Virtual goods, real trade marks: the CJEU's first take on distinctiveness

What has happened?

• The General Court of the EU has delivered a landmark decision addressing the distinctiveness of trade marks for virtual goods. The court clarified how virtual and physical goods are perceived by consumers and how this impacts the assessment of distinctiveness for virtual brands.

• The case involved an EUTM application for the mark Glashütte Original (depicted below) covering various goods including “downloadable virtual products, namely watches.”

• The EUIPO refused the application for lack of distinctiveness for the goods applied for - consumers would perceive the sign as a reference to the German city of Glashütte, which is renowned for high-quality watchmaking in real life. The General Court upheld the decision.

• Although distinctiveness must be assessed on a case-by-case basis, the decision confirms that virtual goods will generally be perceived in the same way as their physical counterparts. This differs from the current approach of the EUIPO where virtual and physical goods/services are often deemed dissimilar absent evidence from the parties.

Want to know more?

The trade mark application at the centre of the case was filed in 2021 by Glashütter Uhrenbetrieb GmbH, a German watchmaker. The applicant sought protection for a wide range of goods and services in Classes 9, 35 and 41, including “Downloadable virtual products, namely computer programs offering chronometers, chronographs, clocks, watches and their accessories to be used online or in online virtual world”

The EUIPO’s Examination Division and Board of Appeal both refused the application for some of the goods and services, arguing that the term “Glashütte Original” lacked distinctiveness under Article 7(1)(b) EUTMR. It said that the word “Glashütte” refers to a German town internationally renowned for watchmaking, and “Original,” merely suggests authenticity. The mark applied for in its entirety would be perceived as a reference to the know-how and reputation for excellence in the watch industry of the city of Glashütte.

The General Court has now confirmed the EUIPO’s decision. It found that the relevant public - consumers familiar with the Glashütte region’s reputation for high-quality watches - would perceive “Glashütte Original” as an indication of craftsmanship, not as a distinctive sign. The public would directly perceive the mark applied for as a logical extension of the reputation of the city of Glashütte as regards traditional watchmaking and the mark would give the public the same positive feelings as regards the quality and authenticity of virtual goods and services as it does real goods and services.

What this means for brand owners?

Brand owners need to ensure that their trade marks meet the distinctiveness requirements whether they are applying for physical or virtual goods or services. The ruling contains general guidance for trade mark applications in the virtual space:

• The court emphasised that virtual goods/services will generally be perceived in the same way as their physical counterparts. But the specific nature of the goods/services matters. Consumer perception must be evaluated on a case-by-case basis.

• If virtual goods/services merely represent or emulate the functions of real goods/services, a transfer of the relevant public's perception of the real goods/services to the corresponding virtual goods/services is likely to occur. Terms that are considered non-distinctive for real-life goods/services, will then also lack distinctiveness for virtual ones.

The ruling contrasts with the EUIPO’s current approach in oppositions, where virtual and physical goods/services are often deemed dissimilar without evidence from the parties. The General Court’s reasoning suggests a closer connection between the two, potentially prompting a shift in how these goods/services are evaluated.

The decision underscores the importance of tailoring trade mark strategies to align with consumer perception in an increasingly digital marketplace. Interestingly, the application was not refused for broader, less specific product categories, such as “downloadable digital files authenticated by non-fungible tokens (NFTs)”. This shows the importance of wording the list of goods and services appropriately.