European Union: TESTAROSSA: Is Second Hand Use Genuine Use?

Ferrari's TESTAROSSA trade mark has been of great interest to the European Courts, although Ferarri's luxury TESTAROSSA sports car has not been produced since 1996.

The TESTAROSSA revocation case at the EUIPO Board of Appeal

In 2015, an application for revocation was filed by Kurt Hesse against Ferrari's International trade mark TESTAROSSA, designating amongst others the European Union, initially registered in 2006 for vehicles, replacement parts, components and accessories, in Class 12. Hesse claimed that the earlier trade mark had not been put to genuine use for a continuous period of five years, pursuant to Article 58(1)(a) EUTMR, at least for some of the goods for which the trade mark was registered. Ferrari as the IR holder argued that, although the Testarossa car is no longer in production, it is still in great demand on the collector's market.

Both parties appealed the decision of the cancellation division ruling that the cars were traded in the relevant period, were recognised by the relevant public as originating from Ferrari and restricting the specification to automobiles.

The Board of Appeal (BoA) referred to the CJEU cases C–720/18 and C–721/18 TESTAROSSA, which held that a trade mark could be put to genuine use in the context of second-hand sales and that using the trade mark for spare parts might be considered genuine use for the complete product.

The CJEU case Ansul vs Ajax

Genuine use has been interpreted by the CJEU as requiring actual use on the market, in connection with the registered goods and services. In the case Ansul BV vs Ajax Brandbeveiling BV C-40/01, the Court said that a mark should be "consistent with the essential function of a trade mark" in order to guarantee the origin of the goods or services to the consumer. The Court continued and said that internal use by the undertaking concerned is not enough and that genuine use entails use on the market. If trade mark owners respect that obligation, they can keep their trade mark registration indefinitely. The reasoning behind this rule is that when a trade mark is not used, it does not fulfil its essential origin function. Protection is not justified if it does not allow consumers to identify the product's origin. Instead of excluding others from using the mark, the sign should then be available for anyone to use it.

The CJEU held in Ansul vs Ajax that use of the trade mark on replacement component parts was genuine use if the parts were integral to the make-up or structure of such goods or used in relation to goods or services directly connected with the goods previously sold and intended to meet the needs of customers of those goods.

The CJEU TESTAROSSA cases

The CJEU held in the TESTAROSSA joined cases C–720/18 and C–721/18 that a trade mark registered in respect of a category of goods and replacement parts for those goods did equate to genuine use of the mark. This is in respect of all the goods and replacement parts, even if it had only been used in respect of some of those goods. There is, however, an important carve out that such use is not sufficient to pass the genuine use hurdle if a consumer who wished to purchase those goods would perceive them as an independent subcategory. If this is the case, only that subcategory would have been put to genuine use, as opposed to the whole class.

It was further clarified that second-hand goods and services relating to goods previously sold under the mark, could amount to genuine use of that trade mark.

The court also provided a reminder that the burden of proof regarding genuine use rests with the trade mark owner.

The CJEU held that genuine use can be use of the trade mark on replacement component parts and accessories of luxury sports cars, if these parts were integral to the makeup of the cars and were intended to meet the needs of the luxury car customers.

The CJEU also held that use of the trade mark in relation to the sale of second hand or used cars could constitute genuine use, where the proprietor itself was using the mark to indicate or certify the origin when reselling.

The BoA's decision

The BoA had to decide whether the second-hand market, in which Ferrari played no role and in relation to which no evidence was provided, amounted to genuine use.

The evidence submitted by the IR holder Ferrari in the revocation proceeding did not sufficiently demonstrate genuine use of the trade mark for the contested goods, according to the BoA.

As to genuine use in the context of second-hand sales, the BoA noted that no evidence was filed demonstrating that Ferrari had been directly involved in any sales of used Testarossa cars or the replacement parts. Further, the evidence filed by Ferrari did not show that third parties (individuals or traders) which had sold the second-hand Testarossa cars had the express consent of Ferrari and were acting for them as owner of the trade mark to create a market share for second-hand cars. Simply being aware of sales between third parties was not sufficient.

Furthermore, the BoA pointed out that a simple reference to 'TESTAROSSA' on second-hand cars by third parties was not genuine use of the contested trade mark, with the objective of creating market share for the trade mark proprietor, but rather a descriptive use, in the context of exhaustion or fair use.

On the question of replacement parts, the BoA found that the submitted evidence showed that it is difficult to find replacements parts of Testarossa cars, as production has ceased, and the parts available on the market are mainly second-hand parts coming from other second-hand cars. Furthermore, those involved in the sale of such parts do not act on behalf of Ferrari but are often independent traders. Therefore, the BoA considered that the filed evidence did not show the contested trade mark – in relation to replacement parts – as an indication of their origin. However, the BoA noted that, even if it did, the economic value of their sales was so different that it may not show it to be equivalent to the economic value of an automobile. Consequently, Ferrari had not established that the sale of replacement parts may establish genuine use for automobiles.

The Board considered that Ferrari had failed to show that it was actively involved in using the trade mark "Testarossa" for second hand cars.

The BoA therefore revoked the International Registration TESTAROSSA for the EU as regards all the contested goods in Class 12, namely automobiles, replacement parts, components and accessories.

These cases show that the continuous use of a trade mark by or on behalf of the trade mark owner is critical to the maintenance of a trade mark registration, and often not easy to establish. When the use of a trade mark is restricted to the second-hand market the available evidence must be handled actively and carefully to maintain the trade mark before the Courts and IP Offices.

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.