SSRN Id3484366

Forthcoming in Journal of Intellectual Property Law & Practice
The absolute ground for refusal or invalidity in Article 7(1)(e)(iii)

EUTMR/4(1)(e)(iii) EUTMD: in search of the exclusion’s own
substantial value
by Eleonora Rosati*
Abstract
Among the absolute grounds for refusal or invalidity in EU trade mark law, there is one for signs that consist
exclusively of “the shape, or another characteristic, which gives substantial value to the goods”. The ‘substantial
value’ exclusion has received relatively limited attention and practical application. Some commentators have called
for its abolition on consideration that other, clearer absolute grounds may perform its role without giving rise to
those issues linked to its uncertain meaning and scope. This contribution reviews relevant EU case law on the
substantial value ground, in order to define rationales, scope, and functions thereof. It submits that the substantial
value ground performs a role – primarily that of preventing or limiting a distortion of the role of trade mark
registration – which cannot be subsumed in other grounds. However, clearer guidance on certain fundamental
aspects, including the role of the average consumer, reputation, and the relevance of the behaviour of the trade
mark applicant/owner, is still required.
***
Abstract .......................................................................................................................................................................................................... 1
Setting the scene: aim, approach, and methodology ............................................................................................................................... 2
1. The exclusion for substantial value conferring shapes ................................................................................................................ 4
I. Origin of the exclusion ................................................................................................................................................................ 4
II. Justifications for the exclusion ................................................................................................................................................... 5
2. Interpretation and application of the ground................................................................................................................................ 9
I. Notion of ‘substantial value’.....................................................................................................................................................11
II. Type of assessment ....................................................................................................................................................................15
3. ‘Another characteristic’: an actual change? ..................................................................................................................................17
I. A mere clarification ....................................................................................................................................................................18
II. Scope and assessment ................................................................................................................................................................22
4. Can other absolute grounds do the job (better)? ........................................................................................................................23
I. Distinctiveness, descriptiveness, and bad faith......................................................................................................................24
II. Public policy and morality ........................................................................................................................................................27
5. Revamping the role of the substantial value ground ..................................................................................................................29
Conclusion ...................................................................................................................................................................................................32
* Associate Professor in Intellectual Property Law at Stockholm University and Of Counsel at Bird & Bird. Email: eleonora@e-
lawnora.com. The Author wishes to thank Nedim Malovic for his research assistance and the anonymous reviewer for their
feedback on an earlier version. Any errors and omissions are of course solely attributable to the Author.
Electronic copy available at: https://ssrn.com/abstract=3484366

Setting the scene: aim, approach, and methodology
Among the absolute grounds for refusal or invalidity of trade marks, Articles 7(1)(e)(iii) of the EU Trade Mark
Regulation1 (‘EUTMR’, in relation to EU-wide applications or registrations) and 4(1)(e)(iii) of the EU Trade Mark
Directive2 (‘EUTMD’, with regard to national applications or registrations) provide that signs which consist
exclusively of “the shape, or another characteristic, which gives substantial value to the goods” shall not be
registered or, if registered, shall be liable to be declared invalid.
Originally derived from Benelux trade mark law, this exclusion has received relatively infrequent consideration by
the Court of Justice of the European Union (‘CJEU’), the General Court (‘GC’), and the EUIPO and national
trade mark offices alike. This is also probably due to the very fact that, as Advocate General (‘AG’) Szpunar “put
it bluntly”3 in his Opinion in Hauck, “the third indent of Article 3(1)(e) of [Directive 2008/954] is not worded
clearly. That is demonstrated by the large variance in the interpretation of it.”5 In sum (as a recent decision of the
UK Intellectual Property Office noted): “[t]his is a difficult and developing area of law”.6
Both the underlying rationale and relationship to the other grounds in Article 7(1)(e) EUTMR/4(1)(e) EUTMD
have been deemed surrounded by ‘considerable uncertainty’7 and, thus, found ‘unclear’.8 Because of all this, in its
Study on the Overall Functioning of the European Trade Mark System, the Max Planck Institute for Intellectual Property
and Competition Law recommended (pre-2015 reform) the deletion tout court of the substantial value ground,
holding that its objectives could be in any case realized by relying on other absolute grounds, including those
1 Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade
mark, OJ L 154, 16.6.2017, 1–99.

2 Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws
of the Member States relating to trade marks, OJ L 336, 23.12.2015, 1–26.

3 The London Taxi Corporation Ltd (t/a the London Taxi Company) v Frazer-Nash Research Ltd & Anor [2017] EWCA Civ 1729 (01
November 2017), at [70].

4 Article 3(1)(e)(iii) of Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to
approximate the laws of the Member States relating to trade marks (Codified version), OJ L 299, 8.11.2008, 25–33 (‘Directive
2008/95’) was the substantial value ground in the legislative instrument that preceded the current EUTMD.
5Opinion of Advocate General Szpunar in Hauck GmbH & Co. KG v Stokke A/S and Others, C-205/13, EU:C:2014:322 (‘Hauck
AG’), at [69]. In the same sense, also U Suthersanen, ‘Breaking down the intellectual property barriers’ (1998) 1998/3 IPQ
267, 291, and A Firth, ‘Shapes as trade marks: public policy, functional considerations and consumer perception’ (2001) 23(2)
EIPR 86, 93.
6 UK Intellectual Property Office, Trade mark applications 3164282/83, 3186701, 3158947/8 and 3248751 by Jaguar Land Rover
Limited to register 6 three-dimensional shape marks and oppositions 409980-984 and 413358 by Ineos Industries Holdings Limited,
O/589/19, at [153].
7 A Folliard-Monguiral and D Rogers, ‘The protection of shapes by the Community trade mark’ (2003) 25(4) EIPR 169, 173
and 179.
8 Max Planck Institute for Intellectual Property and Competition Law, Study on the Overall Functioning of the European Trade Mark
System (2011), §2.32.

relating to distinctiveness (currently Article 7(1)(b) EUTMR/4(1)(b) EUTMD) and descriptiveness (now Article
7(1)(c) EUTMR/4(1)(b) EUTMD).9
In 2015, the EU legislature amended the EU trade mark system and adopted both a new Regulation10 and a new
Directive. Among other things, not only was the substantial value ground not removed, but its scope was seemingly
broadened by adding ‘another characteristic’ to the language of the provision. Pre-reform, in fact, the exclusion
only related to signs consisting exclusively of a ‘shape’. The reason supporting a change in the language of the
ground and the addition of ‘another characteristic’ was not much elucidated during the legislative process that
eventually culminated in the adoption of the current EUTMR and EUTMD.11
By reviewing relevant decisions of the CJEU, GC and EUIPO Boards of Appeal, this contribution seeks to: first,
extract the rationales of the substantial value ground; second, understand how the ground has been interpreted
and applied over time; third, determine whether the addition of ‘another characteristic’ has altered the scope of
the exclusion; and, ultimately, answer the question of what role Article 7(1)(e)(iii) EUTMR/4(1)(e)(iii) EUTMD
performs in the EU IP system.
The analysis is structured as follows. The first part discusses the origin and rationales of the substantial value
ground. The second part reviews relevant case law in order to determine the assessment required under Article
7(1)(e) EUTMR/4(1)(e) EUTMD. The third part considers that the addition of ‘another characteristic’ in the
language of the law merely clarifies the scope of the absolute ground, without altering it. The fourth part reflects
on whether other absolute grounds, notably distinctiveness, descriptiveness, bad faith and public policy and
morality, could absolve the same tasks underpinning the substantial value ground. The final part considers how
the role and functioning of the substantial value ground could be revamped. This contribution concludes that,
whilst other absolute grounds might serve to achieve results similar to those underpinning the substantial value
9 Ibid, §2.34. In this sense, see also A Kur, ‘Harmonization of the trademark laws in Europe: an overview’ (1997) 28(1) IIC 1,
17 (fn 112), calling the inclusion of the substantial value ground in the EC trade mark system a ‘mistake’; DT Keeling, ‘About
Kinetic watches, easy banking and nappies that keep a baby dry: a review of recent European case law on absolute grounds
for refusal to register trade marks’ (2003) 2003/2 IPQ 131, 137; and S Voegl ‘Two Eames chairs, two contrary "decisions"’
(2017) 48(4) IIC 452, 452.
10Regulation (EU) 2015/2424 of the European Parliament and of the Council of 16 December 2015 amending Council
Regulation (EC) No 207/2009 on the Community trade mark and Commission Regulation (EC) No 2868/95 implementing
Council Regulation (EC) No 40/94 on the Community trade mark, and repealing Commission Regulation (EC) No 2869/95
on the fees payable to the Office for Harmonization in the Internal Market (Trade Marks and Designs), OJ L 341, 24.12.2015,
21–94 (implicitly repealed by EUTMR).
11 Inter alia, the International Trademark Association (INTA) opposed the extension of the absolute grounds in Articles 7(1)(e)
of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark, OJ L 11, 14.1.1994, 1–36
(‘Regulation No 40/94’) and 3(1)(e) of Directive 2008/95 so as to also encompass ‘another characteristic’, arguing that the
amended wording would be vague and likely to capture non-traditional trade marks: see JS Evans, ‘As the EU Trademark
Review enters its final stages, legislators misdirect focus from unresolved substantive issues to OHIM surplus and funding of
non-trademark matters’ (18 March 2015) INTA Blog, available at
<https://www.inta.org/INTABlog/Lists/Posts/Post.aspx?List=9a1fdb80%2D62da%2D4720%2Da112%2Dfc18b702a6a1
&ID=145&Web=0fb56cf4%2D9edf%2D418b%2D99ee%2D26f7c848995c#.XWTIUJMzaqA>.

exclusion in certain cases, this absolute ground performs an important role, both on a theoretical and practical
level.
1. The exclusion for substantial value conferring shapes
Even if some commentators have considered the option to protect shapes as marks designating the goods which
they incorporate not easily reconcilable with the basic tenets of trade mark law12, since the early days of a
harmonized EC trade mark system13, the law has expressly provided for the possibility for trade marks to consist
of “the shape of goods or of the packaging of goods” (now Article 4 EUTMR/3 EUTMD). In parallel with this,
ad hoc limitations to the protection of shapes, specifically by means of the absolute grounds currently found in
Article 7(1)(e) EUTMR/4(1)(e) EUTMD, have been envisaged. The law prohibits registration of signs which
consist exclusively of: the shape, or another characteristic, which results from the nature of the goods themselves
(Article 7(1)(e)(i) EUTMR/4(1)(e)(i) EUTMD); the shape, or another characteristic, of goods which is necessary
to obtain a technical result (Article 7(1)(e)(ii) EUTMR/4(1)(e)(ii) EUTMD); the shape, or another characteristic,
which gives substantial value to the goods (Article 7(1)(e)(iii) EUTMR/4(1)(e)(iii) EUTMD).
I. Origin of the exclusion
The substantial value ground finds its origin in the former Benelux Trade Mark Act. The presence of this exclusion
was justified by the need of imposing “a certain limitation to the possibility that trademark protection coincides
with the protection which can be derived from copyrights or design rights”, where the attractiveness of a certain
shape confers a substantial value to the goods in respect of which it has been employed. This means that an
“attractive shape, which does not have a real influence of the intrinsic value of the product” would not fall within
the scope of the exclusion, irrespective of whether also other IP rights (‘IPRs’) cumulatively subsist in such shape.14
However, where “the essential value of the goods does not only lie in the material used, but also, and maybe
especially, in the beauty of the shape”, then trade mark protection would be unavailable.15
The first EC trade mark instruments (Directive 89/104 and Regulation No 40/94) contained no explicit reference
to a ‘need to keep free’ certain signs from trade mark protection, so that the rationale of the exclusion for shapes
12 A Kur and M Senflteben, European Trade Mark Law (OUP:2017), §§4.143 and 4.152-4.154.
13 See Articles 2 of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States
relating to trade marks, OJ L 040, 11.02.1989, 1–7 (‘Directive 89/104’) and 4 of Regulation No 40/94.
14 On this approach, see (critically) Suthersanen, ‘Breaking down’, cit, 291-293.
15 Explanatory Memorandum to Uniform Benelux Law (translation from Cohen Jehoram’s article in Allied and in Friendship:
liber amicorum for Teartse Schaper (2002)), as found in C Gielen, ‘Substantial value rule: how it came into being and why it should
be abolished’ (2014) 36(3) EIPR 164, 165. See also L Anemaet, ‘The public domain is under pressure - why we should not
rely on empirical data when assessing trade mark distinctiveness’ (2016) 47(3) IIC 303, 324.

was not readily apparent.16 With specific regard to three-dimensional signs, in his Opinion in SAT.1
SatellitenFernsehen, AG Jacobs suggested that the public interest rationale in keeping certain shapes free would only
apply to “shapes which are in some way closely bound up with its nature”.17 However, the CJEU (at that time, still
known as the European Court of Justice) extended the public interest rationale to technical shapes in its decisions
in Philips and Linde.18
In all this, the justification for the substantial value exclusion has remained uncertain for a long time. Questions
regarding its rationale are even more puzzling if one considers the ‘absolute’ character of this absolute ground:
indeed, unlike other grounds, if a shape (or another characteristic) falls within the scope of application of Article
7(1)(e)(iii) EUTMR/4(1)(e)(iii) EUTMD, the acquired distinctiveness of the shape at issue will not be able to ‘save’
the application or the validity of the registration. Article 7(3) EUTMR/4(4) EUTMD, in fact, does not list the
ground sub (1)(e) among those that might be overcome though acquired distinctiveness.
Uncertainties have not really dissolved over time: the 2015 addition of ‘another characteristic’ to the language of
the shape-specific grounds occurred without much guidance on the side of EU legislature as to whether this would
alter the scope thereof. Although some commentators argued (pre-reform) that, unlike what is for the other
absolute grounds for shapes, the substantial value exclusion only applied to three-dimensional signs19, it appears
preferable to hold that, in light of existing case law and EUIPO decisions, the scope of the exclusion has not been
altered, in that it also applied to two-dimensional shapes and other characteristics even pre-reform.20
II. Justifications for the exclusion
The rationale of the absolute ground concerning signs consisting exclusively of a shape or another characteristic
which gives a substantial value to the goods is twofold: first, to prevent trade mark law and the virtually perpetual
protection that registration might afford from becoming an (undue) extension of time-limited rights, notably
copyright and designs; second, to avoid that someone acquires a monopoly right when limited options are available
or when the aspect of the shape at issue is indissociable from the goods in question. Relevant decisions refer to
both explanations, though the latter is often presented as a consequence of the former and appears somewhat
weaker for aesthetic functionality than what is the case for the other grounds in Article 7(1)(e) EUTMR/4(1)(e)
16 J Phillips ‘Trade mark law and the need to keep free’ (2005) 36(4) IIC 389, 390.
17 Opinion of Advocate General Jacobs in SAT.1 SatellitenFernsehen GmbH v European Union Intellectual Property Office, C-329/02
P, EU:C:2004:143, at [23]. Note that this case related specifically to the issue of distinctiveness in Article 7(1)(b) of Regulation
No 40/94.
18Koninklijke Philips Electronics NV v Remington Consumer Products Ltd., C-299/99, EU:C:2002:377 (‘Philips’), at [78]-[80]; Linde
AG (C-53/01), Winward Industries Inc. (C-54/01) and Rado Uhren AG (C-55/01), EU:C:2003:206 (‘Linde’), at [72] (though this
part of the judgment related specifically to the interpretation of Article 3(1)(c) of Directive 89/104).
19 Keeling, ‘About Kinetic watches’, cit, 137.
20 See further below, sub §3.I.

EUTMD. Rulings have also stressed the need to interpret the absolute grounds for refusal or invalidity in light of
the public interest underlying each of them.21
In what remains as of today the most analytical assessment of and guidance on the substantial value ground –
Hauck –, the CJEU confirmed that the aim of the exclusion is “to prevent the exclusive and permanent right which
a trade mark confers from serving to extend indefinitely the life of other rights which the EU legislature has sought
to make subject to limited periods”.22 In his Opinion in that case, AG Szpunar linked this explanation to both a
deeper public interest rationale and the need to respect and balance different rights and interests, the latter being
something that often recurs in CJEU IP case law and, with specific regard to trade marks, is now also expressly,
though rather cryptically, acknowledged in the EU trade mark instruments23:
That difference in purposes explains why the protection conferred by marks is indefinite but the
protection conferred by other intellectual property rights is subject to a time-limit imposed by the
legislature. That limit results from the balance which is struck between the public interest in protecting
innovation and creativity, on the one hand, and the economic interest based on the possibility of exploiting
the intellectual achievements of other persons to promote future socio-economic development, on the
other.
Exercise of a trade mark right in order to extend an exclusive right to immaterial assets protected by other
intellectual property rights could — after those rights have expired — jeopardise the balance of interests
which the legislature established inter alia by limiting the scope of protection conferred by those other
rights.24
That the rationale of the substantial value ground is to avoid an undue extension in the protection afforded under
other IPRs is not surprising considering its historical origin. However, over time, some doubts have also arisen
because of the very language employed in case law. So, for instance, in Philips the CJEU appeared to limit this
21 Société de Produits Nestlé SA v Cadbury UK Ltd, C-215/14, EU:C:2015:604 (‘Nestlé’), at [43], referring to Windsurfing Chiemsee
Produktions- und Vertriebs GmbH (WSC) v Boots- und Segelzubehör Walter Huber and Franz Attenberger, C-108/97 and C-109/97,
EU:C:1999:230, at [25]-[27], and Philips, at [77]. See also Hauck GmbH & Co. KG v Stokke A/S and Others, C-205/13,
EU:C:2014:2233 (‘Hauck’), at [17]; Simba Toys GmbH & Co. KG v European Union Intellectual Property Office, C-30/15 P,
EU:C:2016:849 (‘Simba Toys’), at [38], referring to Henkel KGaA v Office for Harmonisation in the Internal Market (Trade Marks and
Designs) (OHIM), C-456/01 P and C-457/01 P, EU:C:2004:258 (‘Henkel’), at [45], and Lego Juris A/S v Office for Harmonisation
in the Internal Market (Trade Marks and Designs) (OHIM), C-48/09 P, EU:C:2010:516 (‘Lego Juris’).
22 Hauck, at [19], referring to Lego Juris, at [45]. In the same sense, see also Opinion of Advocate General Wathelet in Société de
Produits Nestlé SA v Cadbury UK Ltd, C-215/14, EU:C:2015:395 (‘Nestlé AG’), at [61], and Nestlé, at [45].
23See, eg, Recitals 27 in the preamble to the EUTMR and 21 in the preamble to the EUTMD with regard to trade marks and
third-party freedom of expression. On trade marks and freedom of expression, see also, recently, Opinion of Advocate
General Bobek in Constantin Film Produktion GmbH v European Union Intellectual Property Office (EUIPO), C-240/18 P,
EU:C:2019:553 (‘Constantin Film AG’), at [56].
24 Hauck AG, at [36]-[37]. In the same sense, see also Opinion of Advocate General Szpunar in Simba Toys GmbH & Co. KG
v European Union Intellectual Property Office, C-30/15 P, EU:C:2016:350 (‘Simba Toys AG’), at [35].

rationale to the second indent of Article 3(1)(e) of the Directive 89/10425, although in his Opinion in that case,
AG Ruiz-Jarabo Colomer had not made any particular distinction between the various shape-related grounds.26
Indeed, in his Opinion in Linde, still Ruiz-Jarabo Colomer confirmed that also the other grounds in that provision
are animated by the same rationale:
[T]he purpose of excluding from trade mark protection three-dimensional signs which are exclusively
dictated by the nature of the product, by the need for a technical result or by the need to give substantial
value, reflects the paramount concern not to permit individuals to use trade marks to perpetuate exclusive
rights over natural forms, technical developments or aesthetic designs. 27
Even if historically the simultaneous protection of the same object under different IP rights was disallowed in
certain jurisdictions on consideration of the demarcation between the subject matter protected by patent, copyright
and trade mark law28, shapes (or other characteristics) are currently not precluded from being simultaneously
protected by different IPRs29 and no impediments subsist for a shape previously protected by a now expired IPR
to be registered as a trade mark.30 It is worth noting that overlaps in IPR protection are also the result of the
progressive expansion of the scope of the various rights beyond their original remit and are not necessarily
problematic per se, considering the multifaceted nature of many objects or invention or creation31, the different
rationale underlying the various rights, as well as the different protection available under each of them. So, for
25 Philips, at [82].
26 Opinion of Advocate General Ruiz-Jarabo Colomer in Koninklijke Philips Electronics NV v Remington Consumer Products Ltd.,
C-299/99, EU:C:2001:52, at [37]-[38].

27 Opinion of Advocate General Ruiz-Jarabo Colomer in Linde AG (C-53/01), Winward Industries Inc. (C-54/01) and Rado Uhren
AG (C-55/01), EU:C:2003:206 (‘Linde AG’), at [29] (emphasis in the original). The AG reiterated this view the following year,
in Opinion of Advocate General Ruiz-Jarabo Colomer in Shield Mark BV v Joost Kist h.o.d.n. Memex., C-283/01, EU:C:2003:197
(‘Shield Mark AG’, at [52]: “I find it more difficult to accept […] that a creation of the mind, which forms part of the universal
cultural heritage, should be appropriated indefinitely by a person to be used on the market in order to distinguish the goods
he produces or the services he provides with an exclusivity which not even its author's estate enjoys.”
28See the discussion in A Beckerman-Rodau, ‘The problem with intellectual property rights: subject matter expansion’ (2011)
13 Yale JL & Tech 35, 73-74, considering critically the possibility of overlaps under US IP law.
29 OHIM, Second Board of Appeal, Case R 486/2010-2, 14 December 2010, at [15]. It should be noted in the background
national proceedings in Textilis Ltd and Ozgur Keskin v Svenskt Tenn Aktiebolag, C-21/18, EU:C:2019:199 (‘Textilis’), defendants
Textilis and Keskin had argued before the Svea hovrätt, Patent- och marknadsöverdomstolen (Svea Court of Appeal, Patents
and Market Court of Appeal, Stockholm) that a sign consisting of the pattern on a fabric could not be registered as a trade
mark without subverting the principle of the limitation in time of copyright protection (Textilis, at [19]). In its judgment, the
CJEU did not touch upon this issue, but no restriction subsists in this respect. IPR cumulation is expressly acknowledged at,
eg, Recitals 31 and 32 of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs, OJ L 3, 5.1.2002,
1–24; Articles 17 and 18 of Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the
legal protection of designs, OJ L 289, 28.10.1998, 28–35. With regard to EU design legislation, see also A Kur, ‘The
presentation right - time to create a new limitation in copyright law?’ (2000) 31(3) IIC 308, 312: “to place in doubt the principle
that cumulation is permitted in general between different types of intellectual property rights would run counter to the legal
situation in practically all EU countries, as well as to the trend towards unrestricted cumulation, which is unequivocally
demonstrated in recent secondary Community law”.
30 OHIM, Second Board of Appeal, Case R 486/2010-2, 14 December 2010, at [16].
31 LA Heymann, ‘Overlapping intellectual property doctrines: election of rights versus selection of remedies’ (2013) 17 STLR
239, 242-243.

instance, the doing of a certain act might constitute infringement under more than one IPR and the availability of
a defence under one of those rights (eg, trade mark exhaustion) would not prevent a finding of liability under the
other rights (eg, copyright).32 All this said, however, under EU trade mark law pre-existing IP protection might
weigh against the possibility of trade mark registration (see further at §2.II) or call for scrutiny under other absolute
grounds (see further at §4.II.).
Overall, nothing in Article 7(1)(e)(iii) EUTMR/4(1)(e)(iii) EUTMD suggests that the rationale of the ground for
refusal to register covered by that provision is different from the rationale that the case law ascribes to the grounds
for refusal covered by the other indents in that provision.33 This said, the anti-monopoly justification is somewhat
weaker for substantial value conferring shapes than what is for shapes exclusively determined by the nature of the
good or by their technical and functional features.34 Yet, in Philips the CJEU did not distinguish between the various
indents of Article 3(1)(e) of Directive 89/104 when it stated that that provision is aimed at avoiding an undue
restriction of competition.35 Subsequent case law has confirmed the relevance of this rationale also with specific
regard to the substantial value exclusion36 and the EFTA Court in the Vigeland case expressly referred to the
reasoning in Philips.37 All this said, in his First Opinion in Louboutin, AG Szpunar considered that the purpose of
the substantial value exclusion is to exclude the distortion of competition on the market concerned as resulting
from the reservation thereof to a single undertaking38:
[T]he provision in question is designed to prevent the monopolisation of external features of goods which
are essential to their market success, and thus to prevent the protection conferred by the mark being used
to gain an unfair advantage; that is, an advantage which does not result from competition based on price
and quality.39
32 Parfums Christian Dior SA and Parfums Christian Dior BV v Evora BV, C-337/95, EU:C:1997:517, at [58]. See the discussion in
Kur, ‘The presentation right’, cit, 313-314, considering whether a solution in the form of a ‘comparison of limitations’ between
trade mark law and copyright law might be feasible. Cf Art & Allposters International BV v Stichting Pictoright, C-419/15,
EU:C:2015:27, in which the CJEU held that exhaustion of copyright’s right of distribution does not apply in a situation where
a reproduction of a protected work, after having been marketed in the EU with the copyright holder’s consent, has undergone
an alteration of its medium.
33 Bang & Olufsen A/S v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), T-508/08, EU:T:2011:575
(‘Bang & Olufsen’), at [64] and [66], as also referred to in OHIM, First Board of Appeal, Case R 1313/2012-1, 23 May 2013,
at [14]. See also OHIM, Fifth Board of Appeal, Case R 3021/2014–5, 29 January 2016, at [31].
34 Max Planck, Study, cit, §2.32. See also Gielen, ‘Substantial value rule’, cit, 167.
35 Philips, at [78]. See also: Linde AG, at [21]; Nestlé AG, at [60] and Nestlé, at [44], referring to this rationale in connection with
Article 3(1)(e) of Directive 2008/95.

36 See Bang & Olufsen at [66]; OHIM, First Board of Appeal, Case R 1313/2012-1, 23 May 2013, at [14],
37 EFTA Court, Municipality of Oslo, Case E-5/16 (‘Vigeland’), at [80].
38 Opinion of Advocate General Szpunar in Christian Louboutin and Christian Louboutin Sas v van Haren Schoenen BV,
EU:C:2017:495 (‘Louboutin AG1’), at [69].

39 Ibid, at [71].

In this sense, the basic rationale of Article 7(1)(e) EUTMR/4(1)(e) EUTMD is to prevent trade mark law from
being exercised for a purpose (the monopolization of the basic characteristics of a product) which is incompatible
with it.40 All this appears justified more by a broader public policy stance, rather than issues inherent to individual
IPRs per se, that is to say by external – rather than internal – limitations to IP protection. Consideration of a
fundamental rights perspective confers further strength to the argument that trade mark protection should be
limited in these instances. Since the 2007 Treaty of Lisbon41, the Charter of Fundamental Rights of the European
Union (the ‘Charter’) had the status of primary source of EU law, and references to its provisions – notably IP
protection within the right to property (Article 17(2) of the Charter), freedom of expression/information (Article
11), and freedom to conduct a business (Article 16) – have appeared in relevant EU case law (especially at the
CJEU level) with increasing frequency.42 This has been so also in trade mark law. Recently, in his Opinion in the
Fack Ju Goethe case, AG Bobek noted that the scope of application of the Charter and the fundamental rights
guaranteed therein extends to any activity or omission of EU institutions and bodies, including the EUIPO. As a
result, also in the trade mark field different rights and interests must be appropriately balanced by competent
authorities.43
2. Interpretation and application of the ground
A sign that consists exclusively of a shape or another characteristic that gives substantial value is excluded from
registration. Article 7(1)(e) EUTMR/4(1)(e) EUTMD also excludes from registration signs that consist exclusively
of a shape or another characteristic that (i) results from the nature of the goods themselves or (ii) and is necessary
to obtain a technical result. As said, the rationale of these three grounds is similar, in the sense that they prevent
an undue extension of the life of other IPRs that legislature has made subject to limited duration.44 The three
grounds in Article 7(1)(e) EUTMR/4(1)(e) EUTMD may apply cumulatively to the same shape and each of them
must be applied independently of the others.45 The provision does define neither the concept of ‘shape’ nor that
of ‘another characteristic’ (on the latter, see further below at §3), but the former is not confined to three-
40 Simba Toys AG, at [4] referring to Hauck AG, at [25]-[40].

41 Article 6(1) of the Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European
Community, signed at Lisbon, 13 December 2007, OJ C 306, 17.12.2007, 1–271.

42 In copyright, see the recent decisions in Funke Medien NRW GmbH v Bundesrepublik Deutschland, C-469/17, EU:C:2019:623;
Spiegel Online GmbH v Volker Beck, C-516/17, EU:C:2019:625; and Pelham GmbH and Others v Ralf Hütter and Florian Schneider-
Esleben, C-476/17, EU:C:2019:624.
43 Constantin Film AG, at [48] and [56].
44 See, recently, Nestlé, at [45], referring to Hauck, at [19], and Lego Juris, at [45].
45Nestlé, at [46], referring to Hauck, at [39]. in the same sense, see also Nestlé AG, at [63]-[69], noting (at [65]) the CJEU holding
in Hauck, ie that the grounds for refusal of registration set out in the first and third indents of Article 3(1)(e) Directive 2008/95
could not be applied in combination should not be intended as meaning that the grounds for refusal laid down in that provision
may not be applied cumulatively to the same shape.

dimensional shapes: it also applies to other categories of marks, such as figurative signs representing shapes.46
Whether a sign consists ‘exclusively’ of a ‘forbidden’ shape or another characteristic depends on what the essential
characteristics, ie the most important elements, of the sign at issue are. The assessment, conducted on a case-by-
case basis, serves to discriminate between signs which, despite the presence of one or more minor arbitrary
elements, will fall within the scope of application of the ground and signs which will not, due to the fact that they
incorporate additional, distinctive matter.47
As mentioned, there is relatively scarce case law on the substantial value ground, which includes surprisingly
unambitious or even altogether contradictory rulings. There are judgments – like those of the CJEU in Louboutin
and Textilis – that are characterized by a cautious approach and shed little light on how the ground is to be
interpreted (also post-reform). Then there are decisions which show a contradictory approach in relation to nearly
identical subject matter48, even in a context in which the assessment of whether a certain shape or characteristic
confers a substantial value is not monolithic and may change over time.49
The sign at issue in R 486/2010-2 The sign at issue in R 664/2011-5
In relation to the scrutiny required under Article 7(1)(e)(iii) EUTMR/4(1)(e)(iii) EUTMD, various questions have
arisen before both EU courts and the EUIPO, such as: is this to be conducted with regard to the sign’s
representation alone? does it entail a simple visual analysis or a detailed examination? what is the role of the average
consumer? what evidence is to be considered? is the trade mark owner’s reputation relevant? Although the required
46 Pi-Design AG and Others and OHIM v Yoshida Metal Industry Co. Ltd, C-337/12 to C-340/12, EU:C:2014:129 (‘Yoshida’), at
[55]. See also European Intellectual Property Office, Guidelines for Examination of European Union trade marks (2017), available at
<https://euipo01app.sdlproducts.com/1004922/903850/trade-mark-guidelines/introduction>, Part B, §4.6.
47 See European Intellectual Property Office, Guidelines, cit, Part B, §4.6, as well as the clear explanation in P Torremans,
Intellectual Property Law, 8th edn (OUP:2016), 450-451.
48 See, eg, OHIM, Second Board of Appeal, Case R 486/2010-2, 14 December 2010 and OHIM, Fifth Board of Appeal, Case
R 664/2011-5, 18 March 2015. For a critical commentary, see Voegl, ‘Two Eames chairs’, cit.
49 See further below, sub §2.I.
10

scrutiny is in principle one in which only the shape or characteristic is taken into account, to determine whether a
shape or another characteristic actually adds ‘substantial value’, an evaluation in abstracto appears difficult, if possible
at all, to undertake. Thus, the consideration of different factors is required.
I. Notion of ‘substantial value’
“A shape gives substantial value to a product if it has the potential to determine to a large extent the consumer’s
behaviour to buy the product.”50 In Hauck, a referral made in the context of an application for the annulment of
the Benelux trade mark registration of a sign corresponding to the Tripp Trapp children represented below, the
CJEU rejected a narrow reading of the concept of ‘substantial value’. It ruled out that this notion could only be
referred to the shape of products having solely artistic or ornamental value: holding otherwise would entail a risk
that products which have essential functional characteristics as well as a significant aesthetic element would fall
outside the scope of application of the ground, with the result that its underlying anti-monopoly rationale would
be circumvented.51
The sign at issue in Hauck Tripp Trapp children chair

(source: <stoke.com>)
In order to determine whether the relevant public buys because the shape is the only or one of the essential selling
features of the product at issue, it is necessary to consider the aesthetic, economic and commercial value of such
shape. For a shape to possess substantial value, such value must come directly from the shape for which protection
is sought. In this sense, the notion of value entails the likelihood that a certain product will be purchased (and
chosen over other products of the same kind) primarily because of its particular shape. However, in an appeal
concerning registration of the three-dimensional sign pictured below, the OHIM Third Board of Appeal noted
50 OHIM, Fifth Board of Appeal, Case R 942/2012-5, 16 January 2013, at [11]. In the same sense, speaking specifically of
‘eye-appeal’ of a shape, see OHIM, Second Board of Appeal, Case R 486/2010-2, 14 December 2010, at [16].
51 Hauck, at [32].
11

that: “the fact that the shape may be pleasing or attractive is not sufficient to exclude it from registration. If that
were the case, it would be virtually impossible to imagine any trade mark of shape, given that in modern business
there is no product of industrial utility that has not been the subject of study, research and industrial design before
its eventual launch on the market.”52
The sign at issue in R 395/1999-3
In all this, however, the presumed perception of the sign by the average consumer is not decisive, also because it
is generally the case that an examination on absolute grounds takes place by ex ante prognosis and is based on an
objective analysis.53 With the exclusion of the assessment of distinctiveness, where the perception of the target
public must be taken into account to determine whether the sign at issue is capable of functioning as a trade mark,
the other grounds do not appear to impose any obligation on relevant authorities to consider the average
consumer’s perception in the relevant assessment.54 Nonetheless, such perception might be and has been
considered a relevant criterion for the competent authority when identifying the essential characteristics of the sign
at issue55, eg when the design is an element which will be very important in the consumer’s choice even if the
consumer also takes other characteristics of the goods at issue into account.56 It follows that the average consumer’s
perception serves to appreciate whether the aesthetic value of a shape or another characteristic is per se decisive for
determining the commercial value of the product and the consumer’s choice.57
In his Additional Opinion in Louboutin, AG Szpunar considered that account should be taken of both the
perception of the sign at issue by the relevant public and the economic effects which would result from reserving
that sign to a single undertaking.58 He also noted that the outcome of said assessment might change over time.
Since the substantial value ground is aimed at allowing “a characteristic to remain available for all market
participants over the period during which that characteristic has a particular effect on the value of the goods”,
52 OHIM, Third Board of Appeal, Case R 395/1999-3, 3 May 2000, at [33].

53 Lego Juris, at [60] and [76]; Bang & Olufsen, at [72]; Louboutin AG1, at [69]; Opinion of Advocate General Szpunar in Christian
Louboutin and Christian Louboutin Sas v van Haren Schoenen BV, EU:C:2018:64 (‘Louboutin AG2’), at [52].
54 Hauck, at [33], referring to Lego Juris, at [75].
55 Hauck, at [34]. In the same sense, see OHIM, Fifth Board of Appeal, Case R 664/2011-5, 18 March 2015, at [16].
56 Bang & Olufsen, at [72]-[73]. The GC found that for the goods at issue in this case (apart from loudspeakers, other apparatus
for the reception, processing, reproduction, regulation or distribution of sound signals in Class 9 as well as music furniture in
Class 20), the design was an element that would be very important in the consumer’s choice even if the consumer took other
characteristics of the goods at issue into account.
57 European Intellectual Property Office, Guidelines, cit, Part B, §4.6.
58 Louboutin AG2, at [48], recalling Hauck AG, at [89]-[92].
12

when this is no longer the case, for instance on account of changes in the public’s preferences which result in that
characteristic being no longer sought and valued by the public, then the substantial value exclusion may no longer
apply to a certain shape (or characteristic).59
In all this, it is also clear that the notion of value is different from that of reputation, because what the law requires
for the substantial value exclusion to apply is only that consumers’ choice will be affected by the aesthetic features
of the shape, not by the reputation of the trade mark owner or other trade marks also used to identify those same
goods.60 AG Szpunar emphasized all this, in particular in his Additional Opinion in Louboutin:
[I]f the concept of a ‘shape [giving] substantial value to the goods’ were to be acknowledged as being, even
in part, determined by characteristics which are perceived as attractive by the public, it would then be
necessary to exclude the characteristics linked to the reputation of the trade mark or its proprietor, in
order to prevent the appeal created by that reputation being attributed to a shape which, taken on its own,
would not be attractive. Otherwise, the ground for refusal or invalidity laid down in Article 3(1)(e)(iii) of
Directive 2008/95 could be interpreted very broadly and improperly having regard to its objective.61
Put it otherwise, the question to be asked is the following: is the shape or characteristic in question the one which
gives substantial value to the good, or is it rather the reputation of the trade mark represented by that particular
sign or the reputation of the trade mark owner that confer such value? In the case of the Louboutin red sole sign
(pictured below), does the substantial value stem from the application of that particular shade of red to a specific
part of the shoe (the sole), or does it rather descend from the reputation of Louboutin62?
Examples of different uses of the ‘red sole’

(source: <http://eu.christianlouboutin.com>)
The sign at issue in Louboutin
59 Louboutin AG2, at [51].

60 OHIM, Fifth Board of Appeal, Case R 942/2012-5, 16 January 2013, at [11]-[12] and [19].
62Further to the CJEU Louboutin decision, the referring court ruled that the Louboutin trade mark was valid and infringed:
Rechtbank Den Haag, C/09/450182 / HA ZA 13-999, NL:RBDHA:2019:930. See C Gommers, ‘Red Sole Diaries: another
chapter’ (14 February 2019) The IPKat, available at <http://ipkitten.blogspot.com/2019/02/red-sole-diaries-another-
chapter.html>.
13

Attractiveness flowing from reputation alone does not lead to the application of the substantial value exclusion:
holding otherwise would run contrary to an important aspect of the system of competition which trade mark law
helps to maintain, that is the possibility of acquiring such a reputation.63 The analysis should thus exclusively focus
on the intrinsic value of the shape, without taking into account the attractiveness of the goods as flowing from the
reputation of the mark or its proprietor.64
The fact that a certain shape was previously protected by a different IPR might also favour a finding that such
shape is caught within the substantial value exclusion. Whilst a conclusion of this kind is not surprising considering
the key rationale of the ground, it also suggests that a careful IP protection strategy should be envisaged by
concerned IPR holders and aspiring trade mark owners.65 For instance, registration of a design right might make
it harder to obtain subsequently trade mark protection for a shape. This is the conclusion that the High Court of
England and Wales substantially reached in a case concerning registration of the shape of a London taxi. Arnold J
(as he then was) reasoned that the circumstance that The London Taxi Corporation Limited had a registered design
for the TX1 model (shown below) favoured a finding that, indeed, its shape conferred a substantial value to the
good. However, the assessment would not be different if such design registration had not been sought (as it was
the case for the Fairway model, also pictured below), insofar as protection would be available in principle.66
The TX1 The Fairway
On appeal, it was noted how it is not entirely clear “whether, in addressing substantial value, one should take into
account or ignore the fact that consumers will recognise the shape”. However, if consumer recognition is required,
then the assessment is not “only to "the shape itself"”, and the same is true if one has to take into account “the

64 Louboutin AG1, at [70]. In the same sense, see also OHIM, Fifth Board of Appeal, Case R 2520/2011-5, 16 January 2013,
at [19].
65 In this sense, see G Engels and C Lehr, ‘Sweets, cars and bottles – three-dimensional trade marks’ (2017) 12(9) JIPLP 797,
800.
66 The London Taxi Corporation Ltd (t/a The London Taxi Company) v Frazer-Nash Research Ltd & Anor [2016] EWHC 52 (Ch) (20
January 2016), at [214]-[215]
14

relevance of the presence or availability of design protection in fact.” The Court of Appeal of England and Wales
found that these are issues in respect of which no clear guidance is available yet.67
II. Type of assessment
In its case law, the CJEU has been consistent in holding that “the competent authority may carry out a detailed
examination that takes into account material relevant to identifying appropriately the essential characteristics of a
sign, in addition to the graphic representation and any descriptions filed at the time of the application for
registration.”68 The representation of the shape applied for is relevant and an inquiry into the hidden characteristics
which are not visible in the shape represented is not required.69 However, the assessment should not be limited to
the sole representation of the sign. It should in fact take into account ‘additional information’70, which encompasses
material relevant to identifying the essential characteristics of the contested mark.71 In any event, the circumstance
that a certain mark has been registered as a figurative mark or is described as, eg, a position mark (as it was the
case of the Louboutin red sole trade mark) has no bearing in the determination as to whether the substantial value
ground applies.72 This is important (and was even more so pre-reform, when the absolute ground only expressly
referred to ‘shape’) because it prevents a trade mark applicant/owner from circumventing the application of the
absolute ground, so that examination under Article 7(1)(e) EUTMR/4(1)(e) EUTMD is possible irrespective of
whether the application or registration explicitly states that the mark at issue is in fact a shape mark.73
In relation to the question whether the assessment is to be conducted by carrying out a simple visual analysis or
whether, instead, a detailed examination is to be undertaken, case law has allowed both approaches, depending on
the circumstances at issue. If a detailed examination is to be undertaken, surveys, expert opinions, data relating to
IPRs conferred previously in respect of the goods concerned may be all taken into account.74 With specific regard
to substantial value shapes, the criteria to be considered – besides the average consumer’s perception – include:
67 The London Taxi Corporation Ltd (t/a the London Taxi Company) v Frazer-Nash Research Ltd & Anor [2017] EWCA Civ 1729 (01
November 2017), at [76].

68 Pi-Design AG and Others and OHIM v Yoshida Metal Industry Co. Ltd, C-337/12 to C-340/12, EU:C:2014:129 (‘Yoshida’), at
[54]. Yoshida, at [54].

69 Simba Toys, at [49]-[51].
70 Simba Toys AG, at [88]-[89].
71 Louboutin AG1, at [34]. The description of the sign at issue in Louboutin was the following: “The trade mark consists of the
colour red (Pantone 18.1663TP) applied to the sole of a shoe as shown (the outline of the shoe is therefore not part of the
trade mark but serves to show the positioning of the trade mark). Colour: Red (Pantone 18–1663TP)”
72 Ibid, at [32] and [35]. In a similar sense, see also Yoshida, at [58].
73 Gielen, ‘Substantial value rule’, cit, 165.
74OHIM, Second Board of Appeal, Case R 1072/2009-2, 15 December 2010, at [38] (see also [32]), referring to Lego Juris, at
[71]. In the same sense, see also OHIM, Fifth Board of Appeal, Case R 3021/2014–5, 29 January 2016, at [34], and Yoshida
Metal Industry Co. Ltd v Office for Harmonisation in the Internal Market (Trade Marks and Designs), T-331/10 RENV and T-416/10
RENV, EU:T:2012:220, at [44].
15

- the nature of the category of goods concerned,

- the artistic value of the shape in question,
- its dissimilarity from other shapes in common use on the market concerned,
- a substantial price difference in relation to similar products, and
- the development of a promotion strategy which focuses on accentuating the aesthetic characteristics of
the product in question, so that it is necessary to assess the overall relevance the manufacturer gives to
the shape of their product as a marketing tool.75
A shape or another characteristic might possess substantial value per se, and the choice of a particular shape, eg a
diamond-shaped bottle as a container for beverages, might be indicative of a strategy aimed at communicating
certain ideas (expense and exclusivity) and, thus, targeting consumers who would purchase the product because of
the aspect of the container, rather than because of its content.76
The sign at issue in R 1313/2012-1

Jewel Lines Precious Vodka®
(source: <https://www.jewellinespreciousvodka.com/>)
It might also be the case that such value has been acquired through the applicant/owner’s own marketing strategies
and efforts.77 Overall, in Hauck the CJEU made it clear that the assessment to be undertaken is a multi-faceted one
that goes beyond the external appearance of the shape-product78 and is also intended to depend on the
circumstances at hand.79 In any event, as it will be discussed further below at §4.I., assuming that a shape or another
75 Hauck, at [35].
76OHIM, First Board of Appeal, Case R 1313/2012-1, 23 May 2013. The reasoning of the Board is explained in C Rusconi,
‘23/05/2013, R 1313/2012-1, Shape of a bottle’, in EUIPO, 20 Years of the Boards of Appeal at EUIPO (EUIPO:2017), 342-
343.
77 The latter was, for instance, the case in Benetton Group SpA v G-Star International BV, C-371/06, EU:C:2007:542 (‘Benetton’),
at [21]-[28]. On this, see also M Senftleben, ‘Public Domain Preservation in EU Trademark Law—A Model for Other
Regions?’ (2013) The Trademark Reporter 775, 798.
78 For a commentary on more general trends in EU trade mark and design case law see, see U Suthersanen, ‘Excluding designs
(and shape marks): where is the EU Court of Justice going?’ (2019) 50(2) IIC 157, 159-160.
79See also M Senftleben, ‘A clash of culture and commerce: non-traditional marks and the impediment of cyclic cultural
innovation’, in I Calboli and M Senftleben (eds), The Protection of Non-Traditional Trade Marks (OUP:2019), 329, referring to the
CJEU Hauck decision as aiming at an “open, flexible application of the doctrine of aesthetic functionality.”
16

characteristic is able to ‘escape’ application of the substantial value ground, trade mark protection may remain
nonetheless challenging to obtain and present ‘enormous challenges’.80
3. ‘Another characteristic’: an actual change?
A question that has arisen in the aftermath of the 2015 reform is whether the addition of ‘another characteristic’
to the language of Article 7(1)(e) EUTMR/4(1)(e)EUTMD has altered the scope of the exclusions envisaged
therein. Pre-reform, arguments were advanced that the approach to functionality in EU trade mark law was limited
to ‘shapes’ and that it should be broadened instead, so to “cover not only shapes, but other functional
characteristics of a product as well.”81 Following the reform, some commentators have submitted that the
alteration of the language has served to compensate for the relaxation of the representation requirement (no longer
a graphical representation, but merely representation in an appropriate form) and the seemingly lower threshold
under Article 4(b) EUTMR/3(b) EUTMD. In other words, the reformed language of the absolute ground in
Article 7(1)(e) EUTMR/4(1)(e)EUTMD would serve to contrast registration of certain signs that would now have
better chances to overcome the representation hurdle.82 The result would thus be an increased risk that certain
types of non-traditional marks, which could be considered as giving substantial value to the goods, could be
rejected or invalidated without the possibility of relying on, eg, inherent or acquired distinctiveness.83
The view that the addition of ‘another characteristic’ in the language of the ground has altered its scope of
application is not convincing. First, both the EUTMR and the EUTMD contain recitals in their preambles that
spell out and – thus – codify the seven (infamous) Sieckmann84 criteria. This means that a representation might be
in any appropriate form, but will still need to satisfy the requirements of it being clear, precise, self-contained,
easily accessible, intelligible, durable and objective (Recitals 10 EUTMR and 13 EUTMD). All this suggests that
the presumed relaxation of the representation requirement does not necessarily entail an actual lowering of the
threshold to registration. Second, there is a wealth of pre-reform case law that suggests that the scope of the
absolute grounds in what is now Article 7(1)(e) EUTMR/4(1)(e)EUTMD has never been just limited to three-
80 In this sense, A Kur, ‘Yellow dictionaries, red banking services, some candies and a sitting bunny: protection of colour and
shape marks from a German and European perspective’, in I Calboli and M Senftleben (eds), The Protection of Non-Traditional
Trade Marks (OUP:2019), 90.
81 S Maniatis, ‘Whither European trade mark law? Arsenal and Davidoff: the creative disorder stage’ (2003) 7(1) Marq Intell Prop
L Rev 99, 114. See also CJ Ramírez-Montes, ‘Proving inherent distinctiveness of trade dress marks: does European Union law
depart significantly from the norm? Part 1’ (2019) 2019/3 IPQ 224, 242.
82 See Louboutin AG1, at [62]. See also D Fields and A Muller, ‘Going against tradition: the effect of eliminating the requirement
of representing a trade mark graphically on applications for non-traditional trademarks’ (2017) 39(4) EIPR 238, 242-243, and
M Lynch, ‘Product configuration marks: the shape of things to come’ (2017) 12(6) JIPLP 465, 471.
83 M Adams and A Scardamaglia, ‘Non-traditional trade marks in Europe: an historical snapshot of applications and
registrations’ (2018) 40(10) EIPR 623, 624. See also L Brancusi, ‘Trade marks' functionality in EU law: expected new trends
after the Louboutin case’ (2019) 41(2) EIPR 98, 99.
84 Ralf Sieckmann v Deutsches Patent- und Markenamt, C-273/00, EU:C:2002:748, at [55].
17

dimensional signs.85 The CJEU put it bluntly in its Storck decision, when it considered that case law developed in
relation to three-dimensional trade marks consisting of the appearance of the product itself also applies where, as
in the case at issue, the trade mark applied for is a figurative mark consisting of the two-dimensional representation
of that product.86 Again in its Study on the Overall Functioning of the European Trade Mark System, the Max Planck
Institute for Intellectual Property and Competition Law considered that the notion of ‘shape’ as found in the pre-
2015 reform legal texts would need to be interpreted rather broadly.87 All this is also further confirmed by the fact
that, as also noted by the referring court in Louboutin, the various language versions of the EUTMR and EUTMD
(also pre-reform) suggest indeed that the concept of ‘shape’ has never been limited to three-dimensional signs:
‘forme’ (French), ‘forma’ (Italian), ‘Form’ (German), ‘vorm’ (Dutch), etc, are all terms that may be employed
indistinctly to refer to three-dimensional and two-dimensional shapes. In practice, the classification of the sign as
two-, rather than as three-dimensional, has never excluded that: (1) at the time of seeking registration, scrutiny of
the application could also be conducted having regard to specific shape-related grounds or the enhanced
distinctiveness requirement for three-dimensional signs; and (2) at the time of enforcing the rights in a registered
two-dimensional sign, courts have accepted that such trade marks could be infringed by the use of three-
dimensional signs.88
I. A mere clarification
In its two most recent decisions on the substantial value ground, Louboutin (this case was however referred and
decided under Directive 2008/95) and Textilis, the CJEU regrettably failed to provide express guidance on whether
the addition of ‘another characteristic’ altered the scope of the exclusion. In Textilis, in particular, the Court limited
itself to tackling the question asked, that is whether the reformed language would have retroactive application.89
The CJEU answered in the negative, considering the need to safeguard legal certainty and legitimate expectations90,
but did not address whether ‘another characteristic’ was part of the substantial value ground even before the 2015
reform. It found that a sign like the one at issue (pictured below), which consists of two-dimensional and decorative
motifs and which is affixed to goods such as fabric or paper, contains lines and contours. However, even if that
85 Also suggesting that the absolute grounds for shapes applied to three-dimensional and two-dimensional signs alike even
pre-reform, see A von Mühlendahl, ‘European trade mark law: registrable signs, service marks’ (2014) 9(2) JIPLP 160, 162,
and European Copyright Society, Trade Mark Protection of Public Domain Works. A Comment on the Request for an Advisory Opinion
of the EFTA Court Case E-05/16 - Norwegian Board of Appeal for Industrial Property Rights – Appeal from the Municipality of Oslo (2016),
available at <https://europeancopyrightsocietydotorg.files.wordpress.com/2016/11/ecs-efta-reference-vigeland-final-
1nov16.pdf>, 8-10.
86 August Storck KG v European Union Intellectual Property Office, C-25/05 P, EU:C:2006:422, at [29].
87 Max Planck Institute for Intellectual Property and Competition Law, Study, cit, §2.30, also referring to Philips and Benetton.
88 See, inter alia, the interesting discussion in DS Gangjee, ‘Paying the Price for Admission. Non-Traditional Marks across
Registration and Enforcement’, in I Calboli and M Senftleben (eds), The Protection of Non-Traditional Trade Marks (OUP:2019),
73-80.
89 For a pre-Textilis analysis, see Kur and Senftleben, European Trade Mark Law, cit, §4.178 (considering the matter also from a
fundamental rights perspective), and Brancusi (2019), 99-101.

90 Textilis at [30].
18

sign represents shapes which are formed by the external outline of drawings representing, in a stylized manner,
parts of geographical maps, it also contains decorative elements which are situated both inside and outside those
outlines, as well as word elements (‘Manhattan’). As such, it would not be indissociable from the shape of the
goods to which it is affixed, the form of which differs from the decorative motifs.91
The sign at issue in Textilis
Examples of different uses of the Manhattan design by Josef Frank

(source: <https://www.svenskttenn.se>)
Previously, in Louboutin, the Grand Chamber of the CJEU had limited itself to holding – laconically – that a sign
like the one at issue in the background proceedings “cannot be regarded as consisting ‘exclusively’ of a shape,
where, as in the present instance, the main element of that sign is a specific colour designated by an internationally
recognised identification code.”92 This said, in his Opinions in that case, AG Szpunar reviewed the reformed
ground and submitted that the change in language would not entail a change in its scope of application. He opined
that EU legislature had merely intended to clarify the ground, not changing it. This would follow from
consideration that the EUTMD does not contain any transitional provisions aimed at safeguarding trade mark
owners’ legitimate expectations as regards signs registered under the previous regime.93 The AG reiterated this
view in his subsequent Additional Opinion, also rejecting the argument advanced by UK Government that other
91 Ibid, at [39]-[44].
92 Christian Louboutin and Christian Louboutin Sas v van Haren Schoenen BV, C-160/15, EU:C:2018:423 (‘Louboutin’), at [26].
93 Louboutin AG1, at [63]-[64]
19

changes, eg those concerning the own name defence in what is currently Article 14 EUTMD, were not
accompanied by transitional provisions either. The AG noted that the own name defence is a limitation on the
exclusive rights of a trade mark owner, while the amendments introduced by the EUTMD do not limit a trade
mark owner’s rights.94 In addition to the AG’s considerations, the analogy proposed by the UK Government is
also unconvincing for another reason: whilst the amended defence relates to prima facie infringing activities
committed after the entry into force of the relevant instruments, an actual change to an absolute ground for
registration or invalidity would potentially have retroactive effects and affect registrations obtained before the entry
into force of the relevant legislative instruments.95
Earlier CJEU case law also supports the conclusion that the addition of ‘another characteristic’ has not altered the
scope of the ground.96 This is especially so because, in approaching the way in which the ‘essential characteristics’
of a sign are to be identified, the CJEU did not limit the relevant assessment to the shape alone. So, in Hauck, the
Court stated that “the fact that the shape of a product is regarded as giving substantial value to that product does
not mean that other characteristics may not also give the product significant value.”97 and that the concept of
‘shape which gives substantial value to the goods’ cannot be limited purely to the shape of products having only
artistic or ornamental value.98 This approach had been also previously employed in relation to Article 7(1)(e)(ii) of
Regulation No 40/94 in Lego Juris, in which the CJEU found that ground not to be limited to shapes: what is
required for its correct application is an identification of the ‘essential characteristics’ of a three-dimensional sign.
The concept of ‘essential characteristics’ “must be understood as referring to the most important elements of the
sign.”99
The sign at issue in Lego Juris
The GC decision in Yoshida Metal Industry, concerning registration of the sign pictured below, also suggests an
expansive reading of the notion of ‘shape’.
94 Louboutin AG2, at [37]-[39]

95 As explained, in Textilis the CJEU excluded however that retroactive application would be possible.
96 The same is true of pre-reform national case law. For an overview of relevant Italian decisions concerning patterns, see J
Ciani and M Bresciani, ‘Pattern protection in the fashion industry: an overview of Italian and European case law’ (2018) 13(11)
JIPLP 884, 887. In scholarly literature, see (cautiously) Firth, ‘Shapes as trade marks’, cit, 94.
97 Hauck, at [30].
98 Hauck, at [31]-[32].
99Lego Juris, at [68]-[69]. In the same sense, see also OHIM, Second Board of Appeal, Case R 1072/2009-2, 15 December
2010, at [29]-[30].
20

The sign at issue in Yoshida Metal Industry
Right before recalling that the rationale for the absolute ground in Article 7(1)(e)(ii) is to prevent trade mark
protection from granting its proprietor a monopoly over technical solutions of functional characteristics of a
product that a user is likely to seek in the products of competitors100, the GC held in fact that:
Article 7(1)(e) of Regulation No 207/2009 does not, however, define the signs which must be considered
as shapes within the meaning of that provision. It makes no distinction between three-dimensional shapes,
two-dimensional shapes, or two-dimensional representations of three-dimensional shapes. Hence, it must
be held that Article 7(1)(e) of Regulation No 207/2009 may therefore apply to two-dimensional shapes.101
A two-dimensional sign could be indeed treated as a three-dimensional one, depending on “the actual use made
of the trade mark following its registration”.102
In all this, in EU case law103 the clearest confirmation that the notion of ‘shape’ would be limited to neither three-
dimensional shapes nor shapes tout court comes from the GC and CJEU decisions concerning, respectively
registrability of the Louis Vuitton’s Damier Canvas pattern mark and the validity of Louis Vuitton’s locking device.
The sign at issue in Vuitton GC The sign at issue in Vuitton CJEU
In their judgments, both the GC and CJEU limited their assessment to distinctiveness. However, they suggested
that a two-dimensional sign might be treated like a three-dimensional sign when they relied on relevant case law
100Yoshida Metal Industry Co. Ltd v Office for Harmonisation in the Internal Market (Trade Marks and Designs), T-331/10 EU:T:2012:220
(‘Yoshida GC’), at [25]. In the same sense, Yoshida Metal Industry Co. Ltd v Office for Harmonisation in the Internal Market (Trade
Marks and Designs) (OHIM), T-331/10 RENV and T-416/10 RENV, EU:T:2015:302 (‘Yoshida GC RENV’), at [37].
101 Yoshida GC, at [24]. In the same sense, Yoshida GC RENV, at [36].
102 Yoshida, at [61].
103 With regard to Benelux case law, see Gielen, ‘Substantial value rule’, cit, 165-166.
21

on distinctiveness of three-dimensional signs, including the ‘substantial departure’ requirement for

distinctiveness.104 Indeed, “the line of authority that evolved in relation to three-dimensional trade marks consisting
of the appearance of the product itself also applies where the trade mark applied for is a figurative mark consisting
of the two-dimensional representation of that product. In such cases, the mark likewise does not consist of a sign
independent of the appearance of the products it designates.”105
In sum, it appears that – despite the formal changes made in the context of the 2015 trade mark reform to both the
representation requirement and the language of the absolute grounds in what is now Article 7(1)(e)
EUTMR/4(1)(e) EUTMD – the substantive scope of protection has not been really altered. In this sense, the stance
of the CJEU in Textilis, ie that there is no retroactive application of the reformed substantial value ground, is
formally correct. However, it might be incorrect to think that only substantial value conferring three-dimensional
signs registered prior to the entry into force of the new EUTMR and EUTMD are exposed to the risk of
invalidation post-reform. Trade marks consisting exclusively of a two-dimensional shape or another characteristic
that gives substantial value to the goods may also be liable to be invalidated, irrespective of when they were
registered.
II. Scope and assessment
Having considered that that addition of ‘another characteristic’ should not be necessarily intended as a change in
the law, a number of issues arise concerning its interpretation, including: whether a two-dimensional or other type
of sign (eg a colour, pattern, sound106) considered on its own might be regarded as being ‘another characteristic’;
and how ‘another characteristic’ is to be assessed in order to determine the applicability of the substantial value
ground. Starting from the latter, there appear to be no particular reasons which justify a different assessment of
whether ‘another characteristic’ confers a substantial value to the goods from that reserved to substantial value-
conferring shapes. First, the essential characteristics of the sign at issue must be identified.107 Then, an assessment
of the overall impression that a sign produces is to be conducted. These steps allow the correct application of the
substantial value ground, which “requires that all of the essential characteristics of the sign at issue be properly
identified, on the basis of the overall impression produced by that sign.”108 Even if it is true that how a sign is
categorized does not preclude it from being considered in a different way, this does not mean that any
104Louis Vuitton Malletier v Office for Harmonisation in the Internal Market (Trade Marks and Designs), T-359/12, EU:T:2015:215
(‘Vuitton GC’), at [20]-[21]; See also below, sub §4.I.
105 Louis Vuitton Malletier v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), C-97/12 P,
EU:C:2014:324 (‘Vuitton CJEU’), at [53].

106 The EUIPO Guidelines provide indeed the example of a sound: “a sign that consists exclusively of ‘other characteristics’
that give substantial value to the goods could be a sound mark, representing a specific sound of a motorbike that may be
appealing to a significant part of the relevant public to the extent that it may indeed affect the consumer’s choice of purchase.”
(European Intellectual Property Office, Guidelines, cit, Part B, §4.6).
107 Lego Juris, at [68]-[70]; Hauck, at [21].
22

‘characteristic’ that gives a substantial value would fall within the scope of application of the ground. With regard
to colours, this has been clearly the case since the Libertel decision, in which the CJEU suggested that colours per
se, which are not spatially delimited, do not fall within the absolute ground for shapes.109 What is required for a colour
or another characteristic to potentially fall within the scope of application of the substantial value ground is its
application to an element of the surface of the goods110 and a determination that it is indeed because of that
characteristic that the relevant public buys the product incorporating it. For ‘another characteristic’ to fall within
the ground in principle, it is required that it is both spatially delimited and indissociable from the goods. In Textilis,
in fact, the CJEU appeared to endorse the approach indicated by AG Szpunar in his First Opinion in Louboutin.
The Court indicated the need for a pattern to be spatially delimited for the substantial value ground to apply, and
excluded that the sign at issue would fall within the scope of application of that ground: a sign is not indissociable
from the shape of the goods if it is affixed to goods, the form of which differs from the decorative motifs that
compose the sign.111 This said, the fact that the characteristics giving substantial value to the goods are, in part,
determined by the public’s perception does not mean that account is to be taken of the reputation of the trade
mark or its proprietor as part of the assessment.112 Even if potentially falling within the scope of application of the
ground, this may nonetheless be inapplicable due to the fact that the sign at issue would not confer a substantial
value per se, as the actual substantial value would instead stem from the reputation of the trade mark or its
proprietor. In any case, public policy considerations (including pro-competitive ones) underpin the decision
whether to allow registration of signs falling within the scope of Article 7(1)(e) EUTMR/4(1)(e) EUTMD.
4. Can other absolute grounds do the job (better)?
Even if recent CJEU case law (notably Hauck) has sought to shed further light on the rationale and scope of the
substantial value ground – including the fact that its purpose is not just to prevent trade mark protection from
unduly extending the protection granted under copyright and design rights, but also potentially patents113 –
uncertainties remain in relation to a number of key aspects. All this gives rise to the question whether, as suggested
by the Max Planck Institute, other absolute grounds for refusal or invalidity might be more appropriate to rely
upon also to achieve the stated objectives of the substantial value ground.
109 Libertel Groep BV v Benelux-Merkenbureau., C-104/01, EU:C:2003:24, at [53]-[54]; see also Louboutin AG1, at [46] and [48].
On the application of the substantial value ground to colours, see C Gommers, E De Pauw and M Mariano, ‘Louboutin v
110
Van Haren: white flag for red soles or provisional truce?’ (2018) 13(11) JIPLP 909, 915-916.
111 Textilis, at [42].
113 I Fhima, ‘The public interest in European trade mark law’ (2017) 2017/4 IPQ 311, 317.
23

I. Distinctiveness, descriptiveness, and bad faith
Whilst it might be the true that consideration of distinctiveness alone could be enough in most cases to prevent
registration of substantial value conferring shapes or other characteristics, the justifications underpinning Article
7(1)(b) EUTMR/4(1)(b) EUTMD differ from Article 7(1)(e) EUTMR/4(1)(e) EUTMD, and the grounds operate
under different logics. Distinctiveness relates to the ability or inability of a sign to function as a trade mark. The
grounds in Article 7(1)(e) EUTMR/4(1)(e) EUTMD apply irrespective of and even if the sign at issue functions
as a trade mark because their rationale is to prevent the misuse of trade mark registration: instead of seeking
registration to be able to operate in a system of undistorted competition, registration would serve for the opposite
reasons, that is to gain an unfair advantage over competitors.114 As such, assessment of whether the absolute
grounds in Article 7(1)(e)/4(1)(e) apply logically precedes that of distinctiveness, as the effects arising from their
subsistence are irreversible: a shape or another characteristic that is caught within the scope of the provision cannot
be ‘saved’ by inherent or acquired distinctiveness. The language of Article 7(3) EUTMR/4(3) EUTMD is clear,
and the CJEU has confirmed all this since the Philips decision.115
In any case, when it comes to assessing distinctiveness of a three-dimensional sign, case law has held that the
relevant criteria are in principle no different from those applicable to other categories of trade marks.116 However,
what is required in practice is a substantial departure from the norm or customs of the reference sector, on
consideration that the average consumer would not be “in the habit of making assumptions about the commercial
origin of goods on the basis of signs which are indissociable from the appearance of those same goods.”117 In
addition, the question whether acquired distinctiveness needs to be proved with regard to whole territory of the
EU remains ‘highly controversial’ and guidance from the CJEU is still awaited.118 In any event, one should not
think that the distinctiveness hurdle facing three-dimensional sign is necessarily limited to them. In his Additional
Opinion in Louboutin, in fact, AG Szpunar recalled that in X Technology Swiss119, the CJEU did not uphold one part
of a ground of appeal relied on by the applicant (who was seeking to register a sign characterized by an orange
114 Simba Toys AG, at [32]; Hauck AG, at [31]-[33]; Opinion of Advocate General Mengozzi in in Lego Juris A/S v Office for
Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), C-48/09 P, EU:C:2010:41, at [74].
115 Philips, at [57] and [75]-[76]. In the same sense, see also Benetton, at [26]-[27] and Nestlé, at [40].
116 Vuitton GC, at [20], referring to: Storck, at [19] and [26], and case law cited; Fraas v OHIM (Tartan pattern in dark grey, light
grey, black, beige, dark red and light red), T-50/11, EU:T:2012:442, at [40]; Vuitton CJEU, at [53]-[54].
117 Louboutin AG2, at [63], referring to Mag Instrument v OHIM, C-136/02 P, EU:C:2004:592, at [30]-[31], and Deutsche SiSi-
Werke v OHIM, C-173/04 P, EU:C:2006:20, at [28] and [31]). See also: Vuitton GC, at [23]; Henkel, at [18]; Schunk v OHIM
(Presentation of part of a chuck), T-7/09, EU:T:2010:153, at [19] and case law cited; Jaguar Land Rover Ltd v Office for Harmonisation
in the Internal Market (Trade Marks and Designs), T-629/14, EU:T:2015:878, at [19]-[20]; Voss of Norway ASA v Office for
Harmonisation in the Internal Market (Trade Marks and Designs), C-445/13 P, EU:C:2015:303, at [90]. See further Kur and
Senftleben, European Trade Mark Law, cit, §§4.157-4.158.
118 The CJEU will have to address this when it decides EUIPO v Mondelez UK Holdings & Services, C-95/17 P (in progress). See
G Humpreys, ‘A selective review of some recent cases of the EUIPO Boards of Appeal: practical application of the
jurisprudential criteria of the CJEU’ (2018) 40(8) EIPR 530, 531.
X Technology Swiss GmbH v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), C-429/10 P,
119
EU:C:2011:307.
24

colouration in the form of a hood covering the toe of each article of hosiery, represented below), ie that the GC
had incorrectly failed to distinguish between three-dimensional marks and position marks when assessing the
distinctive character of the sign.
The sign at issue in X Technology Swiss
The CJEU did not reject the GC’s finding that, to establish whether or not a sign has distinctive character, it is not
necessary to consider its classification as a figurative, three-dimensional or other mark, but rather whether or not
the sign is indistinguishable from the appearance of the goods in question.120
Considering the rationale of the absolute ground in Article 7(1)(e) EUTMR/4(1)(e) EUTMD, there may be more
points of similarity between this ground and those relating to descriptiveness (Article 7(1)(b) EUTMR/4(1)(b)
EUTMD) and bad faith (Article 7(2) EUTMR/4(2) EUTMD). Descriptiveness as an absolute ground also pursues
the public interest objective of keeping signs or indications relating to the characteristics of goods or services in
respect of which registration is applied for free for everyone to use.121 The CJEU has clarified that this ground
applies to any trade mark, including product shapes, which consists exclusively of a sign or indication which may
serve to designate the characteristics of goods or a service within the meaning of that provision.122 This said, unlike
the exclusion in Article 7(1)(e) EUTMR/4(1)(e) EUTMD, and similarly to Article 7(1)(b) EUTMR/4(1)(b)
EUTMD, this absolute ground can be overcome, eg on consideration that the combination of descriptive elements
at issue is not simply descriptive123 or that the average consumer does not perceive the sign as descriptive.124
Louboutin AG2, at [64]; X Technology Swiss GmbH v Office for Harmonisation in the Internal Market (Trade Marks and Designs)
120
(OHIM), T-547/08, EU:T:2010:235, at [21]. In the same sense, see also Vuitton GC, at [20]-[21].
121Windsurfing Chiemsee Produktions- und Vertriebs GmbH (WSC) v Boots- und Segelzubehör Walter Huber and Franz Attenberger, C-
108/97 and C-109/97, EU:C:1999:230, at [25].
Linde, at [74]-[76]. For a critical discussion of descriptiveness as interpreted in relation to shapes, see Kur and Senftleben,
122
European Trade Mark Law, cit, §§4.159-4.160.

123 As it was, eg, famously established in Procter & Gamble Company v Office for Harmonisation in the Internal Market (Trade Marks
and Designs), C-383/99 P, EU:C:2001:461.

124 As it was established, eg, in another well-known case: Matratzen Concord AG v Hukla Germany SA, C-421/04, EU:C:2006:164.
25

Turning to bad faith, in Lindt, the CJEU was asked to clarify whether the bad faith absolute ground applies in the
case of an application made despite awareness that a competitor in (at least) one Member State is using the same
sign, or one so similar as to be capable of being confused with it, for the same or similar goods or services, and
such application is aimed at preventing that competitor from continuing use of the sign.125
The sign at issue in Lindt
The Court provided a qualified response, holding that – to determine bad faith – account must be taken of all
relevant circumstances, in particular: the fact that the applicant knows or must know that a third party is using, in
at least one Member State, an identical or similar sign for an identical or similar product capable of being confused
with the sign for which registration is sought; that they aim to prevent that third party from continuing to use such
a sign; and the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is
sought.126 In a case in which the sign consists of the entire shape and presentation of a product, the fact that the
applicant is acting in bad faith might more readily be established where the competitors’ freedom to choose the
shape of a product and its presentation is restricted by technical or commercial factors. However, the Lindt holding
is rather specific and the Court warned that, even in such circumstances, the applicant’s registration of the sign
may be in pursuit of a legitimate objective.127 All this said, in the case of the substantial value ground the goal is
not to repress a subjective behaviour of the applicant (as is the case of bad faith), but rather to prevent the use of
the trade mark system to unduly extend IP protection vesting in a certain ‘object’. In this sense, whilst bad faith
requires a scrutiny of the subjective state/intention of the applicant, the substantial value ground operates mostly
on an objective basis and pursues a more general policy objective of trade mark ‘sanitization’.
125 Lindt has unsuccessfully attempted to register the shape of its chocolate bunny multiple times. The most recent decision
is the one of the Grand Board of the EUIPO in 2017. In dismissing the applicant’s appeal, the Board found that: “the
traditional shape and appearance of an Easter bunny gives substantial value to the chocolate goods, in comparison to other
kinds of chocolate goods.” (EUIPO, Grand Board, Case R 2450/2011 G, 7 July 2017, at [44]).
126 Chocoladefabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH, C-529/07, EU:C:2009:361 (‘Lindt’), at [53].
127 Ibid, at [48]-[49]. Also considering the CJEU holding as providing limited guidance, see R Moscona, ‘Bad faith as grounds
for invalidation under the Community Trade Mark Regulation - the ECJ decision in Chocoladefabriken Lindt & Sprungli AG v
Franz Hauswirth GmbH’ (2010) 32(1) EIPR 48, 49-50.
26

II. Public policy and morality
The most comprehensive judicial assessment of how the absolute ground for public policy and morality might
apply in the context of trade mark registrations for signs previously protected by copyright is arguably the decision
of the EFTA Court in Vigeland. On consideration that a number of artworks by Norwegian artists, notably those
of Gustav Vigeland, would soon enter the public domain under the Norwegian copyright law, the Oslo
Municipality (which managed several of these copyrights) sought to register six artworks by Vigeland as trade
marks.
The Angry Boy (Sinnataggen) Cast iron gate
Section of cast iron gate
Egil Skallagrimsson
Wheel of life (Livshjulet)

The Monolith (Monolitten)
27

The Norwegian Industrial Property Office (‘NIPO’) rejected some applications tout court, due to their lack of
distinctiveness or because the signs consisted of a shape that adds substantial value to the goods. Some
registrations were granted in respect of certain goods and services. The Oslo Municipality appealed to the Board
of Appeal. In addition to the grounds considered by NIPO, the Board also noted that registration might be refused
on grounds of public policy and morality. The Board referred the case to the EFTA Court for guidance.
The EFTA Court considered inter alia the interplay between the public domain and copyright protection, holding
that the latter would be an exception to the rule that creative content becomes part of the public domain
once communicated, as well as the rationale of copyright and trade mark protection.128 Because of the potentially
everlasting exclusivity afforded to a trade mark owner, several conditions must be satisfied for a trade mark to be
registered. The court considered that a trade mark based entirely on a copyright work presents “a certain risk of
monopolisation of the sign for a specific purpose, as it grants the mark’s proprietor such exclusivity and
permanence of exploitation which not even the author of the work or his estate enjoyed”.129 Hence, “[t]he interest
in safeguarding the public domain […] speaks in favour of the absence of individual protection for, or exclusive
rights to, the artwork on which the mark is based.”130 The court observed that absolute ground in what is currently
Article 7(1)(f) EUTMR/4(1)(f) EUTMD refers to ‘public policy’ and ‘morality’: in certain cases these two limbs
overlap, but these concepts are not synonyms. Refusal based on ‘public policy’ is done on objective criteria, whilst
an objection to a trade mark based on ‘accepted principles of morality’ concerns an assessment of
subjective values.131
In a case like the one at issue, both public interest and morality could be at stake. Starting from the latter, on the
one hand registration of those artworks would not be offensive per se. On the other hand, trade mark registration
of artworks that are considered part of a certain nation’s cultural heritage and values might be perceived by the
average consumer as offensive, and therefore be contrary to accepted principles of morality.132 Moving on to public
interest considerations, which may vary from country to country and change over time, “an artwork may be refused
registration, for example, under the circumstances that its registration is regarded as a genuine and serious threat
to certain fundamental values or where the need to safeguard the public
domain, itself, is considered a fundamental interest of society.”133 In this sense, the public policy/morality
exclusions is somewhat more ‘absolute’ than that in Article 7(1)(e) EUTMR/4(1)(e) EUTMD, in that it does not
128 Vigeland, at [65]-[69].

129 Ibid, at [70], also referring to Shield Mark AG, at [52].
130 Ibid, at [72].
Ibid, at [85]-[86]. On the notions of ‘public policy’ and ‘morality’ in EU trade mark law, see also recently Constantin Film
131
AG, at [75]-[83].
132 Vigeland, at [91]-[92].
133 Ibid, at [96].
28

require consideration of the classes of goods and services for which registration is sought.134 At the same time, it
also applies in very specific – if not exceptional – circumstances, ie where registration is sought for a sign that
consists exclusively of a work pertaining to the public domain and the registration of which constitutes a genuine
and sufficiently serious threat to a fundamental interest of society. The mere fact that a work is protected or was
previously protected by copyright is not sufficient to justify application of the ground, since “in principle, nothing
prevents a sign from being protected under both trade mark and copyright law.”135 From all this it follows that the
public policy/morality absolute ground and the substantial value ground remain distinct and pursue different
objectives: registration as a trade mark of public domain work is not contrary to public policy or accepted
principles of morality per se, as one needs to consider the status and perception of the artwork at issue in the jurisdiction
where registration is sought. In this sense, ‘the risk of misappropriation or desecration of a work’ may be a relevant
consideration in certain, specific instances.
5. Revamping the role of the substantial value ground
The preceding analysis has shown that, despite a number of shortcomings, the substantial value ground performs
an important role which cannot be entirely subsumed in other grounds. As such, it should be retained. A final
question is whether the operation and application of the substantial value ground might be improved in some way.
Two points, which are closely connected and are somewhat interdependent, are offered in response.
The first calls for a closer scrutiny of the possibility that different IPRs subsist on the same ‘object’ simultaneously
and at what conditions all this should be possible. With particular regard to shapes or other characteristics that
give a substantial value, the ‘default’ IPRs are copyright and designs. Even if it appears that Article 17 of the Design
Directive136 leaves in principle EU Member States free to determine at what conditions copyright protection would
arise in respect designs protected by design rights, in Infopaq137 the CJEU removed the possibility of envisaging
different standards of protection for different copyright subject matter. In the subsequent decision in Flos, the
CJEU held that, while unregistered designs are outside the scope of the Design Directive, they may qualify for
copyright protection under the InfoSoc Directive ‘if the conditions for that directive’s application are met’138, ie if
they are their author’s own intellectual creation.139 In that case, the CJEU held that EU law prohibits Member
States from denying copyright protection to designs that meet the requirements for copyright protection –
134 Ibid, at [81]-[82].

135 Ibid, at [62].
Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs,
136
OJ L 289, 28.10.1998, 28–35.

137 Infopaq International A/S v Danske Dagblades Forening, C-5/08, EU:C:2009:465.
138 Flos SpA v Semeraro Casa e Famiglia SpA, C-168/09, EU:C:2011:29, para 34.
139 On the particular outcome of Flos, C-168/09, see (critically), L Bently, ‘The return of industrial copyright?’ (2012) 34(10)
EIPR 654, 660-661.
29

including designs other than registered ones (subject to Article 17) – and suggested (albeit rather ambiguously) that
Member States cannot set any particular requirements as to how protection is to be secured. The implication of all
this is that – if a design is eligible for protection under the InfoSoc Directive and is, as such, original in the sense
clarified by the CJEU – then Member States cannot deny such protection. Such a reading of the Flos case is the
one that AG Jääskinen proposed in Donner.140 It is also the conclusion that both AG Szpunar in his Opinion and
the CJEU in its judgment substantially shared in Cofemel.141 This was a referral concerning the conditions at which
a design may be protected by copyright and whether it is compatible with EU law that a certain national law
requires a design to be a 'work of art', an 'artistic creation' for copyright to vest in it. With its decision, the CJEU
clarified that copyright protection for designs could no longer be subject to an originality threshold other than that
of ‘author’s own intellectual creation’. This means that national approaches, which make copyright protection
dependent on the design displaying a high level of artistic value (as it has traditionally been the case, eg, under the
Italian scindibilità approach and the German Stufentheorie), are no longer allowed. In contrast, the principle of unity
of the art, as found, eg, in French law, is to be applied across the EU in relation to all copyright subject matter. All
this means that, in certain countries, it might become all at a sudden easier for an object to be protected by both
design rights and copyright, especially if national courts do not undertake a thorough scrutiny of the fulfilment of
the originality requirement, as instead mandated by the CJEU in Cofemel.142 On the one hand, it might make trade
mark registration of a sign consisting of the design less pressing from a strategic standpoint, in that copyright
protection might be easier to claim successfully also in countries which have traditionally had an artistic value
requirement. On the other hand, it might also render trade mark protection more difficult to obtain. In fact, since
the CJEU in Hauck suggested that prior IP protection is one of the factors that might weigh in favour of a finding
that the shape or characteristic at issue confers a substantial value to the goods, the fact that both design and
copyright protection might be in principle available could make the application of the substantial value ground
more likely. In this sense, the role of the substantial value ground could be revamped and serve to monitor and
contain any attempts to use trade mark law to unduly extend the IP protection available to an ‘object’, irrespective
of whether said object is capable of functioning as a trade mark. As a result, there could be greater room for the
ground to fulfil its role.
This leads to a second point, which relates to what an authority should take into account when determining whether
a sign consists exclusively of a shape or another characteristic that gives a substantial value to the goods. Overall,
what EU case law requires one to consider is the following. First, consideration should be taken of the sign
representation and any accompanying descriptions and other material, although the sign classification is not in any
case decisive. Second, the notion of ‘value’ is not just commercial, but also entails an assessment of the sign’s own
attractiveness. Third, the perception of the average consumer may be taken into account but is not decisive. In all
this, consumer taste might change over time. Fourth, the assessment should also consider: the nature of the
140 Opinion of Advocate General Jääskinen in Titus Alexander Jochen Donner, C-5/11, EU:C:2012:195, at [31].
141 Opinion of Advocate General Szpunar in Cofemel — Sociedade de Vestuário SA v G-Star Raw CV, C-683/17, EU:C:2019:363,
at [48]; Cofemel — Sociedade de Vestuário SA v G-Star Raw CV, C-683/17, EU:C:2019:721 (‘Cofemel’), at [29] and [48].
142 Cofemel, at [49].
30

category of goods concerned; the artistic value of the shape in question; its dissimilarity from other shapes in
common use on the market concerned; a substantial price difference in relation to similar products; the
development of a promotion strategy which focuses on accentuating the aesthetic characteristics of the product in
question, so that it is necessary to assess the overall relevance the manufacturer himself gives to the shape of his
product as a marketing tool; whether the sign at issue was previously protected by other IPRs. Fifth, the three
grounds in Article 7(1)(e) EUTMR/4(1)(e) EUTMD may apply cumulatively to the same shape. Finally, in the
event that registration is not prevented because of the substantial value ground, registration will be in any case only
available if the shape or characteristic at issue significantly departs from the norm or customs of the reference
sector.
In all this, it is unclear whether and to what extent different subjective (consumer’s perception) and objective
elements should be considered and what the hierarchy (if any) between them is or should be. There are three
critical elements that require further clarification. The first is the role of the average consumer and how their
perception is to be assessed, as guidance so far has been provided more by AGs than the CJEU. Some clarity on
this point might be finally provided when the CJEU decides Gömböc, a referral for a preliminary ruling from
Hungary asking indeed (and among other things) the very question whether the and to what extent the perception
or knowledge that the buyer has of the goods represented graphically is relevant to the assessment of the substantial
value ground.143 Another area in which guidance from the CJEU is still regrettably missing is reputation: the CJEU
in Louboutin did not discuss this element at all, despite its relevance to AG Szpunar’s analysis. The third element is
the role of the trade mark applicant/owner: should it be the case that the substantial value of the sign applied
for/registered depends on their past behaviour (earlier applications for other IPRs, pricing and marketing
strategies)? Both case law and examination guidance is contradictory on this point.144 If, however, the correct
answer was (as it seems to be) that such behaviour does matter, then beauty would not just be in the eye of the
beholder (the average consumer), for how controversial that might be, but also in that of the trade mark
applicant/owner.
143Gömböc Kutató, Szolgáltato és Kerreskedelmi Kft. v Szellemi Tulajdon Nemzeti Hivatala, C-237/19 (in progress). For an explanation
of the referral, see A Laszlo, ‘The right to self-right: CJEU to rule on functionality of shape for decoration and toys on
reference from Hungarian Supreme Court’ (5 July 2019), Kluwer Trademark Blog, available at
<http://trademarkblog.kluweriplaw.com/2019/07/05/the-right-to-self-right-cjeu-to-rule-on-functionality-of-shape-for-
decoration-and-toys-on-reference-from-hungarian-supreme-court/>.
144 See, eg, European Intellectual Property Office (2017), Part B, §4.6: “If a shape or other characteristic derives its appeal
from the fame of its designers and/or marketing efforts rather than from the aesthetic value of the shape or other characteristic
itself, Article 7(1)(e)(iii) EUTMR will not apply”, referring to OHIM, Second Board of Appeal, Case R 486/2010-2, 14
December 2010, at [20]-[21]. But cf Benetton, at [28]; Hauck, at [35]; OHIM, Fifth Board of Appeal, Case R 664/2011-5, 18
March 2015, at [46].
31

Conclusion
Moving from the criticisms that have surrounded the substantial value ground, this contribution has reviewed
relevant case law and identified its underlying rationales. It has also considered that the addition of ‘another
characteristic’ in the language of Article 7(1)(e) EUTMR/4(1)(e) EUTMD has not necessarily altered the
substantial scope of the ground. Finally, it has argued that the substantial value ground might at times overlap with
the absolute grounds concerning distinctiveness, descriptiveness, bad faith and public policy and morality.
However, the justifications underpinning the substantial value ground cannot be absorbed into any of the other
grounds, nor can the application of this ground be overcome on consideration that the sign at issue is distinctive
or has acquired distinctiveness: in this sense, it remains an exclusion with a specific identity and function, which
also serves not to unduly remove ‘objects’ from the public domain145 and does so in a legislative context in which
nothing prevents IPR cumulation per se.146 The substantial value ground performs a unique role that serves to
safeguard the functions and role of the trade mark registration system, as well as reducing the risk that the operation
and limits of other IPRs are circumvented. As such, where relevant, competent authorities should consider this
ground at the very outset, before turning to other questions, eg distinctiveness. A more careful consideration of
this exclusion could also serve to clarify – at last – the practical doubts surrounding its application, including issues
such as the roles of the average consumer, reputation, and the behaviour of the applicant/trade mark owner.
145 See also Senftleben, ‘Public Domain Preservation’, cit, 785.

146For a critical outlook, see M Senftleben, ‘Vigeland and the status of cultural concerns in trade mark law - the EFTA Court
develops more effective tools for the preservation of the public domain’ (2017) 48(6) IIC 683, 689-691.
32

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Forthcoming in Journal of Intellectual Property Law & Practice

The absolute ground for refusal or invalidity in Article 7(1)(e)(iii)

Electronic copy available at: https://ssrn.com/abstract=3484366

Setting the scene: aim, approach, and methodology

mark, OJ L 154, 16.6.2017, 1–99.

of the Member States relating to trade marks, OJ L 336, 23.12.2015, 1–26.

November 2017), at [70].

System (2011), §2.32.

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1. The exclusion for substantial value conferring shapes

I. Origin of the exclusion

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II. Justifications for the exclusion

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C-299/99, EU:C:2001:52, at [37]-[38].

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Article 3(1)(e) of Directive 2008/95.

EU:C:2017:495 (‘Louboutin AG1’), at [69].

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2. Interpretation and application of the ground

40 Simba Toys AG, at [4] referring to Hauck AG, at [25]-[40].

Community, signed at Lisbon, 13 December 2007, OJ C 306, 17.12.2007, 1–271.

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The sign at issue in R 486/2010-2 The sign at issue in R 664/2011-5

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I. Notion of ‘substantial value’

The sign at issue in Hauck Tripp Trapp children chair

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The sign at issue in R 395/1999-3

52 OHIM, Third Board of Appeal, Case R 395/1999-3, 3 May 2000, at [33].

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Examples of different uses of the ‘red sole’

59 Louboutin AG2, at [51].

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The TX1 The Fairway

63 Louboutin AG1, at [72].

January 2016), at [214]-[215]

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II. Type of assessment

November 2017), at [76].

[54]. Yoshida, at [54].

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- the nature of the category of goods concerned,

The sign at issue in R 1313/2012-1

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3. ‘Another characteristic’: an actual change?

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fundamental rights perspective), and Brancusi (2019), 99-101.

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The sign at issue in Textilis

Examples of different uses of the Manhattan design by Josef Frank

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The sign at issue in Lego Juris

94 Louboutin AG2, at [37]-[39]

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The sign at issue in Yoshida Metal Industry

The sign at issue in Vuitton GC The sign at issue in Vuitton CJEU

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on distinctiveness of three-dimensional signs, including the ‘substantial departure’ requirement for

II. Scope and assessment

EU:C:2014:324 (‘Vuitton CJEU’), at [53].