In Céline SARL v Céline SA, the Court decided that the owner of a registered trade mark can stop a third party from using an identical company, trade or shop name to sell goods that are identical to those for which the mark was registered, where the use is in relation to goods in such a way as to affect or be liable to affect the functions of the mark.
But the ECJ said that it was up to the French court that had referred the question to the Court to decide whether the specific use of the registered trade mark as a shop name constitutes "use in relation to those goods" for the purposes of Article 5(1) of the Community trade mark directive.
The dispute began when fashion design company Céline SA, which registered its trade mark in 1948, discovered a clothes shop in France trading under the name Céline.
Céline SA sued Céline SARL and asked the Nancy Regional Court to ban the defendant from infringing the Céline trade mark and from engaging in unfair competition by naming its company and shop Céline. The Court backed the trade mark owner and ordered Céline SARL to stop using the term Céline and to pay €25,000 in damages.
Céline SARL appealed, arguing that that the use of a sign which is identical to the earlier word mark as a company or a shop name did not amount to infringing conduct since it is not the function of either a company or a shop name to distinguish goods or services.
It also argued that, in any event, there could be no confusion on the part of the public as to the origin of the goods concerned, given that Céline SA is in the business of luxury clothing and accessories.
The Nancy Court of Appeal decided to stay the proceedings and referred the following question to the Court for a preliminary ruling: "Must Article 5(1) of [the directive] ... be interpreted as meaning that the adoption, by a third party without authorization, of a registered word mark, as a company, trade or shop name in connection with the marketing of identical goods, amounts to use of that mark in the course of trade which the proprietor is entitled to stop by reason of his exclusive rights?"
The ECJ said that case law in Arsenal Football Club, Anheuser-Busch and Adam Opel made it clear that the owner of a registered mark may only prevent the use of a sign by a third party which is identical to his mark under Article 5(1)(a) of the directive if the following four conditions are met.
First, that use must be in the course of trade; second, it must be without the consent of the owner of the mark; third, it must be in respect of goods or services which are identical to those for which the mark is registered; and finally, it must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services.
The parties agreed that the mark was being used in the course of trade and without authorization but disagreed about the other two issues.
In its ruling the ECJ said: "The unauthorized use by a third party of a company name, trade name or shop name which is identical to an earlier mark in connection with the marketing of goods which are identical to those in relation to which that mark was registered constitutes use which the proprietor of that mark is entitled to prevent in accordance with Article 5(1)(a) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, where the use is in relation to goods in such a way as to affect or to be liable to affect the functions of the mark."
It went on to say: "Should that be the case, Article 6(1)(a) of Directive 89/104 can operate as a bar to such use being prevented only if the use by the third party of his company name or trade name is in accordance with honest practices in industrial or commercial matters."
But the ECJ ruled that it is for the national court to "carry out an overall assessment of all the relevant circumstances in order to assess, more specifically, whether Céline SARL can be regarded as unfairly competing with Céline SA".
