The Regional Court of Munich ruled in the trademark dispute over the famous Swiss Army Knife that no Swiss flag may be applied to products from China. The good reputation of the geographical indication of “Switzerland” was unfairly exploited. What is the recent EU case law on this issue?

LG Munich: Judgement Swiss Army Knife

In its judgment ‘Schweizer Taschenmesser’ (Swiss Army Knife) of 15.06.2021, the Regional Court of Munich (LG München) upheld the action brought by the manufacturer of the famous Swiss Army Knife against the defendant’s use of certain marks with a clear reference to Switzerland (Case No. 33 O 7646/20).

Specifically, the case concerned products, namely pocket knives and multifunctional tools, which are very similar to the famous Swiss Army Knife. A small addition to this: the Swiss manufacturer Victorinox reported the production of the 500 millionth original Swiss pocket knife in 2017 – the Swiss Army Knife is a world star.

The defendant’s products were closely based on the design of the famous Swiss Army Knife, but were products from China. Moreover, not only was the red colour taken from the original Swiss Army Knife, but the products also contained indications such as “SWITZERLAND” or characters that were graphic designs of the Swiss flag, either in isolation or as a component. These products were sold by the defendant via an online platform.

Successful lawsuit: infringement of “Switzerland’s” good reputation

The Swiss original manufacturer took legal action against this before the Regional Court of Munich – and was proven right. According to the LG München, the signs used by the defendant constitute geographical indications of origin whose good reputation the defendant exploits in an unfair manner without justifiable cause.

The court considered it decisive that the design of the products from China closely resembled the ‘Swiss Army Knives’ manufactured by the plaintiff. However, it is precisely this famous Swiss army knife and the applicant’s products that contribute decisively to the good reputation of geographical indications of origin with reference to Switzerland, the court emphasised.

The defendant had argued in vain that the products it sold were clearly recognisable as “souvenir articles”. Consumers would therefore not conclude from the labelling that the products were manufactured in Switzerland. Any possible misleading of consumers was also eliminated by the fact that the product packaging was clearly marked “Made in China”.

However, the Munich Regional Court rejected this argument. It was not relevant here whether consumers might think that the products from China were produced in Switzerland. The Munich Regional Court ruled that if the good reputation of a geographical indication of source was exploited in an unfair manner, it was not additionally necessary for the target public to be misled about the origin of the products in order for the corresponding claims for injunctive relief to be accepted. It remains to be seen how the defendant will deal with this decision; the judgement of the LG München is not legally binding.

In any case, however, it is an interesting ruling that we would like to discuss in more detail here. Recently, there have been relevant decisions and rulings in case law regarding geographical indications of origin, which we will briefly summarise below with reference to the Munich ruling on the Swiss Army Knife.

“Swissness” legislation in Switzerland

First and foremost, Switzerland itself should be mentioned here, because in 2017, an amendment to trademark law came into force in Switzerland, known as “Swissness” legislation for short, which is intended to provide greater protection for the “Swiss brand” against misuse by free riders. Since then, there are new strict regulations and requirements for the right to signal a Swiss origin for goods. In short, to be allowed to market oneself as a Swiss product, at least 50% of the manufacturing costs must be incurred in Switzerland, for industrially manufactured products even 60%.

However, this case was not judged according to Swiss law, but according to German law, based on EU law.

Do other rules apply to “souvenir articles”?

And in EU law there has already been a clear ruling on the argument that a “souvenir article” cannot be confused with a well-known brand article, and that no one would assume that souvenir articles are made in famous places – i.e. geographical indications of origin.

This argument has already been rejected at the highest court level of the EU. In the “Neuschwanstein” case, the ECJ succinctly stated that the Nice Classification does not recognise a class of goods or services called “souvenir articles”. Souvenir articles are thus also subject to the tests for distinctiveness, likelihood of confusion and also misleading for goods and services.

Product packaging “Made in China” – origin of the products

EU law also stipulates that manufacturers of spare parts are obliged to visibly mark the non-original components as spare parts and can then freely sell them; this is part of the case law on so-called repair clauses. Beyond repair and replacement parts, however, such a regulation does not exist – and cannot be applied to the ‘Swiss Army Knife’ case. What is relevant here is whether, for example, consumers are misled about the origin of the products.

This was, for example, the issue for the ECJ in the ‘Swabian Whisky’ case. A prohibited indirect use of a registered geographical indication exists if the disputed designation is identical to the indication in question or is phonetically and/or visually similar to it, it said in the reasons for the judgement. However, the additional precise designations on the label, which made it clear where the whisky came from, were expressly not to be taken into account.

The extremely good reputation and standing in the EU was also an issue before the ECJ in relation to a geographical designation of origin, only recently in the case of “Aceto Balsamico di Modena”. Despite the extremely good reputation of the original Aceto Balsamico, the ECJ only confirmed the high protection claim for the entire term, but since “aceto” and “balsamico” are otherwise common and above all not protected words, there could also be “German Balsamico“.

Conclusion

In many respects, the LG München judgment ‘Swiss Army Knife’ is mirrored by EU case law. It therefore remains interesting whether and how this case will proceed: the judgement of the LG München is not legally binding yet.

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From Meyer-Dulheuer MD Legal Patentanwälte PartG mbB

September 2021