Running rings around referential use of trade marks: the CJEU's decision in Audi v GQ

On 25 January 2024, the Court of Justice of the European Union ("CJEU") issued its highly anticipated preliminary reference concerning Audi's renowned four rings trade mark (C-334/22, Audi Group AG ("Audi") v GQ. 

Summary of facts

Audi, the Claimant, owns European Union trade mark no. 000018762, registered in respect of (among others) ‘land, air and water vehicles, parts and constituent parts of such articles included in this class, including engines’ in Class 12 and comprising this logo (the "Audi logo"):

The Defendant, GQ (an individual), manufactured and sold radiator grilles for older Audi models, which contained a section in the shape of the Audi logo, allowing customers to mount the original Audi emblem on the grille. Audi sued GQ for trade mark infringement before the Regional Court of Warsaw, arguing that the grille allowing the attachment of the Audi emblem represented Audi's logo and was therefore unauthorised use of the Audi logo. Audi claimed trade mark infringement under all three heads of Article 9(2) EU Trade Mark Regulation 2017/1001 ("EUTMR"), that is:

• identical mark and identical goods and services (EUTMR Article 9(2)(a);
• identical/similar mark and identical/similar goods and services plus likelihood of confusion (EUTMR Article 9(2)(b); and
• identical/similar mark where there is a reputation which suffers detriment or is taken unfair advantage of (EUTMR Article 9(2)(c).

The Defendant's use of the allegedly infringing sign must be "in the course of trade".

Trade mark proprietors cannot stop every and all use of their trade marks by third parties. Most relevantly in this case, article 14 EUTMR limits their rights in these terms:

 1. An EU trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade:

(...)

(c) the EU trade mark for the purpose of identifying or referring to goods or services as those of the proprietor of that trade mark, in particular, where the use of that trade mark is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts.

2. Paragraph 1 shall only apply where the use made by the third party is in accordance with honest practices in industrial or commercial matters.

In the Regional Court of Warsaw, GQ argued that the shaped element on the radiator grille served a technical function and would not be viewed by an average consumer of the Defendant's goods as an indication of their origin, and therefore did not function as a trade mark. Instead, GQ was using the Audi logo in order to identify that the goods were spare parts for Audi vehicles and that his use of the Audi logo fell under Article 14(1)(c).     

The Regional Court of Warsaw felt it needed guidance to resolve the case satisfactorily, and referred questions to the CJEU, summarised as follows:

1. did Article 14(1)(c) preclude Audi from prohibiting GQ from using a sign identical to its registered trade mark as a mounting element in spare part radiator grilles, and did it make a difference whether it was technically possible or impossible to affix the original emblem to the grille without reproducing the mark?

2. how should "honest practices in industrial or commercial matters" be evaluated?

3. in the absence of a "repairs clause" like that provided in design law, where a trade mark is included in the shape of an automotive spare part, does the trade mark fulfil a designation function (i.e. does it function as a trade mark)?

4. in the absence of a "repairs clause" like that provided in design law, where a mounting element reflecting the shape of the trade mark is included in the shape of an automotive spare part, is the mounting element to be regarded as a trade mark fulfilling a designation function?

The Court's Decision

Was there use in the course of trade?

The Court answered questions 3 and 4 before then going back to 1 and 2, jumping straight to the issues of whether GQ's activities constituted use of the Audi logo in the course of trade in a manner liable to affect the functions of the trade mark.

Use in the course of trade should be considered before assessing whether there is a likelihood of confusion under article 9(2)(b) (the Court does not specifically mention consideration of the other elements required for infringement under article 9(2)(c), but it must apply equally to that head of infringement).  

The Court clarified firstly that in trade mark law there is no "repair clause"¹, unlike in design law, and trade mark law applies regardless of technical function. The objective of maintaining undistorted competition which the designs repair clause seeks to enable is met, for trade marks, by article 14 EUTMR.

The EUTMR does not define 'use'; instead, case law confirms that "it refers exclusively to active conduct on the part of the third party", and that use is in the course of trade "if it is in the context of a commercial activity intended to obtain an economic advantage and not in the private sphere".

GQ's importation and offer for sale of the radiator grilles bearing the Audi logo did constitute use of the sign in the course of trade.

Was the use in the course of trade liable to affect the functions of the trade mark?

The Court went on to consider the various functions of a trade mark, noting that the essential function of a trade mark is to guarantee origin, and that other functions include the investment function, which enables the proprietor to attract and retain consumers by means of various commercial techniques, as well as the functions of communication, advertising and guaranteeing the quality of the product/service. 

Whether the use affected any of these functions was dependent on which head of infringement was in consideration. For 'double identity' infringement under article 9(2)(a), use must adversely affect any of the functions of the trade mark, not just its essential function.  Infringement under article 9(2)(b), however, requires a likelihood of confusion, which exists "where the public might believe that the goods or services in question come from the same undertaking or … from economically linked undertakings". Likelihood of confusion therefore refers to origin, and accordingly infringement under this head requires that the essential function of the trade mark is adversely affected.

The Court referred to infringement under article 9(1)(c) (reputation), but did not specify which function(s) of the trade mark need to be adversely affected, or indeed whether the functions need to be affected at all so long as the other requirements of the article are met (e.g. unfair advantage is being taken of the repute of the mark).

Answer to questions 3 & 4:  is this use capable of infringing?

The CJEU of course is charged, in a request for a preliminary reference, with the task of giving its view on interpretation of the law only, and not with applying the law to the facts, or coming to a conclusion on the particular case. In this case, the Court made clear its view that a defendant in this particular fact pattern "makes use of a sign in the course of trade in a manner liable to affect one or more of the functions of that trade mark, which is a matter for the national court to ascertain". The proviso initially appears slightly at odds with the wording immediately before it, but the court had been clear earlier in the judgment that it was for the national court to decide whether the marks and goods were identical or similar, whether there was a likelihood of confusion and so on, and the proviso likely relates back to that. Therefore the best interpretation is that the court's view is that the use in this case was capable of amounting to infringement provided the national court held that the use fell into article 9(2) upon considering the requirements of that article.

Questions 1 & 2:  is this referential use?

Having ascertained that GQ was using the Audi logo in the course of trade in a manner liable to affect the functions of the trade mark, and which was therefore capable of infringing, the court looked at whether GQ's use could be said to fall into article 14(1)(c), and therefore whether Audi could be stopped from seeking to prohibit GQ's use.

While the wording of the article had changed with different versions of the legislation, its purpose remained to "enable suppliers of goods or services which are complementary to goods or services [of the trade mark proprietor] to inform … the public of the intended purpose of the goods which they market … or, in other words, of the practical link" between them. Where the use of the trade mark is necessary for that purpose, the trade mark proprietor will not be able to stop that use. 

The court did not believe that the use here was necessary. It noted that the shape of the radiator grille was motivated by the commercial aim of resembling the original as closely as possible.  A distinction had to be made between 1) a situation like the present case where a sign is affixed to spare parts intended to be incorporated into goods of the trade mark proprietor, and 2) a situation unlike the present case where the sign is used to indicate that spare parts are intended to be incorporated into goods of the trade mark proprietor, but is not affixed to those spare parts. The latter situation falls into article 14(1)(c), but the former does not, and it instead "exceeds … the referential use referred to in Article 14(1)(c)". 

It was irrelevant whether it was technically possible or impossible to affix the original emblem to the grille without reproducing the mark. The mounting element on its own was capable of infringing, and Audi was entitled to seek to prevent that use. The court declined to answer question 2 as in this case there was no need to consider whether GQ's use was in accordance with honest practices in industrial or commercial matters.

Comment

This judgment is arguably a good example of what a preliminary reference should be: a clear explanation of the law, along with guidance on what it means and its practical application to the case. It did perhaps go further than many CJEU rulings, effectively indicating what it thought the outcome should be.

With thanks to Charlotte Budd, Solicitor Apprentice, for her contribution to this article.

Footnote

¹ Article 110 Council Regulation (EC) 6/2002:  "… protection as a Community design shall not exist for a design which constitutes a component part of a complex product … for the purpose of the repair of that complex product so as to restore its original appearance".