Trade Marks: Trends And Developments 2022 - Trademark

Introduction

In the past year, leading decisions were issued in Switzerland that helped in clarifying fundamental questions in Swiss trade mark law and contributed to legal certainty. In particular, two decisions were rendered by the Swiss Supreme Court (SSC) that dealt with absolute grounds for refusal and buttressed the trend in Switzerland to align Swiss trade mark law with the laws of the EU and Switzerland's neighbouring countries. One of these decisions concerns the protracted legal dispute regarding the three-dimensional trade mark of the Nespresso coffee capsule that finally ended after ten years with a decision of the SSC declaring the trade mark null and void due to technical necessity (SSC decision of 7 September 2021, 4A_61/2021).

Another decision worth mentioning is the SSC's decision on the Federal Institute of Intellectual Property's (FIIP) practice regarding trade marks containing an indication of origin, which eventually led to a significant simplification of the FIIP's examination practice (SSC, decision of 8 March 2021, 4A_361/2020). Lastly, the Swiss Federal Administrative Tribunal (SFAT) decision outlining the conditions under which the use of a European trade mark in Germany suffices to fulfil the use requirement of a Swiss trade mark further shows Switzerland's efforts to take into account international trade mark systems and to incorporate them into the applicable law (SFAT decision of 14 July 2021, B-6253/2016). The decisions do not only demonstrate the trend to develop Swiss trade mark law in a direction ensuring compatibility with international standards and trade mark systems, but also show Switzerland's endeavours to continue to provide the conditions for being an attractive business location.

Invalidity of Nespresso's Three-Dimensional Trade Mark due to Technical Necessity

Background

On 29 June 2000, Nestlé SA filed an application for a three-dimensional trade mark claiming the shape of the Nespresso coffee capsule in class 30 after the patent protection for such coffee capsule expired in 1996. After the FIIP initially refused the trade mark based on the grounds that the shape was not substantially different from an ordinary shape and belonged to the public domain, the shape was eventually registered in the Swiss trade mark register with the annotation "acquired distinctiveness" (CH-486889; the "Trade Mark").

In 2011, Nestlé SA and its licensee Nestlé Nespresso SA (together "Nestlé") initiated court proceedings against several competitors distributing similar-looking coffee capsules, including such against Denner AG, a Swiss retailer, and against Ethical Coffee Company SA/Ethical Coffee Company (Suisse) SA (together "Ethical Coffee"), a manufacturer of biodegradable coffee capsules. In the proceedings against Denner AG, the first instance court did not question the validity of the Trade Mark, but dismissed Nestlé's action based on the argument that there was no likelihood of confusion between the capsules claimed by the Trade Mark and those sold by Denner AG (Commercial Court St. Gallen decision of 21 May 2013, HG.2011.199). In the parallel proceedings, Ethical Coffee did not only request dismissal of the action based on non-infringement, but filed a counterclaim requesting cancellation of the Trade Mark based on absolute grounds for refusal.

After conducting an expert opinion on the awareness and recognition of the Trade Mark in 2015, three expert opinions on technical background, the suspension of the proceedings due to insolvency of the two Ethical Coffee companies in 2018 and resumption of the proceedings in March 2020 (in the position of the defendants now the assignees of Ethical Coffee's assets), the first instance court eventually dismissed the action and approved the counterclaim by judgment dated 8 December 2020 and ordered the FIIP to cancel the Trade Mark. According to the court, the shape of the coffee capsule was not a technical necessity and not excluded from trade mark protection pursuant to Article 2 lit b of the Swiss Trademark Act (STA). However, in the opinion of the court, the shape was part of the public domain, and since Nestlé had not provided any evidence that the shape acquired distinctiveness by use the Trade Mark was declared invalid based on Article 2 lit a of the STA.

Criteria to qualify as a technical necessity

Following Nestlé's appeal, the SSC confirmed the invalidity of the Trade Mark, but clarified in an obiter dictum that the invalidity of the Trade Mark already results from the technical necessity of the shape according to Article 2 lit b of the STA and, therefore, the coffee capsule may even not be protected as trade mark based on its acquired distinctiveness (SSC decision of 7 September 2021, 4A_61/2021):

According to the SSC's established case law, a shape is "technically necessary" within the meaning of Article 2 lit b of the STA, if no alternative shape for a product of the same kind is technically available to a competitor or no alternative shape can be expected from a competitor in the interest of functioning competition. The latter is the case if any alternative solution would be less practical, less resistant or would involve higher manufacturing costs, since competitors cannot be expected to abandon the most obvious and appropriate solution (see SSC 129 III 514 consid 2.4.2 and 3.2.4; and SSC 131 III 121 consid 3.1).

In a first step, the SSC had to define the applicable scope of possible alternative solutions, as it did in an earlier decision in connection with the Lego brick (SSC decision of 3 July 2012, 4A_20/2012). In such decision, the SSC ruled that the alternative solutions available to competitors don't necessarily have to be compatible with the (existing) Lego brick system, while the first instance court in the current case held that the scope of alternative solutions must be limited to shapes compatible with the existing system (ie, the Nespresso coffee machine). The SSC confirmed the first instance court's decision in this respect and stated that the scope of alternative solutions may be limited to shapes compatible with an existing system, in particular if the consumers' interest in a functioning competition is evident.

However, in a second step the SSC criticised the first instance court's conclusion that there were alternative solutions to the Nespresso capsule available and its shape was, therefore, not a technical necessity leading to the Trade Mark's invalidity. Referring to its constant case law, the SSC reminded that a strict standard had to be applied for the examination of alternative solutions and that competitors did not have to settle for a less efficient alternative, as the first instant court seemed to suggest: the first instant court based its decision on expert opinions that pointed out that a coffee capsule (compatible with the Nespresso machine) did not necessarily have to have the geometric shape of a Nespresso capsule, even if such alternative solution may have certain disadvantages, but also certain advantages. The SSC made clear that the fact that an expert does not perceive a shape as an absolute technical necessity does not necessarily exclude the possibility for it to be a technical necessity within the meaning of Article 2 lit b of the STA. In particular, the judge may not rely only on (theoretical) findings of an expert, but must examine in each specific case whether – based on the expert opinions – alternative solutions could reasonably be requested from competitors, which presupposes that these alternative solutions:

are equivalent in terms of effective competition; and
sufficiently differ from the disputed shape from a purchaser perspective.

The SSC concluded that due to the disadvantages of alternative shapes identified by the experts one could not reasonably request competitors to use such alternative shapes and, in addition, such alternative shapes do not sufficiently differ from the Nespresso capsule. Therefore, the shape of the Nespresso capsule has to be qualified as "technically necessary" within the meaning of Article 2 lit b of the STA and is not amenable to trade mark protection.

The decision is to be welcomed in particular as the SSC clarified in the obiter dictum that in the interest of functioning competition the examination of alternative solutions must be limited to solutions being compatible with the relevant (pre-existing) system and that the grant of a monopoly for an indefinite period of time for a technical solution by trade mark law would conflict the ratio legis of the STA, in particular after the expiry of patent protection – which was limited by the legislator in time to foster free competition.

Change of the FIIP's Examination Practice for Signs Containing an Indication of Origin

Background and the FIIP's previous examination practice

Under Swiss law, misleading signs are excluded from trade mark protection (Article 2 lit c of the STA). According to the SSC, a sign is misleading, if it contains a geographical indication or even consists exclusively of a geographical indication and misleads the consumers by making them to believe that the marked goods or services originate from the country or place to which the indication refers, although in reality this is not the case (SSC 135 III 416 consid 2.1; and SSC 132 III 770 consid 2.1). However, over the past years, the SSC has developed an extensive catalogue of cases in which an indication of origin is not regarded as misleading and may be amenable to trade mark protection. In addition, in 2017 Swiss trade mark law was amended by the so-called "Swissness bill", which provides for additional rules concerning the use of indications of origin (such as Article 47 – 50 of the STA).

Over the time, the FIIP has established guidelines and rules for the examination of signs containing an indication of origin which are published in its directives for trade marks (Richtlinien in Markensachen or the "FIIP Guidelines"). In particular, it has been the FIIP's practice for a long time to request a geographical restriction of the list of goods to the country of origin in question whenever a sign containing an indication of origin was concerned. With the entry into force of the Swissness provisions, it had decided to strictly apply this approach also to trade mark applications claiming services (eg, "all the aforementioned goods/services of Swiss origin"). Since then the FIIP had no longer granted trade mark protection to signs containing an indication of origin, unless the list of services was geographically restricted to the country of origin in question. With such approach, the FIIP no longer had to examine whether the specific sign in question complies with SSC's case-law and the applicable provisions of the STA, which (would have) entailed a much more time-consuming assessment of evidence for each individual case and would according to the FIIP, have been unreasonable and could not be expected in a trade mark registration process.

However, in its decision concerning the trade mark application "SWISS RE – WE MAKE THE WORLD MORE RESILIENT" for services in class 36 the SSC held that the FIIP's practice of a general geographical restriction of the list of services goes too far, in particular if the trade mark application is compliant with Article 49 STA (SSC decision of 8 March 2021, 4A_361/2020). The SSC noted that the FIIP's approach to geographically restrict all lists of services of trade mark applications for signs containing an indication of origin as a precautionary measure was too undifferentiated and is not justified by the FIIP's concern (or need) to avoid an excessive examination effort. Interestingly, the geographical restriction practice with regard to goods was not subject to the SSC's decision.

Interim examination practice of the FIIP from 8 March 2021 to 28 February 2022

In view of the SSC's decision the FIIP changed its examination practice for signs claiming services and containing an indication of origin effective as of 8 March 2021.

Signs with a Swiss indication of origin are registered without a geographical restriction of the list of services, provided that the following conditions are met, which will be examined ex officio by the FIIP:

for private individuals/sole proprietorships: the applicant (or its domicile) is in Switzerland; and
for legal entities: the applicant's registered office is in Switzerland and the majority of the authorised signatories listed in the commercial register are domiciled in Switzerland.

For private individuals and sole proprietorships the examination shall be limited to the information contained in the trade mark application, while for legal entities the commercial register shall be consulted and the query in this regard shall be strictly related to the information contained in the trade mark application. If the conditions are not apparent from the commercial register, the applicant is requested to either show credibly that it meets the conditions or to geographically restrict the list of services. If the applicant fails to do so, the application will be rejected.

A sign with a foreign indication of origin is registered without a geographical restriction of the list of services, provided that the applicant has its domicile or seat in the country concerned. The examination by the FIIP is limited to the information provided in the trade mark application and if the condition is not met, the FIIP will request a geographical restriction and reject the application in case of applicant's refusal.

New FIIP examination practice as of 1 March 2022

In September 2021, the FIIP announced that after a comprehensive review of its examination practice and consideration of all interests, it had concluded that the practice should be eased, essentially adopting the approach followed by the EUIPO and the national offices of neighbouring countries. According to such new approach, an indication of source is not considered misleading provided that at the time of trade mark registration its correct use is possible.

Therefore, a geographical restriction of the list of goods and services for signs containing an indication of origin will no longer be requested by the FIIP, unless such sign falls into one of the following categories, for which a geographical restriction is required based on an explicit or implicit obligation under international treaties:

(non-)agricultural protected designations of origin (GUB) and protected geographical indications (GGA);
foreign GUB/GGA listed in the sectoral agreement with the European Union and foreign geographical indications (excluding names of countries/regions) listed in bilateral treaties that provide for ex officio refusal of trade mark protection (ie, Russia, Jamaica, Georgia, Japan and Mexico);
controlled Swiss designations of origin (KUB) for wine;
foreign geographical indications for wine and spirits (Article 23 of TRIPS), as far as protected in the country of origin as GUB/GGA or under a similar title;
international registrations under the Geneva Act of the Lisbon Agreement, provided protection is granted for Switzerland (Article 50e STA); and
designations regulated in industry guidelines (Article 50 para 2 of the STA).

In such cases any rejections due to missing geographical restrictions will be based on Article 2 lit d of the STA (infringement of applicable law).

The change in practice and the amendment of the FIIP Guidelines will enter into force with effect as from 1 March 2022. Applicants who wish to have their trade mark applications assessed under the new regime may submit to the FIIP a request for suspension of examination until its entry into force.

Requirements for Trade Mark Use in Germany Qualifying as Use in Switzerland

As in other jurisdictions Swiss law provides that use of a trade mark is a requirement for maintaining its validity and enforceability. In principle, such use has to take place in Switzerland. However, under Article 5 of a treaty between Switzerland and Germany concluded in 1892 (the "Treaty"), use of a trade mark in Germany suffices to maintain the validity and enforceability of the corresponding Swiss trade mark and vice versa.

In connection with the Treaty the SFAT had to deal with the question whether the owner of an international trade mark with Switzerland as one of the designated countries (word mark "PROSEGUR") that was no longer in use in Switzerland could, in the framework of opposition proceedings against two Swiss trade mark applications in which the applicant raised a non-use defense, rely on its use of a similar trade mark registered for, and used in, the European Union (word/device mark "PROSEGUR" + image of a globe) to maintain enforceability of its international trade mark in Switzerland (SFAT decision of 14 July 2021, B-6253/2016). In its decision, the SFAT outlined in textbook manner the requirements for a trade mark holder to benefit from the Treaty and the use requirement thereunder.

German or Swiss nationality of a trade mark holder (or with establishment in Germany or Switzerland)

With regard to the personal scope, the right to invoke Article 5 of the Treaty only applies to a person (i) with German or Swiss nationality or (ii) having its residence, an establishment or a branch in Germany or Switzerland, whereby for legal entities, a real and not only apparent establishment or branch is required. Third country nationals that neither have their residence nor an establishment nor a branch in Switzerland or Germany may not benefit from Article 5 of the Treaty.

Registered trade mark in Switzerland and in Germany (or in the EU)

In general, the Treaty is only applicable if a sign is registered as a trade mark in or for both Germany and Switzerland (so-called "double protection requirement"). Even though the Treaty does not explicitly provide for this double protection requirement, this condition used to be reflected in Article 1 of the Treaty and was abolished after Germany's accession to the Paris Convention, and according to the SFAT, continues to be a condition to benefit from the Treaty. However, as Article 1 of the Treaty originally referred to the prerequisites according to the domestic law of the individual party and since according to German law, a European trade mark is to be treated in the same way as a national German trade mark, the SFAT further concluded that – at least in the context of an opposition – the party opposing against a Swiss trade mark without using its own Swiss trade mark may still benefit from the Treaty, if it has registered one of the following trade marks in addition to its Swiss trade marks:

a national German trade mark;
an international trade mark with Germany designation; or
a European Union trade mark.

It should be noted that while Switzerland recognises an EU trade mark as a "German trade mark" within the meaning of Article 5 of the Treaty, the European Court of Justice refuses to allow proof of use of an EU trade mark based on use of a corresponding Swiss trade mark. Accordingly, a trade mark holder may not rely on its use of a Swiss trade mark in Switzerland in order to preserve its rights in a EU trade mark that is no longer used (CJEU decision of 12 December 2013, C-445/12P – Rivella International v OHIM).

Trade marks registered in a similar form

The trade marks registered in or for Switzerland and Germany (whether a national trade mark, an international trade mark or an EU trade mark) do not necessarily have to be identical but must be corresponding in its essential elements. In the present case, the SFAT concluded that the Treaty was applicable even if the Swiss trade mark was a wordmark ("PROSEGUR") and the EU trade mark was a word/device mark containing the word PROSEGUR and an image of a globe.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Switzerland: Trade Marks: Trends And Developments 2022