SKW Schwarz prevails on behalf of Lotte in the dispute over “Koala Bears” – EU General Court focuses on scope of trademark use

SKW Schwarz has won a key victory on behalf of Japanese confectionery group Lotte Co. Ltd. in the dispute over the use of a figurative trademark: The European Union’s General Court dismissed the appeal of Nestlé Schöller GmbH & Co. KG (now Nestlé Deutschland GmbH) against the registration of the Lotte application and annulled an EUIPO decision to the contrary (Case T-41/17, July 12, 2018). The judgement is one of the few high court rulings examining the extent to which a trademark must be used in order for use to be considered genuine. More than ten years of litigation between Lotte, one of Japan’s largest confectionery manufacturer, and Nestlé Schöller revolved around cookie packaging depicting koala bears. In 2007, Lotte had registered a European Union trademark for pastries, biscuits, fine bakery products, etc., which consisted of a figurative mark with koalas. In 2008, then-Nestlé Schöller objected to said trademark, referring, among other things, to packaging bearing the inscription “KOALA-BÄREN lustige Gebäckfiguren Schöller” for which it had registered a figurative mark twenty years earlier that also depicts koala bears.

Based on Lotte’s motion, EUIPO requested Nestlé Schöller to provide evidence of genuine use of the earlier mark, whereupon the company provided various pieces of evidence. The EUIPO Opposition Division initially granted the opposition. Following Lotte’s appeal, however, the Fourth Board of Appeal of EUIPO found that Nestlé Schöller had failed to provide legally effective evidence of genuine use of the earlier mark. Over the years, Nestlé Schöller had changed the appearance of the packaging, resulting in ten different versions. In 2015, the General Court had already ruled that the shape of the packaging used by Nestlé Schöller was in part so different from the registered trademark that Nestlé could not rely on trademark protection (Case T-483/12, September 15, 2015). Only two versions of the product packaging presented were deemed to be so close to the opposition mark that right-preserving use was recognized.

Subsequently, a decision was required as to whether the scope of use was sufficient in relation to these two product packaging versions. After having been referred back to the Fifth Board of Appeal of EUIPO, the matter was remanded to the General Court. In its decision, the General Court found that the scope of use was insufficient to demonstrate genuine use of the Nestlé Schöller trademark. Nestlé Schöller and its distribution partner Kuchenmeister were only able to submit three invoices for the product packaging at issue for 2003 and 2005 covering some 1,400 units generating sales of 862 euros and some 5,800 units generating sales of 3,709 euros for those two years. According to the General Court, these sales figures are practically insignificant for low-priced goods and could not be deemed sufficient in the confectionery industry. As a result, the General Court accepted Lotte’s plea of non-rightful use and dismissed Nestlé’s appeal.

“The General Court’s decision confirms, on the one hand, that the use of trademarks is only genuine if the level of use is economically sufficient to open up a market,” said Margret Knitter, Partner at SKW Schwarz, who won the judgement on behalf of Lotte. “Companies should therefore ensure that the sales figures for their goods reach an economically relevant level, or at least document the sales in detail.”
With a view to the wide variety of packaging for koala biscuits, Margret Knitter points out another key aspect for manufacturers: “It is a prerequisite for effective trademark protection to use the trademark ideally as originally registered. This sets certain limits to the creativity of marketing. Companies should regularly set up meetings between marketing departments and brand experts to ensure that the appearance of the goods continues to be covered by trademark protection.”

Contact for additional questions:
Margret Knitter, LL.M.
Rechtsanwältin, Certified Expert for IP
SKW Schwarz Rechtsanwälte
T +49 (0)89 28 64 0-300
m.knitter@skwschwarz.de