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CJEU: Castles, candy, candlesticks – no happy end at Neuschwanstein?

Court of Justice of the European Union, 6 September 2018, Case C-488/16 P BSGE v EUIPO/Freistaat Bayern

King Ludwig II. of Bavaria was without a doubt an architectural visionary. During his reign in the second half of the 19th century, he initiated the construction of various impressive buildings all across his kingdom which now form an important part of the German cultural heritage. His most breath-taking creation is the world-famous Castle Neuschwanstein (roughly translating to “New Swan Stone Castle”) in the small Bavarian village of Schwangau. Technically still unfinished, its fairytale appearance attracts around 1.5 million visitors a year and served as an inspiration for the “Sleeping Beauty Castle” which can be found in Disneyland theme parks all around the globe.

The saga of the Neuschwanstein marks

It was surely beyond Ludwig’s imagination that his famous castle would at one day be the subject of trademark proceedings with the potential to change the playing field for the European souvenir industry. The Free State of Bavaria, which owns and operates the castle as a museum, has registered the name “Neuschwanstein” through several German and EU trademarks for categories of goods which can serve as typical souvenirs for tourist locations, such as stationery, clothing, games and playthings, jewellery and sweets, as well as for certain services, such as insurance, real estate affairs, and services of an advertising agency.

The German Federal Supreme Court has been called upon first to decide whether or not the name Neuschwanstein can serve as a trademark or whether it refers to a geographic location relevant for the goods and services in question and therefore has to be kept free for all to use. In 2012, the Supreme Court took a balanced and well-reasoned decision, holding that the public would indeed associate the name with the location of the castle whenever goods were concerned which could also serve as souvenirs, or services of the tourism industry. In consequence, the mark remains registered only for unrelated goods and services, such as pharmaceutical preparations”, insurance, telecommunications, and agriculture (German Federal Supreme Court, judgment of 8 March 2012, I ZB 13/11).

One of the EU word marks filed by the State of Bavaria covered a similar range of goods and services as the older German mark, including articles of body and beauty care, jewellery, sweets, toys, as well as the class headings in class 36, telecommunication and beauty care services. This alerted a German trade association for the souvenir industry. Concerned about the industry’s ability to market products with the names of famous historical sites, it requested the cancellation of the EUTM for descriptiveness, arguing that it only designated the origin of the goods and services in question. The EU trademark instances thought otherwise, from the EUIPO to the AG, the General Court and now up to the CJEU.

The Decision of the CJEU

The CJEU outright rejected the notion that Neuschwanstein could serve as a geographic indication for any of the goods and services in question. The court said that the name of the castle is a fanciful creation. The castle is famous for its unusual architecture, but its name cannot have any bearing on the nature and characteristics of the goods sold there as souvenirs. The judges though that the ‘souvenir function’ is not an objective feature of the goods but is merely ascribed to a product by its buyer. In a statement that sits uncomfortably with the court’s own well-known decision in Windsurfing Chiemsee (C-108/97, there at ref. 36), the CJEU said that the place where goods were marketed did not necessarily tie those goods to the place concerned, and to its name, not even where souvenirs are concerned.

Are lakes better locations than castles?

The decision sits uncomfortably with the CJEU’s earlier decision in Windsurfing Chiemsee, where the court expressly confirmed that an indication of the geographical origin did not necessarily have to indicate the place where the goods were manufactured. Rather, such a geographical connection could depend on other ties, such as the fact that the goods were designed in the location concerned. In Windsurfing Chiemsee, the court had also pointed out that the public interest necessitates the free availability of a geographical indication not least because it ” may be an indication of the quality and other characteristics of the categories of goods concerned, and may also, in various ways, influence consumer tastes by, for instance, associating the goods with a place that may give rise to a favourable response.” Arguably, the function of a souvenir item is one of the archetypical examples where an everyday product like a t-shirt or a mug is transformed, by way of a geographical reference, into a special memory of that place, influencing consumer tastes by eliciting a favourable response in the Chiemsee sense.

One could contend that the CJEU’s earlier reasoning on geographic references is both more flexible and more appropriately tailored to reflect public perception: If I buy a mug at Neuschwanstein Castle, which has a picture of the castle on it and says Neuschwanstein, or if I see such a mug in a friend’s kitchen, I am not going to think the name Neuschwanstein indicates the commercial entity responsible for the mug. Instead, all I will think is “ah, a souvenir from Neuschwanstein Castle”. On the other hand, if the name “Neuwschanstein” is used for a service such as “agriculture” or “insurance”, I am certainly not going to think of the castle as a tourist location. The earlier judgment of the German Federal Court of Justice appropriately reflected these differences in the public perception, while the CJEU applied an ill-fitting blanket approach covering the entire specification of goods and services.

The decision is bad news for the tourism and souvenir industry and gives the owners of famous sites a lot of commercial leverage to monopolize the names of locations of cultural heritage. The decision also brings uncertainty about the remaining scope of geographical references: In what ways can a retailer of souvenir goods now legitimately refer to the fact that the souvenir is a reminder of a certain location? We will presumably see an increase in new registrations for the names of famous tourist sites. And the manufacturers and vendors of souvenirs will have to carefully label their goods, or even seek licenses to gain legal certainty.