EU and UK trade marks are liable to be revoked if "genuine use" (i.e. actual use of the mark by its owner or by someone else with its consent) cannot be proven for a continuous five year period. A recent decision of the Court of Justice of the European Union (Ferrari SpA v DU) has confirmed that the sale of second-hand sales of luxury sports cars, as well as replacement and accessory parts, may constitute genuine use of a trade mark, even where those models have been discontinued.
The iconic Ferrari "Testarossa" was sold between 1984 and 1996. After it stopped making the car, Ferrari continued to sell second hand models, and replacement parts for them.
Ferrari had registered "TESTAROSSA" as an EU Trade Mark for, among other things, "vehicles, aircraft and water vehicles and parts thereof". An individual applied to cancel the EUTM on the basis that it had not been used for a continuous period of five years. Ferrari defended the action on the basis that its use of the mark for second hand sales of Testarossas, as well as replacement parts for them, constituted genuine use.
The CJEU's decision has established a number of useful principles in relation to when a trade mark will be deemed to have been "used", even without the sale of any new goods under that mark. These are detailed in turn below.
The sale of second-hand goods constitute genuine use
The starting point is that the sale of second-hand products bearing a trade mark does not automatically constitute "use" of that mark in relation to the goods sold. Second-hand sales, if made without the consent of the trade mark owner, will not usually constitute use of the trade mark on the goods sold. A good example of this is Aiwa Co Ltd v Aiwa Corporation, where the English High Court held that sales of second hand Aiwa audio equipment, by third parties, did not constitute "use" of the AIWA trade mark (no new products had been sold under the mark since 2008). The CJEU confirmed this general point in the Ferrari case.
However, the CJEU also made clear that second-hand sales can constitute "use" of the trade mark, "if the proprietor of the trade mark actually uses that mark, in accordance with its essential function which is to guarantee the origin of the goods for which it was registered, when re-selling second-hand goods". The key point appears to be that, when selling the second hand Testarossas, Ferrari was confirming that the goods were genuine Testarossas, and that they therefore came from the trade mark owner – i.e. the "TESTAROSSA" trade mark was being used as a badge of origin for the second-hand goods. As Ferrari put it, "the sale of used vehicles bearing the marks at issue thereby comprised a renewed commitment in respect of the vehicle concerned".
There is therefore now a clear distinction between goods sold second-hand by the trade mark owner (or by a third party with its consent) and those sold by a third party unconnected with the trade mark owner. The former is likely to amount to use of the mark, while the latter will not.
Use of the trade mark for replacement parts can constitute genuine use in respect of the original goods
This might seem the most surprising of the principles elucidated by the CJEU. It is best summed up in the following statement from the judgment: "…use, by its proprietor, of a registered trade mark in respect of replacement parts forming an integral part of the goods covered by that mark is capable of constituting 'genuine use'…not only for the replacement parts themselves but also for the goods covered by that mark."
The TESTAROSSA trade mark was registered for "vehicles, aircraft and water vehicles and parts thereof". One might have thought its use in respect of replacement or component parts for vehicles would only constitute use sufficient to support the "parts thereof" part of this specification; however, the CJEU has held that it was use in respect of "vehicles". It appears that the goods (in this case, vehicles) must have previously been sold by the trade mark owner. Therefore, for example, a garage that only carries out repairs of goods under a mark, without ever selling those goods, could not be making use of the marks sufficient to support a registration for the goods themselves.
Use in respect of a particular market segment only can support a registration for a wider category of goods
Where a mark is registered for goods in a broad category of goods, which may be sub-divided into several independent categories, the trade mark owner will need to show genuine use of the mark for each of those independent sub-categories. Accordingly, it was necessary to assess whether "high priced luxury sports cars" was an independent sub-category of "vehicles".
The fact that the goods were sold at a particularly high price, and therefore belonged to a specific market, was not sufficient to make them an independent sub-category of "vehicles". Whilst "sports cars" are high-performance cars and capable of being used in motor sports, they are also capable of being used for transport, like any other car. As for "luxury cars", several types of cars can be classed as "luxury". The CJEU therefore concluded that "high priced luxury sports" cars are not an independent sub-category of "vehicles" - unless it was apparent that consumers who wished to purchase those goods perceived them as such. The latter point is for the German national court to determine.
Separately, the CJEU noted that, although a relatively low number of units had been sold under the "TESTAROSSA" mark (turnover from sales of replacement parts between 2011 and 2016 was only €17,000), this was reflective of the scarcity of Testarossas – there were only 7,000 in the world. The high price, and rarity, of the goods was a relevant factor in an assessment that the use had not been merely "token". This is clearly a common sense approach – otherwise it would be far easier to maintain trade marks for high volume products than it would be for highly exclusive ones.
All of the above principles provide useful guidance on what will constitute "genuine use" for the purpose of supporting a trade mark registration. Most importantly of all, sales of second hand goods will constitute use of the mark in relation to those goods, provided those sales are made by the trade mark owner or with its consent. The sale of replacement parts can also constitute use of the mark in respect of the goods to which those parts are applied.