French Courts’ position regarding the filing of IR in the name of multinational companies based on a national trademark of a country where they conduct business through their subsidiary.
We would like to provide you with a quick update of the French case-law regarding a precise question/issue which has not been widely examined concerning the filing of International Trademarks in the name of multinational companies. Indeed, multinational companies usually file their trademarks in the name of the parent company while they own numerous subsidiaries across Europe through which they conduct business in the EU.
The question is hence to know whether this company, which head office is based in a country “A”, can use its national trademark of a country “B” as a basis for an IR if it conducts business through a subsidiary in the country “B”. Indeed, the needed condition required by the Madrid Protocol and Arrangement is that this company shall have “a real and effective industrial or commercial establishment” on the territory of one of the Contracting Parties. According to the Guide to the International Registration of marks: 02.04 “The interpretation of “national”, “domicile” and “real and effective commercial or industrial establishment” is a matter for the laws of the Contracting Parties to determine, each as far as it is concerned.”
From our experience, trademark offices are divided with respect to this question: For example, OHIM appears to allow one entity based on the territory of one Contracting Party to use a national trademark as a basis for an IR if they conduct business through a subsidiary in another Contracting Party, while the German TMO does not allow a non-German entity to use a German national mark as a basis for an IR even if they conduct business through a subsidiary in Germany.
Therefore, please find below a summary of the French Office/Courts’ position.
For ease of the explanation, let us take a concrete example:
A multinational firm based in the US is considering to use its national Spanish trademark as a basis for an international registration designating, inter alia, France. Such international registration is only possible if this company has “a real and effective industrial or commercial establishment” on the territory of Spain (Art. 2(1)(ii) of the Madrid Protocol). It appears somewhat unclear whether this condition is fulfilled if the non-Spanish mother entity (based in the US) conducts business in Spain only through its local subsidiary which is a separate entity incorporated under local laws.
The most important issue raised by this question is the interpretation in France of a “real and effective commercial or industrial establishment”.
The French case law has decided that the sole registration of the establishment before the French Company register is not sufficient. Therefore, evidence proving the legal existence of the “establishment” is not sufficient to conclude to the existence of a “real and effective commercial or industrial establishment” (French High Court, March 3, 2009).
Consequently, the specific condition is to prove that the Spanish subsidiary effectively conducts business in Spain.
According to another decision (Court of Appeal, February 24, 2011), the applicant should provide the judge with evidence showing a real industrial or commercial activity in the country, and notably through accounting or fiscal documents.