SmartWater Trade Mark Revoked for Lack of Genuine Use

A recent decision by the General Court of the European Union (Seventh Chamber) ("General Court") in Case T-250/13 Naazneen Investments Ltd v OHIM, Energy Brands Inc. intervening has revoked the Community Trademark SMARTWATER on the basis of non-use of the mark, pursuant to Article 51 (1)(a) of Council Regulation 207/2009.

The provision states: "The rights of the proprietor of the Community trademark shall be declared to be revoked on application to the Office or on the basis of a counterclaim in infringement proceedings: (a) if, within a continuous period of five years, the trademark has not been put to genuine use in the community in connection with the goods or services in respect of which it is registered, and there are no proper reasons for non-use."

Background

In June 1999 the Community word mark SMARTWATER in class 32 beverages, namely water with dietary supplements, was registered to Water Concepts, who in 2002 assigned the mark to Gondwana. In June 2007, Gondwana assigned the mark to Naazneen, and in 2008, Naazneen applied to renew the word mark for a further 10 years.

In 2009, Energy Brands Inc, a privately owned subsidiary of The Coca-Cola Company, applied to revoke the SMARTWATER mark on the basis of non-use during the period of 3 July 2004 to 2 July 2009 ("relevant period"). The application for revocation of the mark was upheld by the Cancellation Division on 18 May 2011.

On 25 May 2011, Naazneen filed a notice of appeal with OHIM against the decision of the Cancellation Division.  On 18 February 2011, the Second Board of Appeal confirmed the earlier decision of the Cancellation Division on the basis that the applicant failed to establish that they had put the mark to genuine use and had failed to adequately explain the lack of non-use of the mark during the relevant period.

Application to the General Court

Naazneen applied to the General Court seeking an annulment of the decision of the Second Board of Appeal on the grounds that the Board of Appeal had failed to state the reasons to which they had based their decision in accordance with Article 75 of Regulation No 207/2009.

In reply, the General Court held that the Board of Appeal was not precluded from reproducing reasoning set out in the earlier decision where it is relevant to the current proceedings and that by confirming the analysis of the Cancellation Division, the Board of Appeal implicitly rejected Naazneen's arguments and were not required to address each of the arguments raised by Naazneen.

Naazneen also sought to appeal on the grounds that the Board of Appeal was wrong to find that there were no proper reasons for non-use of the mark and there was no assessment of the evidence in existence of actual sales.

In this regard the General Court held that in assessing genuine use, due consideration must be given to all the facts and circumstances available in determining whether use of the mark was sufficient. This includes consideration of the extent or volume of overall use, the length of period in which the mark was used and the frequency of use.

The General Court upheld the decision of the Second of Board Appeal in finding that an order for twelve pallets of bottles representing 15,552 bottles as a "test sale" was not sufficiently large enough to establish use of the mark.

In addition, the Cancellation Board found no evidence of genuine commercial activity on the applicant's website. Attempts to access the site were met with the following: "site under construction, please visit us later!" Further to this, evidence was produced showing that the sales value of the product during the relevant period totalled 800 euros, a sum held to be, in the absence of any other supporting evidence, insufficient in the economic sector for the purposes of creating or maintaining market shares for the goods covered by that mark.

The General Court rejected Naazneen's argument of a re-launch affecting marketing on the basis that the re-launch occurred three years prior to the end of the relevant period and thus gave Naazneen sufficient time to have made sales to prove genuine use.

Conclusion

The importance of this case cannot be underestimated to holders of idling trademarks. The case shows the extent to which the Cancellation Board will go to investigate the use of a mark. Furthermore, the case highlights the responsibility of the right holder to ensure that they can show, when faced with an application to revoke a trademark for lack of use, that there has been genuine commercial activity during the relevant period to which the lack of use is alleged.