Author
Timothy Pinto

Timothy Pinto

Senior counsel

Read More
Author
Timothy Pinto

Timothy Pinto

Senior counsel

Read More

29 June 2020

Brands update - July 2020 – 3 of 9 Insights

EU law on the "technical result" and "substantial value" exclusions for shape marks

  • IN-DEPTH ANALYSIS

Gömböc Kft v Hungarian IP Office

In this case, the CJEU considered the extent to which a relevant authority can take into account information – such as the perception or knowledge of the relevant public – in addition to the shape of the trade mark applied for when assessing the exclusions for shapes which are necessary to obtain a technical result, and give substantial value to the goods. The Court also summarised the tests and rationale for these exclusions and considered whether owning design protection automatically entails refusal. 

Background

Almost everyone knows about toys which have one stable point of balance (eg a Weeble or roly-poly toy). They right themselves by means of a heavy weight inside to create a low centre of gravity. It is much more difficult to create such a body using a homogenous material. It is even harder to create one which only has one stable point of equilibrium (ie a stable resting position) and one unstable equilibrium (ie which would only balance if there was absolutely no vibration or air movement) at the opposite end. 

The gömböc is a homogenous 3D convex body which has one stable and one unstable resting position (called mono-monostatic). It was conceived by the Russian mathematician Vladimir Arnold in 1995, and proven and embodied by two Hungarian scientists in 2006. There are a variety of gömböcs. They are difficult to produce, as high manufacturing precision is essential. 

Facts

The applicant, Gömböc Kft, applied in Hungary for a 3D trade mark for a gömböc shape for "decorative items", "decorative crystalware and chinaware" and "toys" in classes 14, 21 and 28. 

The Hungarian IP Office refused registration on the grounds that the mark is the shape of goods which is necessary to obtain a technical result, and gives substantial value to the goods. 

The Office relied on the knowledge of the characteristics of the shape that the public was able to obtain from the applicant's website and from the considerable publicity the gömböc had enjoyed in the press. 

Regarding "toys", all of the shape's elements were designed to obtain the result that the toy, which the mark represented, would always return to a point of stable equilibrium. Where "decorative items" is concerned, the mark "embodied a striking and attractive shape which is an essential element" of the marketing and purchase of the goods in question. 

After the applicant's appeals were dismissed, the Hungarian Supreme Court referred three questions to the Court of Justice. In doing so, it pointed out that:

  • the relevant public was aware that the product depicted in the sign had become the tangible symbol of a mathematical discovery, and
  • the 3D shape represented by the sign already enjoyed design protection. 

Questions

Must the assessment under Article 3(1)(e)(ii) of Directive 2008/95 ("the shape of goods which is necessary to obtain a technical result") be limited to the graphic representation of the sign, or whether other information, such as the perception of the relevant public, should also be taken into account?

Whether Article 3(1)(e)(iii) ("the shape which gives substantial value to the goods") must be assessed only on the basis of the perception or knowledge of the relevant public as regards the product that is graphically represented?

Whether Article 3(1)(e)(iii) must be interpreted as meaning that the ground for refusal must be applied systematically to a sign which consists exclusively of the shape of the product where the appearance of that product enjoys protection under the law relating to designs, or the sign consists exclusively of the shape of a decorative item?

Judgment

Question 1 – technical result

Rationale of Article 3(1)(e)(ii)

The court first explained the free competition objectives of the "technical result" ground of refusal, namely:

  • to prevent a trade mark right granting an undertaking a monopoly on technical solutions or functional features of a product which a user is likely to seek in the products of competitors
  • to prevent the protection afforded by trade mark law from being extended, beyond signs which serve to distinguish a product or service from those offered by competitors, so as to form an obstacle preventing competitors from freely offering for sale products incorporating such technical solutions or functional characteristics in competition with the proprietor of the trade mark
  • to ensure that undertakings are not able to use trade mark law in order to perpetuate, indefinitely, exclusive rights relating to technical solutions.

Two-stage test 

The Court summarised the main principles, namely:

  • A sign consisting exclusively of a shape must be refused when the 'essential characteristics' of that shape perform a technical function.
  • The presence of one or more minor arbitrary features in a three-dimensional sign, all of whose essential characteristics are dictated by the technical solution to which that sign gives effect, does not alter the position.
  • The competent authority must apply a two-stage test: first, properly identify the essential characteristics of the 3D sign at issue, and second, establish whether they perform a technical function of the product concerned.

Stage 1 – identifying the essential characteristics

The competent authority may either base its assessment directly on the overall impression produced by the sign or examine in turn each of the components of the sign. In this regard:

  • The identification of the essential characteristics must generally begin with the assessment of the graphic representation.
  • However, the competent authority may also take into account other useful information, such as surveys, expert opinions or data relating to IP rights conferred in respect of the same goods.
  • The presumed perception by the relevant public, while potentially relevant, is not a decisive factor.

Stage 2 – assessing if the characteristics perform a technical function

  • Even if the sign does not show all of the essential characteristics required to obtain the technical result, the exclusion will still apply if at least one of the essential characteristics required to obtain that technical result is visible in the graphic representation of the shape of the product.
  • The technical functions of the product must be based on objective and reliable information such as features: in any description of the product submitted at the time of filing, in data relating to intellectual property rights conferred in respect of that product, by looking at surveys or expert opinions on the functions of the product, or in any relevant documentation, such as scientific publications, catalogues and websites, which describes the technical features.
  • By contrast, information concerning any knowledge the relevant public may have of the technical functions of the product involves subjective factors, potentially giving rise to uncertainty and/or inaccuracy, and this risks undermining the objective of this ground of refusal.

Conclusion on Question 1

At Stage 1, information in addition to the graphic representation alone – such as the perception of the relevant public – may be used to identify the essential characteristics of the sign.

At Stage 2, information in addition to the graphic representation of the sign may be taken into consideration to establish whether those characteristics perform a technical function of the goods. However such information must originate from objective and reliable sources and cannot include the perception of the relevant public.

Question 2 – "substantial value"

Rationale of Article 3(1)(e)(iii)

The "substantial value" ground of objection is to prevent registration of a shape which has "such a great influence on the attractiveness of the product that restricting the benefit of the shape to a single undertaking would distort the conditions of competition on the market" (a further rationale is set out under Question 3 below). 

Test

Again, there is a two stage test:

  • First, identify the essential characteristics of the shape of the sign.
  • Second, determine if it is apparent, from objective and reliable evidence, that a consumer's decision to purchase the goods in question is, to a very great extent, determined by one or more features of the shape which alone forms the sign.

Perception and knowledge of the relevant public

The presumed perception of the sign by the average consumer may be taken into account in identifying the essential characteristics of the sign but it is not a decisive factor. Here, the Hungarian authorities were entitled to:

  • take into account the perception and knowledge of the relevant public when finding that the substantial value of the product was due to the shape being the tangible symbol of a mathematical discovery, and
  • conclude that this meant that the shape was special and striking and that it was an essential characteristic of the sign.

The shape mark exclusion is not limited to shapes having an exclusively aesthetic, artistic or ornamental value. Other factors may be relevant, such as whether the shape is dissimilar from other shapes in common use on the market concerned.

Conclusion on Question 2

  • In order to identify an essential characteristic of the shape of the sign, the perception or knowledge of the relevant public as regards the product represented graphically by a sign may be taken into consideration.
  • It is necessary to determine, from objective and reliable evidence, whether the consumer's decision to purchase the product in question is to a large extent determined by that essential characteristic.

Question 3 – design protection and decorative goods

Further rationale of Article 3(1)(e)(iii)

The objective of this ground of refusal is to prevent the exclusive and permanent right that a trade mark confers from serving to extend indefinitely the life of other rights in respect of which the EU legislature has sought to impose time limits. 

Impact of registered designs

The CJEU noted that the protection of designs under the Designs Directive 98/71 is expressly "without prejudice to any provisions of [EU] law or of the law of the Member State concerned relating to unregistered design rights, trade marks or other distinctive signs, patents and utility models".

Furthermore, the rules for trade mark and design protection are different. Several forms of IP protection can co-exist provided that the relevant conditions for registrability are met. 

Impact of signs comprising shapes of products with artistic or ornamental value

Shapes applied for in relation to decorative items could be refused under the ground in Article 3(1)(e)(iii) but this was not automatically the case. The substantial value may be due to other factors unconnected with its shape, such as the story of its creation, its method of production, the material it contains or the identity of its designer.

Therefore, it still needed to be proved that "the consumer's decision to purchase the product in question is based to a very large extent on one or more characteristics of that shape". 

Conclusion on Question 3

There is no automatic refusal for shapes which give substantial value to the goods simply because the sign enjoys design law protection or consists exclusively of the shape of a decorative item.

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