The Lidl shop of champers

Supermarket chain Lidl has locked horns for a prolonged period with Champagne house Veuve Clicquot (VC) over VC’s EU registration for the single colour orange which is protected for Champagne wines. Lidl challenged the validity of that registration on the basis that the colour orange is not capable by itself of identifying Champagne as originating from a single undertaking. It lost before the EUIPO at first instance and then before the Board of Appeal but more recently has achieved partial success before the General Court (GC) of the EU. The GC decision is here and the case has been referred back to the EUIPO for a decision on an outstanding point.

Background

Lidl is active in the highly competitive field of Champagne and sparkling wines. It markets its own brand Champagne and an example of one of its Prosecco products is below, next to VC’s registration for the colour orange.

Lidl Product                                                    Veuve Clicquot Registration

                                                    

VC applied to register its orange mark before the EUIPO on 12 February 1998 and achieved registration based on acquired distinctiveness some nine years later on 23 March 2007. Lidl filed a (second) invalidity action on 3 November 2015 seeking to remove the mark from the register. There are additional technical strands to this case but these are not discussed in this report which focuses on the issue of colour marks, acquired distinctiveness and evidence.

Colour Marks

The essential function of a trade mark is to distinguish the goods or services of one undertaking from those of other undertakings. Distinctiveness is indispensable. Under EUIPO policy, marks consisting of single colours are not inherently distinctive for any goods and services unless there are exceptional circumstances. Consumers are not in the habit of making assumptions about brand origin purely based on a single colour applied to goods or their packaging. They place more weight on accompanying wording, graphic elements or the overall combination of everything.  Also, as a practical matter, the number of colours is finite and to grant an exclusive monopoly in one colour to a single trader may result in undue restrictions on new and other traders in the field. That is contrary to a free market.

In light of the above, both parties accepted that the colour orange was not inherently distinctive. That is not fatal to an application or a registration because the European Union Trade Mark Regulation allows for acquired distinctiveness. Under Article 7(3) a trade mark which is inherently devoid of any distinctive character may nevertheless be registered or remain on the register if it “has become distinctive in relation to the goods or services for which registration is requested as a consequence of the use which has been made of it.”

When prosecuting its trade mark application VC filed large amounts of evidence showing longstanding and widespread use of the colour orange throughout the EU in relation to its Champagne products. It satisfied the EUIPO that the colour had acquired distinctiveness by the date of application.

Two Relevant Periods in an Invalidity Action

In defending the subsequent invalidity action, VC had two bites at the cherry because there are two relevant evidence periods, namely:

Period One: Up to 12 February 1998 which is the trade mark application date.

Period Two: 12 February 1998 to 3 November 2015 which is the period between the trade mark application date and the invalidity action application date. VC is entitled to rely on acquired distinctiveness after registration if, by the time of the invalidity challenge, the mark has in fact become distinctive.

If acquired distinctiveness is proved at either of 12 February 1998 or 3 November 2015, the invalidity action fails.

Evidence of Acquired Distinctiveness

Where colour marks are concerned, acquired distinctiveness must be proved across all EU member states because colour is purely visual and is perceived identically by consumers throughout the EU. In other words, a block of colour does not use language or image to communicate so it transcends national borders and is equally non-distinctive across all territories. Proving acquired distinctiveness in a colour is a high bar when you combine the geographical requirement with the established assumption that consumers rarely rely on colour alone to distinguish the origin of a product.

The GC categorised evidence as primary (direct) or secondary.

Primary evidence is of greater probative value and is essential to prove a case. Examples include surveys, market studies and statements from professional bodies or the specialised public. Press articles and other publications can also qualify as primary evidence provided they are independent and not paid for advertorials. Their text must contain some kind of indication that the mark has the capacity to identify the goods as originating from a particular undertaking.

Secondary evidence can support the case but is insufficient alone. Examples include sales figures, advertising materials and reference to market share. Extensive use does not prove the necessary causal link between consumers’ recognition of a mark and their identification of trade origin from one particular undertaking. This is especially so when the mark is pure colour because it will almost inevitably be accompanied by additional imagery or wording and the assumption is that consumers will rely on those elements for their primary recognition.

Decision of General Court

Lidl succeeded insofar as the GC considered that VC’s originally filed evidence before the EUIPO was insufficient in Greece and Portugal as at 12 February 1998, VC’s application date. VC proved its first shipment to Portugal took place in 1864 and to Greece in 1845. It filed information on sales figures for Veuve Clicquot Champagne, market share, distribution and promotional budget between 1994 and 1997. Other examples of use in the Greek and Portuguese marketplaces included invoices, advertising, promotional events and even reference to recognition of Veuve Clicquot Champagne by King Constantin of Greece in 1964. Whilst impressive, all were regarded as secondary evidence. No primary evidence in these territories was filed and for that reason the GC disagreed with the Board of Appeal’s decision on acquired distinctiveness.

VC therefore lost to Lidl on that point and the case was referred back to the EUIPO for consideration of the evidence of acquired distinctiveness within Period Two, the later period up to the application for invalidity on 3 November 2015. The lower tribunals omitted to examine this period. Because the function of the GC is to annul or confirm earlier decisions, it declined to make its own decision ab initio. Consequently the EUIPO is now required to consider this point. No doubt that leaves scope for further appeals by both parties.

Comment

Colour marks are rarities and rightly so. If a business manages to achieve registration through evidence of acquired distinctiveness, it should be aware of the ongoing requirement to maintain the validity of its registration so it does not become vulnerable to an invalidity action at a later date.