May 2011 – On 28 August 2009, the AMO adopted a decision against ENVI-PAK, a company engaged in the waste package materials processing business.
ENVI-PAK is the registered holder of the “Der Grüne Punkt” trademark in Slovakia, based on an exclusive licence to the trademark obtained through Packaging Recovery Organisation Europe s.p.r.l. (the “Green Dot”). Pursuant to the licence agreement, ENVI-PAK is exclusively entitled to sub-licence to other entities the use of the Green Dot trademark in Slovakia.
In Slovakia, as in other European countries, producers of waste package material (packagers, resellers, feeders, etc.) have the responsibility to process and recycle waste packages. Many of them do this through specialized contractors, such as ENVI-PAK. ENVI-PAK allows its clients (the “service clients”) to use, along with their services, the Green Dot trademark on the packages. The Green Dot trademark, however, is so widespread and widely recognized by package material producers, that many Slovak companies using package disposal services other than those of ENVI-PAK, find themselves putting goods on the Slovak market wrapped in packages marked with the Green Dot trademark (i.e. they use the Green Dot trademark, but not the services of ENVI-PAK – the “licence clients”). According to AMO, this is very common due to decisions taken by mother companies’ management located abroad and without any input by the Slovak companies on the layout of the packages.
Since June 2007, ENVI-PAK started to approach those companies using the Green Dot trademark on their packages but not using ENVI-PAK's waste management services. ENVI-PAK asserted their trademark rights against these companies and offered them three options: (i) to refrain from using the Green Dot trademark; (ii) to enter into a service agreement with ENVI-PAK; or (iii) to enter into a separate licence agreement to only use the Green Dot trademark.
In July 2007, the AMO launched proceedings against ENVI-PAK and, after a two years’ investigation, they found that ENVI-PAK had abused their dominant position on the product market of (i) collection, processing and recycling of package waste through waste management organisations and on the product market of (ii) licensing third parties for the use of the Green Dot trademark.
AMO established that while ENVI-PAK allowed their service clients use the Green Dot for free, the licence clients had to pay fees for the use of the Green Dot trademark. The fees were determined without regard to the costs incurred by ENVI-PAK in connection with the maintenance of the Green Dot trademark and the fees were set with a view to motivating the licence clients to become service clients – i.e. to use the waste management services of ENVI-PAK rather than to just pay for the use of the trademark.
The Loophole
In the decision of the AMO, the AMO noted that the events indirectly triggering this case date back to shortly before the commencement of the proceedings of the AMO against ENVI-PAK.
On 24 May 2007, the Court of First Instance delivered its judg ment in the lengthy case of Der Grüne Punkt – Duales System Deutschland GmbH v Commission of European Communities (T-151/01) ( “DSD”).
DSD was also a processor of waste packages but the facts of the case were slightly different. DSD was asking all companies using the Green Dot trademark on their packages, irrespective of the waste management system they were using, to pay a fee to DSD for their services. In other words, irrespective of whether the packages ended up being processed by DSD or another company, as long as the packages carried the Green Dot trademark, DSD charged a fee to such companies. DSD’s reasoning behind this was that the Green Dot trademark potentially makes final consumers dispose of the packages in DSD’s bins and that DSD may end up processing other competitors’ waste without being paid for it.
The Commission found this practice abusive as DSD had been charging for services that it had not been providing.
During the review before the CFI, DSD argued that the Commission, by ordering it to refrain from the abusive practice, was imposing a compulsory license to the Green Dot trademark. DSD argued that as long as they were supposed to let some companies use the Green Dot trademark free of charge, their rights in the trademark were being infringed. The CFI dismissed this claim and explained that the Commission’s refraining order was only aimed at the abusive practice ,i.e., letting companies pay for a service that they were not being provided.
The CFI recalled earlier case law (such as the Volvo case) and maintained that the use of a trademark may, on the other hand, be subject to a reasonable fee. The court went further to say that the Green Dot trademark does have a value and that DSD shall not be precluded from imposing a levy in the form of an adequate fee for the sole use of the Green Dot trademark, even where the package bearing the logo has been recovered by another system [paragraph 196 of the DSD judg ment].
The CFI thus opened the doorway to charges for the use of the Green Dot trademark, given its exclusive trademark character. The judg ment given by CFI was upheld on appeal by the European Court of Justice on 16 July 2009.
The Reaction
As established in the proceedings before the AMO, ENVI-PAK was relying on the DSD judg ment when it started to approach the license clients with the three options described above. It has been proven in the proceedings before the AMO that ENVI-PAK had not been taking any steps to enforce its rights to the Green Dot trademark against the non-licensed users of the trademark before the DSD judg ment.
For the reasons stated above, the AMO found the practice of ENVI-PAK abusive and imposed a fine of EUR 18,394. The way AMO calculated the fine is remarkable, too. The basis for the fine was set at EUR 114,966.94 (corresponding to ENVI-PAK’s estimated relevant turnover during the two years and two months of the infringement). The fine was then raised by 15% for aggravating circumstances (according to the AMO, ENVI-PAK was attempting to conceal its anti-competitive conduct and obstructed the investigation) of the abuse (i.e. the fine was raised by EUR 17,245.04) and subsequently, the basis for the fine was reduced by 99% (leaving EUR 1,149.67). AMO's reasoning was that as there were only a few decisions dealing with trademarks in relation to competition law, at both the Community and at national levels, there were good reasons to reduce the fine by such a high percentage. The AMO also concluded that its definition of the relevant market i.e. the market of licensing third parties for the use of the trademark Green Dot, was unprecedented and therefore ENVI-PAK possibly might not have been aware that its conduct was abusive.
ENVI-PAK appealed the decision and the appellate body of the AMO essentially upheld the first instance decision by adopting the decision dated 6 August 2010.
For further information please contact Zuzana Hodonova, Counsel, at .
Published in e-Competitions, N 33096, www.concurrences.com