Earlier this year, after several years of debate and contributions from numerous stakeholders, the European Parliament, Council and Commission announced their provisional agreement on the EU trade mark reform package.

The Council has now published the final compromise texts of the recast Directive and revisions to the Regulation, after what Cecilia Wilkström, rapporteur of the reform package, described as "tough negotiations".

From final compromise texts to law…

The compromise texts are not yet absolutely 'final', but they are unlikely to undergo major revision.   Once endorsed by the Parliament's Legal Affairs committee, the texts will undergo legal-linguistic revision before formal adoption of the Council's position and finally adoption by the Parliament (which is likely to be towards the end of 2015).   All going well, most of the provisions of the Regulation will come into effect in the second quarter of 2016.  The Directive will take longer, as Member States will have three years to transpose the Directive into national law.

Key changes

  1. The EU Intellectual Property Office.  This will be OHIM's new name.
  2. The EU Trade Mark.  And this will be the new name for the CTM.
  3. Fees.  Introduction of additional class fees on application and renewal. This is intended to discourage the applicants and registrants from filing and maintaining overly broad specifications.
  4. IP-Translator rights.  Trade mark owners will be able to declare that any trade marks they filed by reference to Nice class headings before the IP Translator case are intended to cover all the alphabetical goods in that class.  But they will not be able to prejudice the rights of other trade mark owners affected by that expansion of goods.
  5. Origin function.   Neither the draft Directive nor the amendments to the Regulation clarify whether it is necessary to show that an allegedly infringing sign has a negative effect on the origin function.   The Directive contains wording in Recital 16 carried over from the original, but the draft amended Regulation has no reference to origin function at all.   The controversial rulings of the Court of Justice of the European Union in this area will therefore remain relevant.
  6. Nature of goods and technical function.  Marks will not be registerable if they consist of any characteristic which results from the nature of the goods, which is necessary to achieve a technical result, or which gives substantial value to the goods.  Previously only shapes were unregisterable if they had these qualities.  This may make non-traditional marks even harder to register.
  7. Transit.  Trade mark owners will be able to prevent fake goods transiting through the Community where the holder or owner of those goods is unable to prove that the trade mark owner would not be entitled to prohibit the placing of those goods on the market in the country of final destination.  Just how those trading in 'fake' goods will be able to prove this negative (particularly given the usual uncertainties over the actual destination of fake goods in transit) remains to be seen.
  8. Importation by consumers.  The drafts no longer contain provisions stating expressly that goods imported by a consumer can infringe if the consignor acts in a commercial capacity.

Comment

The Council comments that "The reform of the current system will improve the conditions for businesses to innovate and to benefit from more effective trade mark protection against counterfeits, including fake goods in transit through the EU's territory.  The new legal framework is also aimed at making trade mark registration systems throughout the European Union more accessible and efficient for businesses in terms of lower costs and complexity, increased speed, greater predictability and legal certainty".

Whilst the drafts are helpful to trade mark owners in many respects, they are not as favourable as they might wish.  Identical marks on identical goods will apparently still not infringe if there is no proven impact on the origin function.   Trade mark owners may still face difficulty in stopping consumers who either send counterfeit goods to other countries via the EU, or import them into the UK.

The transit provision is welcome and finally deals with the unsatisfactory positon identified by Kitchin J in Nokia v HMRC: "I can only hope that [my decision] provokes a review of the adequacy of the measures available to combat the international trade in fake goods by preventing their transhipment through Member States".  The preambles seek to address concerns raised by the generic medicine lobby but, of course, this new provision was only ever designed to affect such medicines if they bore infringing trade marks.

Whilst the drafts are better than nothing, by some considerable way, there are still improvements to be made.  Given the "tough negotiations" needed to reach the current compromise, it may be some time before further improvements become reality.