The EUIPO Board of Appeal has considered whether the sale of second-hand cars and spare parts meets the threshold for genuine use.

What has happened?

• The EUIPO Board of Appeal has revoked Ferrari's EUTM registration for the mark TESTAROSSA for all goods in class 12 including automobiles on the basis of non-use. This partly overturns the earlier ruling of the Cancellation Division which had revoked the registration for all goods in class 12 except automobiles. 

• Testarossa is one of the most famous Ferrari brands, produced from 1984 to 1996. The car is still in considerable demand on the collector's market for vintage cars. 

• It is established law that a trade mark is capable of being put to genuine use by its proprietor when that proprietor resells second-hand goods put on the market under that mark (Ferrari v DU).

• However, Ferrari had not acquired or sold any second-hand Testarossa cars itself or through any licensees. Rather, second-hand sales had been made by third parties. Ferrari was not actively involved in such third-party sales and could probably not even object to or control such sales (under the exhaustion of rights principle). These sales therefore did not constitute genuine use of the TESTAROSSA mark. 

• Ferrari (and others) had sold Testarossa spare parts. This can constitute genuine use for the product itself (ie cars) as well as spare parts. However, the evidence of use for spare parts was sporadic and references to Testarossa were descriptive. This was not sufficient to constitute genuine use for cars or spare parts. 

• The case is a useful reminder that sales of second-hand goods and spare parts can sometimes constitute genuine use, but those sales must be by (or on behalf of) the trade mark proprietor.

Want to know more?

Background

Ferrari S.p.A registered the word TESTAROSSA in 2007 as an EUTM for goods in class 12 (automobiles, parts, components, accessories and engines) and 28 (games and playthings including toy vehicles). Testarossa is one of Ferrari's most well-known cars but is no longer produced. 

In September 2015, a request for revocation of the registration was filed, on the grounds of non-use, ie that the trade mark had not been put to genuine use for a continuous period of 5 years in relation to the goods it covered.

Ferrari filed evidence of use including articles, pictures, a list of cars certified by Ferrari as Testarossas, various invoices relating to the sale and certification of second-hand Testarossa cars and a list summarising sales of second-hand ‘TESTAROSSA’ cars.

Alongside its evidence, Ferrari made the point that "although no longer in production, the ‘TESTA ROSSA’ and the ‘TESTAROSSA’ cars are still in great demand: on the collectors’ market."

The cancellation applicant argued that "the fact that a few used historical FERRARI TESTAROSSA sports cars still exist and are being traded among collectors does not imply genuine use. The sporadic sale of used historical cars by car dealers does not constitute a genuine use of the trade mark by third parties with the consent" of the trade mark owner. 

The cancellation was partially successful at first instance, with the goods covered by the TESTAROSSA registration being restricted to automobiles. 

Appeal

Both parties appealed the decision to the Board of Appeal. Ferrari's appeal was aimed at having the decision set aside in relation to 'replacement parts, components, accessories; engines'.

Ferrari's case hinged mainly on whether the sale of the car parts by third parties (without the express consent of the proprietor of the trade mark) constitutes genuine use.

The Board of Appeal found that, based on the evidence filed, it could not conclude that that there had been genuine use of the mark for spare parts of Testarossa cars as:

• Production has ceased, and the parts available on the market were mainly second-hand parts which came from other second-hand cars. 

• Those selling the parts were not acting on behalf of the trade mark owner. Sales by third parties (not on behalf of the trade mark proprietor) cannot constitute genuine use. Once goods are legitimately put on the market by the trade mark proprietor or with its consent, the proprietor loses the ability to object to the further commercialisation of those goods - the proprietor's rights are said to be exhausted. Given this, sales by third parties cannot constitute genuine use. The proprietor cannot object to or control such sales.  

• The use of TESTAROSSA in relation to second-hand parts was merely descriptive use. Spare part traders will use trade marks of a vehicle descriptively, to specify the purpose of the product they are selling.

The cancellation applicant's appeal was based on the fact that sales of cars were not by or on behalf of Ferrari. The Board of Appeal agreed that Ferrari had not acquired or sold any second-hand Testarossa cars itself or through any licensees. Rather, second-hand sales had been made by third parties. Ferrari was not actively involved in such third-party sales – it had not received any commissions or even been aware of the sales. For reasons already specified above (exhaustion of rights), Ferrari could probably not even object to or control such sales. These sales therefore did not constitute genuine use of the TESTAROSSA mark. 

What does this mean for you?

This decision serves as a reminder about the necessity for brand owners to be involved in second hand sales (whether directly or indirectly) if these sales are to count towards genuine use of a trade mark. 

It is also a reminder that second hand sales of spare parts (and services such as repair services) can constitute genuine use not just for the spare parts or repair services themselves but for the main product. However, such sales must – again – be by or on behalf of the trade mark proprietor.

This is particularly relevant for legacy brands.