When deciding on European Union Trademark (EUTM) revocation proceedings, the EUIPO must not take into account non-challenge clauses (General Court of the European Union (GCEU), judgment of November 16, 2017, T-419/16 Carrera Brands v. EUIPO (“Carrera”), at para. 35).

In the case at hand, the applicant for revocation, Autec AG, had concluded two trademark purchase agreements with predecessors of the contested EUTM’s present proprietor. The agreements concerned different “Carrera” trademarks and comprised the obligation of the seller (i.e. Autec AG) to tolerate also new applications for identical or similar trademarks. In the present proceedings, Autec AG requested the revocation due to non-use of a registered EUTM “Carrera” apparently falling under the scope of said non-challenge clause. The trademark owner argued that the revocation request was inadmissible, as it was filed in violation of Autec AG’s contractual obligations. The GCEU, however, dismissed this line of reasoning. It found that, whereas relative grounds for refusal of registration protected the interests of proprietors of certain earlier rights, the absolute grounds for refusal of registration as well as the rules on revocation aimed to protect the public interest underlying them, and that, consequently, the corresponding rules did not require the applicant to show an interest in bringing proceedings. Based on these considerations, the court denied legal relevance of non-challenge clauses in EUTM revocation proceedings.

Practical Impact:

It is clear from the reasoning of the judgment that the court’s findings also apply to invalidation proceedings based on absolute grounds (e.g. a lack of distinctiveness). If and how the EUIPO has to take non-challenge clauses into account when deciding on invalidation proceedings based on earlier rights remains to be seen.

When negotiating contracts concerning European Union Trademarks, the parties will have to safeguard their non-challenge interests by additional contractual tools. For example, a contractual non-challenge clause could be supplemented by an obligation to pay a contractual penalty for each case of contravention, if permitted by applicable antitrust laws. Such a clause should at least practically deter the parties from pursuing invalidation of the respective EUTMs in the future.