The European Commission has recently published draft legislation in relation to proposed reforms of the European trade mark system, which are designed to modernise and further harmonise trade mark law across the EU. The proposed changes do not represent a major overhaul of the existing system but nonetheless, there are several key changes which will impact brand owners, particularly in relation to dealing with counterfeit goods.
Why is the system changing?
There have been no major changes to the existing European trade mark system in almost 20 years, which means that the system is now somewhat outdated. Previous harmonisation efforts have concentrated on substantive areas but many procedural areas have not been harmonised.
The reforms represent an attempt to modernise the trade mark system at a central and national level within the EU in order to keep pace with legal developments and the fact that the business environment has moved on. There are also inconsistencies between the existing Community Trade Mark Regulation (207/2009/EC) and the Community Trade Mark Directive (2008/95/EC) which these reforms seek to address. One of the stated aims of the reforms is to improve the means to fight against counterfeit goods within the EU.
How will the reforms be implemented?
The proposed reforms are to be implemented by recasting the Community Trade Mark Directive and amending the Community Trade Mark Regulation. There is also a proposed revision to the Commission Regulation (2869/95/EC) on the fees payable to OHIM.
- Community trade marks will be re-named 'European trade marks'.
- OHIM to be renamed the 'European Union Trade Marks and Designs Agency' or the 'Agency' in abbreviated form.
- Rights holders can prevent third parties from importing goods for commercial activity (if the import of such goods is unauthorised) from outside of the EU with marks identical (or which cannot be distinguished in essential aspects) to the trade mark registered in respect of those goods into the EU, regardless of whether the goods are released for free circulation within the EU. This aims to deal with the uncertainty stemming from the Philips/Nokia decisions of Court of Justice in 2011, where it was held that goods would only be considered counterfeit, if there was proof that such goods were the subject of a commercial act directed at EU consumers.
- Trade mark owners may also prevent the import of goods (if the import of such goods is unauthorised) into the EU by businesses located in or outside of the EU, even if only the consignor is acting for commercial purposes. This provision is aimed at discouraging the ordering and sale of counterfeit goods over the internet which are then shipped to private consumers.
Increasing legal certainty by clarifying provisions and removing ambiguities
- The requirement for graphic representation of a trade mark is to be abolished. This requirement has caused issues with non-traditional trade marks, such as sounds and smells. The proposal is that the mark should 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 may allow more sound and smell trade marks to be registered, not least as it is proposed that the definition of a trade mark should be expanded to include "sounds" and "colours as such".
- Trade mark holders can object to use of their trade marks in comparative advertising if the requirements of the Comparative Advertising Directive (2006/114/EC) are not satisfied.
- Trade marks applied for in script or language not intelligible in the EU should not be registered, if registration would have been refused on absolute grounds when translated into any official language of the Member States.
- The absolute grounds for refusal of registration will be extended to cover indications of origin for traditional terms for wine, other traditional specialities and denominated plant variety rights.
- For the purposes of opposing a registration, bad faith arguments will extend to marks registered and still in genuine use outside of the EU, as at the date of the application. Under the existing system, this type of bad faith argument is limited to marks registered within the EU so the proposed amendment effectively increases protection for trade marks registered outside of the EU.
Harmonising National Law
- Third parties will be able to file observations on absolute grounds without becoming a party to proceedings as soon as they become aware of an application, rather than from the publication date. Third parties will be given the same rights in trade mark proceedings at all national offices.
- The five year period for genuine use will remain but if a country allows for opposition proceedings post registration (as is the case in Germany), the five year period will run from the day from when the mark can no longer be opposed, or, in the case of opposition proceedings, from the date when the opposition is decided.
- The filing of CTMs at national trade mark registries will be abolished. Going forward, all CTMs must be filed with OHIM.
- Conducting optional national searches from national registries for CTMs will be abolished.
- CTM fees will become due immediately upon filing. There is currently a one month period in which to pay the registration fee from the date of filing and this is to be abolished. This is to stop applicants filing 'test applications' to see if they pass the registry's examination. As most applications are examined within a month of filing, if the application is rejected in this period, the applicant could avoid paying the filing fee.
- Registration and renewal fees will be lower if protection is only sought in one or two product classes. Under the existing system, it is the same price to register a CTM for up to three product classes, even if you only want coverage in one product class. Under the new system, it will cost €775 to apply for a CTM covering one product class, compared to the existing fee of €900 to cover up to three classes. Registering a CTM in two classes will cost €825. The aim of this new fee structure is to encourage smaller businesses to consider trade mark protection and to discourage broad filings.
- A renewal fee of €1000 will be applied if the CTM registration covers one product class, €1100 for two classes and €1250 for three classes. This is a significant saving on the existing renewal fee of €1350 for up to three product classes.
When will the changes come into effect?
- The legislative proposals will be sent to the European Parliament and the Council for adoption under the co-decision procedure. It is hoped that the proposals will be adopted by Spring 2014. Once officially adopted, Member states will then have two years to transpose the new rules of the Directive into national law.
- With the amended Regulation, most amendments will become effective with its entry into force (date currently unknown). The amended Fees Regulation is likely to come into effect before the end of 2013 so businesses should be able to avail of the reduced CTM fees for single or double class filings later this year.