Why Ferrari can keep the “Testarossa” trademark and the ECJ’s latest case law on genuine use

Ferraris may well be able to keep its iconic Testarossa for vehicles, according to a ruling by the ECJ, even though it has not sold any vehicles under the mark since 1997. Even a minor use of the mark for spare parts is sufficient to preserve the right in light of this decision.

1. History of the case

In 2017, the Düsseldorf Regional Court ruled, following an action brought by toy manufacturer Kurt Hesse, who now heads Autec AG, that sports car manufacturer Ferrari had to consent to the cancellation of its German and international trade mark for “Testarossa” because Ferrari had not used the mark for vehicles for over 20 years. Ferrari had argued that it still offered maintenance, repair and retrofitting of Testarossa vehicles. However, the District Court pointed out that this was done under the Ferrari umbrella brand and that the use of Testarossa in the spare parts business was too small to maintain the trade mark. Ferrari had sold spare parts for Testarossa vehicles worth €17,000 during the relevant period of use between 2011 and 2017.

According to press reports, the background for the cancellation action was that Hesse no longer wanted to pay licence fees for the use of the trademark in the toy sector and, moreover, had plans to use the model name for bicycles, e-bikes and shavers as well.

Ferrari appealed against this decision of the Düsseldorf Regional Court. The Higher Regional Court of Düsseldorf referred a number of questions concerning rights-preserving use to the ECJ for a preliminary ruling.

2. Decision of the ECJ

In its judgment of 22.10.2020, the ECJ (case number C-720/18, GRUR-RS 2020, 27498) answered these questions in a preliminary ruling.

According to the relevant provisions, a trade mark is revoked, i.e. cancelled, if it has not been put to genuine use within an uninterrupted period of five years and there are no proper reasons for its non-use. According to the established case law of the ECJ, a trade mark is “put to genuine use” if it is used in accordance with its principal function, i.e. to create or preserve an outlet for those goods and services. Token uses of the trade mark which are made solely to maintain the trade mark are not taken into account.

Since Ferrari had no longer used the mark for motor vehicles during the period of use, the central question for the outcome of the proceedings was whether a mark was “genuinely” used for motor vehicles even if it was only used for individual parts or accessories. The ECJ answered this question in the affirmative, thus confirming its 17-year-old case law (judgment of 11 March 2003, Ansul, ECJ Case C4001 C-40/01, ECLI:EU:C:2003:145, para. 43), which had always met with skepticism in Germany, as it did not seem to be compatible with traditional German case law.  Although the mark had only been used for spare parts of high-priced luxury sports goods, the ECJ also seems to affirm a use for the broad term “land vehicles and their parts”, as luxury sports goods is not an independent sub-category. Also the fact that the trade mark registration itself protects parts of land vehicles does not exclude a use for land vehicles. Finally, even a relatively small number of units sold does not mean that the trade mark is used purely symbolically, as long as the trade mark has been used with the aim of preserving an outlet. Thus, in the case of high-priced luxury sports goods, even a very low turnover could constitute a genuine use maintaining the registration. The ECJ, thus, confirms an old decision of the Federal Patent Court, which considered the sale of a few COBRA sports cars as a genuine use (Federal Patent Court GRUR 2001, 58 – COBRA).

The ECJ’s comments with regard to the sale of used trade mark goods are also very interesting.  A trade mark may also be used for goods which have already been put on the market under that trade mark and for which trade mark rights have, thus, already been exhausted. The fact that the proprietor of the trade mark cannot prohibit third parties from using his trade mark for goods already put on the market under that trade mark does not mean that he may not use it himself for such goods. A trade mark may, therefore, also be put to genuine use by its proprietor by marketing used goods. This decision seems to contradict the previous precept of German trade mark law, according to which a use of a trade mark that does not infringe cannot be a genuine use of the trade mark. This precept was also decisive for the Düsseldorf District Court not to see a genuine use in the sale of used Testarossa cars.

The ECJ also ruled on the legal validity of the German-Swiss Convention of 1892, which provides that use in one country is also deemed to be use in the other country. Although, according to the ECJ, there is no possibility of interpreting this agreement in conformity with EU law, the agreement could be applied by German courts as long as the incompatibility has not been removed, which Germany is obliged to do under Art. TFEU Article 351.

In light of the ECJ’s decision, Germany must also amend its rules of civil procedure on the burden of proof in revocation proceedings. The rule according to which the plaintiff or applicant bears the burden of proof and the trade mark proprietor only has a secondary burden of proof is not in conformity with EU trade mark law. Rather, the trade mark proprietor bears the full burden of proving that the trade mark has been “put to genuine use”, because he is in the best position to provide evidence of the specific acts of use.