Budejovicky Budvar Narodni Podnik v Anheuser -Busch Inc

Factual and Procedural Background

The appeal arises from a decision of a judge dismissing the appellants' appeal against a decision of a Hearing Officer in the Trade Mark Registry. The appellants, hereinafter "BB," challenged the validity of a trade mark registration held by the other party, hereinafter "AB." The dispute concerns the use of identical trade marks for identical goods, specifically beer products, which have coexisted in the market for many years. The Court of Appeal previously referred questions of trade mark law to the Court of Justice of the European Union ("the Court") to resolve issues fundamental to the appeal. Prior judgments addressed certain English law defences such as abuse of process and estoppel against BB, which were resolved against them. BB also raised a defence of acquiescence under the Directive, which was ruled out by the Court. The key remaining issue concerned whether the proprietor of an earlier trade mark can prevail where there has been a long period of honest concurrent use of identical marks for identical goods, such that the mark no longer guarantees origin exclusively to one proprietor.

Legal Issues Presented

1. Whether Article 4(1)(a) of Council Directive 89/104/EEC permits the proprietor of an earlier trade mark to prevent registration or use of an identical later trade mark where there has been a long period of honest concurrent use of the identical marks for identical goods, such that the essential function of guaranteeing origin is not adversely affected.
2. Whether the defence of honest concurrent use is available on appeal, specifically whether BB can raise this point at this stage.
3. Whether there is evidence of an adverse effect on the essential function of the earlier trade mark sufficient to invalidate the defence of honest concurrent use.
4. Whether it would be unfair or unjust to resolve the appeal without remitting the case for further fact-finding regarding any adverse effect.

Arguments of the Parties

Appellant's (BB) Arguments

• Where there has been a long-standing situation of honest concurrent use of the same mark for the same goods, each user can register the mark and prevent third-party use, but neither can prevent the other from using it.
• The essential function of the trade marks is not adversely affected by honest concurrent use, despite some inevitable confusion.
• The case before the court is a rare example of honest concurrent use.
• It is fair to allow the point of honest concurrent use to be raised on appeal as it is a point of law based on existing evidence.

Appellee's (AB) Arguments

• The honest concurrent use point is not open for BB to raise on appeal.
• If it is open, existing factual findings demonstrate an adverse effect on the essential function of the earlier trade mark.
• If no adverse effect is shown, it would be unfair to resolve the appeal against AB without remitting the case to the Trade Mark Registry for further evidence on the adverse effect issue.
• Confusion evidenced in earlier cases is significant and exceeds any de minimis threshold, thus impairing the essential function of the mark.
• It would not be unjust to allow AB to amend pleadings and adduce further evidence if the case were remitted.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
GE Case [1973] RPC 297	Illustrates that points of law may be raised for the first time on appeal in cases involving honest concurrent use.	Referenced to support allowing BB to raise the honest concurrent use point on appeal despite it not being raised earlier.
Whitford J [1984] FSR 413	Evidence of confusion and passing off claims involving the Budweiser mark.	Used to demonstrate factual background on confusion and concurrent use between parties' marks.
Second Court of Appeal case [2000] RPC 906	Confirmed the existence of honest concurrent use between the parties.	Supported BB's position regarding the coexistence of the marks and the level of confusion.
O2 v Hutchison Case C-533/06 [2008] ECR I-4231	Comparative advertising and interpretation of trade mark law.	Referenced to show the Court's evolving approach in tempering rigid trade mark infringement rules.
Hölterhoff [2002] ECR I-4187	Purely descriptive use of trade marks.	Illustrated exceptions to strict trade mark protection.
BMW v Deenik [1999] ECR I-905	Use of a mark honestly stating a relationship (garage repairing BMWs).	Demonstrated limits on infringement where use does not affect essential function.
Adam Opel v Autec Case C-48/05 [2007] ETMR 5	Use of a mark on unrelated goods not infringing if no effect on essential function.	Supported the principle that absence of adverse effect negates infringement.
Celine v Celine Case C-17-06 [2007] ECR I-7041	Use of a mark as a business name not affecting essential function of registered trade mark.	Further example of tempering rigid application of same mark/same goods rule.

Court's Reasoning and Analysis

The court began by confirming that the defence of acquiescence had been ruled out by the CJEU. The central legal question concerned whether Article 4(1)(a) of Directive 89/104/EEC permits the proprietor of an earlier mark to prevail against a later identical mark after a long period of honest concurrent use where the essential function of guaranteeing origin is not adversely affected.

The Court of Justice ruled that cancellation of the later mark cannot be obtained if the honest concurrent use neither has nor is liable to have an adverse effect on the essential function of the mark. This ruling was accepted as dispositive by the court.

BB argued that the situation before the court was a rare example of honest concurrent use, permitting both parties to register and use the mark without interfering with each other’s rights, despite some inevitable confusion. AB contended that the honest concurrent use point was not open on appeal, that there was evidence of adverse effect, and that further fact-finding was necessary.

The court held that it was not unfair to allow BB to raise the honest concurrent use point on appeal because it was a point of law based on existing evidence, and BB had raised it in its Notice of Appeal. The court rejected AB’s argument that the point was not open.

Regarding the alleged adverse effect, the court analyzed the previous factual findings and concluded that while some confusion existed, it was not sufficient to impair the essential function of the mark. The court emphasized that the essential function guarantee differs in a context of long-established honest concurrent use, where the mark signifies goods of either user rather than exclusively one.

The court further found that AB had approached the case on an incorrect legal basis, assuming that proof of same mark and same goods was sufficient for invalidation without proving adverse effect. AB failed to plead or prove any adverse effect on the essential function of its mark despite presenting extensive sales evidence.

The court rejected AB’s request for remittal for further evidence, reasoning that AB had ample opportunity to plead and prove adverse effect but did not do so. Remitting the case would amount to a new trial caused by AB’s failure to present its case properly initially, which would be unjust.

A concurring judge agreed with the outcome but expressed more sympathy towards AB’s argument about potential unfairness, noting that the honest concurrent use point was not clearly raised early, and that if there were evidence of adverse effect, AB should have an opportunity to present it. However, no evidence or outline of such evidence was provided to the court, and it was too late to remit.

Another judge agreed with the majority that the appeal should be allowed.

Holding and Implications

The court ALLOWED the appeal.

The holding establishes that where there has been long-standing honest concurrent use of identical trade marks for identical goods, the proprietor of an earlier trade mark cannot obtain cancellation of the later mark unless it proves an adverse effect on the essential function of the mark as a guarantee of origin. The court emphasized that the essential function adapts in such circumstances to signify goods of either user rather than exclusively one party.

As a direct consequence, the earlier decision dismissing BB's appeal was overturned. The court declined to remit the case for further fact-finding, as AB failed to plead or prove any adverse effect despite opportunities to do so. No new precedent was created beyond the application of established principles from the Court of Justice and prior case law.