Summaries of judgments made in collaboration with the Portuguese judges and référendaire of the General Court (Maria José Costeira, Ricardo Silva Passos and Esperança Mealha)
EU trade mark – Application for EU figurative mark CANNABIS STORE AMSTERDAM – Absolute ground for refusal – Trade mark contrary to public policy – Article 7(1)(f) of Regulation (EU) 2017/1001 – Article 7(2) of Regulation 2017/1001
1 – Facts
In 2016, Santa Conte, resident in Naples (Italy), filed an application for registration of an EU trade mark for food, drink and restaurant services with the European Union Intellectual Property Office (EUIPO), as reproduced below:
Registration was refused on the basis of Article 7(1)(f) of Regulation No 2017/1001, according to which “shall not be registered (…) trade marks which are contrary to public policy or to accepted principles of morality”.
Disagreeing with this decision, Santa Conte challenged EUIPO’s decision before the General Court of the European Union (GC).
2 – Decision
The GC recalled that the decisive criterion for assessing whether a sign is contrary to public policy is the perception which the relevant public (understood as reasonable persons with average sensitivity and tolerance thresholds) will have of the mark. It also pointed out that, according to paragraph 2 of the above-mentioned article and its case-law, the refusal at issue applies even if the grounds for it exist in only one Member State (MS).
Next, the GC stated that the term “cannabis” refers to a textile plant, for which the common organisation of the market and production are highly regulated within the EU. In particular, its main psychoactive constituent, tetrahydrocannabinol (THC), may not exceed the threshold of 0.2%. However, the GC also stated that the cannabis leaf has become a “media symbol” for marijuana, a narcotic product derived from the former, which is illicit in a large number of MS (despite the current debates about its legalisation for therapeutic and even recreational purposes). In addition to this circumstance, the GC mentioned that the importance given to the term “cannabis” and the mention of the words “store” and “Amsterdam” in the sign make it perceived by the public as “cannabis store in Amsterdam”. In this sense, according to the GC, this sign is a clear and unequivocal allusion to the marketing of marijuana.
The GC subsequently stated that combating the spread of cannabis is a public health objective, given the harmful effects of this drug. As the prohibition of cannabis products (which have a THC content of more than 0.2%) seeks to protect an interest considered fundamental by the EU, according to its systems of values, the TG concluded that the regime applicable to the consumption and use of that substance is covered by the concept of “public policy” for the purposes of the above-mentioned article.
The GC added that under Articles 83 and 168(1), third subparagraph, of the Treaty on the Functioning of the European Union, drug trafficking is one of the areas of particularly serious crime with a cross-border dimension, in which the EU legislature may intervene, and the action of MS in reducing drug-related health damage should be complemented by the EU, notably through information and prevention.
On those grounds, the GC ruled that the registration of the sign at issue as a EU trade mark should be refused on absolute grounds, upholding the contested decision and dismissing its appeal.
Aid granted by the States – Concept of State aid – Advantage – Transfer of State resources – Granting of an advantage to beneficiaries – State intervention relieving the burden normally borne by an undertaking’s budget – Reduction of financial guarantees for the rehabilitation of mining sites – Inclusion – State investment for the rehabilitation of mining sites guaranteeing a higher level of environmental protection – Decision declaring the aid partially incompatible with the internal market and ordering its recovery.
The present case concerns an action brought by a Spanish company, Iberpotash, SA, against EU Decision 2018/118 on State aid SA.35818 implemented by Spain in favour of Iberpotash, a company which owns and operates two potash mines in Catalonia (Spain). In this decision, the Commission considered that two measures adopted by Spain, namely the establishment of too low an amount of guarantees for mining companies for the rehabilitation of the sites and to cover the costs of possible environmental damage caused by mining and the State investment of around EUR 7.9 million for the recovery of the Vilafruns heap, constituted State aid. The first measure was found to be incompatible with the internal market, while the second measure was found to be partly compatible with the internal market under the Community guidelines on State aid for environmental protection (2008/C 82/01), and partly incompatible, in particular as regards the part exceeding the maximum amount of investment aid aimed at improving the level of environmental protection.
The Court dismissed the action in its entirety.
(a) As regards the first measure, the legal obligation on mining undertakings to provide bank guarantees for the post-mining rehabilitation of mining sites is provided for in Article 14 of Directive 2006/21/EC on the management of waste from the extractive industries and amending Directive 2004/35/EC and seeks to ensure that mining undertakings have sufficient resources to cover the future costs of restoring mining sites and, in particular, to avoid the need for the State to intervene to cover those costs.
The Court held that the Spanish State was under an obligation to intervene in the alternative in the event of failure to comply with the environmental protection obligations imposed on mining undertakings, on the one hand, in accordance with national law and, on the other, in accordance with European Union law, in particular Article 6(3) of Directive 2004/35/EC on environmental liability with regard to the prevention and remedying of environmental damage. Moreover, if the State did not act in the place of undertakings, in the event of their failure to comply with their environmental obligations, it could fail to fulfil its obligations under Directive 2006/21/EC and run the risk of being subject to infringement proceedings and being ordered to pay periodic penalty payments until such time as those obligations have been met.
The applicant contested that the measure in question constituted aid, since it did not satisfy the criterion of transfer of State resources and did not entail any reduction in the State budget. The Court considered that the risk of an additional burden on the State budget was also present in a situation such as that in the present case, where the applicable provisions require the establishment of guarantees to cover environmental risks, albeit with a private banking institution, and where there is an obligation for subsidiary State intervention to cover those risks, since the establishment by a mining company of a guarantee at too low a level increases the risk of the State having to intervene. This increased risk is a burden on the State budget and the increase in that risk is the direct consequence of the amount of guarantees due being set too low (paragraph 71).
Owing to the obligation of the State to take the necessary rehabilitation measures in place of the undertaking legally required to carry out mining operations, the level of the guarantees established for that undertaking was liable to have an impact on State resources in so far as the economic risk of its subsidiary intervention would, when the level of the guarantees was set too low, be increased quantitatively in the event, in particular, of the insolvency of that undertaking (paragraph 63).
The applicant contested the existence of a sufficiently concrete risk of an additional burden on the State in the future because of its financial capacity to cover possible environmental damage resulting from its mining operations. The Court held that, assuming that the applicant had sufficient financial capacity to reduce the risk of the State having to intervene, it should be considered that, given the fact that the financial situation of an undertaking may change at any time as a result of various economic contingencies, and in so far as, in general, it is likely to do so, the obligation to provide a financial guarantee is intended precisely to ensure that funds are available at all times and irrespective of the financial capacity of the entity required to provide such a guarantee, the financial capacity of the latter has had no influence on the determination of the appropriate amount of such guarantees and, ultimately, on the assessment of the existence of a sufficiently concrete risk of a burden on the State budget (paragraph 67).
In so far as the applicant contested the applicability of the case-law on State guarantees, the Court pointed out that although, in the case of State guarantees, the State budget was burdened, inter alia, by the reduction in premiums which it itself received and therefore by an immediate reduction in its revenue, in a situation such as the present case, there was an advantage in favour of the applicant as a result of the reduction in premiums which it had to pay on the amount of guarantees lower than it should have done, thereby altering normal market conditions. The fact that the loss of income related to the budget of the private banking institution did not prevent the identification of the existence of an advantage for the applicant arising from the setting of the financial guarantees, which it had to provide, at a lower level than necessary. On the other hand, the risk of an additional burden on the State budget was also present in the present case, since the provision by the applicant of a guarantee at too low a level increased the risk that the State would have to intervene (paragraphs 70-72).
(b) As regards the second measure, namely the investment for the recovery of the Vilafruns heap, the Court considered that the intervention by the State, decided on and financed entirely by the public authorities, constituted a positive benefit, in the same way as a subsidy, necessarily entailing an advantage for the applicant, which, thanks to the recovery of the heap, will not have to implement other rehabilitation measures for a very long period. The measure in question had undeniably favoured the applicant by reducing the environmental risks for the future associated with the Vilafruns site (paragraph 165).
In so far as the applicant criticised the Commission for failing to demonstrate the future risks arising from the Vilafruns site, the Court considered that the Commission had recognised that the applicant was in a legal situation as regards compliance with its environmental obligations and that, by means of the measure for the rehabilitation of the heap, the State had decided to adopt a higher level of environmental protection than was necessary at the time when the contested decision was adopted. Since the State may decide to apply a higher level of environmental protection than the minimum required, as is apparent from paragraph 9 of the Community guidelines on State aid for environmental protection (2008/C 82/01) and, a fortiori, may decide to take measures which were not yet necessary at a given time but which may be necessary in the future in the general public interest, that does not mean that the applicant, as the owner of one of the sites covered by the State measure, is exempt from bearing the costs thereof. Furthermore, the Court considered that, under the applicable national legislation, the owner of a mine which was no longer in operation had to comply with the rehabilitation plans approved by the mining authorities and that, in the present case, the competent authorities must be regarded as having approved the measure for the rehabilitation of the Vilafrun slag heap. Finally, the Commission had taken due account of the fact that the Spanish State had opted for a higher level of environmental protection and had drawn the necessary conclusions when examining the compatibility of the aid, concluding specifically that only part of the amount of the State investment had to be recovered by the company in accordance with the Community guidelines on State aid for environmental protection (2008/C 82/01) (points 170-172).