Fifth Avenue Entertainment v EUIPO - Commodore Entertainment (THE COMMODORES) (EU trade mark - Judgment) [2018] EUECJ T-459/17 (06 December 2018)

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(EU trade mark — Opposition proceedings — Application for EU word mark ‘THE COMMODORES’ — Unregistered earlier sign ‘Commodores’ — Article 8(4) of Regulation (EC) No 207/2009 (now Article 8(4) of Regulation (EU) 2017/1001) — Relative ground for refusal — Reference to the national law governing the earlier mark — Action for passing off)

Fifth Avenue Entertainment LLC, established in Orlando, Florida (United States), represented by: B. Brandreth, Barrister, and D. Cañadas Arcas, lawyer,

European Union Intellectual Property Office (EUIPO), represented by H. O’Neill and S. Bonne, acting as Agents,

the other party to the proceedings before the Board of Appeal of EUIPO, intervener before the Court, being

Commodore Entertainment Corp., established in Saint Paul, Minnesota (United States), represented by J. Mellor QC and J. Whelan, Solicitor,

ACTION brought against the decision of the Fifth Board of Appeal of EUIPO of 22 May 2017 (Case R 851/2016-5), relating to opposition proceedings between Commodore Entertainment and Fifth Avenue Entertainment,

composed of V. Tomljenović, President, A. Marcoulli and A. Kornezov (Rapporteur), Judges,

having regard to the response of EUIPO lodged at the Court Registry on 26 October 2017,

having regard to the response of the intervener lodged at the Court Registry on 27 October 2017,

having regard to the written question put by the Court to the applicant and its answer to that question lodged at the Court Registry on 20 June 2018,

1 The Commodores were a widely known band, formed during the 1970s by a number of artists, including Mr McClary.

2 On 17 October 2014, the applicant, Fifth Avenue Entertainment LLC, filed an application for registration of an EU trade mark with the European Union Intellectual Property Office (EUIPO) pursuant to Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78, p. 1), as amended (replaced by Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (OJ 2017 L 154, p. 1)).

4 The goods and services in respect of which registration was sought are in Classes 9 and 41 of the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended, and correspond, for each of those classes, to the following description:

– Class 9: ‘Series of musical sound recordings; series of musical video recordings; downloadable musical sound recordings; downloadable music video recordings featuring music and entertainment; audio-visual recordings featuring music and entertainment.’

– Class 41: ‘Entertainment in the nature of live performances by a musical artist.’

5 The EU trade mark application was published in Community Trade Marks Bulletin No 199/2014 of 23 October 2014.

6 On 22 January 2015, the intervener, Commodore Entertainment Corp., filed a notice of opposition pursuant to Article 41 of Regulation No 207/2009 (now Article 46 of Regulation 2017/1001) to registration of the mark applied for in respect of all the goods and services referred to in paragraph 4 above.

7 The opposition was based on a number of grounds, including that set out in Article 8(4) of Regulation No 207/2009 (now Article 8(4) of Regulation 2017/1001), which is the only relevant ground for the purposes of the present dispute. The intervener asserted a right to the unregistered earlier sign ‘Commodores’ under the law of several Member States. By decision of 28 April 2016, the Opposition Division rejected the opposition in its entirety. It concluded, in essence, that the opposing party had failed to provide information on the content of the applicable national law or the conditions to be fulfilled in order for it to be able to prohibit the use of the mark applied for under the law of the Member States referred to.

8 On 7 May 2016, the intervener filed a notice of appeal, pursuant to Articles 58 to 64 of Regulation No 207/2009 (now Articles 66 to 71 of Regulation No 2017/1001), against the Opposition Division’s decision. In the context of its action before the Board of Appeal, it pointed out that the ground derived from Article 8(4) of Regulation No 207/2009 was based on the earlier unregistered right ‘Commodores’ (‘the unregistered earlier sign’), coming under the law of the United Kingdom, namely section 5(4)(a) of the Trade Marks Act 1994. The intervener stated that it owned goodwill (‘the attractive force which brings in custom’) in the sign, which is protectable under the national law referred to.

9 By decision of 22 May 2017 (‘the contested decision’), the Fifth Board of Appeal of EUIPO annulled the Opposition Division’s decision and rejected the registration of the mark applied for in its entirety on the basis of Article 8(4) of Regulation No 207/2009.

13 The applicant claims, in essence, that the intervener has not accrued goodwill — within the meaning of the term under the national law referred to — in respect of the unregistered earlier sign and that, even if it were assumed that the intervener did have such goodwill, the applicant would have, at the very least, separate goodwill from that of the intervener, allowing it to use that sign in parallel.

14 According to EUIPO, the applicant’s argument that it has separate goodwill in respect of the unregistered earlier sign allowing it to use that sign in parallel was presented for the first time before the Court and is, for that reason, inadmissible.

15 According to settled case-law, the purpose of actions brought before the Court pursuant to Article 65(2) of Regulation No 207/2009 (now Article 72(2) of Regulation 2017/1001) is to secure a review of the lawfulness of decisions of the Boards of Appeal. In the context of that regulation, Article 76 thereof (now Article 95 of Regulation 2017/1001) requires that review to be carried out in the light of the factual and legal context of the dispute as it was brought before the Board of Appeal (see, to that effect, judgment of 6 April 2017, Nanu-Nana Joachim Hoepp v EUIPO — Fink (NANA FINK), T‑39/16, EU:T:2017:263, paragraph 16 and the case-law cited). Moreover, under Article 188 of the Rules of Procedure of the General Court, the pleadings lodged by the parties in proceedings before the Court may not change the subject matter of the proceedings before the Board of Appeal.

16 First, in that regard, it should be noted that, in its appeal before the Board of Appeal, the intervener claimed to have the ‘full’ proprietary right to the name ‘The Commodores’ within the United Kingdom (page 305 of the file before EUIPO) and to benefit from ‘sufficient’ goodwill in respect of that name enabling it to prohibit its use in accordance with the law of that Member State (page 297 and 298 of the file before EUIPO). In response, the applicant claimed, in its observations before the Board of Appeal (pages 776 to 778 of the file before EUIPO), that the evidence submitted by the intervener was insufficient to establish that the conditions required for a successful action for passing-off by the intervener were fulfilled and, in particular, that the applicant did not claim to be the ‘sole’ owner of the ‘goodwill’ in respect of the name ‘The Commodores’, but merely the ‘equal owner’, enjoying ‘equal rights’ to use the name, like any of the founding members of the band in question (pages 795, 796 and 804 to 814 of the file before EUIPO).

17 The Board of Appeal was therefore right to conclude, in paragraph 49 of the contested decision, that ‘the ownership of the goodwill [was] where the crux of this dispute lies’. In such circumstances, the applicant’s argument based on the fact that it has at the very least separate goodwill from that of the intervener does not alter the substance of the dispute before the Board of Appeal.

18 Second, while it is true that the applicant did not invoke before the Board of Appeal certain national court judgments on which it relies in its application, this does not mean that the arguments based on those judgments are to be rejected as inadmissible. Neither the parties nor the Court itself can be precluded from drawing on national legislation or case-law for the purposes of interpreting national law to which EU law refers, as is the case here (see paragraph 28 below), since what is in issue is not the allegation that the Board of Appeal failed to take into account the facts of a specific judgment handed down by a national court, but rather the reliance on statutory provisions or judgments in support of a plea alleging that the Boards of Appeal misapplied a provision of national law (see, by analogy, judgment of 21 October 2014, Szajner v OHIM — Forge de Laguiole (LAGUIOLE), T‑453/11, EU:T:2014:901, paragraph 23).

20 The applicant raises two pleas in law, the first alleging infringement of Article 8(4) of Regulation No 207/2009 and the second alleging infringement of Article 76 of that regulation.

21 With regard to the first plea in law, as a preliminary point, it should be pointed out that the parties agree that, in the context of the present dispute, the applicant and the intervener are authorised to exercise the intellectual-property rights at issue of, respectively, Mr McClary and certain other members of the band The Commodores.

22 Pursuant to Article 8(4) of Regulation No 207/2009, the proprietor of a sign other than a registered trade mark can oppose the registration of an EU trade mark if that sign satisfies four cumulative conditions: the sign must be used in the course of trade; it must be of more than merely local significance; the right to that sign must have been acquired in accordance with EU law or the law of the Member State in which the sign was used prior to the date of application for registration of the EU trade mark; and, lastly, the sign must confer on its proprietor the right to prohibit the use of a subsequent trade mark.

23 Those conditions are cumulative, with the result that, in the case where a mark does not satisfy one of those conditions, the opposition based on the existence of a non-registered trade mark used in the course of trade within the meaning of Article 8(4) of Regulation No 207/2009 cannot succeed (judgment of 30 June 2009, Danjaq v OHIM — Mission Productions (Dr. No), T‑435/05, EU:T:2009:226, paragraph 35).

24 The first two conditions, namely those relating to the use and significance, which must be more than merely local, of the earlier trade mark, are apparent from the very wording of Article 8(4) of Regulation No 207/2009 and must therefore be interpreted in the light of EU law. Regulation No 207/2009 thus sets out uniform standards, relating to the use of signs and their significance, which are consistent with the principles underlying the system established by that regulation (judgment of 24 March 2009, Moreira da Fonseca v OHIM — General Óptica (GENERAL OPTICA), T‑318/06 to T‑321/06, EU:T:2009:77, paragraph 33).

25 In the contested decision, the Board of Appeal concluded that the first two conditions laid down in Article 8(4) of Regulation No 207/2009, that is to say, those relating to the earlier sign’s use and significance, which must be more than merely local, were fulfilled.

27 The applicant does, however, contest the Board of Appeal’s conclusion that the third and fourth conditions set out in Article 8(4) of Regulation No 207/2009 were also fulfilled.

28 In that regard, it is apparent from the words ‘where and to the extent that, pursuant to … the law of the Member State governing that sign’, in Article 8(4) of Regulation No 207/2009, that the third and fourth conditions laid down by that regulation are, unlike the preceding conditions, assessed in the light of the criteria set by the law governing the sign relied on.

29 That reference to the law governing the sign relied on is entirely justified, given that Regulation No 207/2009 makes it possible for signs which fall outside the EU trade mark system to be relied on against an EU trade mark. Therefore, only the law of the Member State that governs the sign relied on can determine whether that sign predates the EU trade mark and whether it can justify a prohibition of the use of a subsequent trade mark (judgment of 24 March 2009, GENERAL OPTICA, T‑318/06 to T‑321/06, EU:T:2009:77, paragraph 34).

30 According to case-law, the opposing party must demonstrate that the sign in question comes within the scope of application of the law of the Member State relied on and that it confers the right to prohibit the use of a subsequent trade mark (see, by analogy, judgment of 12 June 2007, Budějovický Budvar v OHIM — Anheuser-Busch (BUDWEISER), T‑53/04 to T‑56/04, T‑58/04 and T‑59/04, not published, EU:T:2007:167, paragraph 74).

31 In the present case, the Member-State law relied on is that of the United Kingdom and, in particular, the Trade Marks Act 1994, which provides in section 5(4):

‘A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented: (a) by virtue of any rule of law (in particular, the law of passing-off) protecting an unregistered trade mark or other sign used in the course of trade ...’

32 The Court has previously held that it follows from section 5(4) of the Trade Marks Act 1994, as interpreted by the national courts, that the party invoking that provision must establish, in accordance with the legal rules governing actions for passing-off, as laid down by the laws of the United Kingdom, that three conditions are satisfied: first, the goodwill acquired by the sign at issue; second, misrepresentation by the proprietor of the subsequent mark; and, third, damage caused to that goodwill (judgment of 18 July 2017, Alfonso Egüed v EUIPO — Jackson Family Farms (BYRON), T‑45/16, EU:T:2017:518, paragraph 43).

33 In the present case, with regard to the first condition, the Board of Appeal considered in paragraph 49 of the contested decision that ‘the ownership of the goodwill [was] where the crux of this dispute lies’. In that regard, the Board of Appeal concluded that the ‘goodwill in the business operating under the name [The Commodores]’ was owned by the opponent and is ‘protectable’ under UK law (paragraph 62 of the contested decision), which therefore enables it to prohibit the use of the mark applied for in the context of an action for passing-off.

34 The Board of Appeal also held that neither the applicant nor Mr McClary was ‘entitled to the sole proprietary right to the mark [The Commodores]’ (paragraph 60 of the contested decision), as, according to the general partnership agreement entered into by the members of the band and one other person on 20 March 1978 (‘the general partnership agreement’) and the amendment to the general partnership agreement of 1 July 1981 (‘the 1981 amendment’), they had assigned their rights to Commodores Entertainment Publishing Corp., a company which subsequently merged with the intervener.

35 The applicant criticises the Board of Appeal for having failed to take into account, inter alia, the fact that the term of the general partnership agreement was limited to seven years and that the 1981 amendment had not altered the term of that agreement. According to the applicant, when that agreement expired, the rights previously assigned to the general partnership, including the right to the name ‘The Commodores’, were reassigned to the founding members of the band, including Mr McClary, who, it is claimed, never left the group. That fact, inter alia, demonstrates, according to the applicant, that Mr McClary has a separate right to the goodwill associated with that name, as do the other founding members of the band.

36 In that regard, it should be pointed out that, on the basis of the documents put before the Court, it does indeed appear to be the case that, in accordance with clause 4 of the general partnership agreement, the term of that agreement was limited to seven years and that the 1981 amendment did not alter the term of the agreement. While the Board of Appeal referred to a number of relevant clauses from that agreement, it did not examine the effect resulting from the expiry of its validity. In fact, it did not mention the fact that the agreement had expired, merely stating, in paragraph 60 of the contested decision, that there was a ‘clear’ agreement showing that the founding members had assigned the rights to the intervener, without, however, considering the effects of the agreement’s expiry on that assignment.

37 That omission is particularly important given that the Board of Appeal observed, in paragraph 61 of the contested decision, that the question of whether Mr McClary had left the band in 1984 was debatable and did not form part of the subject matter of the proceedings before it.

38 It therefore must be held that the Board of Appeal could not, without erring in its assessment, conclude, on the basis of, inter alia, an agreement the term of which had expired and which was, in any event, governed by the laws of the state of Nevada, United States (see clause 1 thereof), that the ‘common-law ownership’ of the name ‘The Commodores’ resided with the intervener (paragraph 58 of the contested decision) and that that agreement showed clearly that the founding members had assigned their rights to the intervener, with the result that the applicant could not rely on a ‘sole proprietary right to the mark [The Commodores]’ (paragraph 60 of the contested decision).

39 As the applicant points out, by merely concluding that the applicant could not rely on the ‘sole proprietary right to the mark [The Commodores]’, the Board of Appeal omitted to examine whether the applicant was the co-owner of that right and, if that had to be the case, the impact of such co-ownership in the light of the national law relied on.

40 The parties agree that the national law relied on provides that, in certain circumstances, several persons can simultaneously own separate goodwill in a name, with the result that they are permitted to use that name simultaneously. In such circumstances, an action for passing-off brought against a party that owns such separate goodwill by another party that also owns goodwill in that name is bound to fail.

41 Although EUIPO and the intervener submit to the Court arguments seeking to establish that, in any case, the applicant did not satisfy the conditions laid down in national case-law relating to the existence of separate goodwill, it must be held that it is not for the Court to adjudicate on such a matter. Indeed, it is common ground that that matter was not in any way addressed in the contested decision. It is settled case-law that the elements that have not been mentioned by the Board of Appeal in the contested decision are not relevant. Such new elements cannot supplement the reasoning of the contested decision and have no influence on the assessment of its validity (judgment of 21 May 2015, adidas v OHIM — Shoe Branding Europe (Two parallel stripes on a shoe), T‑145/14, not published, EU:T:2015:303, paragraph 44).

42 In the context of an application for annulment, the Court reviews the legality of the decisions of the Boards of Appeal. If such a decision is contested in an action before it and held to be unlawful, the Court is obliged to annul it; it may not dismiss the action by substituting its own reasoning for that of the Board of Appeal which adopted the contested act (judgment of 17 March 2010, Mäurer + Wirtz v OHIM — Exportaciones Aceiteras Fedeoliva (tosca de FEDEOLIVA), T‑63/07, EU:T:2010:94, paragraph 44).

43 It must therefore be concluded that the Board of Appeal failed to examine to the requisite legal standard whether the fourth condition set out in Article 8(4) of Regulation No 207/2009, namely that the national law relied on confers on the intervener the right to prohibit the use of the mark applied for, was satisfied.

44 It follows that the first plea must be upheld and that the contested decision must be annulled, without it being necessary to examine the other arguments raised in the context of the first and second pleas.

45 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.

46 Since EUIPO has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the applicant.

47 In accordance with Article 138(3) of the Rules of Procedure, the intervener must bear its own costs.

1. Annuls the Decision of the Fifth Board of Appeal of the European Union Intellectual Property Office (EUIPO) of 22 May 2017 (Case R 851/2016-5);

2. Orders EUIPO to bear its own costs and to pay those incurred by Fifth Avenue Entertainment LLC;

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Fifth Avenue Entertainment v EUIPO - Commodore Entertainment (THE COMMODORES) (EU trade mark - Judgment) [2018] EUECJ T-459/17 (06 December 2018) URL: http://www.bailii.org/eu/cases/EUECJ/2018/T45917.html Cite as: EU:T:2018:886, [2018] EUECJ T-459/17, ECLI:EU:T:2018:886

Court of Justice of the European Communities (including Court of First Instance Decisions)