trade marks, the consumer, and the public interest

51

Anne M. Thomas Trade Marks, the Consumer, and the Public Interest

Abstract

In order to create a Common Market for branded products the European Commission is presently promoting a regulation for a Community Trade Mark backed by a directive to approximate Member States' trade mark laws. A consumer working group studying these two initiatives found a common interest with the Commission not only in freeing the flow of competing goods but also in specific proposals which to some extent acknowledge a consumer interest. However, the consumer interest in market transparency is not a major theme in either proposal nor do the drafters adopt the consumer oriented certification mark system. Above all there is no promise of effective, continuing consumer representation in the operation of the laws and this threatens to perpetuate the distortion of the public interest towards that of proprietors that has been allowed to develop, particularly since registration systems were introduced about a century ago.

The practice of distinguishing the goods of one trader from those of another by the application of a name or mark is as old as the first clay pots, and the public interest in maintaining the singularity of that mark is long acknowledged. Records show that according to the highly developed commercial law of first century Rome, consumers deceived by fraudulently marked goods had recourse to civil action in the courts. Significantly, however, there is no evidence that the true originator or owner of the mark could claim recompense for the threat to his good name. On the whole it can be said that at least until the eighteenth century, European laws relating to the marking of goods were chiefly concerned to punish deception rather than uphold the rights of trade name owners, and those rights that were recognised derived in nearly every instance from actual use in the market.

By the mid-nineteenth century, however, increasing pressure for easier protection of marks culminated in the introduction of national trade mark registries which not only obviated the need to establish prior right to a registered mark but which also recognised trade marks as items of saleable, assignable property and extended the rights of owners accordingly. Today registration is the most attractive form of primary protection for most large and medium scale firms, particularly if trading internationally. All marks can derive protection from the laws of unfair competition, passing off and trade descriptions. The pirating and counterfeiting of marks is punishable as a criminal offence.

In the past the owner of a trade mark was usually the manufacturer of the product to which it was applied. Although this can still be the case, in the complex marketing systems of today the proprietor may also be anyone, a retailer, an importer, a dealer, who has a legitimate commercial interest in identifying products (or services, which can also be registered in some states) as under his control and therefore his responsibility.

The connection between goods or services and some person responsible for establishing the goodwill and reputation of those goods and services is frequently referred to as "the origin function" of a mark, but it must be noted that from

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a consumer's point of view, this "function" can be of very limited value. As the UK Trade Mark Act (1938) states, a trademark can be used, "with or without any indication as to the identity of (the owner)."

Identifiable or not, under national laws, and for that matter international conven- tions and treaties signed to facilitate trade between states, it is the owner of the mark who decides how and by whom his mark shall first be used in any given territory.

TRADE MARK RIGHTS AND THE EUROPEAN COMMUNITY

When that territory is the European Common Market governed by the rules of the Rome Treaty, the rights of trade mark ownership inevitably come into conflict with the imperatives arising from the principles the Treaty embodies: the free circulation of competing goods and services throughout the EEC.

Trade mark rights are one of the mechanisms used by traders to control both the quantity and destination of their goods on the market. The Treaty (Article 3o) insists on the removal of all quantitive restrictions on trade between Member States, and although Article 36 provides for the protection of industrial property rights (trade marks, patents, copyrights, etc.) it stresses in the final sentence that such protection "shall n o t . . . (be permitted t o ) . . , constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States." Likewise Article 85 (i) prohibits agreements, including agreements relating to trade marks, between under- takings which may affect trade between Member States and has the object or effect of restricting competition within the market's territory. The European Court of Justice ruled against the agreement between the proprietors of the two marks, Phildar and Sirdar, not to market in each other's territory)

As trade mark rights, unlike other industrial property rights have no limitation in time, they could, if left to operate as usual, delay indefinitely the establishment of a truly common market. Both the Commission and the Court have acted consistently to establish just such a market in branded goods as quickly as possible. The creation of a Community system of trade mark registration is seen as an essential device to achieve this end. The first attempt to create a single Community system was abandoned in the sixties primarily because industry and the trade mark profession were not satisfied that the savings on time and money of one community-wide registration would compensate (a) for the loss of control over their trade-marked goods, (b) for the linguistic problems, and (c) for the threat to smaller firms trading within one Member State and challenged by a dominant community trademark.

Commission rulings and judgements in the European Court of Justice (ECJ) in cases relating to trade marks, notably Consten and Grundig v. Commission (1966) 2 and Sirena SRL v. Eda GmbH (1970) 3, clearly established the dominance of Community rules over national trade mark laws and sought to ensure that traders in one Member State could not be insulated from competition from the same (but lower priced) goods first put on the market in another Member State by the proprietor or with his consent.

The existence of trade mark and other industrial property rights is protected in the Treaty under Article 222. Nevertheless the ECJ has ruled that the exercise of those

Thomas, Trade Marks 53

rights can be an abuse of the Treaty. This distinction between existence and exercise has permitted the Community institutions to adopt a flexible approach in developing Community law in the field, and this flexibility has contributed to the impetus, on all sides (though for different reasons), for action.

A Community system of trade mark registration would not of itself solve all the problems of conflict between national rights and the Treaty of Rome. The Commu- nity system would not be obligatory and many proprietors would see no reason to register their marks as Community Trade Marks (CTMs) or, indeed, to register them at all. Therefore the Commission proposes one or more directives aimed at harmon- ising Member States' trade mark laws. In November I98o the Commission published its final proposals, following discussions on three previously circulated documents: a draft regulation for a Community Trade Mark (Commission, I978a) and a draft directive for the approximation of Member States' trade mark laws (Commission, i978b ) together with an earlier memorandum on the creation of an EEC Trade Mark (Commission, i976 ).

In I978 an ad hoc group of consumer representatives met at the Commission to consider the consumer interest in trade mark matters in the light of these three earlier Commission documents. In I979 they presented an opinion (ENV/Io/79) to the Environment and Consumer Protection Service of the Commission which was subsequently adopted by the Consumers Consultative Committee (CCC/45/79). In early i98o many of the same group met again to draft an opinion (CCC/I4/8o), also adopted by the CCC, on the draft directive.

The final Commission proposals do not differ substantially from their earlier drafts studied by the group and reported on in this article. The directive to approximate Member States' trademark laws is restricted in scope to laws which directly affect the flow of goods and services. It is anticipated that eventually the Community Trade Mark, as described in the regulation, will replace practically all national marks and that the Community Trade Mark Office the regulation seeks to establish, will take over most, if not all, of the work of national trade mark offices. However, it is acknowledged that there will be a long transitional period when both national and community marks will run in parallel and it is this transitional period that will present the most problems of confusion for consumers.

CONSUMERS AS OBJECTS

It has to be admitted that except in the instance where trade mark law is used to exclude fair comparative advertising, and the more recent call for generic names rather than trade names for prescription drugs, consumers and their representative bodies have shown little concern about trade marks. They have ignored, or at best shown only a passing interest in their national systems of brand name or trade mark protection and the effect these systems have in the market place.

As the voice of industry, speaking the specialist language of the experts, is more or less the only voice to be heard in the trade mark registries and courts of the world, it is not surprising that the consumer protection element of the public interest in trade marks has been subsumed to the interests of brand name and trade mark proprietors.

Indeed it is now argued that if consumers have any interest in trade mark conflicts

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it is merely as witnesses of confusion or more precisely, as passive items of evidence of confusion.

The plaintiff in trade mark actions is now the infringed or aggrieved mark owner, not the deceived or confused consumer.

The consumer working group meeting in Brussels identified various instances where the legitimate use of trade marks could be said to work against the consumer interest in fair competition and market transparency, that is to say, in freedom of informed choice. Evidence was drawn from the main body of consumer research, so the perceived lack of consumer concern referred to above should be more accurately defined as a failure to centre that concern on trade marks per se.

THE CONSUMER INTEREST IN TRADE MARKS

Consumers are primarily interested in the relativities of price and quality when selecting a product. Price comparisons and variations can be ascertained pre-purchase. Qualitative evaluations can usually only be arrived at post-purchase. The consumer can rarely tell for certain whether a product is any better or worse than, or indeed any different from, its competitors at least until he has bought it. Nor can he tell in advance, in the case of a repeat purchase, if previously experienced quality has been maintained. For judgement on the quality of a potential purchase he must rely on experience, advice, and recommendation. The trade mark identifies a choice already made but only offers at best guidance on the quality problems of that choice. It is not the role of ordinary trade marks (unlike certification marks and to a lesser extent collective marks) to certify the quality of a product or to differentiate it in quality from that of competitors. Consumers must rely for the protection of their interests on the concern of proprietors to distinguish their products from those of others and to establish and maintain a good reputation for the quality of products bearing their marks. It is the owner's need to protect the investment made in the reputation of his name that offers consumers a reasonable expectation of consistency of quality.

That investment will be in research, in quality of manufacture, in advertising, in quality control, in sales and after-sales service. Already we can see a threat to the value of trade marks for the consumer in the temptation to proprietors to unbalance investment loads in favour of advertising thus weakening those other, more important consumer protection elements in the establishment and maintenance of the reputation of a mark.

The consumer working group appraised the two Commission drafts against the defined needs (a) to strengthen these other elements and (b) to see consumer interests represented in trade mark procedures. The different problem areas the working group found can be identified in different permutations of the essential parts: product; mark; mark owner (proprietor).

The group first looked at a prime cause of the Commission's initiatives: the use of trade mark rights to restrict competition between the same goods marked by the same proprietor but marketed by different enterprises.


PROBLEM AREAS

Parallel Imports: Same Product, Same Mark, Same Proprietor

In drafting its two proposals, the Commission has been careful to stay within the limits of trade mark experience at the Community level. Much of its experience of restrictions on intra-brand competition has been gained with the help of the Dutch firm, Centrafarm BV, which has made a practice of buying pharmaceutical products in Member States where the price is lower and reselling them where the price is higher. For example in Centrafarm v. Winthrop 4 and Sterling Drug Inc. 5 (I974) which concerned patent as well as trade mark rights, Centrafarm bought pharmaceutical products marketed in the UK, where government monopsony keeps the price low, and resold them on the higher priced Dutch market. The patentee, Sterling Drug Inc., claimed infringement of patent rights and its Dutch subsidiary, Winthrop, claimed infringement of its trade mark rights. In accordance with the ECJ ruling in these and earlier cases both the draft-regulation and the draft-directive stress that the rights of proprietors are exhausted once the goods to which their mark is applied are put on the market by them or with their consent, adding, "unless the goods are modified or impaired after the initial sale." This addition responds to the judgement in two later cases, Hoffman La Roche v. Centrafarm (i978) 6 and Centrafarm v. American Home Products (i978) 7.

In both cases, Centrafarm went further than simply importing the drug. For example it repacked the Hoffman La Roche pills "Valium" in the quantities appropriate for the German market where it eventually resold them and placed the German trade mark owned by Hoffman La Roche on the packs adding its own name and address on the label.

The later draft directive responds more precisely to the rulings in these cases by including repackaging as grounds for continuing proprietorial control. However, in accordance with the second sentence in Article 36 of the Rome Treaty, the Article states that this control will be lost if the repackager (the parallel importer) proves that the trade mark is being used to partition the market, informs the mark owner of his intention to sell, and names himself on the packaging.

It would appear that the Commission presumes that the repackager will be able to prove market partitioning whenever necessary. The consumer working group was not convinced that establishing proof would be such an easy task. As the mark served its essential function of guaranteeing the identity of the origin of the goods, the group saw no reason for preventing repackaging as long as the quality of the goods was not modified or impaired. There remains, however, the fear that proprietors will pack inadequately to discourage the practice. A far more satisfactory solution could be sought trough the harmonisation of packaging rules for pharmaceutical products.

False Differentiation: Same Product, Different Mark, Same Proprietor

A separate issue raised by the Centrafarm v. American Home Products (AHP) case, is the practice of one proprietor applying different marks to the same product. AHP applied the mark "Seresta" to pills marketed in the Netherlands and "Serenid" to those marketed in the UK. The pills were identical pharmaceutically but tasted

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differently. Had the marks related to food or drink this taste difference might have been significant, but consumers do not (or should not) buy drugs for the flavour.

Centrafarm removed the mark "Serenid" from the imported U K products and replaced it with the Dutch mark and in the inevitable legal battle it was eventually ruled by the ECJ that national courts should prevent such unauthorised use of a trade mark. Thus consumers will be encouraged to believe that the products are different and fail to benefit from price competition.

Consumer product testing organisations have also noted the practice of falsely differentiating goods that are substantially the same and from the same origin, by the application of different marks. Apart from promotional cost restraints, there is little to prevent the practice of brand differentiation which is particularly prevalent in the cosmetic and detergent product areas.

The Commission's proposals do not promise to meet the problem entirely. The proposed CTM is unitary in nature, one mark registered for the whole Common Market territory but this does not exclude the registration of different CTM's for essentially the same product. The directive as drafted requires Member States' trade mark offices to ensure that a mark is invalidated if the product to which it is applied is also marketed in another Member State under another mark, unless there are good reasons for so doing.

Apart from coping with the implications of the judgement in the A H P case, this requirement should facilitate the identification of dangerous products as long as the marks of those products are registered but the directive can only really be effective on trade between Member States as a single proprietor can continue to market say, washing powder, under a variety of marks in one Member State. Besides there is no indication that consumers will be permitted to intervene in a practice which undoubtedly obfuscates market choice.

Inter-Brand Competition: Similar Product, Similar Mark, Different Proprietor

The long drawn out Terrapin v. Terranova (i976) 8 case illustrates how the exercise of trade mark rights can inhibit inter-brand competition. It is difficult to see how consumers would be confused by these two differently presented marks. One applied to portable buildings and the other to building materials, mainly plaster- work, but the coincidence of the prefix allowed the German proprietors of Terra- nova to prevent the German subsidiary of the U K company, Terrapin, from trading in Germany (even though there were some eighty or so names on the German register with the same prefix).

Here were two distinct proprietors in conflict and the German courts had ruled their trade mark use in the same territory confusing. There was nothing the Commission or the ECJ could do to reverse the decision. However, to avoid future questionable conflicts of this nature both the draft regulation and the draft directive stipulate that only when the public is misled can a later mark be excluded. The more precisely worded draft directive only permits action when a conflict creates "a serious risk of confusion in the mind of the public" (art. 3)- The consumer working group went even further and recommended that infringement actions should only take place when "in the reasonable understanding of a substantial number of consumers in the relevant part of the EEC (the marks) are liable to mislead the


public" (CCC opinion, p. IO). The group was prepared to sacrifice brevity in the drafting to save time in the courts.

Whereas on the one hand there are dubious conflicts and Sirdar/Phildar type agreements not to compete, on the other mark owners can secretly agree to tolerate each other's (similar) mark in each other's territory. Again, in all these instances consumers are not to be permitted to intervene according to the present drafts, even though it is their choice that is restricted or it is they who are confused.

The Commission Directorate for Competition has taken action recently to prevent even identical marks from partitioning the EEC. It has arranged an agreement between Unilever (UK) and Henkel (Germany) that permits their two "Persil" wash powders to be sold in the same territory under the same mark differentiated by the clear display ~ of the company name and different colour packs.

As drafted the regulation and the directive propose a similar informal conciliation procedure for reconciling conflicting marks out of court. An earlier proposal for formal arbitration for the CTM was preferable to the consumer working group, not least because consumer organisations were to be involved in the procedures. They are not be involved in any "conciliations."

The separate problem of consumers confused by "tolerated" similar marks does not appear to be recognised in either draft and this apparent lack of interest in market transparency where inter-brand competition is concerned is mirrored in the Com- mission's approach to the confusions that can be caused by the licensing of marks.

Licensing: A. Different Product, Same Mark, Same Proprietor

Many internationally reputed products produced under licence vary in consistency and quality from licensee to licensee and territory to territory. They are "tailored" to their intended market but carry the same mark. Beers, for example, may vary according to local water supply, and products produced for poorer third world countries may be inferior to similar products carrying the same mark in the affluent West. This presents a dilemma for consumers eager to promote "free-flow" but equally keen to buy the same again.

There is rarely any obligation for the owner of a registered mark to control the composition and quality of goods bearing it. The Commission's proposals do attempt to deal with the problem but must do so by making an unrealistic distinction, from the consumer point of view, between goods first put on the market within the EEC and those first put on the market outside.

The draft regulation requires CTM proprietors to maintain or control the composition and quality of goods produced and first marketed in the EEC.

The article on licensing in the draft directive is less stringent, leaving to the proprietors the decision whether to control quality or not. The consumer working group was less than satisfied with this and recommended that at the very least Member States' trade mark offices should oblige proprietors to exercise control.

The problem remains that the principle of exhaustion of rights once the goods have been put on the market, may lead to consumers buying, say, a Cinzano produced for the North African market when they expected an EEC one produced for the Italian.

The Commission proposes that proprietors shall be permitted to prevent goods

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bearing their trade mark entering EEC territory if they have been unable to control the composition or quality of the goods before they were put on the market outside. (The draft directive merely refers to "legitimate grounds" justifying opposition.) Whereas the exhaustion of rights and flee-flow principles may encourage control and standardisation of goods produced under licence inside the EEC, the present Commission proposals only permit delayed intervention by the proprietor to restrict the importation of poorer quality goods from outside.

The consumer working group considered whether additional information on all labels where the trade marks (and origins) were the same, designating the originally intended market, might not allow free-flow and at the same time warn potential purchasers, but were aware that as with other problems identified in their study of trade marks, action would be required outside the scope of trade mark law, in this case the regulation of advertising and labelling as well.

Licensing: B. Same Product, Different Mark, Different Proprietor

Comparative testing reports by consumer organisations consistently note the application of different brand names under different ownership to identical, or near identical products emanating from the same (licensed) manufacturer. The Con- sumers' Association's "Which?" has many reports similar in purport to the one on disinfectants which noted 38 different brand names for 14 different products sold at different prices. Licensing arrangements can lead to a consumer unintentionally buying a replacement item which is in substance the same as a previous purchase found to be inadequate. Only the mark and the presentation are different.

To increase market transparency and allow consumers to identify genuinely competing products, the consumer working party would have liked a requirement that the manufacturer licensee is always named on the pack, as indeed happens on occasion, and regretted the removal of an earlier proposal that goods produced under a licenced mark should bear a sign L to that effect, even though this would be of limited value to most consumers.

Industry would argue that some manufacturers produce genuinely competing products for their various licensors and that in present-day fast-moving production and marketing arrangements such a regulation would act as a deterrent to licensing, disrupt supplies, and possibly discriminate against small business licensees. Turning to the practicalities of naming the licensee, it is pointed out that as many consumer goods are produced under one mark by any number of manufacturers, each would need to be distinguished on the label. Furthermore, one product can be assembled from parts made by various different firms, and it would be difficult to name all on the label.

Nevertheless, the majority of the working group held that goods differing only in respect of their packaging and trade mark and made by one licensee could be required to identify that licensee by name, and that market transparency would be improved as a result.

Although such information would be of some value, this "solution" is not entirely satisfactory: It can only deal with one aspect of the problem and would need vigorous (and expensive) enforcement. There is no doubt that industry would object strongly and means would be available to avoid the obligation. Besides the main


emphasis should be on trade mark proprietors taking full responsibility for products bearing their marks. Consumers would benefit most from rules which clearly identified proprietors and encouraged them to take full responsibility for the quality of goods produced under their name.

For this reason the identity of the proprietor becomes the more significant factor and that is not always apparent to the consumer. Takeovers and liquidations lead to a confusing pattern of trade mark ownership. Even other proprietors are unaware of the true ownership of marks and the economic connections between proprietors of seemingly competing marks. This latter problem was not specifically dealt with by the group but the Commission's proposals for the assignment of marks were.

Assignment: Same Product, Same Mark, New Proprietor

Whereas it is true that there is nothing in a mark, registered or not, that guarantees quality, the promise of maintained quality is under threat when mark ownership is transferred (for consumers must depend on the owner for the protection of their interests). Marks can be assigned in a variety of ways and for a variety of reasons. Maintaining their reputation need not be one of them. Trade mark law does not insist on the maintenance of quality nor does it insist on informing the consumer that the mark has changed hands. The regulation would empower the proposed Community Trade Mark Office (CTMO) to refuse to register the transfer of a CTM if it is obvious from the transfer document that it may deceive the public, and consumers are among those who may take action if any deception only becomes apparent after the registration. However, there is no mention of assignments in the draft directive so the consumer working party has recommended that all transfers should be carefully vetted by national trade mark offices. But perhaps it is more important that consumers should be in a position to defend their own interests by being informed, at the point of sale, that the reputation of the mark, and therefore of the product, is now in the hands of someone new.

Kaffee Hag: A Very special Case

Assignments of one mark made prior to the Treaty, to two or more different European purchasers, have raised a very particular problem. How are conflicts of prior right to be resolved without partitioning the market?

The decision of the European Court in the Kaffee Hag case (I974) 9 stimulated much concern, not least among consumers, because it sanctioned the existence of the same mark, under the control of two different proprietors, applied to similar but not identical decaffeinated coffees. This decision was made on the grounds of "common origin." The original German mark had been sequestrated after the First World War. Until the I96OS the two proprietors concerned agreed to market in two distinct territories in Europe. But, having observed the steady establishment of the dominance of the free-flow principle, the German producers prepared to move into the Belgian producer's territory and were, as anticipated, challenged.

Consumers can appreciate the potential benefits from the application of the competition principles promised in the Treaty, but if the key to consumer protection from trade marks is the owner of the mark at the time of sale, the Court's ruling and

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the subsequent consolidation of that ruling in the draft directive, do not entirely accord with consumers' interests. From the consumer point of view it is irrelevant who owned the mark in the past but not irrelevant who takes responsibility for it now. However, it is a transitional problem and we are assured that "common origin" cases are rare.

The Court 's ruling could lead to the mark becoming in effect generic (Hag = decaffeinated coffee) and an important and universally accepted form of public policy is the rule that marks that become generic lose all rights to protection. As with the "Persil" marks a solution may be found by adding other differentiating signs, but then these additions become part of the mark and it could be argued that "Persil" has become generic.

Misleading Names

An overt and therefore less disturbing cause for consumer concern is the deception or confusion caused by the names themselves. It is open to dispute how far consumers are deceived by names such as "Slimline" or offended by marks such as the Robinson "Gollywog," two which have been the subject of some public discussion in the UK recently. Both drafts designate the role of guardian of the public's susceptibilities and sensibilities to trade mark officers obliged to vet applica- tions for registration to ensure that no registered marks are liable to deceive or offend consumers.

Here again consumers are to be permitted to intervene both at the time of registration and after if need be, should market conditions change and the marks become either offensive or misleading, but only in the case of CTMs. Unless in the directive to approximate Member States' trade mark laws it is made clear that consumers have an interest in trade mark matters, they will continue to be excluded from most national trade mark office procedures.

CERTIFICATION MARKS

There is, however, one type of mark that can claim to reflect fully the interests of consumers, not least because it legally guarantees certain qualities in the products to which it is applied. These are certification marks which are at present registerable in only some Member States (UK, Eire, and France). They are frequently confused, even by experts, with collective marks because both have in common the factor that the owner of the mark need not be a trader in the product to which it is applied. But they differ quite distinctly. Certification marks can only be owned by "persons" who do not trade in the goods and are only registerable after they have been submitted to an authority which specifically includes a representation of the consumer interest. Not so collective marks. Certification marks are open to all who satisfy the regulation governing each mark whereas collective marks can be used to form cartels. Marks owned by standardisation organisations need certification mark protection (the BSI "Kitemark," the DINmark, and BENOR, for example) but other quite independent bodies can also own certification marks, one of the best known of which is the "Woolmark" certifying pure new wool.

Thomas, Trade Marks 6I

The Commission decided against the approximation of collective and certification mark laws, at least for the time being, as the intention of this first directive on trademark laws is to concentrate on the most important legal obstacles to trade. It is proposed that there will be both collective and what are termed "guarantee marks" in the CTM system. The proposals for collective marks do not appear to alter their present conditions of use to any considerable degree. But, as they stand, the proposals for guarantee marks set against the present system of certification marks in those countries where they exist, fail in at least two basic necessities: There is no proposal to submit each application to an authority which specifically includes a representation of consumer interests, and the regulation does not state that all who satisfy the conditions governing the application of a guarantee marks may register to use it. As far as the latter or these two failings is concerned it is not clear why the Commission decided to omit an article to this effect. In the commentary that accompanies the final (November I98o) proposals, it is suggested that article 85 of the Rome Treaty should ensure that competition is not restricted, and it is stated that in general access must be open to those willing and able to meet the conditions. The intention is there, but it is not made concrete in the articles governing "guarantee marks."

The Commission's timid approach to certification and guarantee marks suggests a lack of understanding of their distinct nature and use for consumers. A proposal that they be listed in a separate part of the CTM register has been abandoned. But far more important is the omission of consumer consultation prior to registration. Consumers are among those who may lodge an opposition to an application to~ register (whereas they may only "submit observations" for the refusal of ordinary CTMs) but there is no proposal to integrate a consumer perspective formally into the vetting procedure. It is difficult to see how consumers will be able to take advantage of the right to lodge an objection without going through tedious and expensive legal procedures.

CONSUMER REPRESENTATION

A major reason for the Commission's reluctance to adopt all the characteristics of the certification system is fear of the cost and complexity of introducing specifically consumer protection representation into the CTMO and national trade mark offices. Yet, reference is constantly made in the memorandum to the "consumer interest" and the regulation grants consumers the right to intervene (at least on certain issues) on their own behalf. There is a particular need for vigilant protection of that interest during the long transitional period before Community marks become the norm and it is in the public interest that consumers should be able to intervene quickly and efficiently. Other "interested parties" vcill only need to be vigilant in their own small areas of the market; "consumers," that is to say voluntary workers or under-staffed consumer organisations, will need to keep an eye on some two million trade marks in a large and rapidly changing market.

Originally it was proposed that there should be a consumer representative on a "Conciliation Board." The intended purpose of this conciliation board was to propose arrangements which would lead to the inclusion of many national marks in

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the CTM system and settle disagreements in an informal manner. The conciliation board does not appear in the final proposals, but it is proposed that the examination office of the CTMO shall invite opposing parties to seek amicable settlements which will not "give rise to confusions on the part of the public." There is no doubt that without formal arrangements for representing the consumer interest, incorporated into both the directive and the regulation, the debate to determine the public interest will be unbalanced. The working group considered it lamentable that this opportun- ity to give consumers a clear voice in trade mark matters was being wasted and that in effect no more than lip service was being paid to "the consumer interest."

The working party proposed for the CTMO a Consumer Advisory Committee (CAC) but were divided as to how far this committee should go beyond advising. (Certification marks are monitored by the UK Department of Trade.) The CAC was intended to act as a reference point for all advice on the consumer interest in CTM questions.

As far as national registration systems are concerned the working party considered that in all circumstances there should be a contact in each trade mark office with whom consumers and their organisations could exchange information. Beyond that the group agreed that it was for Member States to determine the procedure by which consumers' interests could best be represented and made several suggestions for such procedures both at registration and in litigation.

CONCLUSION

This very brief summary of the working group's study of trade marks in general, and the Commission's proposals in particular, may well have raised more questions in the reader's mind than it has answered. It certainly has not attempted to discuss some of the issues, for example generic names for prescription drugs or the use of trade names in fair comparative advertising. Both these topics might well merit a separate study in themselves, as, indeed, might some of the issues actually touched on in this article. It is to be hoped that consumers will want to continue the scrutiny and appraisal of the role of trade marks in the market place.

It is also to be hoped that it will be recognised that consumers should not be considered as merely passive receivers of goods and services as far as trade marks are concerned, but should be permitted, wherever reasonable, to play an active part in the defence of their interests.

Consumers would agree with the Memorandum (para 13) that, "Trade marks play an important role in the public interest in the distribution of goods and services" and that they should be given legal protection. They would also agree with the Commis- sion's proposals to limit the scope of that protection to ensure more choice and more competition in the market place. But unless consumers can establish and maintain an influence to ensure that there is also a more transparent market, we cannot be convinced that the consumer element of the public interest in trade marks is sufficiently balanced against the interests of mark owners to give much credence to the claim, in the same paragraph of the Memorandum, that the European Economic Community is, "an economic system directed towards the needs of the consumer."


Footnotes

1 Sirdar and Phildar v. Commission, Case no. 279/75 O. J. 2975 L 225/27. 2 Consten and Grundig v. Commission, Case no. 56/64 & 58/64. ECR 299 (1966) CLMR 418. 3 Sirena v. Eda, Case no. 4o/70. ECR 69. (197I) CMLR 260. 4 Centrafarm v. Winthrop, Case no. i6/74. ECR ii83 (i974) 2 CMLR 480. 5 Centrafarm v. Sterling Drug Inc., Case no. i5/74. ECR 1144 0974) 2 CMLR 48o. 6 Hoffman La Roche v. Centrafarm, Case no. io2/77. ECR 1139 (1978) 3 CMLR 2i 7. 7 Centrafarm v. American Home Products Corp., Case no. 3/78. ECR i823 (i979) CMLR 326. 8 Terrapin v. Terranova, Case no. ii9/75. ECR io39 (i976) 2 CMLR 482. 9 Van Zuylen Freres v. Hag AG, Case no. i92/73. ECR 731 (i974) 2 CMLR 127.

References

Commission (1976). Memorandum on the creation of an EEC Trade Mark. Brussels: Commission of the European Communities.

Commission (i978a). Draft Council Regulation on the Community Trade Mark. Brussels: Commission of the European Communities.

Commission (i978b). Draft directive on the approximation of Member States" Trade Mark Laws. Brussels: Commission of the European Communities.

Zusammenfassung

Warenzeicben, der Verbraucher und das Allgemeininteresse. Zum Zweck der Sehaffung eines gemeinsa- men Marktes fiir Markenartikel hat die Kommission der EG zwei Vorschl~ige auf dem Gebiet des Warenzeichenrechts unterbreitet: einen Verordnungsentwurf iiber die Schaffung einer Gemeinschafts- marke und einen Richtlinienentwuff fiber die Rechtsangleichung des Markenrechts der Mitgliedstaaten. Diese Vorschl~ige sind yon einer Expertengruppe einer genaueren Priifung dahingehend unterzogen worden, wieweit sie dem im EG-Vertrag auch verankerten Verbraucherinteresse dienen. Die Gruppe, der die Autorin angeh6rte, fand zwar in den Vorschl~igen einige bemerkenswerte Verbesserungen zur Beseitigung yon Handelshemmnissen, die von unterschiedlichen Markenrechten ausgehen k6nnen. Das Verbraucherinteresse an Produkt- und Markttransparenz, an Vermeidung kiinstlicher Produktdifferenzie- rung, an Garantiemarken und an Verbrauchervertretung hat jedoch in die Vorschl~ige kaum Eingang gefunden. Zur Bestimmung des Verbraucherinteresses im Markenrecht arbeitet die Autorin Problembe- reiche heraus, die teilweise der Rechtsprechung cles Europ~iischen Gerichtshofes zugrunde liegen (Parallel- importe, ~,inter-brand<<-Wettbewerb, konfligierende herkunftsgleiche oder verwechslungsf~ihige Marken), sich teilweise auch erst ergeben, wenn eine Gemeinschaftsmarke neben die (bestehenbleibenden) nationa- len Markensysteme tritt. Zum Schlu~ ihres Beitrages macht die Autorin Vorschl~ge zur Einfiihrung von Garantiemarken auf EG-Ebene nach englischem Vorbild und zur Schaffung einer Verbrauchervertretung in einem k~inftigen EG-Markenamt.

The Author

Anne Thomas is a teacher and consumer representative, living at 37, St. Augustine's Road, Canterbury, Kent CTI IXR, England. She is a member of working groups of the Consumers Consultive Committee on trade marks and on patents.

trade marks, the consumer, and the public interest

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