Opinion of Advocate General Ruiz-Jarabo Colomer delivered on 13 June 2002
Grade B
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Not the law itself: Opinion
Address https://gelex.eu/eli/EU/opinion/62001C0206@2002-06-13/en
1. Is the proprietor of a registered trade mark entitled to prevent any use, in the course of trade, of identical signs for identical goods or services, other than the uses covered by Article 6 of the First Directive relating to trade marks (hereinafter the Directive or the First Directive)? Or, on the contrary, does the exclusivity conferred by Article 5 only extend to use which discloses its origin, that is to say, the connection between the proprietor and the goods or services which the trade mark represents? And, if the answer to that second question is in the affirmative, is use as a badge of support, loyalty or affiliation to the owner of the sign indicative of such a connection?
2. Those are the doubts which the High Court of Justice of England and Wales — hereinafter referred to as the High Court — wishes the Court of Justice to dispel in these proceedings for a preliminary ruling.
sec_1 I —
The facts in the main proceedings and the questions referred for a preliminary ruling
3. Arsenal Football Club pic (Arsenal), also nicknamed the Gunners, is a well-known English football club, founded in 1886.
4. Since 1989, Arsenal has registered two word trade marks, Arsenal and Arsenal Gunners, and two graphic marks, The Crest Device and The Cannon Device, all for the purpose of distinguishing articles of clothing and sports footwear, goods falling within Class 25 of the international trade mark nomenclature.
5. Mr Matthew Reed is a trader who since 1970 has been selling souvenirs and articles of clothing connected to the claimant club in the vicinity of Highbury football ground, the team's stadium. Those items bear the signs which the club registered as trade marks.
6. In particular, he offers for sale scarves prominently marked with the word Arsenal. They are products which Mr Reed advertises as unofficial in the stalls from which he carries on business, with a large notice with the following text: The word or logo(s) on the goods offered for sale, are used solely to adorn the product and does not imply or indicate any affiliation or relationship with the manufacturers or distributors of any other product, only goods with official Arsenal merchandise tags are official Arsenal merchandise.
7. Arsenal brought two actions against Mr Reed. One was for passing off and the other for infringement of trade mark; both actions were heard and determined in a single procedure. The first was dismissed on the ground that, according to the High Court, the claimant club had not been able to show actual confusion on the part of consumers and, in particular, had not been able to show that the unofficial products sold by the defendant were regarded by the public as coming from Arsenal or marketed with its authorisation.
8. As for the second action, the High Court rejected Arsenal's argument that the use by Mr Reed of the indications and symbols registered as trade marks was perceived by consumers as a use indicating the origin of the goods (badge of origin), that is, the use was a trade mark use.
9. According to the High Court, the signs and logos affixed to the goods offered for sale by the defendant are perceived by that public as badges of support, loyalty or affiliation.
10. With that preamble, the High Court refers to the Court of Justice the following questions:
10.
1. Where a trade mark is validly registered and does the third party have a defence to infringement on the ground that the use complained of does not indicate trade origin (i.e. a connection in the course of trade between the goods and the trade mark proprietor)?
1.
(a) a third party uses in the course of trade a sign identical with that trade mark in relation to goods which are identical with those for whom the trademark is registered; and
(b) the third party has no defence to infringement by virtue of Article 6(1) of the Council Directive of 21st December 1988 to approximate the laws of the Member States relating to trade marks (89/104/EEC);
2. If so, is the fact that the use in question would be perceived as a badge of support, loyalty or affiliation to the trade mark proprietor a sufficient connection?
sec_2 II —
Procedure before the Court
11. Written observations were submitted, within the period prescribed for the purpose by Article 20 of the EC Statute of the Court of Justice, by Arsenal, Mr Reed, the Commission and by the Surveillance Authority of the European Free Trade Association.
12. The parties to the main proceedings and the Commission presented oral argument at the hearing on 14 May 2002.
sec_3 III —
Legal background
sec_1
1. Community law: the First Directive
13. The Directive is aimed at approximating the laws of the Member States relating to trade marks, with the purpose of abolishing the disparities which may impede the free movement of goods and freedom to provide services and may distort competition within the common market. However, the harmonisation it pursues is only partial, so that the involvement of the Community legislature is restricted to certain aspects relating to trade marks acquired by registration.
14. Article 2 of the Directive provides: A trade mark may consist of any sign capable of being represented graphically, particularly words, including personal names, designs, letters, numerals, the shape of goods or of their packaging, provided that such signs are capable of distinguishing the goods or services of one undertaking from those of other undertakings.
15. Article 5, entitled Rights conferred by a trade mark, lays down the various degrees of legal protection which the Directive requires to be afforded to proprietors of that kind of intellectual property.
sec_1 A.
Article 5(1)
16. Under Article 5(1), the proprietor is entitled to prevent all third parties from using the trade mark in the course of trade. However, it distinguishes between two degrees of usage and, consequently, different levels of protection.
17. The first consists in the use of an identical sign in relation to identical goods or services (Article 5(1)(a)). It covers imitation and passing-off. Subparagraph (a) offers protection against copying, as the Surveillance Authority of the European Free Trade Association has observed in its written observations. The protection is absolute and unconditional, with no limitations other than those resulting from Article 6 of the Directive.
18. For its part, Article 5(l)(b) envisages three situations: identical signs and similar goods and services; conversely, similar indications and identical goods or services; and, finally, similar signs for similar goods and services. In those cases, protection depends on whether there exists a likelihood of confusion, which includes the likelihood of association.
19. In the course of these interlocutory proceedings, the participants have argued over the question whether the proprietor's powers extend to prohibiting use of the trade mark or, more broadly, of the sign of which it consists. The reasoning is byzantine. The Directive is concerned with registered trade marks, that is to say, those signs which, being capable of being represented graphically, are capable of distinguishing the goods or services of one undertaking from those of other undertakings. Thus, where the symbols are identical, the person committing the infringement is using the trade mark proper (the registered sign) while, on the other hand, where they are similar, he is using similar indications which, however, by definition are not the trade mark itself.
20. The decisive factor is that the proprietor is entitled to prevent a third party from using the trade mark in relation to the same or different goods and services, or from using signs and indications which, looked at as a whole, might lead to confusion on the part of consumers on account of their similarity to those registered by him.
sec_2 B.
Article 5(2) and (5)
21. The Directive is aimed at partial harmonisation. It restricts its operation to trade marks acquired by registration. It is, to a certain extent, a de minimis provision which does not prevent, in certain situations, the Member States from granting more extensive protection than that afforded by the Community provision.
22. One such situation is where the mark is one with a reputation, mentioned in Article 5(2), according to which national law may go further than the Community legislature and prohibit the use of a similar sign, even in respect of unrelated goods or services. Such protection is specific, supplementary and optional national protection.
23. On the other hand, the Directive does not affect provisions in any Member State which, on the basis of other fields of national law, afford protection against the use of a sign registered as a trade mark other than for the purpose of distinguishing the goods and services it covers. That provision, announced in the sixth recital, is contained in Article 5(5).
24. In both cases, protection is subject to the condition that the infringer is seeking to gain unfair advantage of the reputation of the trade mark or that the distinctive character or repute of the mark may be damaged. The aim is to safeguard the right of the proprietor of the distinctive sign to preserve goodwill, by protecting the sign against unfair competition.
sec_3 C.
Articles 6 and 7
25. These two provisions are the other side of the coin to Article 5, and their purpose is to reconcile the rights of the registered proprietor with the general interest, which requires free movement of goods and freedom to provide services in the common market.
26. Both articles lay down the limits of the powers of the registered proprietor and set out the circumstances in which he may not prohibit third parties from using the trade mark, either because they are individual signs or for specific uses (Article 6), or because for reasons of commercial policy it is advisable to avoid compartmentalising the intra-Community market by erecting barriers to the freedoms which I have mentioned in the foregoing paragraph (Article 7).
sec_2
2. United Kingdom law
27. The First Directive was transposed into United Kingdom law by the Trade Marks Act 1994, which replaced the Trade Marks Act 1938.
28. Section 10(1) of the Trade Marks Act 1994 provides: A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical to those for which it is registered. A person infringes a registered trade mark if he uses in the course of trade a sign where because — ... there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.
28.
(b) the sign is similar to the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered,
sec_4 IV —
Analysis of the questions referred
29. The High Court has made this reference to the Court of Justice in the course of proceedings between the proprietor of a trade mark and a third party who markets the same class of products as that in respect of which the mark was registered and which bear that sign, although the third party makes it clear that the sign is not intended to express any affiliation to or relationship with the proprietor.
30. The questions referred by the High Court therefore concern the interpretation of Article 5(1)(a) of the Directive. However, the answers which this Court provides must be framed on the basis of a full analysis of that provision together with those to which it is related.
sec_1
1. Question 1
sec_1 A.
Systematic interpretation of Articles 5, 6 and 7 of the Directive
31. In the Directive, the rights of the proprietor of a registered trade mark are delimited positively and negatively.
32. From the analysis which I have carried out above I find, as a first corollary, that, on the positive side, the Directive aims (Article 5(1)) to achieve harmonisation of the rights of trade mark proprietors consisting in preventing the use of identical or similar signs to distinguish identical or similar goods, by requiring, in cases of similarity, that there be a likelihood of confusion. As the Surveillance Authority of the European Free Trade Association has pointed out, protection against copying and confusion is a matter for Community law.
33. Also falling within the field of Community law is the nondiscretionary protection of trade marks of repute (Article 5(2)) against the use by third parties to distinguish identical or similar goods. Such protection must be accorded even where there is no likelihood of confusion, if that type of mark is not to be granted less protection where the goods are similar than where they bear no similarity at all.
34. I consider that the meaning of Article 5(2) is that trade marks having a reputation must in any event be protected, whether or not there is likelihood of confusion. So far as concerns that type of sign, the Directive requires that the laws of the Member States be harmonised where they relate to use in relation to identical or similar goods, leaving them free to protect such marks also where the goods or services in question are dissimilar. The only requirement in either case is that the third party who uses without due cause a trade mark having a reputation is seeking to gain an unfair advantage, or is acting to the detriment of the distinctive character or the prestige and repute of that mark.
35. Thus both the protection of trade marks having a reputation where the goods are not even similar and the rules governing certain uses of the symbol other than for the purpose of distinguishing the goods or services (Article 5(2) and (5)) remain outside the harmonisation sought by the Directive.
36. The negative limits are all defined by Community law, even though one of them (Article 6(2)) is the result of the recognition of certain rights by the laws of the Member States.
37. The factual situation in question in the main proceedings is that of the use of the sign registered as a trade mark to distinguish identical goods. Accordingly, it falls, in principle, within the scope of Article 5(1)(a) and is therefore fully covered by the Directive and the harmonisation which it pursues.
38. A further consequence of the systematic analysis of the various paragraphs of Article 5 is that, according to Article 5(1) and (2), the proprietor of a trade mark may not prevent any use of a sign, but only uses whose purpose is to distinguish the goods or services to which it relates from those of other undertakings. Otherwise, Article 5(5) would have no raison d'être.
39. In other words, Article 5(1) protects the accuracy of the information which the registered sign provides on the goods or services which it represents and, thus, their identification. Article 5(2) protects proprietors of trade marks which have a reputation from exploitation by third parties, outside the ambit of that function of identification, by enabling the Member States to extend protection to those situations in which the goods or services are different. Finally, Article 5(5) excludes from the scope of the Directive protection against use of the trade mark for purposes other than distinguishing goods and services. In short, conduct consisting in the use of a sign for purposes other than distinguishing a product or a service from other products or services is not covered by Article 5(1).
40. Thus, in accordance with Article 5(1), the registered proprietor may object to use by a third party, in the course of trade, of the trade mark, or signs similar to it, to distinguish identical goods and services, or similar ones, which, moreover, is consistent with the definition of trade mark laid down in Article 2 of the Directive. In other words, taking up the terms used by the High Court and the participants in these proceedings, the proprietor may object to the use by a third party of his trade mark as such.
sec_2 B.
Interpretation of the imprecise legal concepts of use of the trade mark to distinguish and use as a trade mark
41. To state that a registered proprietor may prevent a third party from using the trade mark as a trade mark is as good as saying nothing at all. It is therefore necessary to give substance to that indeterminate legal concept and, in doing so, to keep the functions of a trade mark very much in mind.
42. On other occasions and in different contexts I have said that, the function of a trade mark being to distinguish the goods and services of various undertakings with the purpose of guaranteeing to the user or the consumer the identity of their respective origins, that immediate and specific purpose of trade marks is no more than a staging post on the road to the final objective, which is to ensure a system of genuine competition in the internal market.
43. In order to reach that goal and with an obligatory stop at that intermediate stage, the journey may be made using various vehicles singly or together. With that unfailing purpose of distinguishing between the goods and services of various undertakings, distinctive signs may indicate provenance as well as quality, the reputation or the renown of the producer or the provider, while trade marks may also be used for advertising purposes in order to inform and persuade the consumer.
44. Those ways of using a trade mark are uses which are aimed at the abovementioned goal, because they enable the consumer to distinguish between the goods and services which various undertakings offer him, enabling him to select freely between the many choices available to him and promoting competition in the internal market. All of them are uses of the trade mark as a trade mark, which may be prevented by the proprietor, provided always that none of the circumstances exist in which, pursuant to Articles 6 and 7 of the Directive, the proprietor's right lapses.
45. I arrive at the same result if, changing perspective, I shift from the standpoint of use of the trade mark to that of the rights of the proprietor. The proprietor of a registered trade mark is granted an assortment of rights and powers in order that, by means of the exclusive use of the distinctive sign and the resultant identification of the goods and services he provides, a fair, undistorted system of competition may be established from which those who seek to take advantage of or profit from the reputation of others are excluded. That is why those legal advantages must extend only so far as strictly necessary in order for that essential function to be performed. Furthermore, it is evident that there is no reason for the proprietor of a given distinctive sign to be seen as having an exclusive use erga omnes and in any circumstances, but only vis-à-vis those who seek to profit from its status and reputation, passing it off or using it in such a way as to mislead consumers with regard to the origin as well as to the quality of the goods or services it represents.
46. It seems to me to be simplistic reductionism to limit the function of the trade mark to an indication of trade origin. The Commission, moreover, took the same view in its oral submissions to the Court. Experience teaches that, in most cases, the user is unaware of who produces the goods he consumes. The trade mark acquires a life of its own, making a statement, as I have suggested, about quality, reputation and even, in certain cases, a way of seeing life.
47. The messages it sends out are, moreover, autonomous. A distinctive sign can indicate at the same time trade origin, the reputation of its proprietor and the quality of the goods it represents, but there is nothing to prevent the consumer, unaware of who manufactures the goods or provides the services which bear the trade mark, from acquiring them because he perceives the mark as an emblem of prestige or a guarantee of quality. When I regard the current functioning of the market and the behaviour of the average consumer, I see no reason whatever not to protect those other functions of the trade mark and to safeguard only the function of indicating the trade origin of the goods and services.
48. Furthermore, as the Surveillance Authority of the European Free Trade Association observes, in certain cases consumers are more interested in the trade mark itself than in the goods to which it applies.
49. Having arrived at this point, I am in a position to propose that, in answer to the first question, the Court should reply to the High Court that, according to Article 5(1 )(a) of the Directive, the registered proprietor is entitled to prevent third parties from using, in relation to the same goods or services, signs identical with those of which the trade mark consists, which are capable of giving a misleading indication as to their origin, provenance, quality or reputation.
50. To put it in the negative and more restrictive terms in which the High Court has framed its question, anyone who uses another's trade mark may claim in defence to the proprietor's objection that his use of it does not indicate the origin of the goods or of the services or give rise to confusion over their quality and reputation.
51. As against the maximalist arguments advanced by Arsenal and the Commission, for which, in a case such as that in point in the main proceedings, and in the absence of the conditions laid down in Article 6(1) of the Directive, the proprietor of a trade mark is entitled to prevent anyone from using it, I share the more qualified view of the Surveillance Authority of the European Free Trade Association. My position is thus based on the considerations I have set out in the preceding paragraphs and, furthermore, on the reasoning which the European Free Trade Association Surveillance Authority sets out at paragraph 19 of its observations; namely that when the Directive says that protection is absolute in the case of identity it must be understood as meaning that, in light of the aim and the purpose of trade mark law, absolute means that protection is afforded to the proprietor, irrespective of whether there is a likelihood of confusion, because in such situations there is a presumption that there is such a likelihood, and not, on the contrary, that protection is accorded to the proprietor erga omnes and in all circumstances.
sec_3 C.
Presumption of use as trade mark
52. I have just observed that, in cases of identity, likelihood of confusion may be presumed. The same reason as that which justifies that presumption allows the conclusion that, where there is such identity, the use a third party makes of a trade mark is use of it as such. That presumption, which is iuris tantum, may be rebutted by proof to the contrary. Accordingly, there is a possibility, however remote it may be, that in a specific case use of a sign identical with another registered as a trade mark may not be prevented by the proprietor on the basis of Article 5(1)(a) of the Directive.
sec_4 D.
The assessment of the circumstances of each case is a matter for the national court
53. When use of a trade mark by a third party is use of it as such is a question of fact which falls to the national court to determine in the light of the information available to it for the purpose of deciding the case. There are situations, such as that in point in the dispute between Arsenal and Mr Reed, in which, because there is identity both of signs and of goods or services, there will be a presumption of use of the trade mark as a trade mark, but in many other cases the situation will not be so clear-cut and account will have to be taken of the nature of the goods and services, the situation of those for whom they may be intended, the structure of the market and the position in the market of the proprietor of the trade mark; examination of these matters falls outside the jurisdiction of the Court of Justice.
54. In the light of my arguments up to this point, I would propose that the Court, in its answer to the first of the questions referred for a preliminary ruling, reply as follows:
54.
(1) Article 5(1)(a) of the Directive must be interpreted as meaning that, on the basis of that provision, the proprietor of a registered trade mark is entitled to prevent third parties from using, in relation to the same goods or services, identical signs which are capable of giving a misleading indication as to their origin, provenance, quality or reputation.
(2) Where such identity exists, there is a presumption iuris tantum that the use by a third party of the trade mark is use of the mark as such.
(3) The determination of when a third party uses a distinctive sign as a trade mark is a question of fact which falls to the national court to determine in the light of the information available to it for the purpose of deciding the case.
sec_2
2. Question 2
sec_1 A.
Uses unrelated to the functions proper to trade marks. Non-trade uses
55. In view of the scope which, to my mind, must be attributed to the rights which protect the proprietor of a registered trade mark and, consequently, the bounds which third parties may not overstep in using the registered symbol or similar signs, it remains to resolve the second question referred by the High Court, which is, moreover, the key to the case which it has to decide.
56. And here I am going to take a path in the opposite direction to the one I followed in proposing an answer to the first question referred, on which I started from the concept of a trade mark and its functions, and, in defining what is use as a trade mark, identified the limits to which the proprietor's powers may extend. I will now attempt to elucidate the applications of the signs that make up a trade mark, which are totally unrelated to the characteristic function of that manifestation of intangible property. In this way I shall delineate the scope of the question, reducing the grey area in which the unknown quantity must be found.
57. To begin with, there is a first external boundary to the concept of use as a trade mark, which relates to the very concept of a distinctive sign. The registered proprietor cannot, as a matter of principle, object to third parties using the registered symbol or indication where, because it does not satisfy the requirements to be met in order for it to be a trade mark or because it falls under one of the prohibitions laid down in the Directive, it should never have been registered. Whether, for as long as the registration has not been cancelled, it produces effects and confers on the proprietor an appearance of legality sufficient to enable him to object to the use of the mark by others is a separate matter.
58. That is the situation in Case C-299/99, in which I delivered my Opinion on 23 January 2001. My view in that case is that the trade mark which Philips Electronics NV seeks in the main proceedings to prevent Remington Consumer Products Limited from using does not fulfil the conditions required by Community law for a sign to be registered as a trade mark. That issue was also raised in the proceedings between Arsenal and Mr Reed, in which the defendant claimed that the signs registered in favour of the football club were invalid on the ground that they lacked distinctive character. That defence was rejected by the High Court.
59. As regards signs which may legitimately be a trade mark, the proprietor is not entitled, on the basis of the Directive, to object to their use by third parties outside the course of trade, that is, outside any commercial activity involving the production and supply of goods and services on the market.
60. The Directive confers on the registered proprietor a monopoly over the sign which he has registered as a trade mark, but that power of exclusive disposition is, as I have pointed out, relative, because it is at the service of a purpose that transcends it. If the idea is that consumers should be able to select goods and services in the context of an open market, governed by the rules of free competition, the uses which the proprietor of a trade mark is entitled to prevent third parties from making are, precisely, those which arise in that context and which are therefore likely to affect that objective.
61. The law on trade marks has latterly been under strong pressure to include, as part of the concept of signs capable of constituting that kind of industrial property, not only those which may be perceived with the eyes, but also those which may be perceived through the other senses, such as smell or hearing. This possible extension of the catalogue of signs capable of constituting a trade mark must be accompanied by a precise delimitation of the rights which their ownership confers on their proprietor. It would be absurd, even grotesque, to claim that, just because someone has registered the colour turquoise as a trade mark, plastic artists should henceforth refrain from using that pigment in their works.
62. That assertion, which, I am certain, no one would dispute, enables me to clarify the concept of course of trade. The use which the proprietor of the trade mark may prevent is not any that might constitute a material advantage for the user, or even a use which is capable of being expressed in economic terms, but only, as expressed more precisely in all the language versions other than the Spanish, use which occurs in the world of business, in trade, the subject of which is, precisely, the distribution of goods and services in the market. In short, use in trade.
63. It would appear that equally legitimate is the private use that someone might make of the mark BMW on a key ring, from which he gains no material advantage other than the convenience of having the keys that he habitually uses on one holder, as is the use which, in the 1960s, Andy Warhol made of the Campbell brand of soup in several of his paintings, from which, obviously, he obtained an economic benefit. A radical conception of the scope of the rights of the proprietor of the trade mark could have deprived contemporary art of some eminently expressive pictures, an important manifestation of pop art. Other non-trade uses, such as those for educational purposes, also fall outside the scope of the protection afforded to the proprietor.
64. Thus, the proprietor of a trade mark is not in a position to object to the use by third parties of the symbol or indication which he has made his property where it is one of the signs that cannot constitute a trade mark or, if it is a trade mark, where the use made of it by others is not intended for commercial purposes.
sec_2 B.
Uses expressing support, loyalty or affiliation to the proprietor of the trade mark constitutes, in principle, use as a trade mark
65. I thus arrive at the grey area, the aureole of uncertainty within which the answer to the doubt harboured by the High Court is to be found.
66. I consider that the uses to which the High Court refers in its second question are methods of using the trade mark which, as that court itself acknowledges, express a connection between the goods, the sign and its proprietor, between the scarves bearing the trade marks at issue and Arsenal. The broad interpretation which I have proposed for the reply to the first question permits me to make that statement.
67. The nature or the quality of that relationship are irrelevant for the purposes of trademark law. Given the functions of those distinctive signs and the objective pursued by the Directive, the decisive factor is not the feelings which the consumer who buys the goods which the trade mark represents, or even the third party using it, harbour towards the registered proprietor, but the fact that they are acquired because, by bearing the sign, the goods identify the product with the trade mark — irrespective of what the consumer thinks of the mark — or even, as the case may be, with the proprietor.
68. It does not matter whether the reason for the decision to purchase is that the purchaser sees the trade mark as a sign of distinction or as a guarantee of quality or whether, on the contrary, he engages in an act of rebellion as an adherent to the cult of bad taste. In short, for the purposes of resolving the dispute, it is irrelevant whether a football fan buys the shirt of a particular team, bearing the relevant trade mark, because it is his cherished club and he wants to wear the shirt or because, since he is a fan of the rival team, his intention is to burn it. The key to the problem is that he has decided to purchase it on account of the fact that the article is identified with the trade mark and, through it, with its proprietor, that is to say with the team.
69. The debate must be moved on to a different ground. Given that, where there is identity, the consumer purchases the goods because they bear the sign, the base from which the answer to the High Court must be provided is that of the person exploiting it without being the proprietor. It is not the reason for which a person buys goods or uses services that I must examine but the reason which has led the person who is not the proprietor of the trade mark to place the goods on the market or to provide the service using the same distinctive sign. If, regardless of the reason which motivates him, he attempts to exploit it commercially, then he can be said to be using it as a trade mark and the proprietor will be entitled to object, within the limits and to the extent allowed under Article 5 of the Directive.
70. It goes without saying that the proprietor of a trade mark is entitled to object to a third party using it, provided always that he has registered it in order to use it as such. If he does not exploit it commercially, he will not be making effective use of the distinctive sign and over his rights will hang the sword of Damocles of lapse and of their atrophy when it comes to opposing the registration of new indications.
71. In light of the foregoing considerations and of the factual hypothesis underlying the questions referred by the High Court, what has to be decided is whether, when a football club — or, more generally, an incorporated sports club — registers a trade mark in the register of industrial property, it does so only in order to distribute among its supporters products bearing the signs representing that entity with the aim of securing greater support to help its teams to sporting success or whether, on the contrary, it is just another business activity, designed to enhance the profit and loss account.
72. Clearly the answer cannot be derived from an examination of the intentions of each sporting entity (in this case, of Arsenal) but, rather, from an objective analysis of the position which the companies and entities which manage the major football clubs occupy in today's society and economy.
sec_3 C.
Football as an economic phenomenon?
73. Football plays an important role in the contemporary world. From its origins in English universities in the middle of the nineteenth century to the present day, that sport has managed to adapt with uncommon good fortune to the signs of the times and to become, through being broadcast by the media, a mass phenomenon which transcends geographical, cultural, religious and social frontiers. The key to football's success — and also its mystery, to those who do not follow it — lies in its enormous capacity to stir passions whose origin lies in the deep sense of identity between the teams, which are linked to a particular city or country, and their supporters.
74. For decades, football was characterised by its social significance, but was relegated to a place of secondary importance in the economic sphere. Paradoxically, an activity which excited the interest of millions of people around the world was barely exploited commercially and remained alien, for example, to the management model of the great North American professional leagues, whose expansion in the 1970s was related to the sale of exclusive television rights and to the control of those rights by major entrepeneurs.
75. That scenario changed radically in the early 1990s when football's true commercial potential began to be realised. Following the trail of the Australian magnate Rupert Murdoch, owner of the Sky television channel, who reaped enormous profits from the exploitation of exclusive broadcasting rights for the English football league, the main European audiovisual undertakings made sizeable investments in order to acquire the television rights in respect of numerous national and international competitions, making a decisive contribution to triggering one of the greatest transformations which the sport has experienced since it began.
76. In a relatively short time, the professional practice of football has taken on the features of an industry which moves a volume of money which would have been unimaginable a few years ago and which also generates thousands of jobs and activities in very varied sectors. It is difficult to provide accurate figures, but it is calculated that in Italy, one of the countries in which the practice of football is most professionalised, the sport moves approximately EUR 4.5 million per annum and is the 14th industry in the country. In the case of Spain, it is estimated that that activity generates, both directly and indirectly, some EUR 3000 million and employment for some 100000 people.
77. In that context, football clubs in the European major leagues have undergone substantial organisational changes. With some exceptions, they have shed their purely sporting character in order to become commercial companies, with ever more of them being quoted on the stock exchanges. It is little wonder that in a few years the budgets of those clubs have generally exploded, so much so that in the case of some of the most famous clubs in Europe their budgets far exceed EUR 100 million, which is comparable to the budget for an average Spanish city.
78. The most admired management model today is that of Manchester United, possibly the richest club in the world.Control of several of the best teams in Europe is in the hands of successful businessmen, whose conception of football reflects a genuine change of epoch. Thus, for example, Sergio Cragnotti, President of Rome's Lazio, considers that football is the most important business in an ever more globalised economy; in his view, therefore, it should not be regarded as a sport, in the strict sense, but as part of the entertainment industry. That vision of things is shared by Florentino Pérez, President of Real Madrid, who, in referring to the economic prospects of the entity under his direction, has spoken of an unexploited Walt Disney.
79. That image hides a reality which is not so gratifying for most professional clubs, many of which are burdened with heavy debts. In fact, according to a report in The Economist, at the present time, which is characterised by a sharp rise in players' salaries and in transfer fees, clubs find themselves caught up in a dynamic which forces them to spend a large part of what they earn, without it being possible to say that they are badly managed. This explains why, for example, in Italy, whose football league attracts large numbers of investments, the total amount of debt of the clubs is today in excess of EUR 1000 million.
80. It is true that the clubs' sources of finance have increased in recent years. Traditional income from sales of tickets at the turnstiles or from shares have become less significant by comparison with other, more considerable, sources of income, such as television rights, the sale of products related to the team, the exploitation of rights to images of the players and the internet. European clubs also earn money in other ways; these include the benefits they obtain through participating in the championships organised by the European Union of Football Associations (UEFA), holding friendly matches or the operation of facilities (shops, bars, conference centres).
81. One of the sources of income to have increased in importance in recent years is, in fact, the sale of goods related to the team, an activity commonly known as merchandising. That business, the object of which is the sale, either directly or through intermediary undertakings, of scarves, banners, articles of clothing or any other article which identifies the club, has proved to be one of the most profitable, hence its transformation into a priority for those managing the business side of the clubs. According to Real Madrid's marketing director, one of the reasons for the success of merchandising is simple: loyalty to football teams is very strong. The level of loyalty of supporters to their team is such that it would be a dream for brands in any other sector, which are always much more exposed to the vagaries of the market.
82. It is well known that the growth forecasts for merchandising show a rising curve. Transmission of football games by television and the internet allows European teams to open their markets to other regions of the world, particularly in Asia, where the following for this sport has grown considerably in recent years, in part as a result of the fact that the 2002 World Cup is being held in Japan and South Korea. Some European clubs have decided to open shops in cities in Asia in order to offer their goods directly for sale.
83. The success of merchandising has revealed the enormous potential of football as a business, which explains why the transfer value of players, the true stars of the show, depends not only on their performance on the field of play, but also on the income which their image can generate for the club, from advertising or from the sale of articles associated with the player in question. In recent years there has been a considerable number of transfers of football players which lends support to that statement, such as the acquisition of the Japanese player Nakata by Parma and, in particular, of the Frenchman Zinedine Zidane by Real Madrid, the most expensive transfer in history, at around EUR 70 million, much of which the club hopes to recover from the sale of shirts.
84. The great clubs, such as Arsenal, which recently became champion of the English Premier League, are not mere sporting associations whose aim is the playing of football, but genuine emporia which, with the object of playing professional football, pursue an economic activity of the first order. When they register a sign in order to use it as a trade mark and to supply on the market, either directly or through a licensee, certain goods or services identified with the mark, they make effective use of their intangible property and are entitled to object to third parties using an identical indication, with the purpose of exploiting it commercially and making an economic profit, by employing all the methods available under the law, including the most extreme.
85. In the result, and in response to the second of the doubts harboured by the High Court, I consider that the use by third parties which the proprietor is entitled to prevent is use for the purpose of commercial exploitation, which includes use of the distinctive signs which the undertakings which own football clubs have registered as trade marks for the purpose of marketing articles of clothing and other articles connected with the team.
86. In that regard, the reasons on which the consumer bases his choice are irrelevant. The decisive factor is that the persons for whom those articles are intended acquires or uses them because they bear the distinctive sign.
87. The reasoning set out above, and the answers which I propose to the first question referred for a preliminary ruling, do not follow to the letter the way in which the two questions from the High Court are framed but, in interpreting the Directive, may provide a helpful and appropriate answer for the purpose of enabling it to decide the case before it.
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Conclusion
88. In view of the foregoing considerations I propose that the Court give the following answers to the High Court's questions:
88.
(1) Article 5(1)(a) of the First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks must be interpreted as meaning that the proprietor of a registered trade mark is entitled, on the basis of that provision, to prevent third parties from using, in relation to the same goods or services, identical signs which are capable of giving a misleading indication as to their origin, provenance, quality or reputation.
(2) When use of a trade mark by a third party is use as a trade mark is a question of fact which falls to the national court to determine in the light of the information available to it for the purpose of deciding the case. None the less, in cases of identity of signs and of goods or services, there is a presumption iuris tantum that the use by a third party of the trade mark is use thereof as such.
(3) The use which the proprietor is entitled to prevent third parties from making is use for the purposes of commercial exploitation, which includes use of the distinctive signs which the undertakings which own football clubs have registered as trade marks for the purpose of marketing articles of clothing and other articles connected with the team.
(4) In that regard, the reasons on which the consumer bases his choice of the goods and services are irrelevant. The decisive factor is that the persons for whom they are intended acquires or uses them because they incorporate the distinctive sign.