I. Facts

On 19 December 2016, Ms Santa Conte filed an application for a European Union (EU) trademark within the European Union Intellectual Property Office (EUIPO)Footnote ¹ for a figurative trademark representing the symbol of a marijuana leaf and including the written statement “Cannabis Store Amsterdam”. In particular, the application sought a trademark for foods and beverages under Classes 30,Footnote ² 32Footnote ³ and 43.Footnote ⁴ However, in September 2017, the application was rejected.Footnote ⁵ The applicant subsequently appealed the rejection decision before the EUIPO. However, this was dismissed on the basis of Article 7(1)(f) of Regulation 2017/1001, as the subject of the trademark was contrary to public policy.Footnote ⁶ The Court of Justice of the European Union (CJEU), the applicant, sought an annulment of the EUIPO decision before the General Court.Footnote ⁷

The applicant put forward two pleas. Firstly, that the dismissal by the EUIPO was an infringement of the combined provisions of Article 71(1) and Article 95(1) of Regulation 2017/1001. (The combined provisions require the EUIPO to examine the appeal on the facts, evidence and arguments provided by the parties, while also allowing the Board of Appeal to exercise any power within the competence of the department that was responsible for the decision appealed or remit the case to that department for further prosecution.) Secondly, the applicant argued that the dismissal was an infringement of Article 7(1)(f) and Article 7(2) of that Regulation.Footnote ⁸ (The provisions allow the refusal of the registration of trademarks deemed contrary to public policy or to accepted principles of morality notwithstanding that the grounds of non-registrability obtain in only part of the Union.) The applicant argued that the Board of Appeal disregarded their duty of due diligence in reviewing the matter. The EUIPO disputed this claim.

II. Judgment

The CJEU held that the applicant’s argument must be examined in light of “the meaning of the sign for which registration has been sought and how it is understood by the public of the European Union” and how “Article 95(1) of Regulation 2017/1001 is a statement of the duty of diligence”.Footnote ⁹

In her first plea, the applicant argued that the Board of Appeal’s (BOA) understanding of the sign at the core of the dispute was vitiated by an error. She argued that the BOA disregarded the “fact that the psychotropic effects of THC are associated only with the percentage of that active substance in the flowers of Cannabis sativa and not with the content of the leaves of that plant which are represented in the sign applied for”.Footnote ¹⁰ However, the Court rejected this argument by recognising that the BOA “clearly disassociated cannabis that has psychotropic effects from cannabis that does not, based precisely on the THC content”.Footnote ¹¹ The applicant also argued that the BOA associated the word element “cannabis” with an “incorrect perception of the representation of the leaves reproduced in the sign which is the subject of the trade mark application as being the leaves of a plant which does not exist, namely marijuana, and, second, with the geographical indication ‘Amsterdam’”.Footnote ¹²

However, the Court rejected this claim and stated that the BOA was correct to state that the decisive criterion in their assessment about whether a sign was contrary to public policy is the “perception which the relevant public will have of the mark”.Footnote ¹³ It was not wrong for the BOA to suggest that alternatives to the word “cannabis” could have been used on the sign to indicate cannabis products not containing THC,Footnote ¹⁴ nor was it wrong to consider that “the word ‘Amsterdam’ would be understood by the relevant public as referring to the city in the Netherlands which tolerates the use of drugs and is known for its ‘coffee shops’”.Footnote ¹⁵ Overall, the CJEU rejected the first plea and held that the BOA did not infringe the combined provisions of Article 71(1) and Article 95(1) of Regulation 2017/1001.Footnote ¹⁶

With the second plea, the applicant argued that BOA was incorrect in defining the relevant public and identifying the public’s perception of the sign under review and submitted that the sign is not contrary to public policy. In that connection, the Court recalled that the assessment of whether a sign is contrary to public policy or to accepted principles of morality must be carried out with reference to the perception of that sign by the relevant public. The Court also referred to the diversity of the Member States and affirmed that “signs likely to be perceived as being contrary to public policy or to accepted principles of morality are not the same in all Member States, inter alia for linguistic, historic, social and cultural reasons”.Footnote ¹⁷

In determining the definition of the relevant public, the Court first focused on the language of the sign (English). The Court held that the BOA’s assessment was correct as “that sign contains at least two words which can be understood far beyond the English-speaking public”.Footnote ¹⁸ The Court further held that to determine the relevant public, it was necessary to account for the understanding of the words on the sign in “circumstances common to all Member States of the European Union and of the particular circumstances of individual Member States which are likely to influence the perception of the relevant public within those States”.Footnote ¹⁹ The Court rejected the claim by the applicant that the relevant public would be the intended demographic of the shop on the basis that “other persons who, without being concerned by those goods and services, will encounter that sign incidentally in their day-to-day lives”.Footnote ²⁰ The Court then turned to examine the applicant’s claim according to which the BOA did not take into account the development of cultural and social views on cannabis and its use for lawful purposes.Footnote ²¹ In that regard, the Court acknowledged that public opinion on cannabis consumption is not unanimous within the EU, and noted the illegal status of “products derived from cannabis with a THC content exceeding 0.2%” within many Member States.Footnote ²² Hence, the Court concluded that the BOA correctly took this into account,Footnote ²³ and it rejected the first claim of the second plea as unfounded.Footnote ²⁴

The Court then analysed whether the registration sought was contrary to public policy. The Court held that the BOA was correct in their full account of the meaning of the word “cannabis”.Footnote ²⁵ The Court held that the BOA was correct in establishing that the combined presence of the stylised representation of the cannabis leaf and the word “Amsterdam” would be “perceived as a whole by the relevant public as referring to a narcotic substance which is prohibited in a large number of Member States”.Footnote ²⁶ The Court affirmed that “Regulation 2017/1001 does not contain a definition of the concept of ‘public policy’”, and therefore “in view of EU law as it now stands … EU law does not impose a uniform scale of values and acknowledges that the requirements of public policy may vary from one country to another”.Footnote ²⁷ While the Court accepted the applicant’s claim that something is not contrary to public policy merely on the fact it is illegal,Footnote ²⁸ it did also note that a prohibition on cannabis consumption exists in many Member States to achieve fundamental public health objectives.Footnote ²⁹ As a result of this fundamental interest, the Court held that the BOA was correct in determining that the sign was contrary to public policy.Footnote ³⁰ Furthermore, the Court held that the existence of other trademarks for “cannabis” or “cocaine” cannot be relied upon to contest the finding of the BOA.Footnote ³¹ The Court ultimately rejected the second plea, and it held that “consequently, the action must be dismissed in its entirety”.Footnote ³²

III. Comment

The CJEU has taken active steps in the development of what is and (perhaps more importantly) what is not a trademarkable element. This is the crux of the case presented here, which focuses on the extent to which certain signs fall outside the scope of a trademarkable element on the grounds of public policy. This case illustrates that the concept of “public policy” or “accepted principles of morality” is inherently vague and evolves over time.Footnote ³³ The evolutionary character in particular was noted by Advocate General Bobek in Constantin Film Produktion v EUIPO, when he commented that public policy is a “normative vision of values and goals, defined by the relevant public authority, to be pursued now and in the future, that is, prospectively. Public policy thus expresses the public regulator’s wishes as to the norms to be respected in society”.Footnote ³⁴ In a similar vein, Kur and Senftleben state, “The ambit of the provision is malleable to some extent; it can change over time with the views and attitudes of the relevant public”,Footnote ³⁵ while Rosati notes the “interplay between trade mark protection and accepted principles of public policy and morality is not new, but interesting to note are the seemingly different approaches to acceptable levels of ‘contrariety to public policy’ or ‘immorality’ across different jurisdictions”.Footnote ³⁶

In this case, the Court was mindful of the “linguistic, historic, social and cultural” differences across the EU and of the unlawfulness of cannabis consumption in certain Member States.Footnote ³⁷ The Court accepted that the mere fact that the product that was to be sold is illegal in the majority of the Member States in itself does not place the sign in a position contrary to public policy. At the same time, the illegal nature of the product suggested by the sign cannot be ignored entirely, as the CJEU had previously rejected an application as it was contrary to public policy on the grounds that it may encourage unlawful behaviours.Footnote ³⁸

But such an approach then raises the following question: at what point do the “linguistic, historic, social and cultural” differences of the Member States result in a shift in public policy or accepted morality across the EU? Furthermore, at what point would a hypothetical shift allow the CJEU to act? Concerning the above situation, if over half of the Member States legislated and regulated cannabis, would the CJEU then find references to cannabis within the scope of public policy or accepted morality for trademarks? If over 60%, 70% or even 80% of the Member States permitted its use, would the CJEU consider the association to be within the scope of public policy or accepted morality? While it is possible to argue that if all of the Member States permit the use of cannabis, the CJEU would more likely consider the proposed trademark to be within the hypothetical “linguistic, historic, social and cultural” allowances of public policy, even this may not be guaranteed. At the same time, one must remember that this standard does not relate directly to advocating the use of “cannabis”.Footnote ³⁹ As such, one could also argue that such a position may not require full legalisation of use by the Member States, or even for all the Member States to decriminalise its use, for the public policy requirement to shift to allow the trademark in question to be granted.

This is not the first instance in which an applicant sought a trademark relating to cannabis, nor is it the first to be rejected on the grounds of public policy.Footnote ⁴⁰ A trademark application for Ave Maria beer with Mary surrounded by a cannabis leaf in place of a halo was rejected on the grounds of it being contrary to public policy, but unlike the present case, it had the additional element of an inappropriate connection to religious material.Footnote ⁴¹ This created a strong ground for it to be rejected as being contrary to public policy. By contrast, the present case focuses on the fact that the graphic sign and the wording allude to the consumption of cannabis as a narcotic, which is unlawful in most Member States on public health grounds.

The health aspect is relevant in dismissing the application, as Article 168(1) Treaty on the Functioning of the European Union (TFEU) empowers the EU to act to reduce drug-related health damages. Article 168(1) TFEU further obligates the EU to ensure a high level of health protection in all of its activities and policies. Moreover, under Article 83 TFEU, the EU is further empowered to prevent illicit drug trafficking under the broad heading of action on cross-border criminal activity. Thus, the treaties arguably support decisions of the EU trademark office to deny an application on the grounds that the trademark applied for could contribute in some way to encouraging drug consumption, especially if the Member States have decided to ban certain drugs for health protection reasons. As discussed above, the combination of the elements of the sign could be taken to indicate the illegal (in most Member States) narcotic marijuana, and therefore, in the context of a shop selling food and drink, it would not be unreasonable for consumers to infer from the sign that marijuana is present within the food and drink sold.

However, should the appropriate justification for rejection be public health or public policy? If the perception of the presence of illegal drugs alone is sufficient to justify rejecting a trademark on health protection grounds, then perhaps the public policy ground is inappropriate? Since trademarks have previously been granted in connection with more harmful drugs,Footnote ⁴² this case raises the question of the precise relevance of the legal status of narcotics across the Member States when determining the appropriate justification for rejecting a drug-related trademark. Is the centre of gravity of the objection to drug-related trademark applications really the unhealthy and harmful nature of the product or the degree of social disapproval attached to the illegal nature of the product? Depending on which is the operative consideration in cases like the one analysed in this contribution, the Court should perhaps analyse more carefully how the “public policy” rationale is relied upon by EUIPO in future in the context of drug-related trademark applications.

Overall, the CJEU has greatly enhanced trademark protection within the EU, but in doing so has set limitations on the scope and the grounds of what may be sought as a trademark. Within these limitations, the rejection of an application being contrary to public policy or accepted principles of morality is an established ground. But this is still malleable ground, and one that is prone to rapid shifts, alterations and revisions. The Courts have shown an awareness of the evolution of European society. At the same time, the Courts must not be too proactive in this regard, as it is not their function to police or shape the “linguistic, historic, social and cultural” differences of the EU nor its Member States. This is a delicate balancing act, but as shown in this case and many others, it is one the CJEU is succeeding at achieving.