Iceland Foods loses its appeal against the cancellation of its ICELAND marks

Abstract

The long-standing dispute between Iceland Foods Limited and the country of Iceland has raised important questions about the scope of geographical trade mark names. Its referral to The Grand Board has therefore been closely watched. The Grand Board has now confirmed the cancellation of the ICELAND marks and attempted to clarify the legal principles surrounding geographical trade mark names. In particular, it has noted that geographical names do not automatically indicate the geographical origin of the goods and services—all the relevant circumstances should be considered. These include the geographical location’s reputation and the relevant public’s familiarity with it.

Iceland Foods Limited (Iceland Foods), the United Kingdom (UK) supermarket chain, has lost its appeals against the cancellation of its European Union (EU) trade marks for ICELAND (word and stylised) on the basis that they designate the geographical origin of the goods. The European Union Intellectual Property Office (EUIPO) Grand Board of Appeal decisions (see here¹ and here²) provide some useful guidance on the registration of country names as trade marks, indicating that brand owners should proceed with caution. Although the decision does not completely rule out country names functioning as trade marks, it does appear to make them more difficult to register, particularly where there is close proximity to the EU.

Background behind the long-standing dispute

The high-profile dispute between the UK supermarket and the country of Iceland began in 2016, when the Icelandic authorities filed a request for a declaration of invalidity against the supermarket’s ICELAND word mark (following up in 2018 with a invalidation request against the figurative mark).

In 2019, the Cancellation Division of the EUIPO declared the contested marks to be invalid (see here³ and here⁴) on the basis that they were descriptive of the geographic origin of the goods and services provided. Iceland Foods appealed, alleging that the Cancellation Division had erred in holding that there is a presumption that whole country names are descriptive and, in any event, the marks had acquired distinctive character by virtue of almost 50 years of use.

The case has garnered widespread attention, and The Grand Board thought it significant enough to hold its first ever oral hearing in Alicante, Spain. The International Trademark Association and the Swiss Association Against the Misuse of Swiss Indications of Source both filed amicus curiae observations.

The decision

The Grand Board dismissed the appeal, finding that the ICELAND marks would be perceived by the relevant public as an indication that the designated goods and services originate from the country of Iceland. The Grand Board recognised that a country name may occasionally function as a trade mark (acknowledging that there are multiple examples of country names registered as trade marks), but noted that the matter is to be approached “with caution”.

The law

The Grand Board began its decision by finding that the goods and services in the specification and that the relevant public in English speaking countries (the EU) would understand the word ‘ICELAND’ as referring to a North Atlantic country. It then stated that the relevant public in the United Kingdom, Ireland, Sweden, Denmark and the Netherlands has a sufficient command of the English language to be taken as the target public. Given that the goods and services in issue were found to be aimed at the public at large, the level of attention that The Grand Board required was that of the reasonably well informed and reasonably observant and circumspect average consumer.

The Grand Board considered that the proceedings raised important legal issues regarding the scope of objection under art.7(1)(c) European Union trade mark regulation (EUTMR),⁵ which prohibits registration of trade marks which consist “exclusively of signs or indications which may serve, in trade, to designate the …. geographical origin ….of the goods or ….service,” (emphasis added).

The Grand Board stated that the principal public interest underlying art.7(1)(c) EUTMR was the need to keep certain marks free so that other traders can make use of them, in order to compete effectively. It therefore commented, in general terms, that the following are excluded from trade mark registration:

(i) geographical names designating certain well-known places, or well-known places for the goods or services concerned (and thus linked to the relevant class of persons); an

(ii) geographical names that undertakings may use and which must remain available to them to indicate the geographical region of the goods or services concerned.

However, in principle, art.7(1)(c) EUTMR does not preclude the registration of:

(i) geographical names that are unknown to the relevant class of persons (or not known for designating a geographical location); or

(ii) names describing places that the relevant class of persons are unlikely to believe produce the goods or services concerned.

The Grand Board highlighted that case law does not support the presumption that geographical names automatically indicate the geographical origin of the goods and services. It is necessary to consider all the relevant circumstances, including the nature of the goods or services, the reputation of the geographical location and the relevant public’s familiarity with it.

With signs depicting geographical names, the EUIPO (or the country of Iceland in this instance) need to establish, as a preliminary matter, that the relevant class of persons would know the geographical name is the designation of a place. The next step is to determine whether the relevant class of persons would associate the name with the category of goods or services concerned, or whether it is reasonable to assume that the name may designate the geographical origin of that category of goods or services. Accordingly, it is important to consider how familiar the relevant class of persons are with: (i) the place designated by that name; (ii) the characteristics of the designated place; and (iii) the category of goods or services concerned.

Facts relevant to Iceland

Perceptions of Iceland

The relevant public’s degree of familiarity with the geographical name in question (Iceland) was considered first by the Grand Board who thought that the reasonably well informed, reasonably observant and circumspect average consumer of the relevant goods and services in issue would be aware that Iceland is located in Europe.

The Grand Board highlighted Iceland’s “close bonds” with the EU (and especially Denmark, which has the closest historic ties) by virtue of its membership of the European Economic Area. Iceland’s relatively large size compared to other European countries was deemed common knowledge, as well as its reputation for its scenery and its position as a world leader for sustainability and eco-friendly policies (Iceland runs mainly on renewable energy). The Grand Board consequently felt it was unquestionable that “reasonably educated members of the relevant public…recognise ‘ICELAND’ as a country name.”

Further, the evidence demonstrated Iceland’s economic prosperity and industrial capacity, the foreign trade conducted by Iceland, the environmentally sustainable and clean image associated with it and the positive connotations held by the EU public towards Iceland as a world-class tourist destination. The Grand Board therefore determined a high degree of familiarity of the relevant public with the geographical name of Iceland.

Link to the relevant goods or services concerned

This was the main controversy in the case. Importantly, the Grand Board stated that a reputation for particular goods or services (or production in a given location) is not necessary and it did not need to ‘extend’ Iceland’s current reputation for certain goods to other adjacent products.

The country of Iceland had submitted various evidence to show its capacity to produce a wide range of goods and services, including fruit, vegetables, herbs, manufactured products, confectionary and the most technically advanced artificial limbs globally, amongst other things. This led The Grand Board to determine that Iceland would be “capable of producing or supplying any product or service covered by the contested mark”.

Furthermore, The Grand Board believed that Iceland’s eco-friendly and sustainable image could “easily” influence purchasing decisions of the relevant public, given that EU consumers currently are used to seeing the country of origin on the packaging of goods (as they may prefer countries with stricter regulations) and services (where, for electric apparatus, such a reputation may be preferred).

The Grand Board found it plausible that the EU target public would perceive (either now or in the future) the trade marks to be descriptive of the geographic origin of the goods and services at issue rather than an indication of commercial origin.

Country names and close consumer proximity may be more problematic

The Grand Board commented that average consumers of the relevant goods and services in issue are more likely to make assumptions about the origin of products based on their national provenance as opposed to other types of geographical signs (for example, names of regions, lakes and mountains). This was especially the case for country names in the EU or European Economic Area (EEA). The closer proximity and increased familiarity of the relevant EU public to such countries also makes them “more likely to be perceived as embodying certain favourable characteristics that influence acquisition of goods or services”.

Iceland being a country name (as opposed to, for instance, a regional location) and the proximity of the target EU consumers to the country referred to in an EU trade mark therefore appear to be highly relevant. Indeed, The Grand Board rejected Iceland Foods’ comparison of the ICELAND marks with a previous ALASKA trade mark registration. Iceland is a sovereign state rather than a region of the US, more than three times closer to Europe, with more EU visitors and greater economic trade links through its EEA membership. Instead, The Grand Board thought the rejected trade mark applications for SUEDTIROL and ANDORRA were more analogous to the ICELAND marks (Andorra, for example, is also: (i) a sovereign state in Europe; (ii) known for its mountain regions; and (iii) a popular tourist destination). It remains to be seen whether proprietors of trade marks referencing countries further away from the EU will suffer a similar fate to Iceland Foods.

Acquired distinctiveness

The Grand Board rejected the claim put forward by Iceland Foods that the marks had acquired distinctiveness, because they had not filed any evidence regarding Sweden, Denmark, the Netherlands and Finland - territories where ‘Iceland’ will also be understood descriptively. Indeed, The Grand Board had noted earlier in its judgment that the target public in Denmark is likely to have the greatest knowledge of and affinity with the country of Iceland. There was no evidence to support the view that the high level of brand recognition in the UK and Ireland could be extrapolated to the remaining relevant territories.

Protecting local traders

In its final remarks, The Grand Board stressed that any trade mark registration for a country name (and subsequent monopolisation) must not force traders with a genuine connection to a certain geographical location to “look over their shoulder” when referring to the real geographical origin of goods and services, or when using that geographical location as part of their own trade mark.

The Grand Board noted that the ICELAND marks had been used to prevent Icelandic traders from registering trade marks mentioning Iceland as the geographical origin or home country of their goods (for example, ICELAND GOLD). The Grand Board also recognised the importance of a country being able to use its name as part of its promotional activities, highlighting Iceland’s “extremely successful” brand image as a country (in 2017 it was ranked first in best performing nation brands).

The future for geographical trade marks

Brand owners should be mindful of the ICELAND decision when trying to register trade marks that involve geographical terms, as The Grand Board may have paved the way for a stricter line of case law. Country names now appear more difficult to register as a trade mark, particularly where there is close proximity to the EU.

Country names originating further away, with which the EU public is less familiar, may be less problematic. On the other hand, The Grand Board has not ruled out trade mark registration for country names, taking care to clarify they are not special cases. Arguably, The Grand Board’s decision is highly contextual, relying heavily on Iceland’s political, economic and cultural connections with the EU.

There is a need to balance competing interests when allowing trade mark proprietors to monopolise the names of EU and EEA Member States. On the one hand, there is an argument for country names being available for all traders to use when describing their goods and services (particularly countries with a good reputation (e.g.Switzerland’s reputation for high quality goods)).

On the other hand, brand owners may contend that countries do not have an exclusive right to geographical terms, which may serve as an indicator of the origin of goods and services.

Finally, when relying on acquired distinctiveness to justify registration of a mark, trade mark proprietors should ensure they submit documentary evidence of public awareness in all the relevant territories. Care should be taken to consider the target consumers’ perceptions of geographical-based trade marks, particularly those with close geographical proximity or historic ties to the location referenced in the mark.

This material was first published by Thomson Reuters, trading as Sweet & Maxwell, 5 Canada Square, Canary Wharf, London, E14 5AQ, in 2023 E.P.I.R. 45.6 and is reproduced by agreement with the publishers. For further details, please see the publishers’ website.

Footnotes

_{1. EUIPO, “DECISION of the Grand Board of Appeal of 15 December 2022: case R 1238/2019-G”, available at: https://euipo.europa.eu/copla/trademark/data/002673374/download/CLW/APL/2022/EN/20221215_R1238_2019-G.pdf?app=caselaw&casenum=R1238/2019-G&trTypeDoc=NA#. All quotations are taken from this case, unless otherwise indicated.}

_{2. EUIPO, “DECISION of the Grand Board of Appeal of 15 December 2022: case R 1613/2019-G”, available at: https://euipo.europa.eu/copla/trademark/data/011565736 /download/CLW/APL/2022/EN/20221215_R1613_2019-G.pdf?app=caselaw&casenum=R1613/2019-G&trTypeDoc=NA.}

_{3. EUIPO, “DECISION of the Grand Board of Appeal of 15 December 2022: case R 1238/2019-G”.}

_{4. EUIPO, “DECISION of the Grand Board of Appeal of 15 December 2022: case R 1613/2019-G”.}

_{5. Regulation 2017/1001 on the European Union trade mark [2017] OJ L154/1.}