Source: EURLEX
Language: en
Format: md

OPINION OF MR ADVOCATE-GENERAL MAYRAS

DELIVERED ON 25 MAY 1976 (
[1](#t-ECRCJ1976ENA.0500106301-E0002)
)

Mr President,

Members of the Court,

The problem caused by conflicts arising from the co-existence within the common market of the principle of free movement of goods with the territorial nature of the national tides protecting industrial and commercial property in one or more Member States, and in particular the trade-mark right, has appeared only gradually with the interpenetration of markets. All the authorities, anxious to abolish distortions so caused, have found themselves sooner or later confronted with this problem. They have attempted to resolve it in different ways either by means of provisions of positive law or leaving it to the courts to do so.

At the Community level work has been going on for some years to create a ‘European’ system of patents and trade-marks. This shows that the establishment of such a system is inseparable from the achievement of the objectives of the Treaty. But unlike the concept of public policy and public health that of the protection of industrial and commercial property, apart from the very important sphere of patents, has not been the subject of any implementing rules at the Community level although there have been numerous learned conferences devoted to it and it has received close attention in the work of the International League against Unfair Competition.

This means that the scope which the legislature and the Community court have is particularly vast.

It is this problem which the present reference for a preliminary ruling raises once again. The interest which it presents is likewise shown by the fact that all the governments of the Member States except for those of Italy and Luxembourg have made written observations although only the Government of the Federal Republic of Germany was represented at the oral proceedings.

The question which the Bundesgerichtshof has submitted to you in accordance with the last paragraph of Article 177 of the EEC Treaty has been raised in the context of an appeal brought by the British company Terrapin (Overseas) Ltd. of Bletchley against the decision given by the Court of Appeal Munich in favour of the German company Terranova Industrie C. A. Kapferer & Co. of Freihung prohibiting on pain of sanctions the British company from using in the Federal Republic of Germany, including West Berlin, for commercial purposes the name Terrapin (Overseas) Ltd. and that of its subsidiary Terrapin Systembau Nordeuropa GmbH on prefabricated components assembled on site and capable of being dismantled, or huts erected from component parts.

It appears from the documents on the file, as analysed in the report for the hearing, that Terrapin, a British manufacturer of prefabricated wooden houses and construction components for this purpose has been trying for several years to penetrate the German market. The abolition of customs duties as a result of the accession can only help it in its attempts. But it has encountered opposition on this market from a German manufacturer of diverse building materials, Terranova, which a long time ago under the German law on trade-marks protected not only its commercial name but also the generic description Terra and a series of derived words including this stem.

At issue in particular are the word-mark ‘Terra’ No 151654, the word/device mark ‘Terranova’ No 359464 containing a symbol and covering the following products: paints, varnishes, colours, resins, adhesives, artificial stone in the form of slabs, building materials, dry and decorative plastering, plastering for façades, and the ‘Terranova’ mark No 431118 with a particular arrangement of letters covering the same products and in addition rough rendering for walls and façades.

Terranova which has been in existence more than 75 years no more seems to have a dominant position in its own field than Terrapin appears to have a dominant position in the export of prefabricated wooden houses into the Federal Republic of Germany although it is a relatively larger undertaking. Both companies sell their products in several Member States.

Although no conflict appears to have arisen between these two companies in these States the one which exists between them in the Federal Republic has given rise to a whole series of actions which have met with various fates.

After Terrapin had lodged an application for registration of its mark in the register kept by the Patents Office the latter by decision of 28 December 1961 dismissed an objection by Terranova. But on the latter's appeal the Federal Patents Court by order dated 3 February 1967 annulled the decision of the Patents Office and prohibited the registration of the mark Terrapin.

The British company however continued to market the products it manufactures under the marks Terrapin or Tarapin through various licensees and it is thus that the case came before the Bundesgerichtshof.

In the judgment contested before the Bundesgerichtshof the Oberlandesgericht München had found that the products sold by the two companies were similar, that there was similarity between their marks and as a result there was a risk of confusion between their respective products. On this point the German Bundesgerichtshof adopted in toto the findings of the Oberlandesgericht without enlarging upon its point of view. It concluded that from the point of view of the national law the judgment of the Oberlandesgericht, which issued a prohibition affecting the British company could only be confirmed.

But this court asks whether it is not possible to transpose your case-law with regard to the free movement of goods subject to a trade-mark distinguished in particular by your judgments of 18 February 1971 (Case [40/70, Sirena [1971] ECR](http://eur-lex.europa.eu/query.html?DN=61970??0040&locale=EN)), 8 June 1971 (Case [78/70, Deutsche Grammophon, [1971] ECR](http://eur-lex.europa.eu/query.html?DN=61970??0078&locale=EN)), 3 July 1974 (Case [192/73, Hag, [1974] ECR 731](http://eur-lex.europa.eu/query.html?DN=61973??0192&locale=EN)) and lastly 31 October 1974 (Case [16/74, Winthrop, [1974] ECR 1183](http://eur-lex.europa.eu/query.html?DN=61974??0016&locale=EN)) to the case with which it is concerned.

The court seems to me to require more than an answer to an abstract question and to seek confirmation that its view is correct.

In these circumstances it asks you a single question which is basically whether the protection resulting from the national law on trade-marks and commercial names may be used to prevent the importation of a product marketed under a trade-mark or commercial name legally acquired in another Member State and likely to cause confusion if there are no relations between the two undertakings concerned and if their rights arose independently in different Member States.

This latter qualification refers directly to your decision in Hag. You will recall that the interpretation which you gave on that occasion was based on the fact — some interpreters regarded it as decisive — that the homonymy of the trade-marks then in question had a common origin — although there was no longer any connexion of any kind at the time between the two companies which were using these trade-marks — and that in such a case it was proper that the principle of the unity of the market should prevail over the interest of the proprietors of forcibly severed trade-marks: according to some, only the unlawful use of a trade-mark by someone who has no tide thereto would be an infringement justifying a restriction on free movement.

Although the question before you today relates both to trade-marks and commercial names, I shall limit my remarks to the first, for I agree with the Commission in thinking that this should suffice to resolve the question in the present case; moreover I think that the same answer must apply to the trade-mark and the commercial name when they are, as in the present case, almost the same.

This question disregards any restrictive agreement on competition between the holders of the two trade-marks and likewise any abuse of a dominant position by one of the companies. Moreover the bona fides of each of the companies cannot be doubted and in these circumstances there cannot be said to be ‘infringement’ in the true sense. But whereas the Hag case was concerned with a prohibition on marketing in a Member State a product legally bearing a trade-mark in another Member State on the basis that an identical trade-mark having the same origin existed in the first State, the present case differs in that it is concerned with products and trade-marks which are not identical and which, by definition, do not have the same origin.

| I — | The first element, the fact that the products and trade-marks are not identical should, prima facie, lead one to think that such a prohibition is incompatible with the provisions of the Treaty. The second element, the fact that there is no common origin, which appears necessarily to be implied in the case of foreign trade-marks which are not identical and products which are not the same, does not, at first sight at least, appear to be an obstacle to recognizing such a prohibition as being incompatible with the provisions of the Treaty. On the contrary it could be maintained that although you have recognized in the Hag case that trade-marks may co-exist because of their common origin and that although you have thus made an exception to the prohibition on co-existence, you would have decided otherwise in the case of similar products bearing trade-marks having a different origin and capable of giving rise to a risk of confusion. In any event you have not given an express ruling on such a case of similar trade-marks having a different origin.  I do not intend to embark here upon a general discussion of the ‘specific subject-matter’ of trade-marks, but it is nevertheless necessary to set out certain principles with regard thereto.  Let us remember that the Bundesgerichtshof itself stated (Judgment in Cinzano of 2 February 1973) that the function of the trade-mark is not a guarantee, for it does not necessarily guarantee consistency of quality of the product so marked. Its function is simply to indicate the origin of the product; its objective is to distinguish or identify a manufacturer's or trader's products and to guarantee their origin, genuineness and immediate source or as the English say, it implies that the manufacturer who is the proprietor of the mark has the right to prevent the goods of another manufacturer from being passed off as his.  The exclusive right of use given by the legislature to the proprietor of the trade-mark protects him, basically by means of the action for infringement, only against unfair use of it for other products.  In addition to this ‘specific subject-matter’ of the trade-mark within the meaning of your case-law in Deutsche Grammophon (Case [78/70, [1971] ECR 500](http://eur-lex.europa.eu/query.html?DN=61970??0078&locale=EN)), the trade-mark has what has been called ‘incidental’ functions: it suggests a quality and it is intended to promote the sale of the product marked. In this sense it puts its proprietor in a position to protect against third persons the economic position which he has acquired by reason of his technical, financial and commercial efforts.  At the same time it is one of the reasons for the consumers' choice due to the reputation attaching to it; it thus serves both to protect and at the same time, it must be recognized, to ‘condition’ consumers.  Thus the right to a trade-mark enables the proprietor to prevent a competitor from using an identical or similar trade-mark for identical or similar products to create a risk of confusion as to the origin of the products and thereby profiting in an unfair manner from the stock of confidence represented by the trade-mark; this protection is likewise in the interests of the public which should be protected against fraud.  These qualitative and publicity functions which are particularly important in the industrial era are only functions incidental to the function of indicating origin so that is may be asked whether they may likewise be legally protected under the head of industrial and commercial property, whether it is really the trade-mark right which is intended to guarantee this protection or whether the protection of these functions does not come under the law on unfair competition and the law on the protection of consumers. According to Professor Beier who submitted observations on behalf of Terranova ‘the economic interest which the protection against unfair use of his efforts in relation to production, publicity and distribution represent for a manufacturer of articles covered by a trade-mark is not protected by trade-mark law. It can be taken into account only under the head of the law on unfair competition, the law of constracts and the general principles of tortious liability’ (Clunet, 1971, p. 5, La territorialité des marques et les échanges internationaux. Have you not yourselves said in your judgment in Case [16/74, Winthrop ([1974] ECR at p. 1196](http://eur-lex.europa.eu/query.html?DN=61974??0016&locale=EN)); ‘moreover, the specific considerations underlying the protection of industrial and commercial property are distinct from the considerations underlying the protection of the public and any responsibilities which that may imply?’  Thus one may be tempted to maintain the following reasoning:  Whereas in the Sterling Drug case your judgment states that an obstacle to the free movement of goods resulting from national law ‘may be justified on the ground of protection of industrial property … where there exist patents, the original proprietors of which are legally and economically independent’ (ground 11), your judgment in Winthrop given on the same day and relating to a question of trade-marks does not contain the same passage. As against the consideration that ‘a trade-mark right is distinguishable … from other rights of industrial and commercial property, inasmuch as the interest protected by an ordinary trade-mark’ (ground 7 of the judgement in Sirena) and the fact that by reason of its longevity its exercise is ‘particularly apt to lead to a partitioning of markets, and thus to impair the free movement of goods between States which is essential to the common market’ (same ground), it might be inferred that the protection of commercial property cannot be justified to the same extent in the case of trade-marks the proprietors of which are legally and economically independent. Your judgment in Hag would have confirmed and even reinforced this conclusion since it recognized the free movement of a product bearing two identical trade-marks when they originate from the splitting or severing of a single trade-mark although their present proprietors are legally and economically independent. A fortiori it should be the same with regard to trade-marks which are not identical (although similar) on products which are also not identical (although similar or coming within the same production sector) and the proprietors of which have been from the beginning legally and economically independent.  Finally, since, as regards the indication of origin, the ‘specific’ function of the trade-mark according to your case-law, ‘information to consumers … may be ensured by means other than such as would affect the free movement of goods’ (ground 14 of judgment in Hag), does it not follow that the other less ‘specific’ functions of the trade-mark, that is to say, the “qualitative” and “publicity” functions, must yield to free movement and cannot in any event be guaranteed under the head of protection of commercial property by a prohibition on marketing a product marked differently? |

| II — | I do not think so.  First because these “secondary” functions of the trade-mark are difficult to dissociate from the first although they are of a different nature. Then, to accept this argument would involve filling a lacuna in the Treaty whereas the very objective of Article 36 is to “collect together” all the prohibitions or restraints, in particular with regard to importation which, although affecting free movement, are “justifiable”.  It is true that the concept of unfair competition does not appear to me, contrary to what the Government of the Federal Republic of Germany says, directly covered in the preamble to the Treaty: by “recognizing that the removal of existing obstacles calls for concerted action in order to guarantee … fair competition”, the authors of the Treaty were aiming not so much at establishing protection against unfair practices in competition as at prohibiting all practices tending to distort the free play of competition and thus ensuring its neutrality.  Nevertheless even if the Treaty and, until recently, derived Community law, do not specifically take account of protection against unfair competition or protection of consumers, these concerns are not alien to them; the objectives of the Treaty cannot be achieved without them. The work of the working party on trade-marks, called into being some years ago on the initiative of the Commission, bear witness to it. The preliminary draft of the convention on the European law of trade-marks prepared by this working party itself refers (Articles 11 and 12) to the risk of confusion due to the resemblance of trade-marks and the similarity of products, although it does not define these terms. However, these criteria without any doubt have affinities, indirectly at least, with the concept of unfair competition and protection of consumers. There is therefore no need to have recourse to the concept of unfair competition or the protection of consumers as such; it is sufficient to refer to the protection of the trade-mark which, although involving advantages and rights for its proprietor, is granted only subject to certain conditions and also involves duties and obligations on the part of the proprietor towards other trade-marks and towards consumers. In another judgment of 20 February 1975 in Case [12/74, Commission v Germany ([1975] ECR at p. 194, ground 7](http://eur-lex.europa.eu/query.html?DN=61974??0012&locale=EN)) you said moreover that the specific purpose of designations of origin and indirect indications of origin is “to ensure not only that the interests of the producers concerned are safeguarded against unfair competition, but also that consumers are protected against information which may mislead them”.  Does this assume a priori that the protection granted under this head and the prohibitions on marketing involved in it constitute measures having an equivalent effect coming under Chapter 2 of Title I of the Treaty?  This may be doubted since you have decided in your judgment of 11 July 1974 in Case [8/74, Dassonville, ([1974]) ECR at p. 852, ground 7](http://eur-lex.europa.eu/query.html?DN=61974??0008&locale=EN)), in respect of measures taken by a State to prevent unfair practices and to guarantee consumers the authenticity of the designation of origin of a product that “Even without having to examine whether or not such measures are covered by Article 36, they must not, in any case, by virtue of the principle expressed in the second sentence of that article, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States”.  However, since this character of constituting a measure having equivalent effect, which is plain to the Bundesgerichtshof and to myself, does not seem to be so to everybody in so far as the prohibition in Article 30 applies only to measures laid down by law, regulation or administrative action and it does not apply to those of such measures which are “applicable without distinction” to the nationals of other Member States I shall make, ex abundanti cantela, the following two observations:  Although it seems to me in the first place that it is not the legal action as such but the prohibition on marketing likely to be the result of such an action which can have an effect equivalent to that of a quantitative restriction, this prohibition constitutes on this basis a measure which comes under Article 30, subject to the derogations provided for by Article 36.  A judicial decision may constitute a measure having equivalent effect within the meaning of Article 30 and 34 of the Treaty if it relates to a prohibition on importing or exporting. This is precisely the question which you had to decide in the Sirena case.  In the second place to decide whether there is a measure having equivalent effect within the meaning of Article 30 it is not necessary to inquire whether in fact the same prohibition on marketing applies to German manufacturers of similar products bearing a similar trade-mark: you have decided that even measures which “are applicable without distinction” may have effects equivalent to a quantitative restriction: “it is sufficient that the measures in question are likely to constitute an obstacle, directly or indirectly, actually or potentially, to imports between Member States” (Judgment of 26 February 1976, Tasca, [1976] ECR at p. 308, ground 13). Similarly (Judgment of 20 February 1975 in Case [12/74, Commission v Germany, [1975] ECR at p. 198, ground 14](http://eur-lex.europa.eu/query.html?DN=61974??0012&locale=EN)) “it is not necessary to show that such measures actually restrict imports of the products concerned but … that they may merely hinder 'imports which could otherwise take place”.  Such would seem to me to be the case where there is a prohibition which would lead to channelling imports so that only those manufacturers or traders in products which are not similar to those of the company Terranova and the trade-mark and name of which did not risk causing confusion with those of this company could operate in the Federal Republic or who could do so only with its agreement and subject to conditions laid down by it. (cf. the Judgment of. 30 April 1974 in Case [155/73, Saccbi, [1974] ECR at p. 428, ground 8](http://eur-lex.europa.eu/query.html?DN=61973??0155&locale=EN)).  But at the same time it follows that the protection against unfair competition and the protection of consumers cannot justify any kind of impairment of free movement.  According to Article 36 “the provisions of Articles 30 to 34 shall not preclude prohibitions or restrictions on imports … justified on grounds of … the protection of industrial and commercial property” and which do not “constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States”. The concept of protection of industrial and commercial property is thus no more a discretionary concept than that of the protection of public health or public policy. You have had occasion to say so on a number of occasions in respect of the lastmentioned kinds of protection: thus in your judgment of 4 December 1974 in Case [41/74, Van Duyn [1974] ECR at p. 1350, ground 18](http://eur-lex.europa.eu/query.html?DN=61974??0041&locale=EN)) you found that the scope of the concept of public policy within the meaning of Article 48 (3) cannot be determined unilaterally by each Member State without being subject to control by the institutions of the Community. Your judgment of 28 October 1975 in Case [36/75, Rutili [1974] ECR at p. 1231, ground 27](http://eur-lex.europa.eu/query.html?DN=61975??0036&locale=EN)) is to the same effect.  The same must be true as regards the protection of industrial and commercial property which does not appear to me to be a more desirable objective than the protection of public policy or public health.  The protection of the trade-mark is associated, from the point of view of which concerns the German court in the context of its own jurisdiction, with that of “similarity of products”, “similarity of trade-marks” and “risk of confusion”. It follows that if what I have said with regard to the Community aspect of the protection of commercial property is correct, the same must be true with regard to the determination of the criteria which serve to define the subject-matter of this protection; it is thus essential that these criteria should be applied in a uniform manner. |

| III — | I thus come to the crux of the present case: in the absence of a Community system protecting consumers and guaranteeing “fairness” of competition, who are the authorities entrusted with applying the terms “similarity of trade-marks”, “'similarity of products” and “risk of confusion” and how is it to be guaranteed that the criteria according to which they are adopted should be uniform?  Following the precedent set by your judgment of 4 December 1974 in Case [41/74, Van Duyn [1974] ECR at p. 1350, ground 18](http://eur-lex.europa.eu/query.html?DN=61974??0041&locale=EN)) I think that in the absence of any Community implementing legislation it is, in general, for the authorities of the Member States to decide the extent to which they intend to guarantee the protection of trade-marks and in particular to decide the degree of similarity or resemblance required for the simultaneous presence of two products covered by trade-marks on the same market to risk causing confusion. What you said with regard to the concept of public policy appears to me to be applicable to the protection of trade-marks: “the particular circumstances justifying recourse to the concept of public policy may vary from one country to another and from one period to another, and it is therefore necessary in this matter to allow the competent national authorities an area of discretion within the limits imposed by the Treaty”. You returned to this consideration in your judgment of 28 October 1975 in Case [36/75, Rutili [1975] ECR at p. 1231, ground 26](http://eur-lex.europa.eu/query.html?DN=61975??0036&locale=EN)): “Member States continue to be, in principle, free to determine the requirements of public policy in the light of their national needs”.  As for the criteria for judging the risk of confusion it must be observed that they vary from country to country: “truth this side of the Pyrenees, error beyond”. In France imitation is judged having regard to “the averagely observant buyer who does not have the two trade-marks simultaneously before him”; further in that country the principle of the “speciality of the trade-mark” is adopted. In Great Britain the criterion is the “honest concurrent user”.  Assessing the risk of confusion is sometimes a question of pure fact and sometimes a complex problem in which questions of fact and law are mingled.  In France, according to the formula adopted by the Cour de Cassation, the courts trying the issue are sovereign in assessing the risk of confusion: “the court has only made use of its sovereign power of assessment in deciding that this resemblance was such as to cause confusion in the mind of the averagely abservant consumer who does not have the two trade-marks simultaneously before him”. In other countries of the Community, on the contrary, it is a matter subject to review even if its application to the particular case requires, as a preliminary, that certain facts should be found and classified. In German law the risk of confusion is a matter of law subject to review by the Bundesgerichtshof.  Other courts are much more exigent in requiring proof of risk of confusion. I shall cite two examples:   | — | The Supreme Court of Ireland decided on 1 May 1967 that the American company Sterling Winthrop which had acquired the Irish subsidiary of Farben-Fabriken Bayer A.G. and the trade-mark Bayer in circumstances similar to that of Van Zuylen with regard to the trade-mark Hag, could not obtain an injunction prohibiting the German company from selling in Ireland the products covered by the trade-mark “Bayer Germany” since there was no risk of confusion in the mind of the public between the products of the American company marked “Bayer” and those of the German company marked “Bayer Germany” in view of the fact that the latter qualification was clearly shown and the packaging was different. |  | — | In the United Kingdom Mr Justice Graham decided (High Court of Justice, Chancery Division, Sirdar Ltd. v. Les Fils de Louis Mulliez,19 March 1975), in a case in many respects similar to the present, that prima facie there was no likelihood of confusion between the trade-marks Sirdar and Phildar placed on an identical product (knitting wool) since, apart from the United Kingdom, these trade-marks had never competed against one another. He advised the parties to settle their differences amicably on the basis of the principle “live and let live” by adding if necessary an additional distinctive feature to their trade-mark. |   Is it not conceivable that a prohibition does not benefit from the derogation in Article 36 when industrial and commercial property can be protected just as effectively by measures which restrict Community trade less than a radical prohibition on marketing?  You have been very exigent in this respect in the sphere of public health: you have just decided in the de Peijper case on 20 May 1976 that it is for the national authorities clearly to prove that any other rules or practices protecting public health as effectively and less restrictive of intra-Community trade would obviously be beyond the means which can reasonably be expected of an administration operating in a normal manner.  In a sphere akin to that with which we are concerned, designations of origin, you said (Case [8/74, Dassonville [1974] ECR at p. 852, ground 6](http://eur-lex.europa.eu/query.html?DN=61974??0008&locale=EN)) that if a Member State takes measures to prevent unfair practices in connexion with the requirement of the authenticity of designations of origin, “it is however subject to the condition that these measures should be reasonable and that the means of proof required should not act as a hindrance to trade between Member States”.  With regard to trade-marks you decided in Case [192/73, Hag [1974] ECR at p. 744, ground 14](http://eur-lex.europa.eu/query.html?DN=61973??0192&locale=EN)) that “whilst in such a market the indication of origin of a product covered by a trade-mark is useful, information to consumers on this point may be ensured by means other than such as would affect the free movement of goods”.  Is this the case as regards the fight against unfair competition? In particular, faced with the restrictive nature of the exceptions recognized by Article 36 to the fundamental principle of free movement is a simple risk of confusion sufficient, even though indirect? Does Article 36 justify a measure prima facie useful from the point of view of protection of commercial property, but having restrictive characteristics explicable, at least in part, by the fact that having regard to the multiplicity of possible conflicts or clashes between the trade-marks the court wishes to reduce the complexity of its task and to spare itself the task, which is always difficult, of taking evidence on actual confusion by presuming the existence of such a risk? It is not conceivable that the additional work involved in inquiring as to the existence of actual confusion might not obviously be beyond the means which can reasonably be expected of a court operating in a normal manner? Moreover in this sphere courts are often inclined to underestimate the consumer's perceptive capability and the reasoning on the part of the industry in trade-marked products serves only to camouflage interests in respect of price and distribution. Far from simply providing a guarantee of origin the trade-mark is then used to guarantee the reputation acquired by a product and to prevent the distribution of a similar product the competition from which on the market would be dangerous.  Assuming that it is justified to prohibit Terrapin from trading in Germany under its trade-mark and commercial name, it could therefore be unduly harsh not to allow it to make arrangements other than those implying a pure and simple renunciation of its present trade-mark. Would it not be possible to provide for the addition of a distinctive sign to enable the products to be distinguished? Two similar trade-marks could therefore be followed or preceded by another sign indicating their respective sources as the Commission suggested in the administrative procedure which it instituted against the company Sirdar (letter of 10 February 1975, produced as Annex IV to the application in Case 34/75).  On the other hand it may be maintained that according to the provisions of the Treaty it is not the free movement of trade-marks but of goods which is required. This freedom of movement may not, however, completely disregard trade-mark law, especially as today products are often inseparable from trade-marks; in any event this is the direction in which the efforts of traders tend, even those who sell so-called “free” products.  It is true the company Terrapin could export its products to Germany under another trade-mark in the same way as did Hag Bremen at one time before the Luxembourg court referred to you the dispute between it and Van Zuylen. But from the point of view of the British company would not the use of a different trade-mark deprive it in its turn of the benefit of its publicity since it would not be able to export the products as they are sold in its own country? In its decision of 5 March 1975, Sirdar - Phildar ([OJ L 125 of 16. 5. 1975, p. 27](./../../../legal-content/EN/AUTO/?uri=OJ:L:1975:125:TOC)) the Commission considered that the restriction on competition resulting from the agreement to divide the markets between the two competitors is not removed by the fact that the French company can under the agreement export knitting wool to the United Kingdom under a trademark other than Phildar.  But I do not think that you have jurisdiction to settle these questions under Article 177 of the Treaty: the assessment of what is necessary for the purpose of protecting consumers and the fight against unfair competition is, in my opinion, primarily for the national authorities. |

| IV — | I am not unaware of the unsatisfactory aspects of this state of affairs. The different conditions in regulations with regard to the protection against unfair competitors which is recognized by the courts, the different concepts with regard to criteria of confusion or protection of consumers, not to say the “nationalism” of trade-marks, can lead to diametrically conflicting decisions. The exceptions to free movement, justified on grounds of protecting commercial property, are capable of having a different scope and significance according to the Member State. But as Mr Justice Graham very pertinently says in his judgment of 13 March 1975 in the case of EMI v CBS, Community law is, as regards industrial and commercial property — and, let me add, protection of consumers and protection against unfair competition — in a formative stage; the resolution of the conflict between national territorial rights and the free movement of goods has not yet been completely worked out.  It may be that inconsistent and illogical decisions will be given at times by the different courts concerned until a more comprehensive Community law replaces the existing national laws. It is inevitable that this should be so at present unless a governing Community judicial body is created and entrusted with the settlement of these questions.  In the present state of the Treaties the Court of Justice cannot be this supreme court in respect of trade-mark disputes. In saying this I am not thinking so much of the risk of seeing the Court overwhelmed by references for a preliminary ruling relating to the law on trade-marks: it would always be possible to entrust one of your Chambers with deciding this class of cases. But, as you yourselves recognized in your judgment of 9 July 1969 (Case [10/69, Portelange [1969] ECR at p. 315](http://eur-lex.europa.eu/query.html?DN=61969??0010&locale=EN)), your jurisdiction is limited by Article 177 to interpreting the Community law involved in the questions referred to you by the national courts. You cannot decide the facts or rule on the merits of the main action or act as a supreme court to reconcile conflicting decisions given by courts of the different Member States: “Article 177 of the Treaty, which is based on a clear separation of functions between national courts and the Court of Justice, does not permit the latter either to take cognizance of the facts of the case, or to pass judgment on the reasons for requests for interpretation. The question whether the provisions or concepts of Community law, whose interpretation is requested, are in fact applicable to the case in question lies outside the jurisdiction of the Court of Justice and falls within the jurisdiction of the national court”.  You reiterated this view in your judgment of 30 April 1974 in Case [155/73, Sacchi ([1974] ECR at p. 426, ground 3)](http://eur-lex.europa.eu/query.html?DN=61973??0155&locale=EN), stating that Article 177 is “based on a clear separation of functions between the national courts and this Court”.  In the present state of the Community which according to the agents of the German Government “has not yet arrived at the stage of a single State” or according to the order of the Constitutional Court of 29 May 1974“is not a State nor, in particular, a Federal State, but a Community of a special kind progressing towards integration”, an “intra-State institution”, it seems to me that the sovereignty of national courts cannot be brought into question.  For the rest, the answer which I am proposing to you appears to me to be in line with already well-established case-law in which, when giving preliminary rulings, you declined jurisdiction in favour of national courts.  This is the case with regard to tariff classification. Let me limit myself to citing your judgment of 8 May 1974 in Case [183/73, Osram ([1974] ECR at p. 485-486)](http://eur-lex.europa.eu/query.html?DN=61973??0183&locale=EN).  ‘The question of ascertaining whether the products with which the main action is concerned in fact meet these requirements concerns the application rather than the interpretation of the CCT and is consequently a matter for the national court.’  ‘As already stated, it is for the national court to determine whether the items in question in fact meet the conditions whereby they can be classified under one or other tariff heading, and the Court is competent by application of Article 177 of the EEC Treaty to find only as regards the interpretation of the provisions of the tariff.’  You came to the same decision in respect of a matter akin to those at issue in the present case, the degree of care that may be expected of a prudent and diligent trader (Judgment of 30 January 1974 in Case [158/73, Kampffmeyer, [1974] ECR at p. 111](http://eur-lex.europa.eu/query.html?DN=61973??0158&locale=EN)):  ‘In the absence of any express provision of Community law it is for the national court to say whether such a trader has or has not exercised all reasonable care, bearing in mind the circumstances of the case. This is not a question of interpretation but one of application, reserved for the national court’.  In relation to a sporting competition to decide whether in a particular sport pacemaker and stayer constitute a team (Judgment of 12 December 1974 in Case [36/74, Walrave, [1974] ECR at p. 1418](http://eur-lex.europa.eu/query.html?DN=61974??0036&locale=EN)):  “Having regard to the above, it is for the national court to determine the nature of the activity submitted to its judgment.”  In relation to an abuse of competition under Article 86 (Judgment of 30 April 1974 in Case [155/73, Sacchi, [1974] ECR at p. 430](http://eur-lex.europa.eu/query.html?DN=61973??0155&locale=EN)):  “In the fourth question the national court has cited a certain number of acts capable of amounting to abuse within the meaning of Article 86 …  The national court has in each case to ascertain the existence of such abuse and the Commission has to remedy it within the limits of its powers.”  Judgment of 21 March 1974 in Case [127/73, BRT ([1974] ECR at pp. 317-318)](http://eur-lex.europa.eu/query.html?DN=61973??0127&locale=EN):  ‘The inequitable nature of such provisions must be determined by the relevant court, bearing in mind both the intrinsic individual effect of those clauses and their effect when combined.  If abusive practices are exposed, it is also for the court to decide whether and to what extent they affect the interests of authors or third parties concerned, with a view to deciding the consequences with regard to the validity and the effect of the contracts in dispute or certain of their provisions.  It is thus the duty of the national court to investigate whether an undertaking which invokes the provisions of Article 90 (2) for the purpose of claiming a derogation from the rules of the Treaty has in fact been entrusted by a Member State with the operation of a service of general economic interest’.  In relation to social security with regard to the overlapping of a sickness insurance benefit and an invalidity insurance benefit (Judgment of 15 May 1974 in Case [184/73, Kaufmann, [1974] ECR at p. 524](http://eur-lex.europa.eu/query.html?DN=61973??0184&locale=EN)):  ‘It is for the national judge to decide whether, in the present case, such a risk of overlapping exists.’  Finally in relation to force majeure (Judgment of 28 May 1974 in Case [3/74, Pfützenreuter [1974] ECR at p. 599](http://eur-lex.europa.eu/query.html?DN=61974??0003&locale=EN)):  ‘Within the limits of their own competence, national courts can therefore recognize the existence of a case of force majeure not only where the situation in question is covered by the enumeration in paragraph (2) or where it has been recognized by the Member States pursuant to paragraph (3), but also in other case.’  A different interpretation would moreover risk prejudicing the work on the European trade-mark:  According to the information available to me today it appears from the documents published by the Commission that, unlike the case of the European patent it will be a European court of trade-marks (provided for in Article 4) which will have appellate jurisdiction in relation to decisions taken by the Board of Appeal in respect of the. examination and administration of trade-marks (Article 99) and by the Revocation Board in relation to lapse and nullity of a European trade-mark (Article 138) and it is this same European court of trade-marks which in the event of proceedings for infringement of the European trade-mark will have jurisdiction to interpret both the convention and the implementing Community provisions as well as judging the validity of these provisions (Article 161), even if the draft does not rule out the possibility that ‘this institution will be attached to an already existing international court’ (Note 1 to Article 4). |

| V — | However this situation is not completely irremediable. The answer may be sought at different levels.  In the first place even in the sphere of Article 36. it is not necessary that the prohibitions or restrictions justified on grounds of protection of industrial and commercial property should constitute an arbitrary means of discrimination and that the concept of ‘risk of confusion’ should be applied in one State in a discriminatory way according to the nationality of the undertaking: thus if the concept of risk of confusion obtains in a State it should be applied without distinction to all national companies using the same ‘strong’ root to mark products similar to those of the company of another State. In this respect the courts of Member States which also ensure ‘that in the interpretation and application of this treaty the law is observed’ (Article 164) must show all the more vigilance in so far as they are sovereign in the interpretation of the concept of ‘risk of confusion’. In the same way the protection granted under this head must not constitute a disguised restriction on trade between Member States and, in my view, the Commission, which is the most able to discover such restrictions, has a special responsibility in this respect.  Just like each of the Member States (Article 170), it can, if it considers that the legislation of a Member State relating to the protection of industrial and commercial property or the application thereof constitutes a failure to comply with Article 36, take action under Article 169.  There is one kind of solution against which it is impossible to be too vigilant: undertakings claiming to use trade-marks leading to confusion, genuine or imaginary, for similar products could be tempted to agree to share the market or to engage in ‘amalgamations’. There would then be a danger of practices contrary no longer only to unfair competition but to competition altogether which is a sphere at least as distinguished as that of industrial and commercial property. Although the Commission endorsed certain agreements on dividing up markets Nicholas Vitapointe — Vitapro, decision of 30 July 1964, [JO No 13 of 26. 8. 1964, p. 2287](./../../../legal-content/EN/AUTO/?uri=OJ:P:1964:013:TOC)) this was because at the time they related to a third country. Since then (cf. the beforementioned decision in Sirdar — Phildar) it has clearly made known that it would prohibit this type of agreement in which those concerned make a territorial division of the markets among themselves.  De lege ferenda, in the context of work on the European trade-mark, it is necessary to prevent conflicts and adjust registration and publicity rules so as to ‘nip in the bud’ possible disputes before a trade-mark or commercial name capable of creating confusion with a known trade-mark already protected can acquire real standing.  Further the possibility should be open to the proprietor of a previous trade-mark to require within a certain period beginning with the registration of the new trade-mark that the latter should be annulled if the registration has been carried out by a third person in good faith. It is with this that Article 12 of the preliminary draft of the convention on a European trade-mark law is concerned.  But there is no provision made for the case of old trade-marks, assuming that no objection can be made to them on the ground of lapse by reason of prolonged lack of use, and the European draft allows the national trade-marks to continue independently of the European trademark.  As the Commission says it is therefore not the approximation of laws, in the present state of the drafts, which will enable the problem to be resolved.  It would still be necessary to centralize in every Member State the courts required to try actions for unfair competition or aimed at protecting consumers.  Finally to prevent consideration of whether there exists a risk of confusion between two trade-marks from differing at the same time from one country to the other, which could involve deflections of trade, it would be necessary for the courts of a State to take account of the facts and decisions in the other States since in reality these facts and decisions in the context of the common market, are part and parcel of the situations with which they have to deal.  Guidance in this respect could be taken from the common declaration annexed to the Protocol on the Interpretation by the Court of Justice of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Civil and Commercial Judgments and in liaison with this Court of Justice an exchange of information could be organized relating to the decisions given by the national courts in matters which concern us.  The scope of the task may thus be gauged and I unfortunately cannot share the optimism of Professor Beier.  Transposing what was said in the judgment of 29 February 1968 in Case [24/67, Parke Davis ([1968] ECR at p. 71)](http://eur-lex.europa.eu/query.html?DN=61967??0024&locale=EN) we must resign ourselves to finding that so long as the rules on protection against unfair competition and protection of consumers have not been unified in the context of the Community, obstacles to the free movement of products due to a different assessment of the extent to which this protection should be recognized will constitute a factor which, save for any abuses to which this protection could give rise, is not in itself open to objection.  There can therefore be no question of undertaking, under the cover of interpreting provisions on the abolition of quantitative restrictions, a unification of trade-mark law and the protection of industrial and commercial property even by drawing on general principles of law common to the Member States and even less a unification of the law on unfair competition and the protection of consumers by nullifying the interpretations by national courts experienced and armed in this field.  Apart from reference to the final provisions of Article 36 you do not have in the present case to define the principles on which they must be assessed. The criteria for determining whether there is a risk of confusion do not have to be drawn from the Community legal order but they have to be applied in a uniform manner which is a quite different concept. |

In these circumstances my opinion is that you should rule that Articles 30 and 36 do not prevent a national court, founding itself on protection against unfair competition and protection of consumers, from ordering an undertaking not to market the product in a Member State under a trade-mark legally affixed to it in another Member State but capable of causing confusion with similar products sold under a similar trade-mark by another undertaking of the first of these States when there are no relations between the undertakings concerned and their trade-mark rights have arisen independently in different Member States, unless this constitutes arbitrary discrimination or a disguised restriction on trade between Member States.

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(
[1](#c-ECRCJ1976ENA.0500106301-E0002)
) Translated from the French.

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