Code-X / Cody's

In a recently published judgment, the European Court of Justice ruled on a likelihood of confusion between the trademarks “Cody’s” and “CODE-X” (T-198/21, judgment of 23 February 2022) and dealt in detail with the assessment of phonetic similarity and the factual circumstances.

The subject matter was the application for the EU word mark “CODE-X” for, inter alia, non-alcoholic soft drinks and energy drinks. The opponent, Cody’s Drinks International GmbH, filed an opposition based on its earlier German word mark “Cody’s” as well as the German and the international registration designating the European Union  figurative marks “Cody’s”, also registered for, inter alia, beers and non-alcoholic beverages in Class 32.

The Opposition Division rejected the opposition on the ground that there was no likelihood of confusion. The Board of Appeal allowed the appeal in its entirety and annulled the decision of the Opposition Division. In view of the identity of the opposing goods, the normal level of distinctiveness of the earlier sign and an above-average degree of similarity from a visual point of view and a high degree of similarity from a phonetic point of view, there was a likelihood of confusion.

The action brought against this decision was successful. The General Court annulled the decision of the Board of Appeal and rejected the opposition.

First, the Board of Appeal wrongly considered the relevant public’s level of attention to be below average. According to settled case-law, the goods in question are everyday consumer goods aimed at the general public, whose level of attention is average.

The General Court then dealt in detail with the visual, phonetic and conceptual similarity of the signs.

From a visual point of view, the Court found that, notwithstanding the similarities in the first three letters, the word elements are distinguished by the last two letters and, in particular, by the introduction of a hyphen or an apostrophe. These signs and the presence of different vowels and consonants at the end of the sign represented significant differences. The difference created by the alphabetic characters separated by different punctuation marks was visually perceptible. Accordingly, the Court concluded that the signs were visually similar to only a low or perhaps average degree.

From a phonetic point of view, the Court noted that, irrespective of whether the mark applied for was pronounced in three or two syllables, the hyphen had an effect on the pronunciation of the mark by punctuating one of the syllabic breaks. The relevant public would therefore pause before pronouncing the final syllable. In the earlier word mark, on the other hand, the apostrophe would have no effect on pronunciation. Thus, the letter ‘X’ and the hyphen preceding it in the mark applied for would mark a hyphenation which is absent in the earlier word mark. Against this background, the Court considered the signs to be phonetically similar only to an average degree.

Conceptually, it was not questioned that the signs were different.

Notwithstanding the similarities, the Court denied a likelihood of confusion. In the context of the global assessment of the likelihood of confusion, the visual, phonetic and conceptual aspects of the conflicting signs could be given different weight, depending on the objective conditions under which the marks may appear on the market. However, in that context, the reference must be to the circumstances in which the types of goods covered by the marks in question are normally marketed.

The perception of the signs in a particularly noisy environment, such as a bar or a nightclub, is not the only factor to be taken into account. Rather, it is necessary to take into account how those signs are perceived by the relevant public under normal conditions of distribution. Although drinks, in particular alcoholic beverages, are often ordered orally, there is no evidence that the ordering conversation takes place in a crowded and noisy bar or restaurant. For example, orders would also be placed after looking at the drinks menu. Moreover, bars and restaurants are not the only distribution channels for drinks. Drinks are also sold in supermarkets and other retail outlets, where the consumer can choose the product and rely on the image of the mark affixed to it.

In conclusion, the Court held that even if phonetic perception was sometimes preponderant in the case of beverages, such a consideration did not apply in all cases.

Finally, in assessing the likelihood of confusion, the Court took into account that conceptual differences between the signs at issue may counteract phonetic and visual similarities between them, provided that at least one of those signs has, from the point of view of the relevant public, a clear and specific meaning, so that the public is capable of grasping it immediately . Thus, the relevant public would immediately perceive the opponent´s word mark “Cody’s” as a reference to the possessive form of the name “Cody”. The element ‘code’ in the mark applied for would also be regarded as part of the basic vocabulary of the German language and immediately understood. Due to the different meanings in each case, the conceptual difference would cancel out phonetic and visual similarities. A likelihood of confusion could therefore be ruled out.

The General Court annulled the decision of the Board of Appeal, made use of its power to alter decisions under Art. 72 (3) of the Regulation and rejected the opposition.