13 July 2020
Brands update - July 2020 – 4 of 9 Insights
In July 2016, US company Impossible Foods started to sell its vegan, meat-a-like burger under the name IMPOSSIBLE BURGER. The Impossible Burger meat substitute – which is currently awaiting market approval for entry on the EU market – became an instant hit.
The product was soon sold in over 9,000 restaurants in the US, and an agreement was concluded with food chain Burger King to introduce the IMPOSSIBLE WHOPPER in all its US restaurants. Impossible Foods is the proprietor of EU trade mark IMPOSSIBLE BURGER, registered for goods and services in class 29 which includes amongst others plant-based meat substitutes.
Around this time, well-known Swiss multinational food and drink processing company Nestlé launched its own vegan burger under the alternative name INCREDIBLE BURGER.
In response to cease and desist letters issued by Impossible Foods, on 9 August 2019, Nestlé filed cancellation proceedings at the EUIPO against the IMPOSSIBLE BURGER trade mark, arguing it is descriptive and devoid of distinctive character.
Subsequently, Impossible Foods initiated proceedings before the District Court of The Hague (the Netherlands) and requested a Pan-European injunction against the use of INCREDIBLE BURGER.
In response, Nestlé first argued the Court should stay the proceedings in accordance with article 132(1) EUTMR, which states that an EU trade mark court is obliged to stay infringement and validity actions if invalidity proceedings are already pending before the EUIPO. In response, Impossible Foods contended that the stay should be denied given the special circumstances of this case, namely because the cancellation action at the EUIPO was "clearly unfounded" and evidently initiated to slow down the infringement proceedings.
The Court did not agree and ruled that the exception of "special reasons" referred to by Impossible Foods should be interpreted strictly, and no evidence was put forward to support the conclusion that the trade mark was evidently valid and the EUIPO proceedings were unfounded. The Court therefore stayed the proceedings on the merits and noted that Impossible Foods' interests were safeguarded by the possibility to claim provisional measures for the duration of the stay, in accordance with article 132(3) EUTMR (as requested by Impossible Foods in this case).
Next, Nestlé argued that the Court lacked jurisdiction to rule on the claims against all defendants, as it concerned infringement outside the Netherlands. In this regard, it is important to note that Impossible Foods initiated proceedings against several companies of the Nestlé group – ie the Dutch Nestle BV, several other EU entities and the parent company based in Switzerland – and claimed a Pan-EU injunction.
The Court disagreed, and ruled that it had cross-border jurisdiction against Nestlé BV based on article 125(1) EUTMR. In addition, it held that jurisdiction against the EU and Swiss defendants could be based on article 8(1) Brussels II bis and 6(1) Lugano II since:
The Court deemed it relevant that all defendants had contributed to the infringement in and outside the Netherlands by using the same sign – for example, by offering the product for sale or conducting marketing activities.
After assuming jurisdiction, the Court discussed the validity of the IMPOSSIBLE BURGER trade mark and the possible success of Nestlé's claims before the EUIPO before giving judgement on infringement.
Nestlé argued that the trade mark is devoid of distinctive character and consists exclusively of a sign that refers to the characteristics of the goods in question (article 7(1)(b) and 7(1) (c) EUTMR). The word 'impossible' refers to a vegetarian burger that resembles a meat-based burger to an impossible extent, and also to the quality of the burger itself ("impossibly good").
The Court concluded the word 'impossible' itself is not descriptive for burgers, as it refers to an existing and therefore "possible" product. Furthermore, the word 'impossible' does not refer to the burger's quality, and is therefore different compared to (for example) "king burger", as the word 'king' clearly has a positive connotation and describes a characteristic. According to the preliminary opinion of the Court, the trade mark was deemed to be valid.
Subsequently, the court decided on the infringement itself and first of all concluded there is a high degree of visual similarity. The two words of the sign and the trade mark (IMPOSSIBLE BURGER versus INCREDIBLE BURGER) contain the same number of letters, and the first word of the sign and the trade mark both start with the letter 'I' and end with 'IBLE', while the second word is identical.
Furthermore, there is a degree of aural similarity as the word 'im-po-ssi-ble' is pronounced in a somewhat similar way to 'in-cre-di-ble', according to the Court.
There was a lesser degree of conceptual similarity. The word 'impossible' refers to a product that cannot be created and the word "incredible" to the superior quality of the product.
The Court also held that the distinctive character of the trade mark is average, the degree of attention of the relevant public is relatively low (adding to the risk of confusion), and lastly, that the goods are identical (ie plant-based burgers). Ultimately, the Court concluded there is a likelihood of confusion within the meaning of article 9(2)(b) EUTMR.
The last defence put forward by Nestle was that it used the sign INCREDIBLE BURGER in a purely descriptive way – namely, to indicate that the burger was of exceptional quality and taste (article 14(1)(b) EUTMR). Nestlé added that the phrase INCREDIBLE BURGER was used together with the trade mark GOURMET GARDEN and was merely to inform the public.
The Court rejected this argument, stating that INCREDIBLE BURGER is different to existing designations such as "lentil burger" or "cheese burger" since this phrase includes no actual information about the product.
Ultimately, the District Court of The Hague concluded that the Nestlé product infringes the IMPOSSIBLE BURGER trade mark and ordered provisional measures, including a Pan-European injunction. Nestlé plans to appeal against this decision – and nothing is impossible on appeal. In the meantime, Nestlé has renamed its product "Sensational Burger" in Europe, and "Awesome Burger" in the US.
In our opinion, the Court’s decision is not awesome, but rather incredible. First of all, it's questionable whether a preliminary injunction pending the final outcome of these proceedings on the merits was justified. We would argue that the urgent interest requirement that has been applied more strictly in recent years by the District Court of The Hague was not met here, as:
Impossible Foods should have started preliminary injunction proceedings immediately in spring 2019, or should have initiated infringement proceedings on the merits prior to Nestlé filing for invalidity of Impossible Foods’ EU registered trade mark, which it knew would be a risk.
On merit, we feel that the Court did not give enough weight to the fact that "incredible" is used in a descriptive way – for example, almost all trade marks that contain "incredible" in combination with a product/service are refused by the EUIPO. The same goes for the alleged distinctiveness of "impossible": in 90% of published cases, such trade marks are deemed non distinctive. All in all, sufficient food for thought in the appeal proceedings.