Background – EU reviews trade mark system

In 2008 the European Commission decided a review of the functioning of the trade mark system in Europe was required in order to further harmonise the national laws of Member States, streamline procedures, facilitate cooperation between Member States, support anti-counterfeiting and to better reflect the modern business environment.

The Max Planck Institute was tasked with conducting the review in 2009 and following its report the Commission launched its proposal for revision of the Directive and the Regulation in March 2013. Finally, following a process involving drafts, consultations and revisions, the European Parliament has approved the European trade mark reform package, meaning that the new European Union Trade Mark Regulation and the new Trade Mark Directive will now progress to publication in the Official Journal of the European Union.

Once published, the Regulation will enter into force 90 days later, the Directive 20 days later. Member States will have three years to transpose the Directive into their national laws. The only exception is in relation to the implementation of administrative invalidation and revocation procedures at certain national IPOs of Member States where currently the only course of action is through the court system. Those Member States will have seven years to implement the new administrative procedures.

Below we have set out a non-exhaustive list of what we consider to be the most noteworthy points and changes to be aware of:

1.  New terminology

All references to the Community are replaced with the European Union. The new Regulation will therefore be known as the European Union Trade Marks Regulation (EUTMR) and the Community Trade Mark is renamed, the European Union Trade Mark (EUTM). The Office for Harmonisation in the Internal Market (OHIM) will become the more intuitively named European Union Intellectual Property Office (EUIPO).

2.  Non-graphical representations

Trade mark applications no longer need to represent marks graphically. The expectation is that it will therefore be easier to register non–traditional signs such as sounds or smells. The stated requirement is that the sign applied for is “capable of… being represented on the register in a manner which enables the competent authorities and the public to determine the clear and precise subject matter of the protection afforded to its proprietor”.

3.  Trade mark classification

The Trade Mark Directive and EUTMR have incorporated the CJEU’s decision in the IP Translator case (Case C-307/10). It is important to note that since the decision in this case, the wording of trade mark class specifications is interpreted literally. Trade mark owners should be careful to ensure that  all goods and services in respect of which the mark is, or will be, used are included within the class specifications filed to ensure the desired scope of protection is achieved—which, of course, also has a bearing on enforceability. The relevant provision states that goods and services should be identified with sufficient clarity and precision so that the extent of the protection can be readily determined. Whilst the class headings of the Nice classification system may be used, they must comply with the required standard.

ACTION POINT: Owners of EUTMs filed before 22 June 2012 may, within six months of the entry into force of the EUTMR, declare that their intention at the date of filing was to seek protection in respect of goods or services, which must be identified clearly and precisely, beyond those covered within the literal meaning of the relevant class heading. The additional goods or services must have been included in the prevailing Nice class at the time. Without prejudice to the application of provisions on non-use, the Register will then be amended accordingly.

Where specifications are amended, the owner will not be able to rely on the additional goods or services to prevent use of another mark where use of that mark commenced before the Register was updated. In such cases, the owner will need to rely on the literal interpretation of the original, specification prior to amendment.

4.  Absolute grounds for Refusal or Invalidity

  • Signs which consist exclusively of the shape or another characteristic which results from the nature of the goods or is necessary to achieve a technical result, or which gives substantial value to the goods, may not be registered.This absolute ground, which cannot be overcome on evidence of acquired distinctiveness, has been extended to include “other characteristics” beyond shape.
  • Additional grounds:The following grounds are also added as absolute grounds for refusal: designations of origin, geographical indications, traditional terms for wine, traditional specialities guaranteed and plant varieties.

5.  Relative grounds for refusal or invalidity

  • Designation of origin or geographical indications.The owner of a designation of origin or a geographical indication can rely on those rights to prevent the registration and use of a subsequent trade mark.
  • Marks with a reputation – ground of opposition extended to cases where goods or services are similarProtection for trade marks that have established a reputation are extended. A trade mark opposition can be based on a reputation claim, irrespective of whether the goods and services covered by the opposed applications are similar or dissimilar to the goods or services for which reputation is claimed and where use would take unfair advantage of, or be detrimental to, the distinctive character or repute of the earlier mark.

6.  Infringement

  • Company names

    using a registered trade mark as a trade or company name (or part of such) is a specific infringement.

  • Goods in transit

    the owners of EUTMs will be able to prevent third parties from bringing goods, bearing an EU registered trade mark or one which cannot be distinguished in its essential aspects from that trade mark (including packaging), into the EU in the course of trade but which are not released for circulation. Previously only goods that were in free circulation in the EU were deemed to infringe, whereas under this rule the mere transporting or storing of goods could be an infringement.

    However, there is an important proviso: the entitlement will lapse if the holder of the goods can show that the trade mark owner is not entitled to stop the goods being placed on the market in the country of the good’s final destination.

  • Preparatory acts / packaging

    trade mark owners can bring a claim of infringement to prohibit preparatory acts in relation to the use of packaging or other means such as labels or tags to which the mark may be affixed where there is a risk that the packaging, etc. will be used in relation to goods or services and that use would constitute an infringement of the owner’s rights.

7.  Defences to Infringement

  • Using trade marks for reference purposes

    Those who use a trade mark to identify or refer to goods or services have a defence to any claim of infringement. The defence is particularly strong when the trade mark is used to indicate the intended purpose of a product / service, in particular relating to accessories or spare parts.

  • Own name defence

    the “own name” defence is now limited so only natural persons can rely on the fact that they are using their own name or address in accordance with honest business practices as a defence to infringement. Businesses can no longer use this defence. It is therefore important to consider appropriate searches prior to the adoption of trading or company names to ensure there are no relevant prior rights.

  • Non-use defence: in infringement proceedings, the defendant can require the owners of earlier marks registered for more than 5 years to prove use (or proper reasons for non-use) during the five year period prior to the commencement of the infringement proceedings.

8.  Trade mark rights as property

A trade mark can be transferred, separately from the transfer of a business, in respect of some or all of the goods or services for which it is registered. However, unless there is clear agreement to the contrary, the trade mark will automatically be included in the transfer of the business.

9.  Licensees’ right to sue

The amendment harmonises the rights of licensees across the EU. Licensees can only bring proceedings for trade mark infringement if the trade mark owner consents, although an exclusive licensee can bring an action if the owner fails to bring an action within an appropriate period after the licensee has given the owner formal notice.

10.  Fees

There is a new fee structure which the Commission predicts will save businesses up to 37% on marks held longer than ten years and the initial application fee no longer covers up to three classes.  Instead, and assuming that applications are filed electronically, there is a reduced fee of €850 for an application in one class, €900 for two classes and €1050 for three classes. Renewal fees are similarly ordered, with reduced fees across the board. The fees payable for opposition, invalidity or revocation proceedings are all reduced too, as is the cost of filing an appeal.