When is a product name an illegal evocation of a protected geographical indication (GI) of spirit drinks? This question is the core of the decision 307/16 issued by the Market Court on 31 May 2016.
Background
Viiniverla Oy (Viiniverla) started manufacturing and marketing cider spirits named 'Verlados' in 2001. Viiniverla is located in Verla village in Southern Finland.
In 2012, European Commission requested a clarification from the Finnish authorities relating to the use of the name 'Verlados'. The Commission had received a complaint relating to an alleged misuse of the French GI 'Calvados'.
A GI, in accordance with Article 15 of Regulation No 110/2008, is an indication which identifies a spirit drink as originating in the territory of a country, or a region or locality in that territory, where a given quality, reputation or other characteristic of that spirit drink is essentially attributable to its geographical origin.
The Finnish Authorities replied in 2013 and stated that the name 'Verlados' refers to the place where it is being manufactured, the village of Verla and the Verla winery. The Finnish Authorities also stated that the two names have only one syllable in common ('dos') and therefore the 'Verlados' is not evocative from the protected GI 'Calvados'. The Finnish authorities referred to an old decision of the Court of Justice (CJ) in which CJ ruled that there is a clear evocation if the term used to designate the product at issue ends in the same two syllables and contains the same number of syllables as the protected name (Consorzio per la tutela del formaggio Gorgonzola, C‑87/97).
The Commission was not impressed and stated that the 'Verlados' is an illegal evocation of the GI 'Calvados' in accordance with Article 16(b) of the Regulation. It also threatened to open infringement proceedings against Finland if that interpretation was not accepted.
The Article 16(b) is worded as follows:
Without prejudice to Article 10, the geographical indications registered in Annex III shall be protected against:
(b) any misuse, imitation or evocation, even if the true origin of the product is indicated or the geographical indication is used in translation or accompanied by an expression such as “like”, “type”, “style”, “made”, “flavour” or any other similar termAccording to Annex III to the Regulation, 'Calvados' is registered in the category of products No 10 'Cider spirit and perry spirit', country of origin being France.
In November 2013, Sosiaali- ja terveysalan lupa- ja valvontavirasto (National Supervisory Authority for Welfare and Health) issued a decision where it prohibited Viiniverla Oy (Viiniverla) from marketing a drink named 'Verlados' as from 1 February 2014. The decision was based under section 49 paragraph 2 of Alcohol Act (1143/1994). According to that rule, the Authority can prohibit advertising or other marketing or sales promotion measure of alcoholic beverages if the labelling and other presentation of those beverages are not in compliance with the provisions and regulations issued.
The Market Court and a request for a preliminary ruling
Viiniverla appealed to the Market Court and claimed that the use of the name 'Verlados' does not infringe EU law on the protection of geographical indications.
The Market Court felt obliged to request a preliminary ruling and referred three questions to CJ. CJ answered those questions in its decision C 75/15, 21 January 2016.
(1) When assessing where there has been an “evocation” within the meaning of Article 16(b) of Regulation [No 110/2008], should reference be made to an average consumer who is reasonably well informed and reasonably observant and circumspect?The Article 16(b) does not mention the concept of consumer. However, CJ has ruled in its earlier decisions that, for the purpose of finding the existence of an 'evocation', it is for the national court to verify, in addition to the inclusion of part of a protected name in the term used to designate the product at issue, that when the consumer is confronted with the name of the product, the image triggered in his mind is that of the product whose designation is protected.
CJ continued by ruling that the purpose of the Regulation is to protect, inter alia, the attainment of a high level of consumer protection. Therefore it is necessary, as the established case-law relating to consumer protection states, to take into account of the presumed expectation of the average consumer, who is reasonably well informed and reasonably observant and circumspect.
CJ then emphasized that the concept of 'consumer' covers European consumers and not merely consumers of the Member State in which the product giving rise to the evocation of the protected geographical indication is manufactured.
(2) When assessing whether to prohibit the use of the name Verlados used to market nationally a spirit drink distilled from apples in order to protect the geographical indication “Calvados”, what importance should be given to the following facts in the interpretation of the concept of “evocation” in Article 16(b) of Regulation No 110/2008 and the application of that regulation:
(a) the first part of the name Verlados, Verla, is a village in Finland whose name may be recognised by Finnish consumers;
(b) the first part of the name Verlados, Verla, refers to the producer of Verlados, Viiniverla Oy;
(c) Verlados is a local product produced in Verla village of which a few hundred litres on average are sold each year in the winery’s own restaurant and a limited amount by order from the State-owned alcohol business referred to in the Law on alcohol;
(d) the words Verlados and Calvados have only one syllable in common (“dos”) out of three, although the last four letters (“ados”) of the words, that is, half of the total number of letter in each word, are identical?
CJ stated, in essence, that the facts a, b and c are irrelevant.
CJ ruled, as it is stated in its own case-law, that it has to be considered whether the products are similar and the sales names are phonetically and visually identical. Furthermore, any evidence that may show that such a relationship is not fortuitous must be taken into account.
With regard to the fact c, CJ ruled that it is irrelevant that ‘Verlados’ is a local product and mostly sold locally because the Regulation applies, in accordance with Article 1(2), to all spirit drinks placed on the market in the European Union.
With regard to the fact d, CJ specified that the referring court must take into account the fact that 'Verlados' and 'Calvados' both contain eight letters, the last four of which are identical, and the same number of syllables, and that they share the suffix ‘dos’, which confers on them a certain visual and phonetic similarity.
CJ ruled, as it is stated in its own case-law, that it has to be considered whether the products are similar and the sales names are phonetically and visually identical. Furthermore, any evidence that may show that such a relationship is not fortuitous must be taken into account.
With regard to the fact c, CJ ruled that it is irrelevant that ‘Verlados’ is a local product and mostly sold locally because the Regulation applies, in accordance with Article 1(2), to all spirit drinks placed on the market in the European Union.
With regard to the fact d, CJ specified that the referring court must take into account the fact that 'Verlados' and 'Calvados' both contain eight letters, the last four of which are identical, and the same number of syllables, and that they share the suffix ‘dos’, which confers on them a certain visual and phonetic similarity.
(3) If there is considered to be an “evocation” within the meaning of Article 16(b) of Regulation No 110/2008, may the use of the name Verlados nevertheless be authorised on one of the grounds mentioned above or on other grounds, such as that Finnish consumers at least are unlikely to imagine that Verlados is produced in France?
CJ concluded by stating that the wording of Article 16(b) clearly protects GI's from any kind of evocation, even in the absence of any likelihood of confusion. Therefore, the use of the name 'Verlados' can not be authorised if the referring court finds that there is evocation within the meaning of Article 16(b).
The Market Court issued its decision on 31 May.
The Market Court stated that the name 'Verlados' is used in Finland for products similar to those with the protected GI 'Calvados' and that those products have objective characteristics in common, and they are consumed, from the point of view of the relevant public, on occasions which are largely identical.
The court then followed the CJ's guidance and affirmed that there was a clear visual and phonetic similarity between the names.
As for any evidence that may show that such a relationship is not fortuitous, the court stated that Viiniverla had mentioned that it had used an expression "aroma distillation similar to calvados", which shows that the company was very aware of a product named 'Calvados'. Moreover, the suffix 'dos' does not have any specific meaning in the Finnish language.
Therefore, the court ruled that when the average European consumer, reasonably well informed and reasonably observant and circumspect, is confronted with the name 'Verlados' for spirit drinks the image triggered in his mind is 'Calvados', a protected GI.
The court dismissed the appeal by Viiniverla.
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