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Coming of age? The future of trade mark protection in the European Union

03/05/2013

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United Kingdom

The European Union's first unitary IP right, the Community Trade Mark (CTM), celebrates its 17th birthday this month and, like many 17 year olds, is set to come of age over the next few years.

First appeared in Intellectual Property Magazine, 1 May 2013

The European Union's first unitary IP right, the Community Trade Mark (CTM), celebrates its 17th birthday this month and, like many 17 year olds, is set to come of age over the next few years; in this case by providing the basis for a more harmonious and accessible system of trade mark protection across the member states of the European Union.

This rite of passage comes in the form of a range of initiatives that will modernise the CTM Regulation and Trade Mark Directive (as well as the Trade Mark Fees Regulation) with the aim of making trade mark systems within the European Union more efficient, effective and affordable.

After the changes, the CTM will assume its new identity as "the European Trade Mark" with the EU agency responsible for administering the unitary right becoming the "European Union Trade Marks and Designs Agency" – changes that will no doubt please both trade mark owners and practitioners who find the existing terms rather cryptic.

Whilst a major overhaul of the co-habiting unitary and national systems is not required, the journey of self-discovery has yet to see the extensive body of jurisprudence emanating from the Court of Justice of the European Union codified in legislation. The CTM was born at a time when the Digital Age was itself in its infancy and despite significant changes in the way companies conduct business many national offices have failed to keep up with technological advancements.

The Commission has recognised that national offices with outdated IT systems are falling further behind the CTM in terms of efficiency, which, in a worst case scenario, could lead to national trade marks becoming obsolete. The Commission's goal of preserving national trade marks alongside CTMs should be applauded by small and medium sized enterprises (SMEs). National trade marks will often be sufficient for an SMEs needs and are less likely to give rise to disputes with third parties elsewhere in the EU.

The need for IT tools that reflect the information intense nature of business today cannot be underestimated and project-driven funding based on grants will be drawn from the considerable annual income of the EU agency. Co-operation between national offices and with the EU agency will be grounded in Article 52 of the recast Trade Mark Directive and trade mark owners can only benefit from the integration resulting from collaborative IT developments e.g. online trade mark databases that make clear any links that exist between a national mark and a CTM (seniority claims for example) .

Key Reforms:

1. To streamline and harmonise national registration procedures with the CTM Regulation

Proposals to align the principal procedural rules

The alignment of procedural rules for national marks may have the single biggest impact on trade mark owners in the EU, who, at present, can be frustrated by the divergent – and sometimes idiosyncratic – nature of the registration procedure outside of the CTM system. Much of this frustration stems from the current difficulties experienced removing earlier rights as obstacles to registration.

The proposals, which would be legally binding on member states, include:

  • The need for goods and services to be identified by the Applicant with sufficient clarity and precision to enable the competent authorities and businesses to determine the extent of protection the trade mark confers;
  • the examination of a trade mark application to be confined to inherent registrability;
  • the provision of an efficient and expeditious administrative procedure to oppose the registration of a trade mark application on the basis of earlier rights before the national office;
  • the provision of an administrative procedure to challenge the validity of a trade mark registration before the national office;
  • the provision of a non-use defence in opposition and invalidation proceedings.

What will this mean for trade mark owners?

As with the revision to the CTM Regulation, the principles formulated in the IP TRANSLATOR case will apply to the national offices. However, it is currently unclear whether, like the CTM system, the national offices will require the Applicant to list all goods or services included in the alphabetical list when the trade mark owner's intention is protection for all terms under the class heading.

It seems unlikely that national offices operating under a 'class-heading-means-what-it-says' practice, such as the UK-IPO, would make this a requirement as it will be administratively burdensome and contribute to both "cluttering" of the Register and an increase in avoidable oppositions (especially in classes with a diverse range of goods and services such as Class 9).

Examining the eligibility of a trade mark application for registration on the basis of earlier rights creates unnecessary and often artificial barriers to registration and the removal of this time consuming and inefficient procedure will be welcomed by trade mark owners. In particular, such a procedure cannot establish the validity of the earlier right and may oblige the later trade mark owner to take remedial cancellation action (normally on the grounds of non-use) to secure registration, incurring unnecessary (and often very expensive) costs in the process.

To offset the removal of examination on earlier rights, all Member States will now be required to provide a genuine inter partes opposition procedure. This must include a mandatory "cooling-off" period of at least two months to enable trade mark owners to negotiate for a commercially relevant, cost effective and relatively quick resolution.

The Member States will also be required to provide an administrative cancellation procedure, which will see an end to trade mark owners in some countries being compelled to challenge the validity of an earlier registered right through the Courts – an unnecessarily complex and expensive process for the multinational and SME alike. In a jurisdiction such as Italy, where until very recently there was no opposition procedure and only costly Court proceedings for cancellation, trade mark owners can expect to see a significant difference in the time and money it takes to register a trade mark.

The requirement above will be complemented by the inclusion of a non-use defence in national opposition proceedings. The trade mark owner will now be able to challenge the validity of the earlier rights relied upon in oppositions in the same way they would under the CTM system. The effect of this will mean that the Applicant may successfully defend themselves against an opposition and obtain a national trade mark registration years earlier than previously – and at a considerable cost saving.

As regards the period within which the trade mark owner must commence use, the proposed amendments to the Trade Mark Directive seek to remove inconsistencies that currently exist. Some national offices, including Germany, operate post-registration opposition procedures and the calculation of the beginning of the five year grace period from "the date of the completion of the registration procedure" takes into account the conclusion of the opposition procedure. The amendment of this wording to "the date of registration" should ensure all EU trade mark owners are on a level playing field.

Proposals to achieve greater approximation of substantive law

In respect of the mandatory implementation of substantive law, trade mark owners most likely to benefit from their trade marks with reputation becoming enforceable against later marks covering identical, similar or dissimilar goods and services. Spain is a notable example of a member state that does not currently recognise the concept of a trade mark registration with reputation, forcing trade mark owners of reputable marks in Spain (or the wider EU) to rely on likelihood of confusion grounds, even when the respective goods and services are quite different, or go to expense of proving their mark is “well-known” in Spain within the meaning of the Paris Convention.

2. To modernise and improve the provisions of the Trade Mark Directive and CTM Regulationby clarifying and incorporating jurisprudence

Proposed changes will be applicable to both the Trade Mark Directive and CTM Regulation with the envisaged effect of modernising and improving existing provisions, whilst increasing legal certainty for trade mark owners.

The removal of the requirement that a trade mark be "capable of being represented graphically” is likely to push the boundaries as to what trade mark owners will attempt to register. However, the increased level of rights conferred by a registered trade mark will be of more practical and immediate benefit to their owners.

The recast provisions interestingly reject rather than accept the reasoning in the Philips/Nokia judgment and allow a trade mark owner to prevent counterfeit goods destined for non-member states from being transported through the customs unions of the EU.

The trade mark owner will also be able to prevent the importation of goods into the EU where only the consignor "acts for commercial purposes", which is aimed, in particular, at discouraging the ordering and sale of counterfeit goods over the internet.

More generally, the evolution of case law to "black letter" law should improve the consistency of national office and agency decisions at first instance.

3. To revise the Trade Mark Fees structure at national and EU level

It is proposed that all offices in the EU will have a fee structure where a separate class fee will be payable for each additional class beyond the first (and not the third as currently applies under the CTM Regulation) at the point of filing or renewal.

It is proposed that the filing fee structure for the CTM will be €775 for a mark in one class, €825 for two classes and €900 for a mark in three classes – but the final figures will depend on further discussions.

This fee structure is designed so SMEs will no longer feel "priced out" of obtaining EU-wide protection or obligated to cover goods and services on the periphery of their business activities.

However, with the price for a CTM in 3 classes staying constant it remains to be seen whether trade mark owners will settle for a narrower scope of protection for the sake of a €125 saving. If the streamlining of the national and EU trade mark systems, in terms of both the de-cluttering of registers and reduction in avoidable oppositions, is the main objective of these revisions, a larger increment per class will be needed to incentivise trade mark owners (especially multinationals) to restrict the filing or renewal of marks to core goods and services.

Conclusion

The Commission's proposals will improve access to trade mark protection for all owners regardless of their size, business activities or geographical presence.

During its young life, the CTM has helped establish a harmonised yet multi-faceted trade mark regime in the European Union and will now mature into a model that can facilitate genuine interoperability between the unitary and national trade mark systems. 

James McAllister is a Trade Mark Assistant and Laura Witherspoon is a Trainee Solicitor in the IP protection and enforcement group at Fieldfisher.

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