclude, efficient and meaningful competition.

Keywords European trade mark law, aesthetic functionality, functional signs, trade marks and competition law, Bang & Olufsen judgment, Article 6 quinquies

1. Introduction: A loudspeaker navigating between Scylla and Charybdis The Danish firm Bang & Olufsen enjoys a good reputation as producer of high end audio equipment presented in ambitious design. One of their products, the BeoLab 800 loudspeaker, is shaped like a pencil or organ-pipe: its unusually tall and narrow tube-shaped body joins to an inverted cone, and the apex of the cone is attached to a square base. It has been on the market since 1992. As it is placed in the rather small market segment of premium, high-priced products, its market share is not big in absolute numbers, but within its own product class it has become – expressed in the firm’s own words – a “design icon”. One year before marketing, protection for the design was sought at the Danish Patent office; the ensuing registration expired after the (then) maximum duration of design protection in Denmark, i.e. after 15 years. In 2003, Bang & Olufsen applied for CTM registration at OHIM. The application was rejected by the examiner for lack of distinctive character, and the decision was confirmed by the Board of Appeal. Upon appeal filed against that decision, the General Court (then: CFI) annulled the decision, holding that, as the shape is truly specific and departs significantly from the customs of the sector, its distinctive character cannot be denied1. When after that judgment, the First Board of Appeal at the OHIM took a second look at the case, it focused on the aspect of “aesthetic functionality” instead of distinctiveness: based on the argument that the shape of the loudspeaker gives substantial value to the product, the application was again rejected, this time by invoking Article 7(1)(e)(iii) CTMR2. Different from the first decision, this verdict – if it stands – would mean that there is no chance at all for the shape ever becoming 1

Case T-460/05 Bang & Olufsen v OHIM (Shape of a loudspeaker), [2007] ECR II4207. 2 Decision of 10 September 2008 (Case R 497/2005-1).



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registered as a trade mark, irrespective of the degree of inherent or acquired distinctiveness. The General Court, being seized again by an appeal filed by the applicant, confirmed the decision this time, finding no legal flaws in the argumentation3. The ultimate decision is now up to the CJEU. In a nutshell, the story reminds one of the mythical hero Ulysses sailing in the strait of Messina between the sea monsters Scylla and Charybdis: getting too close to Scylla, the ship could be shattered on the piercing rocks; however, if by fleeing Scylla the ship is steered towards the whirlpool of Charybdis, it may be dragged into the abyss and be lost forever. Little less dramatically, conscious product design faces a similar dilemma when it comes to trade mark protection under EU law: shapes which are not significantly different from what is available on the market are lacking distinctiveness which must first be acquired through use, but inherently distinctive shapes may be so attractive that they confer substantial value to the product, thus destroying any prospect of trade mark protection ever being obtained. This article questions the wisdom of barring product shapes from protection in permanence just because they have specific aesthetic value. As a backdrop to the exercise, the rationale underlying the exclusion provision in Article 7(1)(e)(iii) is traced back to its roots in the doctrine of (aesthetic) functionality, as developed in US law and practice.

2. US trade mark law and the doctrine of functionality4 2.1. Legal Foundations The functionality doctrine is a concept initially developed under common law. It first became topical in lawsuits dealing with the reproduction of mechanical features of utilitarian articles.5 Claims for 3

Judgment of 6 October 2011, Case T-508/08 – Bang & Olufsen v OHIM (Shape of a loudspeaker) II. 4 Much of the information in the following section is owed to G. Dinwoodie, ‘The Death of Ontology : A Teleological Approach to Trademark Law’, 1999, 84 Iowa L. Rev. 611, 685. I am also indebted to D. Stauber, LLM student at NYU Law School, spring semester 2009, for adding to my understanding of US law and practice. 5 See, for example, James Heddon’s Sons v. Millsite Steel & Wire Work, 128 F.2d 6, 13 (5th Cir. 1942) (Use of a particular shape, size and colour of an artificial fishing bait was held functional) ; West Point Mfg. Co. v. Detroit Stamping Co., 222 F.2d 581, 591 (6th Cir. 1955), cert. denied, 350 U.S. 840, 76 S. Ct. 80, 100 L. Ed. 749, 1955, (Where plaintiff’s unprotected goods were exactly copied by the defendant, there was no unfair competition as long as the defendant clearly affixed his own trade mark so that no purchaser exercising ordinary care could have been confused as to the source or producer of the goods which were toggle-switches) ; cases cited



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injunction of such conduct gave rise to concerns about the consequences that this might have on the freedom of others to compete in those areas: where a shape, even if distinctive as such, is essentially dictated by the purpose the product wants to achieve, the possibility to enjoin others from making use of that particular shape would severely reduce the number of substitutable alternatives available to competitors.6 Consequently, if – and as long as7 – the shape or its particular features were found to be functional, protection against imitation could not be claimed, irrespective of the degree of secondary meaning which the shape may have acquired. These considerations were subsequently extended so as to apply to constellations where the risk of depriving the market of potential alternatives did not ensue from the technical or utilitarian character of the features whose imitation was at stake, but instead resulted from a product’s aesthetic properties.8 This aspect had been addressed, at least indirectly, in early US Supreme Court decisions dealing with the protection of colours as indicators of commercial origin.9

according to Restatement (First) of Torts, 1938, § 742 – Functional And NonFunctional Features. 6 For some time, and in some Courts, technical features also remained to be in the focus of assessing the functionality rule as applied to ‘decorative’ products. See G. Dinwoodie, supra note 4, at footnote 292, with reference inter alia to Keene Corp. v. Paraflex Indus., Inc., 653 F.2d 822, 825 (3d Cir. 1981) (holding that a design is not functional if it is “ not significantly related to the utilitarian function of the product, but is merely arbitrary ”) ; In re Penthouse Int’l Ltd., 565 F.2d 679, 682 (C.C.P.A. 1977) (finding the shape of jewelry was not functional where shape was ‘nonessential’ to a functioning piece of jewelry) ; In re Deister Concentrator Co., Inc., 289 F.2d 496, 506 (C.C.P.A. 1961) (holding the outline shape of the deck of a shaking table functional when it was “ in essence utilitarian ”) ; see also In re Morton-Norwich Prods., Inc., 671 F.2d 1332, 1338 (C.C.P.A. 1982) (“ From the earliest cases, ‘functionality’ has been expressed in terms of ‘utility ”’). 7 Although the issue is not addressed very often, authority exists for the proposition that product features once deemed wholly functional can be transformed over time to non-functional, source-indicative factors, Adidas America, Inc. and AdidasSalomon AG v. Payless Shoe Source, Inc.., 546 F. Supp. 2d 1029 (D. Or. 22 February, 2008) para. 9a, citing Adidas v. Target, 228 F.Supp. 2d 1192, 1205 (D.Or. 2002). 8 See Restatement (First) of Torts, 1938, § 742, where functionality is generally defined as follows : “ A feature of goods is functional […] if it affects their purpose, action or performance, or the facility or economy of processing, handling or using them. ” Furthermore, in regard to their aesthetic functionality, it is made clear in the comments that “ when goods are bought largely for their aesthetic value, their features may be functional because they definitely contribute to that value and, thus, aid the performance of an object for which the goods are intended. ” 9 A. Leschen & Sons Rope Co. v. Broderick & Bascomb Rope Co., 201 U.S.166, 171, 1906, ; Coca-Cola Co. v. Coke Co. of America, 254 U.S. 143, 147, 1920,cited in Qualitex v. Jacobsohn Products Co., Inc., 514 U.S. 159, 171, 1995. By way of dicta, it was stated in those decisions that features such as colour could not be protected, in view of potential disadvantages for competitors.



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Aesthetic functionality then became an established feature of US jurisprudence after the Supreme Court’s decision in Pagliero v. Wallace China.10 In the case at stake, the defendant had copied the distinctive design of decorated hotel china made and sold by the plaintiff.11 After having found that the claim came under federal jurisdiction on the basis of Section 44 (h) Lanham Act (‘unfair competition’),12 the Supreme Court concluded that the rights granted under that provision do not extend further than the protection obtained for a registered trade mark, which, as the Court explained, would be subject to the functionality doctrine as developed in earlier case law13 “Functional in this sense might be said to connote other than a trade mark purpose (emphasis added). If the particular feature is an important ingredient in the commercial success of the product, the interest in free competition permits its imitation in the absence of a patent or a copyright [cites omitted].” In the case at hand, the plaintiffs had emphasized repeatedly that the design was an “essential selling feature” of hotel china. The Supreme Court confirmed that contention. In the Court’s own words: “The attractiveness and design sell the china”. Hence, it was concluded that, because of its functionality, the design could not be protected. The decision was immediately met with considerable scepticism. As Graeme Dinwoodie notes, the doctrine in its original form possesses “the potential to emasculate trade mark protection for designs. It rewarded fruitless designs with unnecessary protection, but exposed successful designs to unchecked imitation.”14 It has also been observed that the doctrine relies on the presumption that (ornamental) design can only be one or the other – an element pleasing the consumers’ taste or a distinctive feature. This, however, seems to defy market reality: it is not at all unusual that a shape fulfills both 10

Pagliero v. Wallace China Co., 198 F.2d 339, 343 (9th Cir. 1952). In addition, he had made use of the names employed by the plaintiff to identify the different patterns, i.e. ‘Tweed’, ‘Hibiscus’, ‘Shadowleaf’, and ‘Magnolia’. 12 Section 44 (h) deals with protection of foreign nationals against unfair competition: “ Any person designated in subsection (b) of this section, as entitled to the benefits and subject to the provisions of this chapter, shall be entitled to effective protection against unfair competition, and the remedies provided in this chapter for the infringement of marks shall be available in so far as they may be appropriate in repressing acts of unfair competition. ” Although both parties were residents of California, the 9th Circuit used the provision as a ground for jurisdiction, holding that the Lanham Act grants the same protection also to US citizens. 13 Pagliero v. Wallace China Co., 198 F.2d 339 (9th Cir. 1952) with reference to Crescent Tool Co. v. Kilborn & Bishop C., 247 F. 2d 299 (2nd Cir. 1917). 14 G. Dinwoodie, supra note 4, at 691. Similar concerns are expressed by A. Kur, ‘Formalschutz dreidimensionaler Marken – neue Aufgaben für die Markenabteilung des deutschen Patentamtes’, in Deutsches Patentamt et al. (eds), Festschrift 100 Jahre Marken-Amt, Munich, Wila-Verlag, 1994, p. 175, at 183. 11



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functions at the same time. The logical basis for the Supreme Court’s postulate that only such design features can obtain trademark protection that serve no other purpose than the identification of origin is, therefore, seriously challenged.15 Indeed, although the doctrine of aesthetic functionality has never been repealed by the Supreme Court, it can hardly be said any more that contemporary Court practice is effectively informed by Pagliero.16

2.2. Conceptualizing functionality : from categorical distinction to a unitary approach ? Whereas the basic rationale of functionality was and still is generally uncontested under US law, the exact ramifications of that concept have never been quite clear. The problems and intransparencies surrounding the doctrine were enhanced when Pagliero seemed to impose double standards for decorative features on the one hand, and technical features on the other: whereas technical features were only considered as functional when they were ‘necessary’ in order for others to offer competitive products, Pagliero established the rule that mere ‘selling power’ of decorative features was already enough to establish aesthetic functionality.17 In his seminal article advocating a teleological approach to trade mark law, Graeme Dinwoodie18 submits the distinction made in jurisprudence between the two categories of functionality to a critical analysis, and concludes that the application of separate tests should be abandoned. He argues that “the basic tenets of a teleological model support a unitary test of functionality tied to individualized market realities and applied without regard to the classification of a feature as mechanical or aesthetic.” Although functional features are typically more prone to give rise to competitive concerns, the determination should be made on a case-by-case basis: “The conclusion would then depend not on artificial demarcation as ornament or function, but rather on competitive realities.” 19

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G. Dinwoodie, supra note 4, at 691 et seq., with further references. See Restatement (Third) of Unfair Competition, § 17 commentary c, 1995, Reporters’ Note, at 182 (noting numerous decisions rejecting Pagliero). For an overview on Court decisions addressing aesthetic functionality, see Th. McCarthy, McCarthy on Trademarks and Unfair Competition, St. Paul, West, 4th ed., last update 2007, at § 7 :80. 17 The Supreme Court explicitly dismissed as irrelevant the question as to whether competitors should engage in creating their own line of china design instead of copying that of others. 18 G. Dinwoodie, supra note 4. 19 Ibid., at 699 (Emphasis added). 16



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The crucial point in the construction of such a unitary approach is to find and define a workable concept of ‘competitive necessity’ or ‘competitive need’.20 On the one hand, it cannot be sufficient that competitors are deprived of one among many competitive alternatives;21 on the other hand, it would go too far to confine the notion of competitive need to situations where no (technical) alternatives exist for the marketing of substitutable products. ‘Need’, therefore, conforms to ‘competitive essentiality’, as labeled, indeed, by some Courts.22 Although this appears to strike an acceptable compromise between the two extremes sketched out above, it also establishes a gliding scale of evaluation, thereby inevitably reducing the attainable degree of legal certainty. There is no way to determine an absolute threshold of ‘essentiality’; what can be ascertained at best is the relative strength of competitive potential vested in a given shape. Assuming that all shapes possess a certain potential of that kind, it then becomes crucial as to where the borderline is drawn. To pose the question more concretely: to what extent is the potential harm caused to free competition outweighed by legitimate interests of producers and buyers to give and receive information about commercial origin by means of shape? Although these questions are not easily answered, the opinion is endorsed also here23 that to address and discuss them openly is preferable to a seemingly tight and secure, but much less transparent and consistent system, as will be shown in the following.

3. The functionality doctrine in European trade mark law 3.1. Background The need to balance competition concerns on the one hand, and the protection of interests on the other, are universally recognised as the prime task for legislatures when shaping the contours and contents of IP law. As part of this exercise, it is also acknowledged that the protection of shapes under trade mark law deserves special attention, given that the law does not impose a fixed time limit, whereas other intellectual property rights, after the lapse of the prescribed protection period, fall into the public domain. The barring of shapes from protection that are considered as necessary or meaningful competition 20

G. Dinwoodie, supra note 4, uses the term ‘competitive need’. Other than what Pagliero might suggest, see supra note 17. 22 See in particular TrafFix Devices, Inc. v. Marketing Displays, Inc., 532U.S.23 (2001). Although the decision addressed a case of technical functionality (shape of a device previously protected by a patent) the essentiality test developed therein might also apply to aesthetic functionality. 23 In accordance with the arguments made by G. Dinwoodie. 21



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is, therefore, by no means an ‘invention’ of US doctrine only ; in the one or other form,24 corresponding rules can be found in most or all trade mark laws around the world.25 Also in pre-harmonized European trade mark law, impacts of the functionality doctrine could regularly be traced in statutory law26 or in Court practice.27 Although most of the rules existing under previous national regimes were focused on the technical aspect of functionality, the extension to aesthetical features, which had occurred under US law, could also be observed in Europe. Most notably, it found its way into the Uniform Trade Mark Act of the Benelux countries (Benelux Merkenwet, BMW) enacted in 1975. In Article 1 (2) BMW, forms were excluded from protection that resulted from the nature of goods, produced an industrial result, or, finally, “impacted the substantial value of the goods.” According to the legislative material, the clause sought to codify principles that had been previously developed, in particular, in Dutch Court practice.28 However, that practice in turn may have drawn some inspiration from US jurisprudence. Indeed, in comparison to other European systems that are traditionally quite parochial, Dutch law has always been more ‘cosmopolitan’, and ready to embrace foreign influence. It therefore appears plausible to assume that the formulation was born out of an attempt to cast in legislative language not only what, until then, had been the general standard in most (other) European countries, but to add an explicit reference to cases that were treated by US jurisprudence under the epithet of aesthetic functionality. That move is also understandable in view of the fact that the Uniform Benelux Trade Mark Act – for its time, a strikingly ‘modern’ piece of legislation – in other aspects took a pointedly liberal view towards registration and protection of product design. The explicit reference to aesthetic functionality as an absolute and permanent obstacle for protection may have appeared as a necessary counterweight to that generosity. Unfortunately, on the other hand, to codify the various aspects of functionality in the form of separate rules 24

Namely in the form of statutory provisions or as rules established by case law ; see also notes 26 and 27, below. 25 It is all the more astonishing that it has not found its way into the international Conventions dealing inter alia with trade marks ; see on this point below. 26 Inter alia in the Scandinavian countries, § 5 of the Swedish, Danish, Finnish and Norwegian trade marks acts prior to harmonisation. 27 Prior to the implementation of the TMD, Courts in Germany had established the rule that trade dress protection (Ausstattungsschutz, § 25 Warenzeichengesetz) could not be granted to three-dimensional shapes that were “ inseparable from the nature of the goods themselves. ” 28 F. Henning-Bodewig &. H. Ruijsenaars, ‘Designschutz qua Markenrecht ?“ Das Burberrys ”-Urteil des Benelux-Gerichtshofs im Rechtsvergleich’, (1990) GRUR Int. 821, 826, with reference in footnote 80 to the opinion of Advocate General Ten Kate, (1989) XV BMM-Bulletin No. 2, pp. 41 et seq. with further references.



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obviously reinforces tendencies to apply separate, ontologically determined tests rather than fostering a uniform competition-centered approach. Later on, Article 1 (2) of the Benelux Trade Mark Act became the template for the exclusion clauses anchored in Article 3 (1) (e) (i) to (iii) TMD and Article 7 (1) (e) (i) to (iii) CTMR respectively. Furthermore – and in conformity with prior Benelux law and practice29 – it is stipulated in Article 3 (3) TMD and Article 7 (3) CTMR that the grounds for exclusion mentioned under subparagraph (e) cannot be overcome by showing distinctiveness acquired through use. The preparatory documents to European legislation do not specify the motives for adopting the same rule as in the Benelux Act. Commentators often assume that the main rationale lies in the attempt to keep separate the protection available on the basis of different types of intellectual protection regimes. Hence, the second indent30 is most often addressed as a barrier against circumventing the specific requirements and limited duration of patent and utility model law, whereas the third indent31 is considered to rely on the idea that protection for creative forms should be sought – solely or primarily – under design and copyright law. Although these considerations are, to some extent, well founded, they fail to address the crucial point : separating between the different regimes is not an aim in itself, in the sense that the system of intellectual property law must be kept in an ‘orderly’ state. Instead, it ultimately draws its justification from the balance that must be achieved between the protection of creations, innovations and the informational value of distinctive signs, on the one hand, and free competition on the other.32 In its Philishave judgment,33 the CJEU has confirmed that this is indeed the basic principle reflected in the exclusion clause: “The rationale of the grounds for refusal of registration laid down in Article 3 (1) (e) of the Directive is to prevent trademark protection from granting its proprietor a monopoly on technical solutions or functional characteristics of a 29

F. Henning-Bodewig &. H. Ruijsenaars, supra note 28, with reference in footnotes 85 and 86 to decisions of the Benelux Court in the Adidas and Wokkels cases ; German translations published in (1987)GRUR Int. 707 and (1986) GRUR Int. 126 respectively. 30 Article 3(e)(ii) TMD – shapes that are necessary to obtain a technical result. 31 Article 3 (e) (iii) TMD – shapes that give essential value to the goods. 32 More explicit on this point, see A. Kur, ‘Funktionswandel von Schutzrechten : Ursachen und Konsequenzen der inhaltlichen Annäherung und Überlagerung von Schutzrechtstypen’, in G. Schricker, Th. Dreier & A. Kur (eds), Immaterialgüterrechte im Dienst der Innovation, Baden-Baden, Nomos, 2001, pp. 23, 35 et seq. 33 Case C-299/99 Philips v. Remington [2002] ECR I-5475.



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product which a user is likely to seek in the products of other competitors. Article 3 (1) (e) is intended to prevent the protection conferred by the trade mark right from being extended, beyond signs which serve to distinguish a product or service from those offered by competitors, so as to form an obstacle preventing competitors from freely offering for sale products incorporating such technical solutions or functional characteristics in competition with the proprietor of the trade mark. ”34

3.2. Case Law 3.2.1. Benelux Since Benelux trade mark law can be considered as the direct forerunner of European trade mark legislation in the aspect considered here, Benelux case-law addressing the exclusion clause is of some interest. It seems to have been invoked with some frequency35 in the area of foodstuff, for instance, in a case concerning the spiral shape of salty pastry sold under the name of Wokkels.36 The Dutch Court of First Instance had denied protection, based on the consideration that, because of the existence of a broad variety of similarly tasting pastry, the specific commercial value of the brand at stake only lay in its shape. The Court of Appeal, and the Dutch Supreme Court upon appeal for cassation, emphasized on the contrary that the value of the pastry lay in its taste and crispness, and was therefore not crucially influenced by the shape.37 Other decisions have been dealing with ornamentation of clothes – the Burberry-pattern38 or the Adidas

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Ibid., para. 78 (emphasis added). For more examples from Benelux case-law, see F. Henning-Bodewig &. H. Ruijsenaars, supra note 28, at 826 et seq. ; T. Cohen Jehoram, C.J.J.C. van Nispen & J.L.R.A. Huydecooper, Industriële Eigendom, Deel 2 – Merkenrecht, 2008, at 5.5.8.3 (p. 137). 36 Hoge Raad (Dutch Supreme Court), 11 November, 1983,(1985) BIE 9 – Bahlsen v. Smith (Wokkels) ; a German translation is published in (1987) GRUR Int. 707. 37 The same line seems to have been followed by other Courts, see T. Cohen Jehoram, C.J.J.C. van Nispen & J.L.R.A. Huydecooper, supra note 35, with references in footnote 172. A different result was found in a case concerning the shape of chocolate sprinkles (“ triangular shavings of chocolate curled up on one side ”) to be used on bakery products, see Hof den Bosch, 19 October, 1998, (1998) IER 32 – Luijckx7ECC ; English translation published in (2000) E.T.M.R. 530. This decision was rendered after the implementation of the TMR. 38 Benelux Court, 14 April, 1989, (1989) BIE 90 – OM v. De Laet ; German translation published in (1990) GRUR Int. 863. 35



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stripes39 – obviously without leading to clear results40. Benelux case law therefore does not seem to offer much guidance on the issue. Furthermore, the suitability of previous Benelux law and practice as a guiding model for present European rules is qualified by the fact that the legal framework in which it operated is not entirely comparable with the pertinent trade mark systems in most EU Member States or with the CTMR. Due to the fact that under previous Benelux law, no substantive examinations were carried out, the provision became only topical in the framework of infringement procedures, i.e. when concrete conflicts between two marks were assessed by the Courts. Contrary to that, in most national systems as well as under the CTMR, application of the exclusion clause is primarily a task for the registration authorities. Unlike Courts deciding on a particular case, trade mark examiners must make their decision on the basis of an abstract evaluation. They are therefore in a more delicate position when called upon to determine the ‘life or death’ of the sign at stake, with unlimited effect for the future.

3.2.2. Germany Article 3 (1) (e) TMD does not seem to have played a major role in Member States’ case-law so far. The same can be said of Article 7 (1) (e) CTMR, with the prominent exception of the Philishave41 and Lego cases42. In Germany, like in other Member States, Courts and authorities seem to be wary of the rather drastic consequences, and apply the exclusion clauses with much caution. Among the few decisions invoking functionality as a ground for refusal, features that are ‘technically necessary, account for the clear majority of rejections.43 However, also the third ground for refusal – i.e. shapes 39

Benelux Court, 23 December, 1985, (1986) BIE 54 – Burberry v. Superconfex ; German translation published in (1986) GRUR Int. 126. 40 All decisions basically agreed on the point that the reputation of the mark was not a factor to consider as giving ‘essential value’ to the goods. This was explicitly confirmed by the Benelux Court in the Burberry judgment, supra note 39. 41 Case C-299/99 Philips v. Remington, [2002] ECR I-5475. Litigation over Philips’ many registrations for the design of its rotary shaver was conducted in several EU Member States. For Germany, see BGH (Federal Supreme Court), (2006) GRUR 589 – Scherkopf. 42 For Germany, see BPatG (Federal Patent Court), (2007) GRUR 786 – LEGOBaustein. For the Community level, see Case T-270/06 Lego Juris A/S v. OHIM [2008] ECR II-03117 (General Court) and C-48/09 P, Lego Juris A/S v. OHIM [2010] ECR I-00000 (Court of Justice). 43 A comprehensive account of the decisions by the Federal Patent Court concerning the exclusion clause is given by Kur, § 3 – Markenrecht, in H. Eichmann & A. Kur (eds), Handbuch Designrecht, Baden-Baden, Nomos, 2009, at 144.



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that give substantial value to the goods – was addressed in at least two decisions44 by the Federal Patent Court (Bundespatentgericht, BPatG), one of which was considered and reversed by the Federal Supreme Court (Bundesgerichtshof, BGH). The first of these cases concerned the shape of a piece of jewellery – a ring, adorned with gemstones in the shape of a flower.45 The Federal Patent Court decided that it was the shape that gave substantial value to the ring, making it clear that it held this to be the general rule in all cases concerning jewelry. Although the soundness of that reasoning might be doubted, the case seems to have cleared the field once and for all: reportedly, no further claims have been filed for trade mark protection of the shape of jewellery since then.46 For all practical matters, this appears to be a sensible result. The second case is more complex and interesting. It involved the application for trade mark protection of the shape of spare parts, concerning inter alia the bonnet of a BMW car. The rejection of the application by the patent office was confirmed by the Federal Patent Court, for the following reasons : firstly, because the shape was technically necessary in order to fulfil its purpose, namely to be used as a spare part for the particular make of car for which it was designed, and secondly, because the shape gave substantial value to the good : any shape other than the one in question would deprive the part of its marketability – nobody would buy a BMW bonnet that did not look exactly like the one for which trademark protection was sought. In other words – and without making the point explicitly – the Federal Patent Court reasoned that the notion of ‘substantial value’ was not confined to the aesthetic appeal of the product, but contained every reason (with the exception of technical aspects) likely to influence and determine the commercial value of the shape.47 The BGH rejected the argumentation on both accounts. Firstly, the Federal Supreme Court opined that, in spite of the technical constraints limiting the freedom for the designer of car parts, sufficient leeway existed to choose between different forms, and hence, there was no technical necessity determining the form of the part in question. Secondly, and more important for the issue in consideration here, the Federal Supreme Court declared that 44

It cannot be claimed with certainty that these were the only ones ; no comprehensive research of the case-law has been carried out in order to verify that point. 45 BPatG (Federal Patent Court), 26 September 2001, Case 28 W (pat) 61/01, (2002) Bl. 228 – Schmuckring. 46 However, this cannot – and supposedly does not – apply to features that definitely serve as elements distinguishing commercial origin, like the stylized ‘CD’ forming the clasp on jewellery (necklaces and bracelets) by Christian Dior. 47 BPatG (Federal Patent Court), (2005) GRUR 333 – Kraftfahrzeugteile (on car parts).



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‘substantial value’ in the meaning of Article 3 (1) (e) (iii) TMD solely refers to the aesthetic appeal of the good and does not address general economic considerations regarding saleability.48 However, to reduce the meaning of substantial value to purely aesthetical aspects in such a categorical manner does not appear to honour the wording and spirit of the provision. To be sure, the origin of the clause, at least to some extent, derives from the attempt to separate trade mark law from adjacent areas such as copyright and industrial design law, whose primary objective lies in the protection of forms that are creative and, typically, aesthetically appealing. However, this does not rule out a broader understanding, such as that suggested by the Federal Patent Court. If it is basically accepted that the overarching rationale for the exclusion clause lies in the interest to safeguard meaningful competition rather than in a purely formalistic division between different legal fields, the Federal Patent Court’s approach provides a more appropriate tool for achieving that goal. Furthermore, the wording of the provision does not yield any clear foundation for the restrictive interpretation endorsed by the BGH. Given these particularities, the matter should not have been treated as acte clair, but instead, it should have been referred to the CJEU. In addition to expanding on the meaning of ‘substantial value’, the Federal Supreme Court also took the opportunity to mark its general position regarding the assessment of that criterion. As a matter of principle, the Court insisted that a cautious approach should be observed. Basically, such exclusion should only take place where the product is bought mainly or even solely for its aesthetic appeal. Vice versa, where the utilitarian features, at least to some extent, continue to play a role in the buying decision, trade mark protection should remain possible. Furthermore, the exclusion should not apply when it is at least arguable that the shape owns a ‘dormant’ potential to serve as an indication of origin. In other words, the Federal Supreme Court – wittingly or not – endorses the opposite position to the one espoused by the US Supreme Court in Pagliero. The message thus sent to the patent office signals that decisions should not (only) be based on the present situation, but on a sort of prospective evaluation, seeking to provide room for possible future developments that appear at least imaginable. It seems to be the – albeit undisclosed – goal of that strategy to avoid foreclosing the option for trade mark protection in permanence for product shapes which, in the initial phase of marketing, derive their power of attraction mainly from their appearance, but which, later on, may develop a genuine capacity to identify and distinguish the commercial origin of the goods for which they are used. 48

BGH (Federal Supreme Court), (2008) GRUR 2008, 71, 72 – Fronthaube (on a car bonnet).



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3.3. EU Courts 3.3.1 Benetton v. G-Star The point made by the Federal Supreme Court becomes even more important in the light of the Benetton v. G-Star judgment handed down by the CJEU in 2007.49 The conflict concerned a pair of Elwood jeans manufactured by G-Star.50 The appearance of the garment was marked by specific stitching arrangements for which G-Star had secured registration under the Benelux trade mark law51. On the basis of its registration, G-Star sought do enjoin Benetton from selling trousers that were similar to the Elwood model.52 In the ensuing lawsuit, Benetton counterclaimed for invalidation of the trade mark, arguing that it was their shape that gave substantial value to the goods (Article 1 (2) BMW; Article 3 (1) (e) (iii) TMD). The Court of First Instance dismissed both claims. The Appeal Court (Gerechtshof te Amsterdam) held that G-Star had conducted intensive advertising campaigns to give the trousers recognition as a G-Star product, and that, as a result, the attractiveness of the Elwood trousers, at the time of filing, ensued from their recognition as a trade mark. G-Star’s claim was granted ; Benetton thereupon filed an appeal in cassation to the Supreme Court of the Netherlands (Hoge Raad). The Hoge Raad found that the case raised an issue under European trade mark law, and referred the following questions to the CJEU: “(1) Must Article 3 (1) (e), third indent, [of the Directive] be interpreted as meaning that the prohibition contained therein permanently precludes the registration of a shape as a trade mark where the nature of the product is such that its appearance and shaping determine its market value entirely or substantially as a result of their beauty or original character, or does the prohibition not apply where, prior to the application for registration, the attractiveness of the relevant shape to the public has been determined predominantly by the recognition of it as a distinctive sign?

49

C-371/06 Benetton v. G-Star [2007] ECR I-7709. In Germany, the same garment has been the object of a decision by the Supreme Court based on protection against unfair competition, see BGH (Federal Supreme Court), (2006) GRUR 79 – Jeans I. 51 The specification of the mark read as follows : ‘Sloping stitching from hip height to the crotch seam, kneepads, yoke on the seat of the trousers, horizontal stitching at knee height at the rear, band of a contrasting colour or of another material at the bottom of the trousers at the rear, all on one garment.’ 52 The allegedly infringing products were described as follows : ‘Trousers showing, inter alia, an oval kneepad and two lines of sloping stitching from hip height to crotch height.’ 50



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(2) If the answer to Question 1 is to the latter effect, to what extent must this attractiveness have prevailed for the prohibition no longer to apply?” The CJEU obviously considered this a very easy task. Its ruling comprises only nine paragraphs.53 Paraphrasing the question posed, the CJEU first states that “ the issue relates to a case in which a sign which initially consisted exclusively of a shape giving substantial value to the product subsequently and prior to application for registration acquired recognition following advertising campaigns, that is to say on account of the use made thereof. ” As an answer, the CJEU points to its earlier decision in Philishave,54 and to the wording of Article 3 (3) TMD, from which it concludes that registration on the basis of acquired distinctiveness is excluded for signs falling under the obstacles listed in Article 3 (1) (e) TMD. There is no doubt that the answer is formally correct. However, by strictly limiting itself to answering the question posed,55 and by simply referring to the wording of the TMD, without examining the logic of its inner structure,56 the CJEU avoids having to take a position regarding the dilemma underlying the provision: if a shape is aesthetically appealing, but at the same time serves as a badge of origin – and if it is bought by consumers exactly for that reason, i.e. because they want to buy jeans of that particular origin – there is no longer a reason to claim that the substantial value of the product is determined by the aesthetic appeal of its appearance. Hence, there is a logical inconsistency between Article 3 (1) (e) (iii) and Article 3 (3) TMD. This is spelled out quite clearly by the way in which the CJEU summarizes the Dutch Appeal Court’s findings (which were not 53

The allegedly infringing products were described as follows : ‘Trousers showing, inter alia, an oval kneepad and two lines of sloping stitching from hip height to crotch height.’ 54 C-299/99 Philips v Remington [2002] ECR I-5475. 55 The CJEU has shown repeatedly that it can and will go beyond the questions posed by the referring Court if they find reason for that ; see e.g., Case C-48/05 Adam Opel v. Autec, [2007] ECR I-1017 (concerning the question of whether extended protection under Article 5 (2) TMD could be claimed against reproduction of an automotive mark on a toy car) ; Case C-245/02 Anheuser-Busch [2004] ECR I10898 (concerning the question of whether the use of trade name was permissible under Article 6 (1) (a) TMD). In the present case, the CJEU might have questioned whether the case fell into the ambit of Article 3 (1) (e) TMD, which, according to its wording, only applies to “ signs which consist exclusively of (a) shape […] ”. It seems rather doubtful that the stitching could, in fact, be regarded as a ‘shape’. 56 A different approach was chosen in the Case C-292/00 Davidoff & Cie SA and Zino Davidoff SA, [2003] ECR I-389 (concerning the possibility to invoke Article 5 (2) TMD – granting extended protection against the use of a reputed mark for dissimilar goods – in cases when use was made of the mark for goods that were identical or similar), where the Court (ibid., para. 24) observed that “ Article 5 (2) of the Directive must not be interpreted solely on the basis of its wording, but also in the light of the overall scheme and objectives of the system of which it is a part.”



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contested by the Hoge Raad and thus formed the basis of its request for a preliminary ruling): at the time of filing, “ the reputation of the Elwood trousers was largely attributable not to the aesthetic attractiveness of the shape but to the attractiveness resulting from recognition of the trade mark ” (emphasis added). In other words, no ground for exclusion under Article 3 (1) (e) (iii) TMD existed at the time when the application for registration was filed.

3.3.2. Bang & Olufsen v OHIM The Benetton judgment was handed down a year before the First Board of Appeal at OHIM took its second decision in the Bang & Olufsen case. The Board therefore makes ample reference to the CJEU’s holdings in Benetton,57 emphasizing that “it is altogether otiose… to consider whether or not (value-conferring) shapes are inherently distinctive or have acquired distinctiveness”.58 It then points to the presumed purpose of Article 7 (1) (e) (iii) to ensure that the limitations in time of the protection available under copyright and design law are not bypassed by trade mark law,59 noting that the design protection originally obtained under Danish law has expired. Furthermore, it observes that the notion of ‘substantial value’ concerns the aspect whether the shape “has the potential to determine to a large extent the consumer’s behaviour to buy the product”. In that regard, two factors are considered to be indicative: first, the overall relevance that the manufacturer himself gives to the shape of his product as a marketing tool, and second, consumer behaviour, i.e. whether or not consumers actually buy the product for its aesthetic value. Finding that the manufacturer himself has advertised the loudspeaker as a ‘design icon’ or ‘classic design’, and noting that in retail advertisements as well as in descriptions found on on-line auction or second-hand websites, the design features of the product are particularly emphasised, it is concluded that it is indeed the design which sells the product and thus gives it substantial value. In its appeal judgment, the General Court confirmed that the Board did not err in holding that the shape, in addition to the other characteristics of the loudspeaker, gave substantial value to the product. Also, the Court stated with reference to the CJEU’s Lego

57

Case R 497/2005-1, para 19. Ibid., with reference to Benetton, para 28. 59 The concept that Article 7 (1) (e) CTMR and Article 3 (1) (e) TMD (also) serve to exclude the circumvention of the time limitations applying in other legal regimes was first articulated by the CJEU in case C-48/09 – Lego Juris A/S v OHIM, para 52, whereas the fact that the product had been patented previously was not even mentioned in the Philishave judgement (supra, note 33). 58



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judgment60 that the public’s perception of the sign cannot be taken into account other than for determining the product’s essential characteristics. Hence, the fact that the shape, in addition of being attractive as such, may be perceived as signalling the specific characteristics and quality of a certain brand is considered as irrelevant.

3.3.3 Consequences The Bang & Olufsen judgment is under appeal, giving the CJEU an opportunity to analyse the intricacies of aesthetic functionality again and more closely than in Benetton. The outcome of the case will have major repercussions for practice. After Benetton, it was still possible to argue that the CJEU only answered the questions posed by the referring court, without expanding on the meaning and assessment of the relevant criteria. Ample room was therefore left for national case law to develop more generous rules, such as the ‘prospective analysis’ test endorsed by the German Federal Supreme Court61. This time, things are different: if the judgment by the General Court and thereby, indirectly, the reasoning applied by the First Board of Appeal at the OHIM are confirmed, shapes which are appreciated by the public as aesthetically appealing and which are advertised as such by the manufacturer will be at maximum risk of being found ineligible for trade mark protection irrespective of the degree of inherent or acquired distinctiveness62. A prospective analysis assessing the inherent potential of attractive design to develop into an indication of origin would most likely clash with that approach. It is true that the wording of Article 7 (3) CTMR and Article 3 (3) TMD) appears to rule out any possibility for taking account of developments impacting the public’s perception. That, however, is exactly the reason why the strict application of that rule in cases falling under (1) (e) (iii) leads to flawed results. It is important to note in this context that a difference exists between the cases typically covered by the second and third indent of the exclusion clause respectively: whereas the ‘technical necessity’ of a shape can be assessed in a fairly stable and objective manner,63 the answer to the 60

C-48/09 – Lego Juris A/S v OHIM. See supra note 48 and accompanying text. 62 Similar issues may become topical in the case of trade mark applications for furniture design (e.g., ‘classics’ like the Charles Eames lounge chair, that retain their selling power even after the lapse of copyright) or prestigious accessories, such as the Kelly and Birkin handbags made by Hermès. 63 However, even the ‘technical necessity’ of a shape may sometimes represent a temporary issue, for instance when new technical solutions are discovered that offer a (much) wider range of competitive alternatives. Ultimately, to insist on an 61



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question as to whether it is the shape or other factors that determine, in the words of the First Board of Appeal, the “consumer’s behaviour to buy the product” necessarily depends on the public’s apprehension.64 It lies in the very nature of that aspect that it involves subjective evaluations, and this makes it a moving target – more often than not, such evaluations are bound to change with time. An absolute and permanent ban against trade mark protection for attractive shapes, which excludes any consideration of the fact that the aesthetic appeal may eventually become inferior to the message it conveys about commercial origin – meaning that it is primarily bought for the brand, and not for its design65 – does not make sense. At least, it can hardly be the attractiveness displayed at the early stages of marketing which accounts for the everlasting nature of that ban. It is yet another question, whether the shape – beyond the information it has come to convey about commercial origin, and unrelated to the goodwill it represents – still confers such strong competitive advantages to the prospective right holder that to keep it free from monopolisation appears ‘essential’ for others to engage in meaningful competition.66 In line with the general rationale underlying the exclusion clause, such competition-based considerations could indeed militate in favour of maintaining the ban, even when the perception and evaluation by the public are changing. However, the competitionrelated strain of argument as well does not support an inflexible rule imposing a permanent ban.

4. International law aspects In view of the fact that the aspect of functionality has always played a certain role in courts’ and authorities’ assessment of the protectability of trade marks, one might expect that the discussion has made an ‘everlasting’ ban is therefore uncalled for in any of the three alternatives. See also the conclusions, below. 64 It should be noted here that the difference is not derived from an ontological distinction, but follows from the particular circumstances – the competitive realities – in both situations. 65 According to the statement submitted by the referring court in Benetton to the CJEU, that had actually been the case in regard of the jeans – they were bought primarily because the consumers recognized them as coming from a particular enterprise, and not because they liked the stitching so much. Whether the Beo Lab loudspeaker has also reached that stage, or whether the consumer’s decision to buy is still dominated by the design aspect, would have to be investigated. 66 The case concerning the shape of the BMW bonnet (see supra note 48 and accompanying text) can serve as an example : if it is accepted – contrary to the position endorsed by the Federal Supreme Court (BGH) – that the shape did give essential value to the bonnet, the fact that trademark protection would result in a total exclusion of any competition in the aftermarket remains to be essential, even if consumers should view the shape as an indication of commercial origin.



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impact on the rules governing international trade mark protection. However, the relevant provisions do not address the issue, at least not explicitly. Article 15 TRIPS lists, in a non-exclusive manner, forms of signs that must be regarded as eligible for trade mark protection. In addition to that, the provision stipulates that Member States may require that the sign should be visually perceptible, and that if the sign is regarded as inherently indistinctive, registration can be made dependent on distinctiveness acquired through use. Apart from that, reference is made to the Paris Convention and the obligations for protection of foreign marks set out therein. Most important in that context is Article 6quinquies of the Paris Convention, the so-called telle quelle clause. Based on this Article, the owner of a trade mark duly registered in his or her country of origin is entitled to have the right registered in the same form (telle quelle) as in other Union States. The registration of trade marks invoking the telle quelle rule may only be denied on the basis of the grounds for refusal listed in Part B of the provision. These grounds are: (1) existence of prior domestic rights conflicting with the mark; (2) lack of distinctiveness, or descriptive or customary character of the sign; (3) conflict with public order, e.g., when the sign is deceptive. In addition to the restriction of possible grounds for refusal, Article 6quinquies Part C sets out that, for the assessment of whether a sign is distinctive, all factual circumstances have to be taken into account, in particular, the length of time during which the sign has been in use. In an attempt to follow as closely as possible the guidance of international norms, the obstacles for protection listed in Article 6quinquies B (2) Paris Convention were faithfully and literally transposed into European trade mark law (Article 3 (1) (b) to (d) TMD ; Article 7 (1) (b) to (d) CTMR). The provision dealing with exclusion of functional signs, however, does not find any direct correspondence in Article 6quinquies B. Furthermore, the mandatory abrogation from any account being taken of the actual developments regarding the distinguishing capacity that the shape may have acquired over time stands in obvious contrast to what is prescribed in Article 6quinquies C of the Paris Convention. The discrepancies between European trade mark law and Article 6quinquies become topical when registration is sought for a sign validly registered abroad which, under European standards, is regarded as functional. This is not an entirely theoretical issue; it was brought to the fore in a lawsuit pending between Philips and the German Patent Office. After the CJEU had articulated its sceptical position regarding protectability of Philips’ three-headed razor head,67 cancellation proceedings were installed against the registration held by Philips in Germany for the same mark. Philips invoked telle quelle 67

Supra note 33.



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protection based on the national mark it held in the Netherlands. The Federal Supreme Court, however, decided that although telle quelle protection had to be granted as a matter of principle, the mark was rightfully cancelled, because functionality formed part of the overall category of lacking distinctiveness and therefore fell into the ambit of the grounds for refusal to which Article 6quinquies B (2) Paris Convention refers.68 However, as set out above, such reasoning misses one important point : European legislature found it necessary to introduce ‘functionality’ as an additional obstacle to the grounds for refusal that were copypasted from Article 6quinquies B (2) Paris Convention. If the Federal Supreme Court were right to argue that functionality is one specific case of lacking distinctiveness, express legislative measures going beyond the catalogue of obstacles set out in the telle quelle rule would have been redundant. Also, if this were just about distinctiveness, the permanent and insurmountable character of the exclusion clause would squarely contradict the general rule that lacking distinctiveness can be overcome through use. Another reason must, therefore be found in order to support the compatibility of the exclusion clause with international law.69 The only reason which could possibly account for this is the aspect of public order, which is addressed in Article 6quinquies B (3) Paris Convention: if, and only if it can be established that to grant trade mark protection for functional shapes violates fundamental and commonly accepted principles, their exclusion is liable to stand scrutiny under international standards as embedded in the Paris Convention.70 The matter cannot be discussed here in its entirety. However, the preceding analysis confirms that when applying the exclusion clause, a principled approach should prevail over and above a policy-blind, black-letter focused interpretation. Where serious concerns exist as to the distortion of competition resulting from trade mark protection of certain shapes (as is typically the case when forms are monopolized that have substantial functional or technical advantages over others), there is reason to hold that their exclusion from protection is necessary and justified, in order to maintain the systematic balance underlying the corpus of intellectual property law. An additional argument for this can be found in the fact that the exclusion of functional features is 68

BGH (Federal Supreme Court), (2006) GRUR Int 765 – Rasierer mit 3 Scherköpfen. 69 To be more precise : it is not the exclusion clause as such which might violate international standards, because Article 6quinquies of the Paris Convention does not compel Member States to harmonize their trade mark provisions. It is rather the effect of the exclusion clause on foreign trade mark applications invoking the telle quelle rule, which might well be problematical here. 70 The same applies to TRIPS, by virtue of Article 2 as well as pursuant to the reference made to the Paris Convention in Article 15 TRIPS Agreement



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a basic trait to be found in most trade mark laws in the world, showing that there is a common understanding sustaining the rule. If, on the other hand, features are excluded irrespective of their distinctive character for the sole reason that consumers were initially attracted to them by the aesthetic appeal of their shape, and without even entering into an argument about the concrete effects on competition at the present time, this is hardly enough reason to reject claims, especially when they are founded on internationally mandatory norms.

5. Conclusion To conclude, the hard and fast rule embedded in Article 3 (1) (e) (iii) TMD and Article 7 (1) (e) (iii) CTMR respectively does not represent the most fortunate example of European law making. In the process of casting the functionality doctrine in the concrete of statutory language, it has been lost out of sight that the original aim of the rule is to foster and ensure efficient competition. Hence, when deciding on valuedetermining shapes, the attention is focused on elements of largely accidental character, such as the attractiveness of goods in the early stage of marketing, instead of addressing the crucial issues. It follows that the CJEU would be well advised to revisit the issue of how the third indent of the exclusion clause should be understood. Courts and authorities should be encouraged to focus on the competitive concerns lying at the core of the matter, instead of engaging in purely formalistic efforts to draw and maintain a distinction between different areas of intellectual property law. Such an approach would have the following practical consequences. Firstly, there is no reason to confine the application of the third exclusion clause solely to aesthetic aspects; other elements having an equal or even stronger influence on a product’s saleability – and hence on its commercial value – should also be taken into account.71 Secondly, when assessing the way in which the shape of a product influences consumer behaviour, it should be acknowledged that this depends largely on the perception and subjective appreciation of the shape by the public and is therefore liable to change with time. Based on a reading which values logical and structural consistency over a policy-blind execution of black-letter law, therefore, it should not be precluded forever that a shape, initially attracting customers by its pleasant appearance, should have the chance of becoming a valid sign at a later stage.72 Rather than enjoining Courts and authorities from taking reality into account, trade mark protection should only be blocked as long as the sign remains to be functional, which must be 71

See supra (text accompanying note 48), on the discussion concerning the Federal Supreme Court’s “car bonnet” judgment. 72 Contrary to what the CJEU held in Benetton ; see supra at 3.3.



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assessed in the light of all relevant circumstances prevailing at the time when the decision is being made73. Thirdly, even though the perception by the public is key to determining whether a product derives substantial value from its shape, the evaluation of whether it must be excluded from trade mark protection should not stop there. The crucial test should consist of an analysis of the competitive potential of the form at stake, considering to what extent its assignment to one particular right holder would be liable to impede, or even exclude, efficient and meaningful competition. This means that a sign’s rising potential to constitute a source identifier is only one factor in the assessment – it does not, however, automatically lead to a proportionate decrease in the weight given to competition concerns. In this limited sense, the rule that functionality cannot be overcome by simply referring to acquired distinctiveness retains its validity.

73

The ‘Study on the Overall Functioning of European Trademark System’ (15.2.2011), which was prepared by the MPI for the EU Commission, therefore proposes to delete Art. 3(1)(e)(iii) TMD and Art. 7(1)(e)(iii) CTMR.
