Virtual Goods in Focus – EU General Court’s First Ruling

Virtual Goods in Focus – EU General Court’s First Ruling

The General Court (GC) has issued its first-ever ruling on the distinctiveness of a trademark applied to virtual goods. The decision T11163/23 dated 11 December 2024 – “Glashütte ORIGINAL”  concerned the application for the following sign:

1. Background of the case

The European Union Trademark (EUTM) application no. 018727034 dated 1 July 2022 covered (inter alia) “downloadable virtual goods such as watches, clocks, and their accessories for online use or use in virtual worlds” (Class 9), as well as “retail services and the provision of these virtual goods” (Classes 35 and 41).

With EUIPO decision of 13 February 2023, the application was provisionally refused for the above-identified goods and services due to Art. 1 (1) (b) – lack of distinctiveness. The Examiner found, in essence, that the mark applied for would, for a non-negligible part of the relevant German public, evoke the reputation of the town of Glashütte (Germany) of excellence in the horological sector, in so far as, even in the context of virtual goods, the goods and services at issue all referred to horological goods and their accessories.

The appeal filed by the applicant on 12 April 2023 was rejected by the EUIPO Board of Appeal on 29 September 2023, who confirmed the EUIPO 1^st instance’s findings.

By its action to the General Court, the applicant, Glashütter Uhrenbetrieb GmbH – Glashütte/Sa., seeks the annulment of the EUIPO BoA decision of 29 September 2023 (Case R 773/2023-5).

2. The GC’s decision

The applicant relied on a single plea in law, alleging infringement of Article 7(1) (b) of Regulation 2017/1001. It complains that the Board of Appeal erred in finding that the mark applied for lacked distinctive character in respect of the goods and services. According to the GC, that single plea consists, in essence, of four parts, relating, first, to the reputation of the town of Glashütte in the horological sector, second, to the extension of that reputation to the virtual goods and services at issue, third, to the distinctive character of the figurative characteristics of the mark applied for and, fourth, to the registration of a similar mark.

However, while the GC dealt with the question of how to examine “virtual goods” and services related to such virtual goods, the Court missed the opportunity to establish new and specific examination criteria for this quite new category of goods by merely concluding that the relevant public would tend to interpret virtual goods in the same way as their physical counterparts.

Glashütte: A Symbol of Watchmaking Excellence

The GC confirmed that Glashütte, a town in Saxony near Dresden, is renowned for its tradition of high-quality watchmaking. This reputation shapes how the relevant public perceives the sign, even in the virtual realm: “(…) although it is common ground that the reputation of the town of Glashütte in the traditional horological sector does not currently extend to the field of virtual watchmaking, as the applicant claims, the fact remains that the goods and services at issue expressly refer to horological goods and their accessories”. According to the court, the public will view virtual watches in the same way as physical ones. As a result, the sign will not be perceived as an indicator of origin but rather as promotional information about the quality and authenticity of the goods.

The Transfer of Perception from Real to Virtual Goods

The GC noted that for virtual goods resembling or emulating physical goods, there is generally a transfer of perception: the relevant public tends to interpret virtual goods in the same way as their physical counterparts. However, this transfer must be assessed on a case-by-case basis, considering the specific nature of the virtual products and services.

In this case, virtual watches may represent physical watches or imitate their functions. Therefore, the public will directly associate the trademark with the reputation of Glashütte in traditional watchmaking. Consequently, the sign “Glashütte original” will be seen as a logical extension of the town’s reputation and as promotional information rather than a distinctive trademark.

3. Comment LexDellmeier

The applicant can still (and should) bring an action before the European Court of Justice (ECJ). There is a simple reason for that as several “Glashütte Original” trademarks are registered at the EUIPO and WIPO (e.g. EU 004821773 / IR). Some of these trademarks are also (still) protected for the goods “watches” (class 14) (real - not virtual...). After the GC’s latest judgment regarding “virtual goods” and the analogy to “real goods”, the question arises as to whether these registrations could possibly be challenged or be ready for cancellation due to lack of distinctiveness. From the point of view of a trademark practitioner and in view of the trademark owner’s interests, Glashütte should take action against this development.

For more information, please find extracts of the decision here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62023TJ1163.