The unitary Community Trade Mark (CTM) was introduced in 1996. Since then there have been no major changes to the system. However, the IP landscape and business environment have changed dramatically leaving Europe’s trade mark system behind.

To review and remedy this problem, the European Commission carried out a comprehensive evaluation of the overall functioning of the CTM in 2008, finding that many aspects of the system continue to meet business needs and expectations, but that the system needs modernising to bring it up to speed with the internet era and to ensure it functions more effectively, efficiently and consistently as a whole. For these reasons, the European Council called on the Commission to present proposals for the revision of the European trade mark system.

The Commission has recently published draft legislation in relation to the proposed reforms of the European trade mark system. These are the key reforms which will overhaul existing CTM law:

  • Terminology

The term “Community Trade Mark” will be replaced with “European Union Trade Mark” and the OHIM is to be replaced with “European Union Intellectual Property Office” or “Agency”.

  • Harmonisation

National laws and practices will be further harmonised and brought in line with the EU trade mark system to create equal conditions for the registration and protection of trade marks throughout the Union. A more streamlined approach will lead to faster and less burdensome procedures especially for SMEs that conduct business in multiple member states and seek protection and enforcement assistance in multiple EU jurisdictions.

  • Graphic representation

At present, the EU trade mark system requires a sign to be represented graphically in order to be protectable as a trade mark. This requirement has made it virtually impossible for proprietors to register non-conventional trade marks such as sounds, smells and tastes, which cannot be represented graphically in a way that is clear, precise, self-contained, easily accessible, intelligible, durable and objective – criteria set by the European Court of Justice and known as the Sieckmann criteria.

The Commission has now abolished the graphic representation requirement from the definition of an EU trade mark. Instead, “any appropriate form” is allowed as long as it fulfils the Sieckmann criteria. This may open the flood gates for the registration of non-conventional trade marks such as sounds and smells, particularly as the definition of a trade mark has been expanded to include “sounds” and “colours”.

  • Use of general terms

In the landmark IP Translator decision, the Court of Justice of the European Union decided that the use of general terms in a specification should be interpreted as including all goods and services covered by the literal meaning of the term, and that specifications must meet the requisite standard of clarity and precision. 

To ensure all trade marks comply with this, the Commission is giving proprietors of European Union trade marks applied for before 22 June 2012 registered in respect of the entire class heading, an opportunity to amend their specification. Proprietors can do this by filing a declaration at the Office within six months of the entry into force of the new Regulation, confirming that their intention on the date of filing had been to seek protection in respect of goods or services beyond those covered by the literal meaning of the class heading with an indication of those goods or services. Where no declaration is filed, the trade mark will be deemed to cover only the goods or services covered by the literal meaning. 

It is strongly recommended that owners of CTM marks that were filed prior to 22 June 2012 review the coverage of their registrations and contact us immediately should they have concerns.

  • Bad faith

Previously, bad faith could only be raised as a ground for invalidation, but the reforms have now introduced bad faith as a ground for opposition making it possible for a third party to oppose a registered trade mark on the grounds that the proprietor was acting in bad faith when they applied to register their mark.

  • Acquired distinctiveness

A mark that is non-distinctive, descriptive or generic shall not be refused registration if the applicant can show that the mark has acquired a distinctive character through use before the application date. Under the new system, the same has been adopted with regard to trade marks that are subject to invalidation proceedings: a mark will not be declared invalid if the proprietor can show that the mark has acquired distinctiveness before the date of the application for invalidity.

  • Counterfeit goods

One of the stated aims of the reforms was to improve the means to fight against counterfeit goods within the EU. Under the new system, rights holders can prevent goods from entering the EU when those goods are likely to infringe their registered trade mark rights regardless of whether the goods are released for free circulation within the EU. The new provisions are aimed at preventing third parties from importing counterfeit goods for commercial activity from outside the EU into the EU and at discouraging the ordering and sale of counterfeit goods over the Internet to EU consumers.

  • Filing and fees

The filing of CTMs at national offices will be abolished: EU trade marks may only be filed at the EU Trade Mark Office.

Currently filing fees are payable within one month after filing. This enables applicants to file ‘test applications’ to see whether their mark encounters objections during examination and if it does, they can avoid paying the filing fees by not responding to the examination report. To prevent this, filing fees will now be due immediately upon filing.

To help balance the budget of the Office the fees payable directly to the Office have been reconsidered. The most significant change is class coverage. Under the current system it is the same price to register a CTM in three classes as it is in one class. Under the new system, a European Union trade mark will only cover one class and the cost to cover a second class and subsequent classes has been reduced from EUR 150 to EUR 50. The new fee structure discourages broad filings and encourages smaller businesses to seek protection, with the European Commission claiming that the changes will lead to savings of up to 37 per cent for businesses that seek protection of their EU trade marks beyond an initial period of 10 years.

Many of the other fees payable directly to the Office have been reduced.

  • Mediation Centre

In order to “facilitate amicable, expeditions and efficient dispute resolution” the Commission has given the Office an opportunity to establish a Mediation Centre. The Mediation Centre may be used by any person wishing to achieve friendly settlement of disputes arising from EU trade marks and Community designs on a voluntary basis. Parties wishing to use the services must file a joint request to mediate along with payment of the corresponding charge at the Office. Where the parties are involved in proceedings before the Office, ie opposition / revocation / invalidation proceedings, the request for mediation can be filed at any time from lodging the proceedings to filing a notice of appeal and the corresponding proceedings will be suspended. If the parties are able to reach a settlement agreement, one of the parties wishes to end mediation or the mediator believes the parties are unable to reach a settlement, the mediator will inform the Office the mediation proceedings are closed and the suspended proceedings will resume or be concluded.

  • Surplus funds

The Commission’s reforms also address the Office’s growing budget. It said that the accumulation of significant budgetary surpluses should be avoided and that the Office should maintain a financial reserve covering one year of its operational expenditure to ensure it can continue its operations as specified in the Regulation. Part of the reforms place an obligation on the Office to prepare a biannual report to the European Parliament, the Council and the Commission on its financial situation so that the Commission can review the financial situation of the Office and make changes to the budget as necessary.

The first reading of the draft legislation took place on 10 November 2015 before European Council. The majority of the EU member states approved the draft legislation with the exception of the UK who voted against the adoption of the draft and the Netherlands who abstained from voting. A second reading will take place before the European Parliament late November / mid-December 2015. After which, the texts will be published early 2016. It is expected that the amended Regulation will come into force the second quarter of 2016 and a period of three years will be set for member states to implement the new rules into national law.

Overall the changes cater for a more modern and streamlined system of trade mark protection ensuring the system is brought into the internet era. While some commentators believe the proposed changes may not represent a major overhaul of the existing system, the new legislation includes some important changes that will modernise trade mark law and impact brand owners, in particular those regarding use of general terms.