Owner of well-known mark avoids genericness

In the trademark field, fame has a price – trademarks can be so well known that they become generic and lose their trademark status. Therefore, the owners of popular trademarks are constantly trying to protect their property. The owner of the DIVX mark is particularly active in this respect, as was shown in 2007 before the Bobigny Court of First Instance (DivX v JPF Entertainment (15th May 2007)) and recently before the Paris Court of Appeal (Demsa v Société DivX Inc (14th January 2011)).

US corporation DivX Inc is the creator of the DivX codec, which has become popular worldwide due to its ability to compress video files while maintaining relatively high visual quality. A DVD encoded in DivX can be used only with a DVD player incorporating the DivX technology.

DivX registered the DIVX mark in France on 20th June 2003 for, among other products, sound or image recording devices, transmitting or retransmitting apparatus and computer programs. In order to exploit its technology, DivX set up a licensing network whereby only manufacturers which are part of the network have the right to incorporate the DivX technology into their products and affix the DIVX mark to them.

In 2006 DivX became aware that two companies outside its network – Singaporean manufacturer Akai and its French distributor Demsa – were selling DVD players and other hi-fi products with the DivX logo affixed to them. DivX brought suit against both companies for trademark infringement. The defendants were held liable for trademark infringement at first instance; both the manufacturer and the distributor appealed.

Before the Paris Court of Appeal, the defendants mainly contended that there was no trademark infringement because "DivX" was a generic term and did not designate exclusively DivX’s technology and products. Their argument as to genericness was divided into two sub-contentions: 

• The mark was generic at the time it was registered.
• The mark had “acquired” genericness.

With regard to the first sub-contention (which was based on Article L711-2(f) the Code of Intellectual Property), the court had to assess whether, at the time of registration, the term "DivX" was customary in the common language for a compression technology or, more broadly, for any devices compatible with it. The court established that:

• In 1999 the term "DivX" was chosen arbitrarily by DivX to designate the codec that it had just created.
• Within the context of the market for video-compressing technology in 2003, competitors such as Real Networks, Microsoft or Apple were selling their own codecs under the names MPEG-2, REAL or QuickTime.
• At that time, the term "DivX" was used only to designate DivX's products, the codec itself or products using DivX's technology.

The court concluded that, at the time of registration, the DIVX mark was not necessary, generic or customary to designate the products covered by the application.

The court pointed out that, because the DIVX mark was not generic, it was capable of distinguishing the goods of DivX from those of others and, consequently, could fulfil its function as an indicator of origin. The court expressly noted that generic terms should not be registered due to the "origin function" of trademarks, rather than their "protective function". Signs which are customary in the trade should be kept free for use by competitors. The court insisted that consumers should remain at the very heart of trademark law.

Because the DIVX mark could not be cancelled on the grounds that it lacked distinctiveness at the time of registration, the court turned to the second sub-contention: relying on Article L714-6 of the code, the defendants argued that the DIVX mark had lost its distinctive character by becoming customary in the common language to designate the goods at issue.

The court again adopted a fact-based approach to assess whether the term "DivX" had become customary. The court first pointed out that the DIVX mark was used to refer to DivX's technology, and that most of the time it was used in relation with DivX's products. With regard to the few cases in which the term "DivX" had been used in a generic way by third parties, the court considered DivX's behaviour. It pointed out that DivX systematically intervened to protect its trademark and that its failure to react in a single case in 2007 could not be held against it, since DivX holds up to 94% of the market share and cannot have absolute control over its trademark. The court concluded that the DIVX mark had not become generic since registration.

Since the DIVX mark was valid and had been reproduced without the authorisation of its owner on DVD players and other products, the court had to examine whether the mark had been infringed by the defendants. The appellants tried to rely on Article L713-6(b) of the code, which states that the registration of a trademark does not preclude the use of the same or similar sign as “the necessary reference to state the intended purpose of the product or service, in particular as an accessory or spare part, provided that no confusion exists as to their origin".

The court agreed with the lower court that the term "DivX" had been placed on devices using a file compression technology which is different from that developed by DivX, and that these devices were not even equipped with the DIVX codec. Finally, the court held that the defendants had failed to demonstrate that they had taken steps to prevent confusion among consumers, who were likely to believe that the defendants' products used the DivX technology. Consequently, the defendants could not rely on Article L713-6(b) and were liable for trademark infringement.

With this decision, the Paris Court of Appeal confirmed the strength of the DIVX mark and prevented it from joining the list of genericised trademarks, such as YO-YO, TRAMPOLINE and NYLON.