Community trademarks in light of the Max Planck study
A study carried out by the Max Planck Institute for Intellectual Property and Competition Law and published by the European Commission on 8th March 2011 may lead to amendments that will affect the Community trademark (CTM) system. Among the wide range of issues reviewed, some of the study's recommendations could lead to major changes in the protection of CTMs, particularly in regard to use requirements and the development and handling of conflict issues.
Pursuant to Articles 15(1) and 42(2) of the Community Trademark Regulations, if an earlier trademark is a CTM it must be used “in the Community”. The sufficient territorial extent of genuine use within the EU territory is unclear; this issue is pending before the European Court of Justice (ECJ) in ONEL v OMEL, which relates to genuine use of a CTM made in only a single member state.
In agreement with the guidelines of the Office for Harmonisation in the Internal Market (OHIM), pursuant to which “the appropriate approach is not that of political boundaries but of market(s)”, the study recommends that a CTM should not be required to be used in more than one EU member state in order to prove genuine use. Accordingly, the study proposes that the wording of Article 15 remain the same and that the ECJ clarify the territorial conditions required for genuine use in the Community within the meaning of this provision.
This approach is in line with the purpose of the CTM system to be open to undertakings of all kinds and to avoid discriminating factors for small enterprises. This is also reflected in the Council and Commission Joint Statements of 20th October 1995 (B 10 to 15), recognising that: “The Council and the Commission consider that use which is genuine within the meaning of Article 15 in one country constitutes genuine use in the Community.”
These principles have been taken into account and applied by OHIM over time, but the author agrees that a general rule cannot be set forth and, as suggested in the study, genuine use of a CTM should be assessed on a case-by-case basis and in light of the criteria established by the ECJ.
In particular, the author agrees that as previously acknowledged by the guidelines, the assessment of use under Article 15 must be made on the basis of EU, rather than national, standards.
In light of these considerations, it should be highlighted that there are risks connected with use in a single country since such issue must be considered on a case-by-case basis; therefore, it cannot be ideal for use of a CTM to made in only one EU member state as, in the absence of the movement of goods between at least two EU member states, it may be hard to fulfil the genuine use requirements.
However, in case of a CTM used and known territorially outside the country where a later national application is filed and where a market conflict would not arise, it may be difficult to justify the enforceability of such earlier CTM against the later national application.
The principles behind the suggested “coexistence" rule (pursuant to which, under certain defined circumstances, if an application filed in good faith conflicts with an earlier CTM registered for more than 15 years and used in a limited part of the Community “remote” from the relevant country, the two trademarks may coexist) appear to be well founded. However, this rule has been construed using unclear terms that could lead to situations of legal uncertainty, from the concept of the “remote” part of the European Union where use of the CTM is made to the criteria for determining and proving the good or bad faith of the applicant for the later national trademark.
In order to streamline the CTM Register, it has been suggested that a three-year period replace the five-year period after registration of a CTM following which, according to the Community Trademark Regulation, proof of use of the registered CTM must be provided at the request of a third party in opposition or cancellation proceedings.
While the study does not propose this change and the requirement of a formal statement of use in support of CTM applications, it acknowledges that the registration of a trademark sustained by a concrete intention of an applicant to use the mark in the relevant territory is laudable, although such general intent should materialise into actual use only after the expiry of the five-year period.
As observed by the study, formal use requirements would not be in line with the CTM system and most of the national procedures of EU member states, where a registered right prevails over the effective trademark use requirement. Moreover, such formal requirements would imply administrative disadvantages, such as burdensome procedures and possible backlogs at OHIM, and would probably prove onerous for CTM owners, which are used to a system based on registration as the fundamental tool for the protection of trademarks without an obligation to demonstrate use in order to secure or maintain registration.
However, the author agrees with the study’s proposal to amend the current system of obtaining registration in three classes for one basic fee by introducing additional fees for each class beyond the first covered in a CTM application for registration or renewal. Such change would stop leading CTM owners from including further international classes (usually in their entirety) referring to products or services beyond those of real interest to them. The present option to cover two or three classes under a single fee often leads applicants to file or renew CTMs in relation to products or services in respect of which they will never be used, to the purpose of gaining a wider scope of protection for their brands at no additional cost.
Except for trademarks that are well known or intended to be used in connection with a large range of goods and services, the current fee rule provides no economic advantage; rather, it produces potential costs which can be much higher than the payment of extra fees for any further class beyond the first. The existing rule increases the risk of objections from third parties (leading to oppositions, cancellation actions or out-of-court disputes) in relation to products and services beyond the real commercial interests of CTM applicants and which could have been easily avoided by discouraging multi-class applications of unreasonably large scope.
Such economic risks affect not only applicants for later CTMs, but also owners of earlier rights, who may find themselves forced to take action against third parties’ trademarks in connection with products or services that, even if formally claimed in the later applications (or registrations), will never be marketed under such trademarks.
The study’s proposal that “a mark fulfilling the criteria for extended protection based on reputation [Article 8.5] should at the same time also be considered as well-known in the meaning of Article 6bis of the Paris Convention” should offer more clarity in current practice as regards the relationship between these two formal categories of trademark.
Although some opinions argue that this recognition would be out of step with some national law and practice, arguably it would constitute a favourable amendment to enhance the protection of all trademarks enjoying a high profile in the market, whereas similar characteristics and conditions are usually assessed in order to recognise a trademark as either “reputed” or “well-known” among the public.
From this point of view, registration should not be compulsory for a CTM in order to obtain protection against damage to its distinctive character or repute. In addition, any advantage of legal certainty given by the requirement to register would appear to be surpassed by the benefit of enhancing the protection of the trademark's value and the greater attention drawn to its additional functions (eg, advertising, guarantee of quality).
Such privileged protection should not be restricted exclusively to registered rights and OHIM often appears to consider in an equivalent manner reputed and well-known trademarks, usually adopting indiscriminate use of the two different terms in its formal decisions on opposition and cancellation proceedings. Accordingly, a more equalised protection of well-known and reputed trademarks would also have the practical positive effect of eliminating – or at least reducing – unclear references to the two mentioned categories of trademark.
Conflicts and procedural issues
Among the potential amendments involving possible advantages or disadvantages in trademark conflict matters, the study enquires whether the period for filing oppositions should be reduced from three to two months, concluding that there are insufficient grounds for this change.
Such an amendment would be particularly detrimental for amicable resolution of CTM conflicts, as it would reduce the period in which to reach out-of-court settlements before the deadline to oppose the conflicting application, thus precluding the need to proceed with formal oppositions.
Since the term to oppose CTM applications cannot be extended, any advantage in speeding up the CTM registration process through the introduction of a shorter period for filing oppositions would not justify the disadvantage of reducing the available time within which, following publication of a CTM, it is possible to reach agreement between the parties, thereby avoiding contentious proceedings.
On the other hand, a shorter period in which to oppose CTM applications could prove suitable, provided that at the same time, a provision were adopted to entitle the parties to request an extension of the opposition term if settlement negotiations were pending and if such request were filed with the consent of both parties.
Despite 48% of trademark proprietors being in favour of OHIM examining CTM application on relative grounds for refusal (in addition to absolute grounds), the study concluded that the current ex officio examination based on absolute grounds only should remain unchanged. This makes sense as the current system in force is in line with EU member states' national procedures. An amendment to extend examination to relative grounds at Community level would not only prove burdensome for OHIM and slow down the CTM registration process, but also increase the already significant risk of objections based on third parties’ earlier rights.
However, the author agrees with the study’s favourable opinion on the current practice of mandatory and optional searches conducted by OHIM. If optional searches of national trademarks are not deemed sufficiently reliable, the mandatory searches in the CTM Register and the subsequent notification to owners of earlier rights constitute an acceptable compromise, offering a well-balanced and reasonable protection tool for CTMs without any procedural disadvantages.
The study finds that no advantages would derive from including bad faith as an ex officio absolute ground for refusal. However, bad faith should be included as another ground to oppose CTM applications (not just for commencing an invalidity action, as at present). Bad faith is a factually relevant circumstance that can be detected at the time of filing an application, whereas no reasonable advantage appears to derive from postponing such claim to the period subsequent to registration.
The introduction of bad faith as a further ground to file an opposition against a CTM application would facilitate and increase protection for earlier rights, particularly in regard to owners of earlier trademarks enjoying reputation or well-known character, which are more likely to be subject to bad-faith attempts of usurpation by third parties.
Consistency of decision making
The enhancement of consistency in decisionmaking should be particularly recommended at national level, taking into account the practice of many EU member states, where decisions rendered by the respective national trademark offices often stem from extremely brief rulings not supported by detailed reasoning, especially at first-instance administrative level.
Although national decisions are not binding on OHIM, such improvements in national decision making could be indirectly favourable for the protection of CTMs, since national judgments can be taken into account by OHIM and are usually submitted by the parties as relevant evidence in support of their arguments in CTM proceedings.
Classification of goods and services
Harmonisation and cooperation between the practices of national trademark offices and OHIM concerning the classification of products and services, as proposed by the study, would be advantageous, particularly if it promoted the acceptance by all offices of class headings and generic descriptions of the goods and services covered by international classes.
However, the author disagrees with the study's proposal that if a product or service does not fall clearly within a particular generic category covered in an international class, the applicant should be required to identify the goods or services in order to claim them in the application. Such a requirement appears unclear and dependent on discretionary parameters that could create uncertainty for CTM applicants, without any relevant improvement of current OHIM practice.
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