Learning from the Chanel vs Huawei Trademark Dispute – Legal Developments

French luxury fashion house Chanel has lost an EU court battle against Chinese technology giant Huawei over their iconic double ‘C’ logo.  

Background to the Case

In 2017, Huawei Technologies had sought an EU-wide trademark for a new logo which it was planning to use for computer hardware, particularly in Class 9. However, Chanel opposed this registration pursuant to Article 41 of Regulation 2017/1001, claiming similarity to two marks which the fashion house owns. Chanel stated in its opposition that the two vertical lines intertwining semi-circle are too similar to its protected logo, which Chanel uses to sell make-up, perfumes, clothing and accessories.  In 2019, the EU Intellectual Property Office, as the first instance panel which decides whether marks are too similar to be registered, had dismissed Chanel’s objection, saying that there was no likelihood of confusion between the two marks on the part of the relevant public.

Following this, Chanel challenged the ruling at the General Court in Luxembourg. The General Court, alternatively known as the European General Court, is a constituent court of the Court of Justice of the European Union. The Fifth Chamber of the General Court dismissed Chanel’s claims that the marks are similar enough to confuse the public. “The figurative marks at issue are not similar. The marks must be compared as applied for and registered, without altering their orientation,” the tribunal of judges said. The Court concluded that Chanel’s marks are based more on rounded curves, thicker lines and a vertical orientation. Alternatively, Huawei’s proposed mark is vertical in nature and is composed of thinner lines.

This decision can now be appealed at the European Court of Justice.

The Case for Reputable and Well-Known Trademarks

Under Article 8(5) of Regulation No 207/2009, upon opposition by the proprietor of a registered earlier trademark, the trademark applied for is not to be registered where it is identical with, or similar to, an earlier trademark, irrespective of whether the goods or services for which it is applied are identical with, similar to or not similar to those for which the earlier trademark is registered, where, in the case of an earlier EU trademark, the trademark has a reputation in the European Union or, in the case of an earlier national trademark and the earlier trademark has a reputation in the Member State concerned.

Where the use, of the trademark applied for, without due cause, would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trademark for an earlier trademark to be afforded the broader protection under Article 8(5) of Regulation No 207/2009, three conditions must be satisfied:

1. the marks at issue must be identical or similar;
2. the earlier mark cited in opposition must have a reputation; and
3. there must be a risk that the use without due cause of the trademark applied for would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trademark.

Those three conditions are cumulative and failure to satisfy one of them is sufficient to render that provision inapplicable.

Trademarks should be Identical or Similar.

In the above-mentioned case, the Board of Appeal found that the trademark applied for and the allegedly reputed mark were not similar. The Board stated that from a visual point of view the marks had a separate structure and were made up of different elements. In each of the marks at issue,  the mere presence of two elements that are connected to each other does not render the marks similar, even though they share the basic geometric shape of a circle surrounding those elements.
Whilst a phonetic comparison of the marks at issue is impossible, the marks in question are also not similar from a conceptual point of view. Therefore, as the marks at issue were conceptually and technically dissimilar, the Board of Appeal concluded that the first of the cumulative conditions referred to above had not been satisfied, so that the opposition filed by the applicant pursuant to Article 8(5) of Regulation No 207/2009 had to be rejected on that ground alone.

Interestingly, according to well established case-law 1 presented by Chanel, to satisfy the condition laid down by Article 8(5) of Regulation No 207/2009, that the signs at issue must be identical or similar, it is not necessary to prove that there exists, on the part of the relevant section of the public, a likelihood of confusion between the earlier mark with an alleged reputation and the mark applied for. It is sufficient for the degree of similarity between those marks to have the effect that the relevant section of the public establishes a link between them. The assessment of the visual, phonetic, and conceptual similarity of the signs at issue must be based on the overall impression generated by the signs, bearing in mind, in particular, their distinctive and dominant elements.

However, in another case 2 , the General Court expressly stated that it was necessary to compare the mark applied for with the earlier mark as they were registered, and it was only for the sake of completeness that it took account of the representation of the mark applied for positioned back-to-front on the goods that it covered. In the Chanel case, the court stated that it is necessary to compare the allegedly reputed mark in the form in which it was registered, and the mark applied for in the form in which it was applied for, irrespective of any possible rotation in their use on the market.

Whilst the marks share certain characteristics, namely a black circle, two interlaced curves, which the circle surrounds, both black in colour, intersecting in an inverted mirror image, and a central ellipse, resulting from the intersection of the curves, the marks at issue are visually different, despite the presence in each of them of two interlaced curves within a black circle, the latter being, moreover, a common geometric element.

The court held that the visual differences between the marks at issue result, first, from the more rounded shape of the curves, resembling the image of two letters ‘c’ in the allegedly reputed mark, as compared with the image of the letter ‘h’ in the mark applied for, second, from the different stylization of those curves and their arrangement, horizontally in the allegedly reputed mark and vertically in the mark applied for, third, the orientation of the central ellipse, resulting from the intersection of those curves, vertical in the allegedly reputed mark and horizontal in the mark applied for and, fourth, the greater thickness of the line of those curves in the allegedly reputed mark as compared with the line of the curves in the mark applied for, as well as the line forming the circle of the mark applied for as compared with that of the allegedly reputed mark.

Earlier Trademark must have a Reputation

The extent and nature of reputation to be held by a mark are not defined in legislation, however the Court has assisted in solving this lacuna. In the Chevy Case3, the court explained that it ‘is only where there is a sufficient degree of knowledge of that mark that the public, when confronted by the later trademark, may possibly make an association between the two trademarks … and that the earlier mark may consequently be damaged’. The Court established that reputation is a knowledge threshold requirement, therefore, implying that it must be primarily evaluated on the basis of quantitative standards. To satisfy the obligation of reputation, the earlier mark must be known by a significant part of the public concerned by the goods or services covered by that trademark.
Furthermore, if reputation is to be weighed based on quantitative standards, evidence relating to the esteem in which the public might hold the mark in question, rather than to its recognition, are not directly relevant for establishing that the earlier mark has acquired sufficient reputation for the purposes of Article 8(5) EUTMR. The economic value of reputation is also relevant when assessing the possibility of detriment or unfair advantage.

The EUIPO Guidelines state that Article 8(5) EUTMR protects ‘famous’ marks not the fame per se, but rather for the success and renown (‘goodwill’) they have acquired in the market. A sign does not enjoy any reputation inherently, for example, simply because it refers to a renowned person or event, but only for the goods and services it designates and the use that has been made of it.

The Risk of Injury without Due Cause

Unfortunately, the law does not define in detail what is considered as injury to the earlier mark. However, the court has states in the Chevy case4  that it ‘is only where there is a sufficient degree of knowledge of that mark that the public, when confronted by the later trademark, may possibly make an association between the two trademarks … and that the earlier trademark may consequently be damaged’. Whilst being considered too limited to serve as an analysis of the risk of injury, this statement at least gives a significance indication, namely, that detriment or unfair advantage must be a direct consequence of an association between the conflicting marks. In addition, the Court noted that what is required is that the public is already familiar with the earlier mark and is already exposed the latter mark. This argument has been used in cases where the goods and services are largely different.

The EUIPO guidelines state that the evaluation of detriment or unfair advantage must be founded on an overall assessment of all the factors pertinent to the case, including the similarity of signs; the reputation of the earlier mark; and the respective consumer groups and market sectors, with a view to determining whether the marks may be associated in a way that may adversely affect the earlier trademark.

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