A suggestive model for the court to apply

This dissertation will discuss the issue of when a product loses its intellectual property rights and becomes generic. The term ‘generic’ will be given its legal definition in this dissertation. The laws of the European Union and the United Kingdom shall be discussed, as well as the United States, however, this is for comparative purposes mainly. The purpose of the dissertation will be to show that the language used in Directive 89/104 EEC section 3(1)(d) and 46(1)(c) is vague and confusing and should not be used by the courts system when determining a case.

The author shall try to introduce a new test in order to quell the unease about the vagueness of the current language in the Directive, which is the basis for the United Kingdom’s Trade Marks Act 1994. This section is unique in that its requirement for a trade mark is that it be already in use. The test that is applied by Article 3(1)(d) and 46(1)(c) is whether the trade mark or sign has become ‘customary in the current language or in the bona fide and established practices of the trade’ .

This was reiterated by the European Courts of Justice in Merz and Krell GmbH and Co , where the court’s response to whether article 3(1)(d) could apply, was the sign or indication must be customary in the current language or in the bona fide and established practices of the trade to designate the goods or services covered by the application. Objection to the trade mark in this section need only be raised where the examiner does not believe that the sign is capable of being characteristic of the product or is void of any character.

There must be an indication that the sign has become part of the customary language in the general public, or as part of the established practices of the trade. The Work Manual suggests that the ‘applicant should be shown or referred to named publications or provided with other examples of use which show the sign being used to designate relevant goods/services’ The purpose of section 3 (1) (d) is intended to enable applications for signs or marks that have become generic, to the refused and to remain in the public domain.

Objections are required to meet the threshold of having entered into the customary language or into the established practices for the trade. Examples given in the Work Manual include using the title ‘Red Lion’ for a public house, or star devices for brandy and hotel services. The manual however, is unclear as to whether the words ‘of the trade’ qualify the words ‘which have become customary in the current language’ and also, ‘established practices’. It would appear that the words are not qualified.

This leaves people in new product markets in a very vulnerable position. As the first into the market is likely to be the market innovator also, their mark and practices will automatically become industry standard practice. This is only natural as they are the sole operators in the market. This places the market innovator at an economic disadvantage, as their mark is the de facto industry standard. This means that under the current section 3(1)(d) test, the market innovator will fail and their product may become generic, as in the case of the ‘Escalator’ brand.

Owners of marks are very protective of their mark as the trade mark may be worth a lot of money to them. As a result, many companies are regarding their trade mark as the most valuable asset of the company and as such, are willing to go to extreme lengths to protect them. ‘Xerox’ has engaged in an active campaign in order to protect themselves against the genericization of their mark. In 2009, the ‘Google’ brand was worth an estimated $100 billion dollars .

This dissertation will show that it is beneficial for European Union to introduce a different test when deciding whether a product has become generic or not. It will be also shown why this is beneficial and the economic arguments in favour of it. At present, the test is whether the mark has entered into the customary language or part of the established practices of the trade. This test places a high burden on the plaintiff when proving that the mark is unique and would appear that only those marks which are entirely unique or made up, may deserve protection.

The less unique the mark, the more likely it is to become generic. What is a trade mark? A trade mark “may consist of any sign capable of being represented graphically, particularly words, including personal names, designs, letters, numerals, the shape of goods or of their packaging, provided that such signs are capable of distinguishing the goods or services of one undertaking from those of other undertakings” . This new definition can be contrasted to the old Trade Marks Act 1938, which made a distinction between a ‘mark’ and a trade mark’.

When dealing with trade marks, one must always ensure that the issue may go beyond that of something being represented graphically. Section 103 (2) of the Trade Marks Act 1994 extends the meaning of the term ‘use’ to include things that may be represented other than graphically. The ECJ have stated that some sound marks can be registered , however, the courts seem reluctant to allow everything to be a trade mark.

This is particularly a problem when one is dealing with sound, taste and colour, each a very subjective matter. The courts stated that no group of marks are excluded from registration by the Section 3(1) provisions . For the purposes of this dissertation however, the Directive definition in Article 2 will be used-this later become the exact wording in the Trade Mark Act 1994. Schechter states that the traditional function of a trade mark was to “identify the origin or ownership of goods to which it is affixed” .

This is reiterated by the ECJ who state that the function of a mark is to “identify the origin of the marked goods or service to the consumer or end user by enabling him, without any possibility of confusion, to distinguish the goods or service from others which have another origin” However, the mark has now evolved to the point that its prime function is to create custom by signs. That is to say, when a consumer sees a mark on a particular product, they assume it to have originated from the same single source as other products that bear the same mark.

As a result, the consumer rationally believes that the mark is not only indicative of the source of the product, but also that the mark is a guarantee as to the satisfaction of the product. In this sense, when consumers are deciding choosing their goods, they are more likely to buy something that indicates the mark with which they are more familiar. As Schechter states, ‘the mark actually sells the goods. And, self-evidently, the more distinctive the mark, the more effective is its selling power’ . What are the courts interpreting a trade mark as?

Article 46(1)(c) of the Trade Marks Act 1994 states that the test to apply when deciding if a product has become genericised is whether the mark has “become the common name in the trade for a product or service for which it is registered”. This would seem to eliminate the public interest element in any sort of test. Despite this wording, in an Article 234 reference to the ECJ, Bjornekulla v Procordia , the court stated that the assessment ought to be taken from the viewpoint of the consumers. Evidence in the case showed that consumers saw the sign as descriptive of the goods, however, traders observed the mark as that of a producer.

The court qualified the test, which is predominantly trader based, by adding the possibility of an exceptional situation where “features of the product market” meant that the perception of the mark must also be considered. Bently and Sherman provide an example where the sway of the medical profession on a specific drug could make the relevant class when assessing whether the drug is generic or not. The final element of the article 46(1)(c) test is the requirement of fault. Here, the trade mark protection will be revoked as a result of genericism as a result of the inactivity or as a failure to act by the mark’s owner.

This part of the test can be called the ‘requirement of vigilant conduct’ . Essentially, it means that the owner of a mark must do all that is available to him in order to ensure that his mark does not become a generic one. This may involve a number of different tactics, including, policing by the courts and also through public service advertisements . In the Sony Walkman Trade Mark (2000) , the Austrian Supreme Court did not look for failings on the proprietor’s part, however, they noted that abstaining from measures to protect the mark could contribute significantly to the genericisation of the mark.

The test that one can therefore show is being used by the ECJ is as follows; 1) Is the mark now in the domain of the customary language? Is the mark common in the industry standard? 2) Has the owner of the mark abstained from using the mark in a way that would cause it to become generic? 3) Has the owner of the mark done all that is reasonably possible to prevent the mark from entering the domain of genericism? From the legislation and the decisions of the ECJ, one can assume that the legal system is reluctant to take a mark and make it generic.

This is probably for a variety of policy reasons including the protection of the consumer, consistency of the brand and for broader ethical concerns such as the prevention of unfair competition and unjust enrichment. This European test can be contrasted to the United States, where the Lanham Act states that the test of a mark is its relevant meaning to the public rather than ‘purchaser motivation’, in deciding whether a mark has become generic or not. However, the wording of the paragraph is made clearer to the mark owner than that of its European counterpart.

The US version gives very clear examples and situations in which a mark will become generic. An example of this is contained in the wording which states that simply because a mark is used to identify the product, it does not hold that the mark has then become a generic one. The US courts have also interpreted the meaning of the term generic to refer to “the genus of which the particular product is a species” . In Ty Inc. v. Perryman , Judge Posner dismissed the theory that dilution and genericism could be linked under the 1995 legislation;

“An interpretation of antidilution law as arming trademark owners to enjoin uses of their mark that, while not confusing, threaten to render the mark generic may therefore not be in the public interest. Moreover, the vistas of litigation that such a theory of dilution opens up are staggering. ” . There are similarities and deviations between the two tests. Both of them agree that there is a level of subjectivity on the part of the consumer and that ultimately it is the consumers’ perception of the mark in the product market that will count. However, the European test stops there, while the US test goes further.

The US sets out specific points as to what is to happen in specific circumstances. It also sets out a quantum in order to expand upon the courts interpretation of a test. The act sates that if the mark becomes the ‘generic name for less than all of the goods or services’ then only those goods or services may have a petition for the mark to be cancelled. The act further states that simply because a mark has become the name in the industry to identify ‘a unique product’, this is not automatic grounds for genericism, as seems to be the case in Europe.

The main problem with the European test is that it is too vague. It relies entirely upon the subjective view of the consumer. This can lead to problems in an industry where there are very few competitors and one mark ultimately becomes the name of the trade. An example of this in a European context is with the Hoover brand. Here, the brand was refused registration for its trade mark as it had become part of the customary language of the trader and the consumer in the UK. However, when one considers this for a moment, then the test seems to be ultimately flawed and brutal in its application.

Hoover was the first brand to mass market the vacuum cleaner, and produce it internationally. As a result, they became the industry standard and the owners of a pan-European brand. As a result of their success, they also lost their intellectual property rights and became a generic brand. Essentially, a company is asked to open a market, and mass produce a product in an economic zone. Then when it has become the industry standard and the de facto leader of the market, then it will lose its trade mark rights and others will benefit from the name which the original company has built.

Economic historians, particularly Douglass North, have argued that since the Industrial Revolution, there has been more acceleration and production in society than any other time, which links in with the protection of the inventor’s rights, allowing them to profit from their product. This is held to be true by many economists throughout the world. It therefore only stands to reason, that if the protection level for trade marks was increased, then there would be more innovation, assuming all competition laws remain as they are. Both the European and the United States tests are inherently unfair for another reason.

Once a mark has lost its intellectual property rights and become generic, then, no matter how much money or labour that the former owner of the mark makes, the former owner can never enforce actions against competitors to use the genericised term . The only place that the mark will be safe is in a product market where the term has not yet become generic and a secondary meaning has yet to be proven. This leaves the situation where a mark can be generic in Market A, and be a trade marked in Market B as the term is fanciful, descriptive or suggestive.

An example of this in the US is the generic word ‘Safari”. Depending on the market that one is using the term in, it can either be genric or descriptive. Judge Ryan found that the word when connected with clothing was a generic term, however he accepted that there are markets where this term is not generic and may still be used as a trade mark . This was also stated in other cases such as King-Seeley Thermos Co. v. Aladdin Industries, Inc. and Dupont Cellophane Co. , Inc. ,? v.? Waxed Products Co. , Inc . Economic Arguments When one is granted a trade mark, it is essentially a language monopoly.

This allows one to freely license the product, which would be in the interest of the main producer, unless, as Landes and Posner state, the producer is the lowest cost producer in the market. One certain way to avoid genericism is for a company to actively promote the generic meaning of another word. Essentially, the mark’s owner remains proprietor of the mark, while another more neutral word becomes the generic one. An example of this is by the company ‘Xerox’. In the US in particular, the mark ‘Xerox” has become a directly substitutable word for ‘photocopy’.

In order to prevent their mark from becoming a generic one, a mark that has an estimated value of $5,918 million , the company has actively advertised the use of other words to prevent the genericisation. Xerox famously ran a campaign with the slogan, “You can’t xerox a Xerox on a Xerox”. Interestingly, this campaign, although encouraging the public to use alternative words, actually promoted the idea that the brand was a generic one. This was due to Xerox using their own brand name as a noun, but also as a verb. The courts have recognized that when something is used as a verb in everyday language, then it may actually be a generic term.

As a result, the phrase and advertisement is a paradox. Similar to Xerox, the Kleenex company have taken steps to protect their mark. The general public in The US, and in all probability Europe also, refer to using a ‘kleenex when in fact they mean a tissue. This is a step towards genericisation on the part of the mark. However, Kleenex have engaged in a public campaign to re-brand themselves as something more than a tissue. Instead, the brand is to be associated with luxury nasal care. Through advertisements, the company reiterates to the public on a frequent basis that it is a registered trade mark.

According to Coombe , Kleenex have gone as far as to employ a clipping service, where people are given the job of searching through media in order to find inappropriate uses of their trade mark. A letter is then sent immediately o the offending party stating that Kleenex is actually a brand. Although this may seem rather tyrannical and repressive, the vigilant protection of its valuable brand has allowed the company to retain its trade mark and avoid the genericisation. Most commentators are in agreement that it is safer to be in the possession of a ‘fanciful or arbitrary’ trade mark rather than a descriptive one.

Yet, companies continue to use the descriptive words when choosing a trade mark. This is for a very simple reason; the name of the product will convey a message to the consumer about the type of product being sold by that company. As Jacoby states , brands become information ‘chunks’. This allows the consumer to access other information about the brand in question that can be stored in the consumer’s memory. This information answer key questions such as the consumer’s attitude to previous brand use, brand comparison and other clusters of information.

In order to benefit from the descriptive word, then the company will need to maximize the amount of profit it can from the product market before the mark becomes a generic one. Landes and Posner show that the “shorter the expected life of a brand, the more likely the producer is to use a suggestive mark, while descriptive marks are more likely to be used for brands with a long expected life”. This may be due to the fact that suggestive marks conjure up immediate images, while descriptive marks will take a period of time in order to have a secondary meaning, which is almost a requisite for the genericisation of a product.

More than one Meaning In all probability the word that may become generic would have more than one meaning. The generic name is likely to form part of the genus of the product market. Many products have overlapping words in their product and the trade mark. An example of this is the word “Safari”. The word is used for different purposes and different products such as an internet browser, a type of holiday, a form of clothing and also a database system for the French government.

US Courts have not yet reached a decision on whether or not abbreviations that are generic can be trade mark protected. Some courts have allowed the registration “unless they have become so generally understood as representing descriptive words as to be accepted as substantially synonymous therewith” . Contrasted to this, the Seventh Circuit requires a “heavy burden” on the party attempting to trade mark the abbreviation and they require a secondary meaning to be intrinsically linked in with the meaning of the protected expression .

An abbreviation of the generic mark, which still discloses to the consumer the original generic product of the abbreviated name, is still “generic” . An example of a generic abbreviation is “IM” which was found to be generic for the words “Instance Messaging”. This abbreviation was largely used in connection with terms regarding Internet messaging and e-mails . The court said here that if the “words have become so generally understood as being substantially synonymous with the words they represent, they are not protectable”.

This was affirmed by the Court of Appeals, which stated that the term was not trade mark protected, however, they “do not determine that ‘IM’ is generic”. If the abbreviation is not identifiable as the original generic term, then the abbreviation is like a fanciful mark and is therefore protectable . Public Policy Reasons for Genericness Generic terms are all within the public domain and free for all to use. When a trade mark is granted it is essentially granting a monopoly to a single party, something that intellectual property law was not made to protect.

Behind the reason for the genericness of trade marks are sound policy reasons. The most obvious of these reasons is that it may be impossible to describe the product one is selling without using the word in question. Judge Posner summed this up by stating that “To allow a firm to use as a trademark a generic word,…would make it difficult for competitors to market their own brands of the same product. Imagine being forbidden to describe a Chevrolet as a ‘”car” or a “automobile” because Ford or Chrysler or Volvo had trademarked their generic words” .

Economically, when a trade mark is no longer granted rights and becomes a generic name, according to Landes and Posner , the benefits can include the reduction of communication costs. Essentially this means allowing other competitiors to use the generic word to describe their products, something the consumer will understand a lot quicker than a product being introduced into the market. This is because the generic word previously stood as a mark and the public can link the generic word with previous information that they have about the product.

Maccarthy points out that in a hypothetical situation where the term ‘cell phone’ was no longer permitted as a mark, competitors would be “free to use ‘cell phone’ for their competitively interchangeable phones, and not be legally forced to use less common names which might be available, such as ‘mobile phone’ or ‘wireless phone’”. Another issue of public policy arises from the morality of the public. However, this is more of a refusal to register issue based on certain criteria. In the UK, the Appointed Person refused to trade mark the word “Tiny Penis” for a brand name on the groups of public policy and morality .

In this application the Appointed Person held that simply because something could cause offence is not grounds in its self to consider something blocked from being a trade mark. However, on grounds of morality and public policy, registration was refused on the belief that it would cause great offence to the ‘right-thinking members of society’. In another case the mark ‘www. standupifyouhatemanu. com’ was refused registration on the grounds that it could act ‘as a badge of antagonism’ and would only serve to increase violence in football.

McCarthy states that a generic term is available for the business community at large to use. If there is an advertisement indicating that a seller is not selling the generic product the same as the competition then this can be a form of traducement. In the case of Anheuser-Busch Inc v John Labatt Ltd. , the defendant claimed that “If It’s Not Labatt’s, It’s Not Ice Beer”, the term ‘ice beer’ having been declared a generic term’. A jury found this to be defamatory upon the plaintiff, which used the phrase in most of its slogans. However, the jury only awarded $1.

00 in compensation, presumably finding that the advertisement was meant in more of a comparison way than defamatory. What is a ‘secondary meaning’? The ECJ said in the Windsurfing case that a mark obtains a new meaning when the mark “has gained a new significance and its connotation, no longer purely descriptive, justifies its registration as a trade mark”. This is a very vague statement from the Court as it gives no indications as to what is meant by a secondary meaning other than it is of ‘significance’, nor does it quantify what is meant by the term ‘significance’.

It is important to note that a mark may be both distinctive and also be descriptive at the same time. Jacob J. made this point in the Philips case: “Now it is of course the case that a mark may be both distinctive of a particular manufacturer and yet also convey something by way of a description of the goods…. There are degrees of descriptiveness…. On the scale of distinctiveness you come to a point where a word is so descriptive that it is incapable of distinguishing properly, even if it does so partially”.

It is suggested that any applicant who cannot prove that the secondary meaning has a level of meaning high enough to displace to the primary description of the mark will fail in their action. As a result of this the plaintiff would have to prove the case as one of passing off . One must also question the quantity of people to recognize the secondary meaning of the mark. In The Shredded Wheat Co. Ltd v Kelloggs , Lord Rusell questioned the percentage needed for one to prove secondary meaning or whether there is even a mark which is protectable:

“Suppose the proprietor can educate 10% of the public into recognizing the word as his trade mark…. I do no think it would be fair to regard the character of the word as distinctive in that state of affairs. But if the matter were the other way around, so that 90% of people it was taken as a trade mark, then I think it would be fair so to regard it…must be shown in a case of this sort that the mark has really become accepted by a substantial majority of persons as a trade mark-is or is almost a household word” .

Justice Jacobs has stated that recognition by 60% of the public would not satisfy the term of what a secondary meaning is. This seems to be the same as the approach taken by the ECJ in the Windsurfing case where the courts said that the requirement would be satisfied once a mark was “no longer purely descriptive”. In the case of MESSIAH FROM SCRATCH TRADE MARK , the Appointed Person seems to have summed up the issue correctly by stating that:

“it was not necessary that the secondary meaning should have displaced the primary meaning, it is however necessary that it gained a sufficient new significance as indicating origin to justify registration so as to leave third parties who wish to use the designation in its descriptive sense to rely upon the defence. ” . This UK/EU approach can be contrasted with the US where Judge Pettine referred to secondary meanings and genericism as “opposite sides of the same coin” . He went on further to say that “it seems to me…there is no such thing as a “generic” word with a secondary meaning.

If the consuming public does perceive the symbol as designating the producer rather than product, then the generic label has been incorrectly applied” . McCarthy goes as far as to say that the idea of a secondary meaning with regard to genericness is a misnomer. He argues that a generic name and a secondary meaning cannot are total opposites and as such cannot both fall into the same category. If something is not a trade mark, then it does not have the kind of ‘secondary meaning needed to achieve trade mark status. This, according to McCarthy is a ‘logical impossibility’.

When it comes to the evidentiary weight given to secondary meaning, the law in the US seems to be very unclear. This is due to the appearance of the courts to reluctantly accept their European counterparts test of secondary meaning. However, the US Supreme court seem to have accepted the idea of a secondary meaning in the US version of the Shredded Wheat case , with the court referring to the secondary meaning and also “the primary significance of the term in the minds of the consuming public”. The Trademark Board seem to have taken a more balanced approach when it came to the use of secondary meanings as evidence in the Recorded Books case.

Here the court found that: “if the evidence as a whole establishes…that the term is primarily perceived as a generic term, the recognition of the term as a trademark by a subset of applicant’s customers must be deemed no more than a de facto secondary meaning that, in legal effect, can neither confer nor maintain trademark rights in the designation sought to be registered” . McCarthy is of the opinion that the law in the United States regarding secondary meanings and generic names should change.

This is because intellectual property law shifts over time and the law is still evolving. With the age of the internet, new products and services have entered into the public domain, along with a new form of language designed for the internet. MacCarthy makes the point that since names can become generic over time, why should it be that generic names cannot acquire intellectual property rights over a period of time by acquiring a meaning specific to one company? Perhaps the answer to MacCarthy’s question lies in the policy reasons behind generic names.

If the court system allowed generic names to be reintroduced as a trade marked name, then this could lead to a lot case law which could end up being vexatious to the law. As a result, the court would have a lot of applications to remove generic names back into a state of protection by companies. The only possible way that one could foreseeable to this would be through the use of customer surveys and opinion polls, arguably a highly unrealistic expectation level of the public. Another reason against this may be the cost of the reintroduction could have on businesses.

Hypothetically, if a business has built up its products selling generic products, then to lose the rights to the name of those products would prove very costly to the business. This could also impact significantly upon the competition law, with large companies having more available resources to challenge such issues in the court, whereas smaller companies may not have the finances for such an endeavor. This could therefore create a monopoly market, forcing many smaller companies to go out of business, while the monopoly company also retains the trade mark rights to the name of the product or service.

It is highly unlikely that a company will ever recover a generic name and have it brought back into the trade mark protection arena. The courts must weigh up too much to do this with regard to public policy and the effect the change will have on the industry in question. Essentially, entire markets could be swept away by the actions of one court. However, it is not impossible in the United States to have a generic name returned to the protected status. It has only happened, as McCarthy identifies, in two cases: the first being SINGER for sewing machines and the second being GOODYEAR for rubber products.

In a European context, there is no evidence that the court system or the Intellectual Property Office have or will ever allow a generic name to re-enter the trade mark protection arena. Here, the European system is in complete agreement with the American courts that once something has become generic it is impossible for it to return. This also seems to be for policy reasons and if such a thing were ever allowed, it would become too difficult to enforce throughout the EU