German Federal Court of Justice – Examination of a trademark’s distinctive character based on all likely types of use (#darferdas?)

On 17 November 2015, the claimant filed an application for registration of the sign “#darferdas?” (which translates as “#canhedothat?”) as a word mark in respect of Class 25 goods (clothing, in particular T-shirts; footwear; headwear) with the German Patent and Trademark Office (Deutsches Patent- und Markenamt). The German Patent and Trademark Office rejected the trademark application, however, arguing that the sign was devoid of any distinctive character (Section 8(2) no. 1 German Trademark Act (Markengesetz)).

The claimant’s subsequent appeal to the German Federal Patent Court (Bundespatentgericht) was also unsuccessful (Decision of 3 May 2017 – 27 W (pat) 551/16). The responsible judges adopted the German Patent and Trademark Office’s view and rejected the trademark application on the grounds that the sign was devoid of any distinctive character. The Federal Patent Court took the view that the expression “#darferdas?” was a sequence of common words in the German language joined together to form a question, with a hashtag to invite people to discuss this question, and therefore, when placed on the front or back of clothing, would be perceived by the public merely as a decorative element, but not as an indication of origin.

The claimant then pursued further its request for registration by filing an appeal on points of law with the Federal Court of Justice. The competent body at the Federal Court of Justice determined that it cannot be excluded that the use of the sign “#darferdas?” on the front or back of an item of clothing constitutes one of several types of use, as this sign could also be placed on a label inside the garment and thus be perceived as an indication of origin. According to the Federal Court of Justice’s own case law, the existence of plausible and practically significant possibilities of using the sign in such a way that it is easily understood by the public to be an indication of origin suffices for this purpose. The judges at the Federal Court of Justice were, however, in doubt about whether a ruling to this effect would be able to be reconciled with the relevant provisions of EU law and, therefore, referred the following question to the Court of Justice of the European Union (“CJEU”) for interpretation: “Does a sign have distinctive character when there are in practice significant and plausible possibilities for it to be used as an indication of origin in respect of goods or services, even if this is not the most likely form of use of the sign?” (BGH, Decision of 21 June 2018 – I ZB 61/17).

By judgment of 12 September 2019, the Court of Justice of the European Union affirmed the question referred to it for a preliminary ruling and handed the matter back to the Federal Court of Justice. The Court of Justice of the European Union took the view that when examining the distinctive character of a sign in respect of which registration is sought, all the relevant facts and circumstances must be taken into account, including all the likely types of use of the trademark applied for. It also pointed out that the likely types of use must correspond to the types of use which, in the light of the customs and practices used in the economic sector concerned, can be practically significant. According to the Court of Justice of the European Union, the applicant for a trademark is, however, not required to precisely know, at the time of its application for a trademark, what use it will make of the sign in future. In such circumstances, the examination of the distinctive character of a sign should be based on the customs and practices used in the economic sector concerned and, within this context, each conceivable type of use that is practically significant must be examined with regard to whether the sign is understood by the public as an indication of origin (CJEU, Judgment of 12 September 2019 – C-541/18).

The Federal Court of Justice, taking these principles into account, then decided that the Federal Patent Court’s view – that the applied-for trademark was devoid of any distinctive character in respect of the goods concerned – could not be upheld from a legal perspective. According to the Federal Court of Justice, the Federal Patent Court had wrongly assumed that a distinctiveness check must focus on the most likely type of use of the sign in respect of which registration is sought. As a result, the Federal Patent Court had only taken into account the scenario that the sign “#darferdas?” would be placed visibly on the front or back of clothing, headwear or footwear when making its assessment. By contrast, other, less likely types of use that would be less significant in practice, such as the use of the relevant sign on labels inside garments, were not taken into consideration by the judges at the Federal Patent Court.

The judges at the Federal Court of Justice argued that the public can perceive a sign placed on a garment both as an indication of origin and as a decorative element, depending on the type of sign and on where it is placed, which is why the distinctiveness check must be carried out based on the circumstances of the particular case. According to the Federal Court of Justice, the labelling customs and practices in the product sector concerned are of particular relevance in this context. The Federal Court of Justice further pointed out in its decision that types of use which, even though conceivable in the economic sector concerned, are insignificant in practice and, therefore, seem unlikely are, as a general rule, irrelevant for the distinctiveness check. If, however, the applicant furnishes concrete information that makes an unusual type of use seem likely, said rule cannot be adhered to, according to the judges. Furthermore, the distinctiveness check can only be limited to the most likely type of use if there is only one type of use that is practically significant in the economic sector concerned. Because of the above, the Federal Court of Justice set the decision aside and referred the matter back to the Federal Patent Court. The Federal Patent Court must now examine in the reopened appeal proceedings whether the public might perceive the sign “#darferdas?” as an indication of origin, taking into account the various types of use, also and in particular the use on a label attached to a garment.

In particular in the area of clothing, the question keeps arising whether “fun sayings” placed on garments have a distinctive character for trademark law purposes. Such signs often do not indicate the origin of the goods but are merely decorative in nature. It is, however, also possible – even though less usual – to place the saying on a label inside the garment where one usually finds information about the manufacturer. The Court of Justice of the European Union held in the past that a sign cannot be regarded as having distinctive character if the most likely type of use is not as a trademark, even if other, practically significant types of use as a trademark exist in the economic sector concerned. The Court’s view has now changed, however: in its recent judgment, the Court of Justice of the European Union has recognised that all types of use in the economic sector concerned are relevant. Accordingly, it is sufficient that a “fun saying” can be used on the label sewn into a garment in the clothing industry to affirm the distinctive character of a sign, such as “#darferdas?”. It now remains to be seen how the Federal Patent Court will practically implement the requirements stipulated by the Court of Justice of the European Union and the Federal Court of Justice.