“Pre-branded” spare parts: CJEU has its say in Audi trade mark case

The Court of Justice of the European Union (CJEU) has given its ruling following a referral from the Regional Court of Warsaw, in a trade mark infringement claim brought by Audi (Audi AG v GQ, Case C-334/22). Audi’s complaint related to spare radiator grilles sold by the defendant (GQ) which featured an element designed to accommodate an emblem or badge representing Audi’s logo. The CJEU found that a spare part of this nature – which was essentially customised with the intention of having a particular third party trade mark affixed to it – could potentially infringe that trade mark. The “referential use” exemption did not provide a defence when the defendant’s intention was to replicate a genuine Audi car part (including its branding) as closely as possible.

Summary of facts

Audi (the Claimant) manufactures motor vehicles and owns the figurative EU trade mark representing its well-known overlapping rings logo:

The Defendant, GQ, operated a business selling spare parts for motor vehicles to distributors through an online website. GQ had advertised and offered for sale grilles that were adapted and designed for older Audi vehicles from the 1980s and ‘90s. The contested grille featured an element designed to allow the attachment of an emblem or ‘badge’ representing Audi’s logo. Because of its shape, that element was identical or confusingly similar to Audi’s registered trade mark.

In May 2020, Audi brought proceedings before the Regional Court in Warsaw, Poland, to stop GQ from importing and offering for sale non-original radiator grilles featuring a sign identical with, or similar to, the Audi trade mark.

In response, GQ claimed that their actions aligned with an established industry norm where manufacturers allow the sale of replacement grilles that can accommodate their brand emblems.

The Warsaw Court referred the case to the CJEU, seeking guidance on whether an EU trade mark allows its proprietor to prevent the sale of spare parts featuring components in the shape of a registered trade mark which serve as mounting elements for accessories featuring that mark.  

The relevant law

By way of re-cap, EU trade mark law (Article 9 of the Community Trade Marks Regulation, 2017/1001, the EUTM Regulation) prohibits the unauthorised use of a sign which is identical or confusingly similar to a registered trade mark, including by affixing the sign to the goods or their packaging, offering the goods for sale, putting them on the market, importing or exporting those goods.  The proprietor of an EU trade mark cannot stop a third party from using the mark for the purposes of identifying or referring to the goods and services of the brand owner, where that use is necessary to identify the intended purpose of a product or service, provided that such use aligns with honest practices (the so-called ‘referential use’ defence, under Article 14 of the EUTM Regulation).

Notably, however, the EUTM Regulation does not provide for a specific “right to repair” defence or exemption from trade mark infringement. This is in contrast with EU design law (Article 110 of Regulation (EC) No 6/2002, the Design Regulation) which states that a Community design right will not prevent the use by a third party of a protected design which forms a component part of a complex product, where such use is for the purposes of repairing that product to restore its original appearance – the so-called “repair clause”, discussed in our previous reports here and here.

The questions referred to the CJEU

Although Audi’s claim did not relate to designs, the Warsaw Court was puzzled by the absence of a provision similar to the “repair clause” under trade mark law.

It therefore asked the CJEU to provide guidance on whether, in the absence of such a provision, the Defendant should be held to be ‘using in the course of trade a sign’ within the meaning of Article 9 of the EUTM Regulation by supplying a spare radiator grille with a component (already in the shape of Audi’s logo) into which an emblem bearing Audi’s registered trade mark was designed to be essentially ‘slotted in’. The referring Court also asked whether it made any difference if it would be technically possible to attach the Audi emblem to the grille if the “logo ready” component was not present.

The Warsaw Court also sought guidance from the CJEU on what criteria should be applied for determining whether the use of a mark was “in accordance with honest practices in industrial and commercial matters”, if that use was deemed to be for referential purposes under Article 14.

The court’s findings

Is it a ‘sign’, and is it ‘used’?

The CJEU was satisfied that the shape of the component on the Defendant’s grilles which was designed for the attachment of the AUDI emblem (where that component itself had the outline shape of the AUDI trade mark) was a “sign” under Article 9(2) capable of infringing Audi’s trade marks under Article 9 of the EUTM Regulation, despite being a spare part for a motor vehicle. Moreover, affixing that sign to radiator grilles qualified as “use” in the course of trade which was capable of creating an association in the public's eyes with Audi’s EU trade mark, and therefore harming the trade mark’s functions. It was a matter for the national court to determine whether, in actual fact, any of those functions were adversely affected.

‘Referential use’ and ‘repair’ are different concepts

The CJEU recounted the rationale for the ‘referential use’ defence under Article 14 of the EUTM Regulation. Article 14 aims to limit a trade mark proprietor's exclusive rights by preventing those rights from hindering healthy competition and the smooth functioning of the internal market. A similar rationale has been given for the “repair clause” under design law, namely, to avoid manufacturers from monopolising the aftermarket for spare parts, to offer greater consumer choice, and to promote the repair and longevity of products in line with the EU’s sustainability objectives.

However, the Court was clear that a “repair clause” could not be implied into trade mark law by analogy. It noted that the “referential use” defence under the EUTM Regulation already achieves the objective of preserving undistorted competition, since a trade mark owner’s right to prevent the use of identical or similar signs is reserved for cases where that use adversely affects the trade mark's functions, in particular, to act as a guarantee of origin and quality.

Those functions would not be adversely affected by referential use made solely to inform the public of the intended purpose of the supplier’s goods (particularly as a spare part or accessory to a branded product), in an honest manner. Therefore, a general ‘right to repair’ did not apply to, and did not excuse, the Defendant’s activity in a trade mark infringement context.

The Court also stressed that the choice of the shape of the component was driven by the commercial objective of marketing a radiator grille which would resemble the original Audi-branded grille as closely as possible. It was crucial to distinguish this situation from one where an undertaking that is not economically linked to the trade mark owner uses the trade mark to identify and describe spare parts which are intended for incorporation into the brand owner’s goods, but without actually affixing a similar sign to those spare parts. In this case, GQ’s actions went beyond referential use and fell outside of the Article 14 defence.

On that basis, and as Article 14 did not apply, it was not necessary for the CJEU to determine what criteria should be applied to considering whether the use was “in accordance with honest practices in industrial or commercial matters”.

Comment

This judgment helpfully illustrates the differences between design rights and trade marks in the context of regulating the spare parts market. The “right to repair” exemption to design rights already exists in many EU Member States (as well as in the UK) and is set to be rolled out throughout the EU under the proposed new EU Design Directive and Regulation, as reported by Law Now here. However, trade mark law does not provide for a general exemption to the use of trade marks for repair, even where that use is done for the purpose of restoring the appearance of a branded product – in this case, to retain the ‘badge’ which is characteristic to the appearance of a luxury vehicle.

As a matter of law, the distinction seems logical: design rights protect the appearance of products, whereas trade marks protect brands – and, most importantly, to preserve their ability to operate as indicators of origin and quality. Whilst it may be justifiable (and less damaging to the rights holder) to reproduce the design of a component part to restore the appearance of a complex product, it is harder to justify branding spare parts with an original manufacturer’s logo, when those parts do not originate from that manufacturer.

Therefore, trade mark holders can take comfort in the CJEU’s assurance that attempts by third party suppliers to ‘pre-brand’ spare parts in order to provide parts which are as faithful as possible to the original will not be covered by the ‘referential use’ defence. Design holders, on the other hand, should keep a close eye on the final wording of the revised “right to repair” under EU law, and its possible ripple effects on the UKIPO’s anticipated reforms of UK design law.

Co-authored by Ayse Neva Sark, Solicitor Apprentice at CMS London