Trademark counterfeiting: what do consumers think about when they dry their hands?

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We recently reported protecting the design of a “paper dispenser” on our sister DesignWrites. YesYou can see the article here. Below, we take a look at trademark counterfeiting and what consumers think of when they dry their hands with paper towels.

Context – Trademark counterfeiting by charging?

You’ve probably noticed the TORK brand on disposable towel dispensers. They are everywhere, in restaurants, bars, workplaces and public restrooms.

TORK sued a company that sold paper towels as refills for TORK dispensers. They alleged trademark infringement even though the refills were unmarked and sought an EU-wide injunction.

TORK wanted to rely on the case law of the German Federal Court of Justice which declared, in a landmark decision from 1987, that consumers always consider a trademark registered on a towel dispenser to indicate that paper towels are same origin as the distributor. Therefore, by filling the branded dispenser with unbranded paper towels, the paper towels become, so to speak, a branded product of the manufacturer of the towel dispenser. This is why TORK wanted to prevent the distribution of unbranded paper towels, alleging trademark infringement.

Consumer consideration is a brand protection factor

TORK sued in the Regional Court Munich I in 2015. However, the judges assessed consumer understanding differently than the Federal Supreme Court in 1987 and said:

“Given the variety of paper towel dispensers found in publicly accessible areas, the the consumer no longer considers a mark affixed to the towel dispenser as an indication of the commercial origin of the paper towels placed in the dispenser.”

TORK appealed to the Higher Regional Court in Munich, but the court upheld the opinion of the Regional Court. The court held that consumers would not assume that the dispenser would only be filled with paper towels bearing the same trademark.

TORK then took the case to the Federal Court of Justice. The Court first recalled that the filling of the dispenser with third-party products constitutes in principle a trademark infringement if the mark on the container is also understood by the public as identifying the refillable contents. However, this must be determined by different criteria. According to the Federal Court of Justice, the higher regional court had not sufficiently examined them.

The Higher Regional Court therefore had to rule a second time – and again ruled against TORK. The court’s main argument was: Trademarks are less important to consumers in the case of consumer goods that are used free of charge, are common and are available in different ways. Because the consumer’s opinion of a restaurant, a school, his employer or a sports facility is not determined by “whether the hygiene products and dispensers are of special origin and quality, provided that they do not more or less satisfy their needs when drying hands”. Therefore, if consumers pay no attention to the brand, they do not assume that the dispenser and the consumables must be from the same manufacturer.

The Federal Court of Justice decided on May 19, 2022 not to retain the case for further appeal and thus upheld the decision of the Higher Regional Court in Munich.

Prospects – more competition in the aftermarket distributors

The first decision of the Federal Court of Justice is a typical “yes, but…” decision: on the one hand, the historic 1987 decision may still be applicable, but under certain conditions, a divergent public understanding could be established. With the decision of May 19, 2022, the Court confirms that it is serious about this. The rule/exception ratio has thus been reversed: whereas brand infringements in the use of refill materials were previously the rule, they are now the exception, as long as no concrete and deviant understanding of the consumer is proven. Fun fact: although this has been the public’s perception all along, the judges eventually established it without actually gathering evidence – because the judges themselves belong to the relevant public, they were able to rely on their own experience. This is not unusual in Germany.

For manufacturers of refill products – not just limited to paper towels – the new case law is good news. Previously, a consumable dispenser manufacturer could secure a “monopoly” on the refill product under trademark law. The decision is also practical – consumers are often expected to make considerations that they may not in fact do. It seems plausible that consumers, when drying their hands, do not think about the manufacturer of the paper towels.

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