The Cheval Blanc case or the importance of trademark monitoring
While protecting your trade mark, effective and regular trademark monitoring is essential. This is one of the lessons standing out from the French Supreme Court decision of June 8th, 2017 in the Cheval Blanc case (Cour Cass, Ch. com., June 8th, 2017, decision No 15-21.357).
To quickly introduce this decision’s background, Château Cheval Blanc is a wine-producer of Saint-Emilion and one of the most prestigious vineyards of the Bordeaux wine-growing region, in the southwest of France.
For many years, it initiated numerous actions against trademarks it judged confusingly closed to its own (knowing that “Cheval Blanc” is the French for “White Horse”). Thus, it successfully obtained the rejection and cancellation of several trademarks, among which “Chevall bianco” (Italian for “White Horse”), “Cheval Royal” (French for “Royal Horse”), “Cheval Rose” (“Pink Horse”), “Cheval d’or” (“Golden Horse), and “Le cheval du roi” (“The King’s Horse”).
By doing so, it delimited a perimeter of protection around its trademark and also obtained recognition by the courts of the international notoriety of the name “Cheval Blanc”.
Château Cheval Blanc vs. Domaine du Cheval Blanc
However, in 2008, Chateau Cheval Blanc summonsed the company “Chaussié de Cheval Blanc” in revocation of its company’s name and of its trademark “Domaine du Cheval Blanc” registered since 1973 in class 33.
The plaintiff was acting on the dual grounds of the cancellation for deception and counterfeiting imitation.
Nevertheless, after successive examinations at first instance, on appeal and then in cassation, the case was referred back to the Bordeaux Court of Appeal on May 5th, 2015, which considered the action based on the deceptive nature of the “Domaine du Cheval Blanc” trademark to be time-barred.
The Court of Appeal stated that the action based on deception was not an action for infringement. Therefore, it was subject to the common law prescription, which was thirty years old at the time of the summons.
As the trademark “Domaine du Cheval Blanc” was registered since 1973, Château Cheval Blanc had tolerated its registration and use for more than thirty years. Therefore, the grounds of deception were inadmissible as prescribed.
Château Cheval Blanc contested the judgment, arguing that the deceptiveness of the mark cannot be purged either by time or by use and therefore considering that third parties should be allowed to invoke this ground as long as the registration of the trademark was maintained in force.
French Supreme Court decision
After almost ten years of proceedings, the Court of Cassation finally ruled that the action based on the deceptiveness of the mark was time-barred.
Indeed, the Court considered that the action based on the ground of deceptiveness was subject to the prescription of ordinary law: In this case, since the reform of the prescription was not meant to apply (the prescription period was reduced from thirty to five years in civil matters, since the law of June 17th, 2008), the thirty-year period should apply.
In addition, the Court rejected the plea alleging the damage suffered by the plaintiff as a result of the use of the term “Cheval Blanc” in the defendant’s company name, arguing that Château Cheval Blanc did not suffer any specific prejudice resulting from this use.
By filing its action on the dual grounds of the cancellation for deception and counterfeiting imitation, the plaintiff was wisely trying to circumvent the possible inadmissibility of its action for invalidity on the ground of tolerance for five years.
Indeed, according to Article L.714-3 of the French Intellectual Property Code, an action for invalidity is inadmissible if the trademark has been filed in good faith and the owner of the earlier trademark has tolerated its use for five years. Article L.716-5 additionally provides that “Any action for infringement of a later registered trademark whose use has been tolerated for five years is inadmissible, unless its filing was made in bad faith”.
Nevertheless, in this case, even the action based on the ground of deceptiveness was subject to the prescription of ordinary law, as Château Cheval Blanc had tolerated this use for more than thirty years.
Knowing that the prescription period is now of five years, this judgment provides a clear warning to trademark owners: The protection of their brands must be based on effective monitoring and responsiveness.
The mere sending of a letter of formal notice does not have the effect of interrupting the foreclosure period and must be followed, if the disputed use continues, by a cancellation action.