European trade mark reform is an issue that has been the subject of discussions for a number of years. On 21 April 2015, the European Commission announced that the three key institutions of the EU (the Commission, the European Parliament and the Council) have reached a provisional agreement on a European trade mark reform package. The reform package will involve: (i) a recast of the current trade mark Directive, which harmonises various aspects of national trade mark law at a member state level (the "Recast Directive"); and (ii) a revision of the current Regulation, which sets out the law relating to Community Trade Marks (the "Revised Regulation").
The stated aims of the reform package are:
- to foster innovation and economic growth – this is achieved by making trade mark registration systems across the EU more accessible and efficient for businesses through lower costs, increased speed and more predictability across different member states; and
- to ensure the coexistence and complementarity between the trade mark systems across the EU – this aim is achieved by introducing greater cooperation between the central EU trade mark agency and national trade mark offices, with the purposes of converging office practices.
To achieve its aims, the Recast Directive and Revised Regulation provide for reforms in various areas, of which this article focuses on three: (i) procedural changes to Community Trade Marks and national marks; (ii) substantive changes to the law governing both Community Trade Marks and national trade marks; and (iii) anti-piracy measures. The key aspects of these reforms are discussed below.
Key areas of Procedural change
The Recast Directive and Revised Regulation1 update the terminology that is currently used in relation to trade marks, so as to be compliant with the Treaty of Lisbon.
After formal adoption of the package, Community trade marks (“CTMs“) will become known as “European trade marks” (“ETM”). Community trade mark courts will become “European Trade Mark Courts” and the Office for Harmonization in the Internal Market (“OHIM”) will be renamed the “European Trade Marks and Designs Agency”.
- Fee structure for applications and renewals of CTMs
The current fee structure for CTM applications and renewals allows applicants to apply for or renew a mark in up to three classes of goods and services for the same initial fee with an additional fee being charged per class above three. There is no cost reduction for applicants wanting to apply or renew in less than three classes.
The trade mark reform package will introduce a new fee structure for ETMs under which the initial fee will be reduced and will cover only one class, with an additional fee being charged per class above one. An applicant wanting to apply for an EU trade mark in just one class will in the future pay €850 compared to the current €900, whereas an applicant wanting to apply in three classes will pay the increased fee of €1,050 compared to the current €900.
The new fee structure will be welcomed by users of the trade mark system as it will mean that applicants only pay for the level of protection they need. It is also hoped that it will go some way to de-cluttering the trade mark register by discouraging applicants from applying for an over-broad scope of goods and services that are not really required by the applicant.
- Streamlining and harmonization of national office practice
The existing Directive introduced certain harmonised procedures for the registration of trade marks at a national level. The Recast Directive provides for further harmonisation, in particular:
- the filing date given to a trade mark application will be the same across all national offices – it will be the date on which the application documents containing information identifying the applicant, a list of goods and services and a representation of the trade mark are filed with the relevant office by the applicant;
- national offices will no longer be able to reject marks of their own volition on the basis of prior third party rights (so-called relative grounds examination). Such examination is deemed to be an unnecessary barrier to registration and it will be for the owners of prior rights to oppose trade mark applications to keep them off the register. Relative rounds examination has not been a part of the UK and France Intellectual Property Office procedures for a number of years now, but its abolition across the EU will mean that applicants will face less obstacles to registration of their marks as many prior rights cited against registration are in fact no longer in use and can cause issues for new applicants.
- requiring all member states to enable opponents to challenge applications and registrations through opposition and cancellation procedures brought before the national trade mark offices. At present, some Member States, for instance France, only provide opponents with such routes of challenge through court proceedings which can be significantly more costly and time consuming than administrative proceedings.
Keys areas of Substantive Change
- "Own name" defence
At present, a defendant in proceedings for infringement of a CTM has a defence where he is using his own name, provided that such use be in accordance with honest practices in industrial or commercial matters. This applies whether the "own name" being used is a personal or a company name. All member states are also required to have this defence in their national laws.
The Recast Directive and the Revised Regulation state that the “own name” defence against trade mark infringement (both at an EU and a national level) will only apply to personal names, and no longer to company names.
- Protection for trade marks registered outside the EU in cases of bad faith
The Recast Directive and the Revised Regulation will introduce a new ground of opposition which will allow the owner of a trade mark registered outside the EU to challenge the registration of an EU trade mark or a national trade mark where the mark is liable to be confused with the earlier trade mark protected outside the EU. This right of challenge is limited to situations where the mark is applied for in bad faith and where the mark registered outside the EU is in genuine use at the date of application for the later mark.
Although limited, this will provides a useful weapon for the owners of marks protected outside the EU but not within the EU where they have been the victims of trade mark piracy.
- The definition of a "trade mark"
The Recast Directive and Revised Regulation will remove the requirement for a sign to be capable of graphic representation in order to qualify for trade mark protection. This will allow the registration of non-traditional marks, for example those represented by technological means such as a sound file.
- Double identity
Recent European case law has blurred the lines between the protection afforded in the cases of identical/ similar marks and identical/similar goods or services and the protection afforded to marks having a reputation. This has occurred through the introduction of the concept of a trade mark having functions in addition to its function as indicating the origin of the goods or services concerned – such as the investment and advertising function. The reform package takes steps to clarify this area of legal uncertainty by clarifying that in cases of identical/ similar marks and identical/similar goods or services only use of the mark in a manner that affects the origin function will constitute infringement.
Under current European trade mark law as construed by the European Court of Justice in the judgment dated 1 December 2011 in the joined cases C-446/09 (Philips) and C-495/09 (Nokia), customs are not entitled to withhold alleged infringing goods which solely transit on the territory of the EU. Hence, counterfeit goods which transit through the EU territory but which are destined for a non-EU state are not considered to infringe intellectual property rights and thus cannot be withdrawn from the market by the different EU Member States’ customs.
In that respect, the Revised Regulation as well as the Recast Directive2 heighten the trade mark owners’ enforcement powers and provide that intellectual property rights holders are now entitled to prevent third parties from bringing good, from non-EU countries, bearing without authorization a trade mark which is essentially identical to the trade mark registered in respect of those goods, into the customs territory of the EU, regardless of whether they are released for free circulation within the EU territory.
Moreover, the EU trade mark reform package also implements the 6 February 2014 Blomqvist v. Rolex SA European Court of Justice case law in the sense that European trade mark law will soon provide that the proprietor of a ETM shall be entitled to prevent the importing of infringing goods even if only the consignor of the goods acts for commercial purposes. This additional measure thus aims at discouraging consumers on the EU territory from ordering counterfeit goods over the internet.
Those additional anti-piracy measures will provide a stronger framework for trade mark owners to enforce their rights and undoubtedly help on the global fight against counterfeit goods/knock offs.
Trade mark intensive industries, which contribute a great deal to the EU economy, will most certainly welcome this trade mark reform package, even though some of their expectations have not been satisfied.
The next stage will be for the package of reforms to be formally confirmed by the European Parliament and the Council. We cannot be sure when such formal confirmation will occur, but it should be in the coming weeks according to the European Commission. Following confirmation of the reform package, each member state will be required to transpose the new aspects of the Recast Directive into their national laws during a period to be specified (but expected to be three years). The changes introduced by the Revised Regulation will largely become effective as soon as the Revised Regulation enters into force, but some of the changes will require secondary legislation to be enacted.
The European trade mark reform should benefit trade mark owners and consumers alike as it should harmonize trade mark law and practice, enhance the cooperation between the OHIM and national trade mark offices and, lastly, boost anti-piracy measures and thus taking more counterfeit goods off the market.