The Bulldog is an establishment for hotel, restaurant and café services in Amsterdam, started in 1975. It now also sells energy drinks under the name ‘The Bulldog’. Red Bull is opposed to this. It feels that The Bulldog is infringing its famous ‘Red Bull Krating-Daeng’ trademark registered in 1983. As such The Bulldog is illegally profiting from its brand’s reputation, Red Bull claimed. According to The Bulldog, however, there is no trademark infringement, since it was using its name as a trade name for hotel, restaurant and café services even before Red Bull registered its trademark. Consequently it has ‘due cause’ to (continue to) use this name for energy drinks as well, even though it benefits from Red Bull’s brand which has since become very well known. The legal rules on this are not clear. In a judgement of 6 February 2014 the Court of Justice of the European Union (CJEU) therefore gave the criteria for assessing whether a third party may ‘ride on the coat-tails’ of the reputation of a well-known brand in such a case, on grounds of ‘due cause’.
The key question is whether the famous brand Red Bull must tolerate ‘The Bulldog’ energy drink because The Bulldog has due cause, since it used the trade name ‘The Bulldog’ for hotel, restaurant and café services before Red Bull registered its trademark.
The court rejected the injunction Red Bull sought against The Bulldog. In an appeal the Appeal Court of Amsterdam awarded Red Bull’s claim.
The Appeal Court of Amsterdam held:
- that it was common ground that Red Bull is a famous brand for energy drinks; and
- that the public might not confuse Red Bull with The Bulldog, but that it would make a connection between the two names because they are both used for energy drinks and both contain the word ‘Bull’.
Because The Bulldog said in an interview with the Nieuwe Revu: ‘Red Bull has turnover of 2.4 billion euros on an annual basis. If I could just take in 1 percent of that!’, the appeal court believed that The Bulldog actually intended to profit from the reputation of the famous brand Red Bull. According to the prevailing doctrine, there is a case of trademark infringement in such circumstances unless the infringing party can demonstrate that it has due cause that justifies its profiting from the reputation of the famous brand by using a similar mark.
The Bulldog invoked this due cause, referring to its earlier use (since 1975) of the same trade name for hotel, restaurant and café services, including the sale of drinks, even before Red Bull was registered as a trademark in 1983 and went on to become a famous brand.
The Appeal Court rejected that defence relying on an argument based on Benelux trademark law and a decision from the Benelux Court of Justice (Clareyn/Klarein) from 1975. The Appeal Court of Amsterdam held namely that The Bulldog did not have such a need to use the name The Bulldog for energy drinks that it could not reasonably be required to stop doing so. As such the Court seems to have interpreted ‘due cause’ very narrowly, namely as an objectively overriding reason.
The Bulldog did not leave it at this and appealed the decision from the Appeal Court in cassation before the Supreme Court. According to The Bulldog, the Appeal Court’s argument is out of date because of the European harmonisation of trademark law and since, on grounds of article 5 (2) of the Trademarks Directive (European Directive 2008/95), a broader interpretation of the term ‘due cause’ now applies in the Netherlands (the Benelux). The Bulldog claims that on grounds of European law, the fact that it already used the name in good faith before Red Bull was filed as a trademark suffices as due cause. Red Bull is sticking to the more limited interpretation, namely that only an objectively overriding reason can be qualified as due cause.
The Supreme Court doubted whether this term should indeed be interpreted more broadly. The text of the European Trademarks Directive does not provide clarification and the Court of Justice of the EU (CJEU) had not yet given any decision on this. The Supreme Court therefore submitted questions of interpretation to the CJEU.
The CJEU has now given its interpretation of the term due cause (in the sense of article 5 (2) of the Trademarks Directive) for the specific situation of this case.
The CJEU first found that article 5 (2) of the directive does not provide support for the narrower interpretation that only objectively overriding reasons result in due cause.
The CJEU went on to say that for the interpretation of the term ‘due cause’ we must look at the underlying aim of trademark protection, namely that the trademark proprietor must be protected in those cases where a third party infringes or could infringe the functions of the trademark. Famous trademarks have more generous protection in this context than normal trademarks. But, according to the CJEU, trademark protection also involves weighing the trademark proprietor’s interest in maintaining the essential function of its trademark against the other market participants’ interest in having marks (names, logos, etc) with which to designate their products on the market.
The ‘due cause’ must, according to the CJEU, therefore be seen in the context of this weighing of interests. The proprietor of a famous trademark must demonstrate that the infringing party is benefiting unjustly from the reputation of its trademark (the trademark proprietor’s interest in protecting its trademark against infringement of its essential function). The infringing party must then demonstrate that it does this with due cause (the infringing party’s interest in having the protection of the trademark curtailed). If the infringing party succeeds in proving this, then it profits from the famous trademark’s reputation, but its interest in nonetheless being able to use the similar mark outweighs this.
According to the CJEU, it follows from this that the term due cause can include not only objectively overriding reasons, but also subjective interests of a third party that already used a similar mark in the past.
In the Interflora judgement in 2011, the CJEU already weighed these kinds of interests in connection with the use of a famous trademark as a keyword for a third party’s advertisement in the context of a search engine advertising service (Google Adwords). In that case there was due cause for a third party to use the famous trademark because the third party’s advertisement presented an alternative to the famous trademark’s products (the third party’s interest in being able to use comparative advertising prevails).
The CJEU then gives the assessment criteria for weighing the interests of the proprietor of a famous trademark against those of a third party that was already using a similar mark before the famous trademark was registered. The following criteria were given:
- It must be determined to what extent the mark used earlier (The Bulldog) has become assimilated and what reputation it has with the relevant public;
- It must be investigated what the third party’s intent was in using this mark (The Bulldog) and whether that use can be qualified as in good faith. In assessing whether it was used in good faith, the CJEU said that the following must be taken into account:
- the degree to which the products for which the mark (used earlier, The Bulldog) has been used and the products for which the famous trademark has been registered are related;
- the moment at which the mark (The Bulldog) was first used for the same products as those of the famous trademark (Red Bull);
- the moment at which the famous trademark (Red Bull) became famous.
- The economic and commercial relevance of the use of the mark (The Bulldog) for the products for which the famous trademark (Red Bull) has been registered.
It is up to the national (fact-finding) court to assess these criteria.
Finally, the CJEU does give another two pieces of guidance for applying the assessment criteria in the case at hand.
First of all, the CJEU says that if, before the famous trademark (Red Bull) was registered, a mark (The Bulldog) had already been used for products which could be linked to the products for which the trademark was registered, the use of the mark also for the latter products (those for which the famous trademark was registered) constitutes, as it were, a natural extension of the product range for which the mark already enjoys a certain reputation with the public.
In this case, the mark The Bulldog had already been used earlier for catering wares and services, including the sale of drinks. The later sale of energy drinks under the name The Bulldog can, in this light, according to the CJEU, be seen as a genuine extension of the range of products offered by The Bulldog and not as an attempt to take advantage of the reputation of Red Bull’s trademark. This impression would be reinforced if energy drinks had already been sold under the name The Bulldog before Red Bull became a famous brand. This has not been established, however, and must still be investigated further.
Secondly, the CJEU considered in the light of the case at hand that the stronger the reputation of the mark (The Bulldog) in relation to a particular range of products before the famous brand (Red Bull) which the mark resembles was registered, the stronger the commercial necessity of using the mark (The Bulldog) in order to market the same products as for which the famous trademark (Red Bull) was registered. Especially if the products of the famous trademark are, by their nature, associated with the products for which the mark was used earlier.
This marks the end of the CJEU’s guidance for the national court’s assessment of whether in the case at hand The Bulldog has due cause to use its name for energy drinks. It is now the Dutch fact-finding court’s turn to give its view.
Based on the criteria given and the further explanation from the CJEU in this regard, I do not think it implausible that The Bulldog will be able to continue selling energy drinks under its name. Perhaps another relevant point of fact may be whether The Bulldog can prove that it used its name for energy drinks even before Red Bull became a famous brand. From the CJEU’s considerations, however, it can be gathered that this does not necessarily have to be the case. It is equally conceivable that the Dutch court may, based purely on the fact that The Bulldog had used the mark earlier for catering wares and services, including the sale of drinks, conclude that the extension of the product range to include energy drinks logically follows from that and constitutes due cause for The Bulldog to sell energy drinks under that name. The fact that in doing so it gains some advantage from the repute of the Red Bull brand is in that case not a trademark infringement because this due cause is present. As soon as the Dutch fact-finding court has given its decision on this, we will report on this on this knowledge portal.