Anna Carboni of Redd Solicitors takes an in-depth look at the European Commission's proposals to modernise the Community trademark system and reform the national systems that run alongside it.
On 27 March 2013 the European Commission presented its much-heralded package of proposals to modernise the Community trademark system and reform the national systems that run alongside it, by amending the CTM Regulation (207/2009/EC) and Trade Marks Directive (2008/95/EC). If the proposals go ahead as drafted, the “new and improved” pan-EU right will be called the “European trade mark”, while the Office for Harmonization in the Internal Market (OHIM) will be rebranded as the European Union Trade Marks and Designs Agency. National trademark systems and the three-country Benelux system will be further harmonised, with a new framework of cooperation between the national offices and the Agency.
The official Europa press release states that the Commission’s intent is “to make trade mark registration systems all over the European Union cheaper, quicker, more reliable and predictable”; and the accompanying FAQs set out the aims of the reform as including: streamlining and harmonising registration procedures; modernising the existing provisions and increasing legal certainty; removing ambiguities; incorporating extensive case law of the Court of Justice; improving the means to fight against counterfeit goods; and making the fee structures more flexible. This short overview looks at some of the new provisions and considers whether these laudable aims are likely to be achieved.
Let’s start with the money. The Commission proposes to abolish the current approach of charging the same fee for a trademark in up to three classes, in order to encourage SMEs to register their trademarks – and also to discourage applicants from cluttering the register with claims to goods and services for which they do not require protection, simply because they are “thrown in” as part of the price. The fee for a European trademark application in one class would go down from €900 to €775, with the renewal fee decreasing from €1,350 to €1,000. The new approach and the reductions in price are both positive for users of the system, the only uncertainty being the extent to which national registration will remain an attractive option given the reduced differential between the European and national fees. However, most of the national offices have held up well in the face of competition from OHIM, and it is important that they remain accessible to the millions of businesses that only need local protection.
The fundamental condition for a sign to be capable of protection as a trademark, as set out in Article 15 of the TRIPS Agreement, is that it must be capable of distinguishing the goods or services of one undertaking from those of other undertakings. That requirement will remain under the new regime, which will add “colours as such” and “sounds” to the existing list of examples of appropriate signs, comprising “personal names, designs, letters, numerals” and “the shape of goods or their packaging”. However, given the significant increase in the role of non-traditional trademarks, the proposal is to replace the current graphical representation requirement with the condition that, to be a trademark, a sign must be “capable of being represented in a manner which enables the competent authorities and the public to determine the precise subject of the protection afforded to its proprietor”. This will leave it open to applicants to come up with the most appropriate way of representing their marks.
As the Commission’s Explanatory Memorandum states, “The idea is not to go for a boundless extension of the admissible ways to represent a sign, but to provide for more flexibility in that respect while ensuring greater legal certainty.” The crucial consideration for anyone wishing to take advantage of this new flexibility will be to consider, when filing the proposed “representation”, whether it would be clear to the office or any third party exactly what the trademark is. Although not stated explicitly in the proposal, the requirements that the representation is “easily accessible” and “durable” must also be borne in mind (per the Court of Justice in Sieckmann – Case C-273/00). So, while it may be acceptable to lodge a digital file to represent a sound mark, lodging a sample of scent for a smell mark may not be appropriate given (a) the likely change of the scent over time and (b) the difficulty in the public accessing the smell – until technology has progressed to the point that smells can (easily) be accessed via the internet!
As the Court of Justice explained in last year’s IP TRANSLATOR decision (Case C-307/10), it is not only that the representation of a trademark must be clear and precise, but the goods and services for which protection is sought must also be identified “with sufficient clarity and precision to enable the competent authorities and economic operators, on that basis alone, to determine the extent of the protection conferred by the trade mark”. This statement of what should have been obvious (particularly in the light of Rule 2 of the Implementing Regulation (2868/95/EC) that “the list of goods and services shall be worded in such a way as to indicate clearly the nature of the goods and services”) will now be set in stone in both the Regulation and the Directive.
The proposals also provide that “general indications included in the class headings of the Nice Classification or other general terms may be used, provided that they comply with the requisite standards of clarity and precision” and that the use of general terms, including class headings, will be interpreted as including only “the goods or services clearly covered by the literal meaning of the indication or term”. This accords with the approach of the appointed person, Geoffrey Hobbs QC, who recently decided on the return of IP TRANSLATOR (BL O-197-13) that the class heading for Class 41 (“Education; providing of training; entertainment; sporting and cultural activities”) did not cover translation services, despite their inclusion in the alphabetical list of services in the class, and therefore the mark IP TRANSLATOR should not have been refused as being descriptive and non-distinctive of those services.
So far, so good, though these provisions still beg the question of which general terms in the Nice class headings are sufficiently clear and precise and which are not, which is a matter on which OHIM is working with the national offices as part of its Convergence Programme.
However, the proposal for the new Regulation additionally seeks to resolve some matters that were left unanswered by the Court in IP TRANSLATOR in relation to pre-existing Community trademarks (CTMs). Here, the idea is that proprietors of CTMs that use Nice class headings, which were applied for before 22 June 2012, may within four months of the entry into force of the new Regulation “declare that their intention on the date of filing had been to seek protection in respect of goods or services beyond those covered by the literal meaning of the heading of that class, provided that the goods or services so designated are included in the alphabetical list for that class of the edition of the Nice classification in force at the date of filing”, indicating the additional goods and services that were intended to be covered.
22 June 2012 was the day after OHIM President’s Communication No. 2/12 entered into force, which set out OHIM’s approach to the use of class headings in trademark applications and registrations, post-IP TRANSLATOR. This reversed the former practice under Communication 4/03, to the effect that CTMs that adopted class headings constituted a claim to all the goods and services within the relevant class, and tried to mollify users who had relied on the previous practice by declaring that the Office would consider that the intention of the applicant for pre-existing class heading CTMs was to cover all the goods or services included in the alphabetical list of that class.
Both OHIM’s and the Commission’s approach appear to value the proprietor’s presumed or declared intention over the interests of third parties. But, surely, the essence of a registration system is that the register should record the details of the trademark concerned, accurately and objectively, and should be the sole and definitive source of information about it. The register serves as notice to the world of the scope of the trademark, and it cannot be right that one has to examine the proprietor’s intention way back in time, or refer to a separate and possibly outdated list of goods and services to determine what should be covered. What happens to the third parties, advised by lawyers, who always doubted the legality of OHIM’s previous practice, and who have assumed that CTMs are limited to the scope of the meaning of the terms used in their specifications? Should they now be penalised for being right all along, by a mere declaration by a competitor that his trademark rights are far broader than they appeared? Furthermore, what about CTMs that were filed before Communication 4/03 came out? Why should a general term be construed so widely if it was used even before OHIM’s formal adoption of the class heading approach?
This provision is plainly designed to provide recourse for those CTM owners who relied on OHIM’s previous practice, but it is far from clear that it is either correct or fair. Of course, there is an element of politics here, which can often defy logic and equity. However, further thought needs to be given to resolving the issues, taking into account the interests of all concerned and not just those who took advantage of OHIM’s incorrect guidance.
Moving on to less contentious ground, there are three new measures designed to assist in the prevention of counterfeits. First, it will be made clear that goods may not be imported into the EU even if only the consignor is acting for commercial purposes, thus discouraging the sale of counterfeit goods from overseas via the internet. Secondly, both the European and national regimes will allow proceedings to be taken against the application of a sign to “get-up, packaging or other means”, and dealings with such items, where it is likely that they will be used for infringing goods or services. To maximise the usefulness of this provision, it may be worth setting out some examples of relevant “get-up” or “other means”, such as labels, tags and security devices, in order to capture the most common packaging components used by counterfeiters. But, even in its present form, this will be a helpful addition to the enforcement arsenal, which is currently not provided for in the Regulation and is only available in some national laws.
Thirdly, the Commission intends to plug the gap highlighted by the Court of Justice decision in Philips/Nokia (Joined Cases C-446/09 and C-495/09) whereby counterfeit goods can currently pass through the EU, sometimes leaking on to the local market, without trademark owners being able to stop their transit unless they have proof that they will be sold or offered for sale to EU consumers. The proposed new provision is as follows:
“The proprietor of a European [or national registered] trade mark shall also be entitled to prevent all third parties from bringing goods, in the context of commercial activity, into the customs territory of the Union [or Member State] without being released for free circulation there, where such goods, including packaging, come from third countries and bear without authorization a trade mark which is identical to the… trade mark registered in respect of such goods, or which cannot be distinguished in its essential aspects from that trade mark.”
This is a positive step that will strengthen the hand of brand owners against those who use the EU Customs transit process to hide the origin or destination of counterfeit goods. However, as currently drafted, it may be broad enough to capture legitimate goods that pass through the EU bearing a mark that is owned by one proprietor within the EU but another in the country of origin and/or destination, so some further creative drafting may be necessary to fine-tune the provision.
The proposed changes are not all pro-enforcement; there are some that favour defendants to an infringement action. For example, there is express recognition that a trademark proprietor may not prohibit use of a sign that is not distinctive; and a general prohibition on use for the purpose of identifying or referring to goods or services as those of the proprietor. However, the “own name” defence will be limited to the use of personal names, and not trading names, which must be used “in accordance with honest practices”. (The attempt at clarifying the meaning of the latter concept may have the opposite effect and should probably be left to the courts.) Finally, if the sign complained of in an infringement action is in fact a registered European or national trademark, its use cannot be prevented unless it is declared invalid pursuant to the appropriate procedure.
It has not been possible, in this brief overview, to cover everything that is new, particularly the provisions that will further harmonise the national trademark laws. As a taster, these will abolish examination on relative grounds, impose efficient opposition proceedings and enable invalidity and revocation proceedings to take place in the trademark office, rather than the courts. The Commission hopes that its proposals will be adopted by spring 2014, after which EU countries will have two years to transpose the additional requirements of the Directive into national law. The fee changes are intended to be fast-tracked and adopted before the end of this year.
There is no doubt that most of the stated aims of the package will be achieved to some degree, though there is more work to be done to remove ambiguities and increase legal certainty in some respects, particularly in relation to the scope of protection of the tens (if not hundreds) of thousands of class-heading CTMs.