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Has the EUIPO taken Neutralisation too far? In this article, Roland Weede delves into a recent case that explores the problematic issues around the concept of neutralisation.
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What is neutralisation?
The concept of “neutralisation” in trade mark law involves the idea that, when comparing two trade marks for likelihood of confusion, a conceptual difference between the signs can outweigh their visual and/or phonetic similarities, provided that at least one of the signs has a clear and specific meaning that can be immediately understood. In a seminal 2006 decision, the European Court of Justice held that there was no likelihood of confusion between the trade marks PICASSO and PICARO because market participants would overwhelmingly recognise the “concept” of the world-famous artist Pablo Picasso behind the word PICASSO. This would then lead those market participants to clearly differentiate one trade mark from the other, thus ruling out any possibility of confusion.
There have been numerous decisions in which the courts further elaborated on this concept, and it has become firmly established in European harmonised trade mark practice, attributing ever more importance to the conceptual aspect over time. At HLK’s recent trade mark conference, we identified this developing trend as a potential post-Brexit “fault line” for a future divergence of trade mark decisions by the EUIPO and the UKIPO.
A recent opposition decision by the EUIPO takes this theory further than any previous decision and into a territory where we are quite certain that the UKIPO would not want to follow. The case has only been decided in the first instance, with an appeal pending, but it is worth watching for the appeal decision, as it should give more clarity on some problematic issues around the concept of neutralisation.
Exploring the case
The case involves an international trade mark registration by Shanghai-based lighting manufacturer Opple Lighting Co., Ltd. (IR No. 1698480). The trade mark is an only slightly-stylized version of the word “OPPLE”, which has been registered for various marketing, advertising and business consultancy services in class 35. The European designation of this IR registration was opposed by Apple Inc., based on likelihood of confusion with two of their “APPLE” trade marks, and on the reputation said trade marks enjoyed in the European Union.
In a comparison of the signs, the EUIPO found that the average consumer (deemed to be reasonably well informed and reasonable observant and circumspect) will associate the word “APPLE” with …
… the firm, rounded edible fruit of a rosaceous tree, having red, yellow or green skin and crisp whitish flesh.
In contrast, the word OPPLE would not convey any meaning to the average consumer.
In its further discussion on the question of reputation, the office came to the conclusion that despite the considerable reputation of the earlier mark, the low degree of visual and phonetic similarity, further lessened by the clear concept associated with the earlier mark only, makes it unlikely that the relevant public will draw a link between the two signs by which the earlier trade mark could profit from APPLE’s reputation.
On the question of likelihood of confusion, the office first restates the existing visual and phonetic similarity. As part of the global assessment of all factors relevant for the likelihood of confusion, the office again touches on the topic of neutralization:
In this respect, whereas the earlier mark, will immediately be associated with the concept of an ‘apple’ by the average consumer throughout the relevant territory, the contested application is meaningless.
According to the office, this is sufficient to outweigh the visual and phonetic similarities between the signs.
This decision is remarkable under two aspects:
- The simple existence of a dictionary meaning of the word “apple” was sufficient to outweigh the similarities of the signs (which, in our opinion, are similar to more than just a low degree, phonetically as well as visually). This takes the concept of neutralisation to a logical conclusion which significantly reduces the value of trade marks that have any kind of meaning, even if that meaning has no connection to the goods and services at issue. While the idea that a fanciful invented name is a stronger trademark than a word with a meaning is in line with the general principles of trademark law, the decision seems to go beyond that, weakening the protective effect of trademarks with an EU-wide discernible meaning to such an extent that it would be difficult to define the remaining scope of protection.
- The decision changes the sequence of examination in one important aspect: In its judgment of 4 March 2020, EU:C:2020:156 – EXTRAVAGANZA, the European Court of Justice held that the assessment of the conditions of neutralisation forms part of the assessment of the similarity of the signs at issue, if at least one of the signs at issue has, from the perspective of the relevant public, a clear and specific meaning which can be grasped immediately by that public (§ 75 of said decision). The Court expressly states that in such cases, the global assessment of the likelihood of confusion may be dispensed with, because the signs already “produce a different overall impression”, which can only mean that they are not even considered similar.
In contrast, in the decision at hand, the EUIPO at first confirms similarity, while treating the neutralisation on a higher level, either as part of the global assessment of likelihood of confusion, or as part of the assessment of a mental link between the earlier trade mark with reputation and the contested mark.
Our opinion on the case
In our opinion, the approach of the EUIPO in the OPPLE decision is the better one: If neutralisation would really dispense with the global assessment, and end the examination at the stage of examining the similarity of the signs, this would very much devalue trade marks with reputation: If neutralisation makes trade marks dissimilar (“different overall impression”), the question of a mental link between the earlier trade mark with reputation and a later filed trade mark would not even come up.
It will be interesting to see the Board of Appeal’s considerations on these questions. If one does not want to give up the neutralisation theory completely (and there might be good arguments to do so), the Board of Appeal should probably adopt the Opposition Division’s approach on the sequence of examination, which sounds eminently reasonable. However, we expect the Board of Appeal to define some boundaries for the kinds of concept that can neutralise phonetic and visual similarity, such as not to completely devalue trademarks with a recognisable meaning.
This is for general information only and does not constitute legal advice. Should you require advice on this or any other topic then please contact hlk@hlk-ip.com or your usual HLK adviser.
