This article is the third in a series of articles about the impending changes to the Community trade mark system. The first and second articles can be accessed here. Under the reforms, there are going to be changes to the rules and process in place when trade marks conflict (in particular for oppositions and infringement actions) as well as the potential introduction of a mediation centre to resolve disputes. Taking the reforms in turn:-
Oppositions and observations
Shortening of time between publication and opposition for designation of International Registrations At present, once a CTM has been designated under an International Registration and the designation has been published for opposition purposes, the opposition period does not start to run until 6 months after publication. However, this will be shortened to 1 month, which will be a welcome change to brand owners who use the International Registration system as it will significantly reduce the lag between filing a CTM designation of an International Registration and obtaining registered protection across the European Union.
Proof of use for oppositions Currently, if an opposition is based on a trade mark registration that was registered 5 years before the publication date of the contested application, the opponent can be put to proof of use (which means that the owner must show that genuine use has been made of the registration in the territory it is protected during the 5 years prior to the publication date of the contested application). The opponent is then only able to rely on its registration for the goods/services (if any) for which use can be evidenced. Under the reforms, the relevant period will now be the 5 years preceding the filing date of the contested application (rather than the publication date or the date of prior of the contested application, whichever is earlier).
Observations Currently, any third party can file observations explaining why a mark should not be registered during the publication period or whilst an opposition is on-going. The benefit of filing observations is that the “observer” does not become party to any proceedings, it merely serves to bring the registry’s attention to a potential absolute ground for refusal (for example, if the mark is descriptive and should not be monopolised). Under the reforms, observations will be able to be filed as soon as a third party becomes aware of an application, rather than having to wait for it to be published.
The European Intellectual Property Office may now establish a mediation centre which will be available, on a voluntary basis and by joint-request, to parties in opposition, invalidity and revocation actions (or appeals). The parties will be allowed to jointly appoint a mediator with a view to amicably settling the dispute and the dispute will be suspended pending the resolution of the mediation. However, it remains to be seen how effective this will prove to be in practice as it is already common practice to try and negotiate co-existence if there is not a commercial conflict and, where this is not possible, mediation is unlikely to assist any further. However, it is not yet known whether the European Intellectual Property Office will decide to establish a mediation centre.
Preparatory acts Currently, under the CTM system, it is not possible to take action to stop the distribution or sales of labels, packaging or other items (such as authenticity features or devices) which may be subsequently combined with a counterfeit product (but some national laws are in place which cover this activity). However, a new rule will be introduced to allow proprietors of CTM registrations to bring infringement proceedings in relation to these preparatory acts which will assist brand owners in their on-going battle against counterfeiters.
Comparative advertising There is currently legislation in place which regulates the conditions under which comparative advertising is permissible. However, the interaction between the comparative advertising legislation and the previous trade mark legislation has given rise to uncertainty. To remedy this, the reforms will clarify that brand owners may prevent the use of their trade marks in comparative or misleading advertising which is not permissible under the relevant legislation.
Goods in transit Following a decision of the Court of Justice of the European Union, it is not currently possible to seize infringing goods in transit within the EU, unless they are the subject of a commercial act which is directed at EU consumers. This decision has been heavily criticised by brand owners as it impedes their ability to prevent the circulation of infringing goods (as, effectively, you have to wait for them to be offered for sale before taking action). This decision will be reversed so that brand owners can prevent non-authorised goods bearing their protected trade marks from entering or being transported through the EU single market, regardless of whether they are released for free circulation.
However, the texts do include a proviso stating that the ability to take action will be lost if, during the proceedings, it is shown that the trade mark owner would not have been able to prevent the goods being put on the market in the country of final destination. In practice, this proviso may prove troubling as national courts will be in the undesirable position of having to determine the question of whether the products constitute infringement under the foreign law of the country of final destination.
Nevertheless, this change is another tool in the armoury against counterfeiters. In particular, it will assist in preventing the EU’s transit and transhipment routes being misused to distribute fake goods outside of the EU. However, it has been criticised by the Netherlands and India on the basis that it may impede legitimate international trade, particularly for generic medicines.
Limitations CTMs cannot be used to prohibit third parties from using a conflicting trade mark in the course of trade in certain, limited circumstances provided that the use is in accordance with honest commercial practices. Effectively, these limitations to the rights of trade marks constitute defences to infringement and cover:
- own name or address Currently, a defence to infringement of a CTM is that the mark being complained of corresponds to the name or address of the defendant. However, the reforms will restrict this “own name” defence to natural persons only and companies will not be able to rely on the defence based on their company or trade names;
- characteristics Currently, a defence to infringement of a CTM is that the defendant is using the mark to describe a characteristic of the goods or services. However, the reforms will broaden this defence to cover any signs which are non-distinctive (that is, they are not capable of indicating origin as they are not sufficiently arbitrary);
- intended purpose Currently, a defence to infringement of a CTM is that the defendant is using the mark to indicate the intended purpose of a product or service. This defence will be broadened to include any referential use where a mark is used to identify or refer to the goods or services as those of the brand owner.
Intervening rights defence This substantive change introduces a new, qualified defence to infringement of a CTM. Put simply, the defence will apply where the proprietor of a later trade mark adopted a brand name at a time when the earlier trade mark was unenforceable against it but, due to a change in circumstance relating to the earlier right (such it is acquiring a reputation), it has subsequently become enforceable. However, there will be differences to how this defence will apply, depending on whether the later mark is national or EU trade mark.
Date of prevailing of rights The reforms will clarify that the rights conferred by a European trade mark are enforceable against third parties from the date that it is registered (however, reasonable compensation may be claimed in respect of infringement which occurred after the application was published). Moreover, courts seized of an infringement case may not decide the merits until the mark that forms the basis of the action has achieved registration.