Non-original car spare parts and trade mark infringement: is there no room for referential use? The AG Opinion in C-334/22 Audi

Abstract

In her Opinion in C-334/22 Audi, Advocate General (AG) Medina found that provisions of the EU trade mark law must be interpreted as meaning that an element placed on a non-original automotive spare part (radiator grille) for fitting the original mark of the car manufacturer would not constitute ‘use of a sign in the course of trade’. She ruled out, however, the possibility of relying on the referential use limitation in such circumstances. This gives rise to concerns that the AG’s Opinion construes the scope of the referential use limitation too narrowly. The author submits that the AUDI case, which is now to be decided by the Court of Justice of the European Union (CJEU), calls for attributing greater relevance to the catalogue of limitations and exceptions to exclusive trade mark rights, notably the referential use limitation. Moreover, a recalibration of the approach towards the 'honest practices' clause, which serves as a filter for all limitations and exceptions under EU trade mark law, is also needed in the context of non-original spare parts.

Legal context

On 21 September 2023, AG Medina issued her much-awaited Opinion in Audi concerning the marketing of non-original radiator grilles for cars that contain an element for inserting and mounting the original mark (emblem) of the car manufacturer. Similar cases have already been brought before to national courts. Notably, the German Federal Court of Justice (Judgment of 7 March 2019, Case I ZR 61/18, GRUR Int 2020, 71) accepted that there could be infringing ‘use of a sign’ in such circumstances and rejected the application of the referential use limitation.

Among various legal aspects that have been raised in the request for a preliminary ruling in Audi by the District Court in Warsaw, and, consequently, tackled in the AG’s Opinion, the question that stands out concerns the scope of the referential use limitation in Article 14(1)(c) of Regulation 2017/1001 (EUTMR). After the 2015 EU trade mark law reform, this provision covers any use made by a third party for the purpose of identifying or referring to goods or services as those of the trade mark proprietor. It thus goes beyond the narrow scope of the former Article 12(1)(c) of Regulation 207/2009, which was confined to the use necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts. Currently, Article 14(1)(c) EUTMR refers to the use made to indicate the intended purpose as merely an example of referential use (cf also the recent Opinion of AG Szpunar of 7 September 2023, Inditex, C–361/22, ECLI:EU:C:2023:653, in the context of Article 14(1)(c) of the Trade Mark Directive 2015/2436 (TMD) compared to Article 6(1)(c) of the former Trade Mark Directive 2008/95). Moreover, the requirement of the ‘necessity’ of referential use is now only linked to the ‘indication of the intended purpose’ modality, which AG Medina also observed and accepted (para 55). This calls for guidance from the Court of Justice of the European Union (CJEU) on the scope of the current referential use limitation in the context of spare parts.

On a general level, the Court’s decision might play an important role in defining the current scope of referential use in light of Article 14(1)(c) EUTMR, as well as requirements for compliance with the honest practices proviso (Article 14)(2) EUTMR) especially regarding referential use of trade marks enjoying a reputation. For these reasons, the AG Opinion deserves close attention.

Facts

The dispute in the main proceedings concerns the protection of the four-ringed logo of the car manufacturer AUDI, registered as EUTM No 000018762 (Figure 1).

The trade mark proprietor took action before the referring court against the defendant, a natural person selling spare parts to other distributors and not directly to consumers. The defendant advertised and offered for sale on its website non-original radiator grilles, which were destined for older AUDI models from the 1980s to 1990s. These radiator grilles included elements that allowed the inserting and mounting of the original AUDI’s emblem. Shapes of these elements corresponded to a various degree to the shape of the protected mark. Examples of these elements are given in Figure 2.

While recognizing that the AUDI’s mark is highly distinctive and widely known in Poland, the District Court in Warsaw still found it necessary to refer questions to the CJEU on the scope of trade mark protection. First, the referring court seeks guidance on whether the referential use limitation in Article 14(1)(c) EUTMR could preclude the trade mark proprietor from prohibiting the use of a sign that is identical or confusingly similar to an EU trade mark on automotive spare parts where that sign constitutes a mounting element for an automotive accessory, being the emblem reflecting the mark of the car manufacturer (question 1(a)). When asking this question, the referring court distinguished two scenarios, depending on whether it is technically possible or impossible to fit the original emblem on the radiator grille without reproducing a sign that is identical or confusingly similar to the car manufacturer’s mark. In the case of an affirmative reply to question 1(a), the referring court seeks clarification concerning criteria relevant for assessing whether such use complies with honest practices in industrial and commercial matters as required by Article 14(2) EUTMR (question 1(b)). Next, by formulating questions 1(c) and 1(d), the Polish court also requests guidance on whether the element on a radiator grille for fixing the original emblem could be regarded as a sign designating origin and used within the meaning of Article 9(2) and (3)(a) EUTMR.

Analysis

The AG reversed the order of questions raised by the Polish court and started her analysis by examining the concept of a ‘sign’ which is used in the course of trade within the meaning of Article 9(2) and (3) EUTMR, moving next to the referential use limitation and the honest practices proviso.

In her analysis, AG Medina noted that the purpose of a spare part is to restore the original appearance of a product. Therefore, a radiator grille with an element enabling the fitting of the car producer’s mark should allow an exact replication of the original appearance of the car. The AG opposed it to the practice of ‘tuning’ which results in modifying the appearance (paragraphs 31–32). Relying on the earlier CJEU’s Ford decision (Order of 6 October 2015, Ford, C–500/14, ECLI:EU:C:2015:680), AG Medina underlined that the repair clause in design law (Article 110(1) of Regulation No 6/2002 on Community designs) does not have an effect within trade mark law ‘from a formal standpoint’ (paragraph 41). This did not prevent her, however, from finding it necessary to take account of the objectives of other IP domains, in this case of design law, to avoid the neutralization of those objectives when applying the provisions of trade mark law (paragraphs 42–45). It apparently can be read as meaning that, while the repair clause in design law does not formally build an element of trade mark law, it is still desirable to interpret the provisions of trade mark law in such a manner as to prevent the said neutralization of the effect of the repair clause.

The AG’s interpretation of Article 9(2) and (3) EUTMR essentially leaves room for providing proper flexibility in such situations as in the main proceedings at an early stage of assessing an infringement action by utilizing criteria that might allow establishing a lack of a ‘sign’ fulfilling the functions of a trade mark and used in the course of trade. At the same time, the AG interpreted the referential use limitation in Article 14(1)(c) EUTMR narrowly, as inapplicable to such situations, in case the CJEU saw room for ‘use of a sign’ contrary to the AG’s view.

The AG considered it necessary to refer to consumer perceptions when answering the question whether the element such as in the main proceedings would be viewed as a ‘sign’ indicating the origin of the spare part or rather as its mere technical property. Speaking in favour of a case-by-case analysis, the AG pointed out factors that she considered relevant when establishing consumer perception, such as information on a spare part clarifying that it is not original, an indication of the actual independent manufacturer, as well as special features of the geographical market in question. The AG also pointed to the findings of empirical studies carried out by Anna Tischner and Katarzyna Stasiuk (A Tischner and K Stasiuk, ‘Spare Parts, Repairs, Trade Marks and Consumer Understanding’ (2023) 54 IIC—International Review of Intellectual Property and Competition Law, 26 42–54), which demonstrated that, given the large number of used cars in Poland that often require repair, Polish automotive professionals (these were purchasers in the main proceedings) are well acquainted with the car spare parts market and are unlikely to be misled by properly labelled non-original parts. While end consumers are more likely to be misled, the percentage of those who were misled was still insignificant. It is worth pointing out, however, that the legal perspective in the cited studies was not limited to the ‘use of a sign’ aspect but attributed even greater relevance to the catalogue of limitations, which are better suited to considering the context and circumstances of the use.¹ The AG also drew an analogy to the CJEU’s Opel judgment, where the CJEU found that, based on consumer perceptions, a third party’s use of a car producer’s mark on replica toys might fall short of fulfilling the function of indicating the origin of a product, even when the protected mark is also registered for toys (Judgment of 25 January 2007, Adam Opel, C-48/05, ECLI:EU:C:2007:55, paragraphs 20–25).

Moving to the analysis of the referential use limitation (Article 14(1)(c) EUTMR) and the honest practices proviso (Article 14(2) EUTMR), the AG emphasized that her conclusions would be relevant only if the CJEU’s interpretation confirmed the existence—contrary to her view—of a ‘sign’ used in the trade in the circumstances at hand. First, the AG took the view that Article 14(1)(c) EUTMR could potentially apply not only to a sign identical to the protected trade mark but also to a confusingly similar sign (in case this was the qualification of the element for inserting and mounting the car’s emblem). She ultimately, however, found no room for ‘exclusively’ referential use, indicating that once the element on a radiator grille is perceived as performing a technical function and not the function of designating the origin of goods, its use cannot be viewed as a reference to the proprietor’s trade mark (paragraph 57). For similar reasons, the AG was unable to qualify the use at hand as falling within the scope of the specific ‘indication of intended purpose’ modality of referential use. Additionally, in the latter case, she denied compliance with the ‘necessity’ requirement. The AG raised that this requirement concerned conveying information to end consumers while, in her view, the element on a radiator grille would not have an informative function but merely a technical function (paragraph 58).

Regarding the interpretation of the honest practices proviso, the AG referred to criteria set in earlier CJEU case law, notably in the Gillette decision. According to these criteria, modelled after those of permissible comparative advertising in Article 4 Directive 2006/114/EC, the third-party use cannot mislead as to a commercial connection with the trade mark proprietor, affect the value of the trade mark by taking unfair advantage of its distinctive character or repute, discredit or denigrate the trade mark, or present products as imitations or replicas (Judgment of 17 March 2005, Gillette, Case C-228/03, ECLI:EU:C:2005:177, paragraphs 40–45). On this basis, the AG considered three aspects as specifically relevant to the case in question. First, she very briefly stressed that the referring court must check whether the inferior quality of the non-original spare part could trigger ‘discrediting or denigrating’ the protected mark and adversely affect its quality function (paragraph 64). Second, the AG deemed it necessary to examine whether the defendant had taken the necessary steps to indicate that spare parts are non-original and to ensure that they would not be regarded as imitations or reproductions of the original spare part (paragraph 65). Third, referring to the CJEU Acacia judgment (Judgment of 20 December 2017, Acacia, Joined Cases C–397/16 and C–435/16, ECLI:EU:C:2017:992) concerning the repair clause in design law, the AG found that the producer or seller of a non-original part had the duty of diligence to comply with the conditions that are required to ensure that downstream users also comply with honest practices by not engaging in misleading or discrediting practices. As a proper means, the AG mentioned a clear and visible indication on the spare part that it is a non-original product and undertaking proper contractual measures (paragraph 66).

Broader significance

The AG Opinion leans towards the permissibility of manufacturing and selling of non-original spare parts bearing a car manufacturer’s trade mark. The relevance was attributed, in the AG’s view, to the considerations underpinning the repair clause in design law. This touches upon the problem of overlapping IP rights, and the AG’s openness to this problem should be welcomed in the context of the analysed design/trade mark law interface. This is especially justified in light of the CJEU Acacia judgment, where the aim of the repair clause in design law was defined as allowing the replication of parts that are visually identical to the original parts (Judgment of 20 December 2017, Acacia, Joined Cases C–397/16 and C–435/16, ECLI:EU:C:2017:992, paragraphs 74–75). The AG’s approach implies reaching the repair-clause-friendly goal by utilizing internal flexibilities existing within trade mark law. Such an approach is, arguably, not prevented by the CJEU’s Ford decision.

The question, however, remains: at what stages of assessing an infringement claim could the proper flexibilities be found and applied? It seems that the emphasis put in the Opinion on the lack of ‘use of a sign’ while rejecting the applicability of the referential use limitation, might just be insufficient to achieve the purported effect.

As for the ‘use of a sign’ aspect, it will, of course, be interesting to see whether the CJEU follows the AG’s interpretation concerning factors relevant to establishing the absence of a ‘sign’ indicating the origin of goods and the relevant legal implications. If it does, the relevance of conditions in the geographical market concerned, as suggested by the AG, might lead to varying results in different sub-markets within the EU. In Poland, the market for used cars and, consequently, spare parts, is well developed. This might affect the perception of local professional purchasers and end consumers in such a way that they perceive an element in question placed on the radiator grille as merely a technical property of the product and not an indication of origin. In other parts of the EU, however, where the market for used cars and non-OEM spare parts is less developed (as the repair clause in national design law is either not yet in force or has been introduced only recently), ‘use of a sign’ could be established in individual cases.

Against this background, rejecting the applicability of the referential use limitation suggested in the Opinion is problematic. Given that the referential use analysis is only triggered once the element on a radiator grille is viewed as a sign, the AG’s standpoint that the technical function of this element rules out qualifying it simultaneously as a sign that conveys information to the purchaser cannot be shared. When one concludes that the use of the element in question amounts to use within the meaning of Article 9(2) and 9(3) EUTMR, it could still be potentially eligible for qualification as a sign used to refer to the trade mark of the given car manufacturer. The analysed use at hand should be capable of being accommodated within the current wide referential use limitation, eg, to provide information through the use of the element in question about an alternative offer to the offer of the car manufacturer.

Ultimately, if the CJEU disagrees with the AG on the ‘use of a sign’ aspect but shares the AG’s view that referential use limitation does not apply, the flexibilities allowing the manufacturing and marketing of non-original spare parts allowing the exact restoration of the appearance of the car, including the trade mark of the car manufacturer, would be effectively denied under EU trade mark law. This would result in using trade mark law as a tool for controlling the market for products, which is a purpose alien to this IP domain. Next, if the CJEU agrees that, due to the features of the geographical market concerned, the ‘use of a sign’ in some parts of the EU could be ruled out, in these other parts where such use might be confirmed, it could not be offset by invoking referential use.

The Polish court did not address in its questions the limitation contained in Article 14(1)(b) EUTMR, which, following the EU trade mark law reform, not only covers the use of descriptive signs and indications but also the use of ‘signs or indications which are not distinctive’. As for the use of descriptive indications, the CJEU so far has not been ready to interpret it in such a way that it could embrace a third party’s use where the sign itself is not descriptive but the use is undertaken in a non-descriptive manner. In this vein, the CJEU decided in adidas that the limitation did not apply to the purely decorative use of the two-stripe motifs on garments, as the sign in question did not have the aim of providing information about one of the characteristics of the goods (Judgment of 10 April 2008, adidas, C–102/07, ECLI:EU:C:2008:217, paragraphs 47–48). Next in Adam Opel, the CJEU found that a reproduction of a third-party mark on scale models of cars was not intended to provide any indication concerning the characteristics of those scale models, but it was a mere element of the faithful reproduction of the original vehicles (Judgment of 25 January 2007, Adam Opel, C-48/05, ECLI:EU:C:2007:55, paragraph 44). From that perspective, it is unlikely that placing elements on radiator grilles to fit the original emblem would be classified as a use made to describe a characteristic of the spare part. Still, the case of the element placed on non-original car spare parts for fitting the car’s emblem could offer an occasion to consider whether there could be a use that is descriptive of the element in question as a technical property of the product.

Moreover, the limitation added in Article 14(1)(b) EUTMR concerning the use of non-distinctive indications deserves attention. Given that the CJEU has not explored its significance so far, it could be open to accommodating situations when a third party uses a protected and distinctive mark but does it in a non-distinctive manner. (Study on the overall functioning of the European trade mark system. Presented by Max Planck Institute for Intellectual Property and Competition Law, Munich (2011), https://publications.europa.eu/en/publication-detail/-/publication/5f878564-9b8d-4624-ba68-72531215967e, 121, para 2.257; A Kur and M. Senftleben European trade mark law. A commentary (OUP 2017) 417–418, para 6.33.) Arguably, this could be an additional qualification for the use of the element for inserting and mounting the original car’s emblem, especially if one perceives the said element as having merely a technical function. Such a qualification does not appear to contradict a simultaneous reliance on referential use. Two different limitations could be applicable, once a proper justification for each of them is provided.

AG Medina did not elaborate too extensively on the interpretation of the honest practices proviso in Article 14(2) EUTMR, which is the lens through which the applicability of limitations in Article 14(1) EUTMR should be assessed in individual cases. The criteria that have so far been set out by the CJEU in its case law, notably in Gillette, have justified fears of circular reasoning because, once they are understood literally, they depend on factors that are already relevant for assessing infringement under Article 9 EUTMR. This neutralizes the standalone significance of limitations. It is therefore essential that the honest practices proviso be interpreted in a manner that leaves room for a proper balancing of competing interests based on limitations, after conditions for an infringement action under Article 9(1)(a)–(c) EUTMR have already been established (M. Senftleben, et al., ‘Recommendation on Measures to Safeguard Freedom of Expression and Undistorted Competition in EU Trade Mark Law’ (2015) EIPR, 337, 339–340).

In addition, Recital 21 in fine EUTMR and Recital 27 in fine TMD stipulate that provisions of trade mark law should be applied in a way that ensures full respect for fundamental rights and freedoms. This is a distinct call for a balance between trade mark rights protected as property and other fundamental rights and freedoms, which, next to freedom of expression (explicitly mentioned in both Recitals), should also include e.g., freedom to conduct business. Even if this stipulation is not contained in the operative part of both acts, it should not be without relevance when interpreting and applying the provision on limitations in trade mark law.

The approach taken by AG Medina offers only some flexibility in interpreting honest practices in the context of non-original spare parts bearing a car manufacturer’s mark. The requirement formulated by the AG concerning the duty of diligence of the manufacturer or the seller to ensure that downstream users comply with honest practices is necessary and reasonable. As for Gillette’s ‘imitation or replica’ requirement, the AG’s opinion emphasises the efforts made to provide proper information on non-original spare parts. Upholding, however, the ‘imitation or replica’ requirement does not solve the problem, which stems from the fact that the very purpose of a spare part is to be a replica of the original part so that the original appearance of the product can be restored. Therefore, the relevance of the ‘imitation or replica’ factor should generally be put into question when interpreting the honest practices clause in the context of spare parts (A Tischner and K. Stasiuk² , 58. In favour of interpreting the ‘imitation or replica’ negative condition as narrowly as possible in a general context of honest referential use, A Ohly, ‘Limitations of Trade Mark Protection – the New Regime’ (2017) Annali italiani del diritto d’autore della cultura e dello spettacolo (AIDA), XXVI, 105, 115).

Next, the AG’s statement that the national court should determine whether there is possible interference with the quality function resulting in ‘discrediting or denigration’ of the protected mark does not offer a deeper insight. If the assessment of this factor relied on analogue criteria to those that are relevant for assessing an interference with the quality function of a mark having a reputation under infringement criteria this would lead to the aforementioned circular assessment, eroding the independent role of limitations. The same could happen if another Gillette negative criterion of affecting the value of the protected mark by taking unfair advantage of its distinctive character or repute were assessed in the context of Article 14(2) EUTMR in the same manner as in the context of Article 9(2)(c) EUTMR

The significance of the upcoming CJEU’s ruling in AUDI is hard to overstate. It will not only have relevance for the market of spare parts but, on a more general level, it will reveal how much potential the CJEU sees in the flexibilities introduced in the reformed EU trade mark law. Hopefully, the Court will be ready to recognize that, in addition to the extended scope of the referential use limitation in Article 14(1)(c) EUTMR, the call in Recital 21 EUTMR to apply EUTMR in a way that ensures full respect for fundamental rights and freedoms does offer a perspective worth taking into account. It is the freedom to conduct business (Article 16 of the Charter of Fundamental Rights of the European Union) that could be relevant in the context of the activities of independent manufacturers and sellers of spare parts. Securing free and informed consumer choices between OEM and non-OEM spare parts should also play a role.

Footnotes

Author notes