• Enlargement of the European Union

    The Impact on Community Trade Mark Rights

    Stephen James

     

    On 1st May 2004, the following 10 countries joined the European Union (EU):

    Cyprus

    Latvia

    Slovak Republic

    Czech Republic

    Lithuania

    Slovenia

    Estonia

    Malta

     

    Hungary

    Poland

     

    This enlargement increased the number of Member States from 15 to 251, the population of the EU to about 450 million people and the number of EU official languages to 20.

    This major political change clearly affects the Community Trade Mark (CTM) system and will have major consequences both for the registration and the enforcement of CTM rights.

    A new Article 142a (see the Annex to this paper), has been added to the CTM Regulation ((EC) No. 40/94). It addresses certain key problems posed by enlargement. Other issues, which are not addressed by Article 142a, will have to be resolved by reference to other (pre-existing) Articles in the Regulation.

    1Prior to enlargement, the 15 EU Member States were Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and United Kingdom.

    The main points for practitioners to note are set out below:

    1) All CTM registrations and applications filed before 1st May 2004 (the date of accession) will automatically be extended to and will have equal effect in the ten new Member States as from the date of accession (Article 142a(1)). There is no form to be completed or fee to be paid. The extension of these existing CTM rights is automatic.

    2) CTM applications with a filing date prior to 1st May 2004 (existing CTM applications) cannot be refused on the basis of absolute grounds (Article 7(1)) that exist only because of the entry of the new Member States to the EU (Article 142a(2)).

    Thus, such existing CTM applications cannot be refused because the mark has a descriptive meaning in Polish, is deceptive in Hungarian or is immoral in Slovenian. Objections which arise under Articles 7(1)(h), (i) and (j) of the Regulation (see Annex) however, do not appear to fall under this exclusion. For example, if the CTM application is for a mark which is a Latvian state symbol, it can be refused under Article 7(1)(h), even if the application has a filing date earlier than 1st May 2004.

    There may be further exceptions to the list of exclusions, such as the Czech geographical origin of a product.

    3) CTM applications with a filing date prior to 1st November 2003, cannot be opposed on the basis of earlier third party rights (Article 8) that exist in the ten new Member States. This can be inferred from Article 142a(3), see below.

    4) CTM applications with a filing date from 1st November 2003 to 30th April 2004 can be opposed on the basis of earlier third party rights that exist in the ten new Member States and that were acquired by the opponent in good faith (Article 142a(3)).

    This exceptional opposition right, allows the owner of an earlier Czech trade mark application or registration, for example, to oppose a CTM application filed in the six months prior to accession. The filing date (or priority date) of the opponent’s right must be earlier than the filing date (or priority date) of the CTM application. The opposition must be filed (as usual) within three months of the CTM publication date.

    5) CTM registrations with a filing date prior to 1st May 2004 cannot be invalidated on the basis of grounds, either absolute (Article 51) or relative (Article 52), that exist only because of the entry of the new Member States to the EU (Article 142a(4)). It follows that, once a pre-1st May 2004 CTM is registered it is immune to an attack based on new absolute or relative grounds that arise from the entry of the 10 new countries. As set out in paragraph (2) above, this does not apply to invalidation actions brought, for example, under Articles 7(1)(h), (i) or (j).

    Further, this concession does not apply to CTM registrations with a filing date of 1st May 2004 or later.

    6) Under Article 51(1)(b) of the CTM Regulation, it is possible to invalidate a CTM registration on the ground that it was filed in bad faith. It could be argued that, if the bad faith only applied to circumstances which took place in one of the new Member States, it would not, in that case, be possible, given the terms of Article 142a(4), to invalidate a CTM registration having a filing date prior to 1st May 2004 on such a bad faith ground. It is believed that this interpretation would be wrong. Even prior to accession, a bad faith attack on a CTM registration could be based on the CTM owner’s activities in a non-EU state. Article 142a(4) should therefore not place a limit on bad faith actions brought under Article 51(1)(b).

    7) The owners of earlier rights in the ten new Member States may, under Articles 106 or 107 of the CTM Regulation, prohibit the use of an extended CTM in the relevant territory (Article 142a(5)). In order to be effective in this way against an automatically extended CTM, it is necessary that the earlier right was acquired in good faith. However, it is not necessary for the relevant, prior national or local right to have an effective date prior to the CTM filing or priority date. It simply has to have been in existence before the accession of the new States, that is before 1st May 2004.

    It can therefore be seen that the political compromise here is to separate questions of registration and infringement. Whilst the extension of existing CTM rights to the new States will be automatic, the right to use the CTM mark in the new States will depend on the existence (or otherwise) of prior, national or local trade mark rights.2

    Let us imagine the following scenario. The CTM owner has a registration for UNIMAX in class 3 with a filing date of 1st May 2000. The national right owner has a Polish trade mark registration for UNIMIX covering identical goods dated 1st May 2002. The Polish right was acquired in good faith. On 1st May 2004, the CTM registration is extended to Poland and immediately thereafter the CTM owner introduces his UNIMAX product to the Polish market. The owner of the Polish registration cannot invalidate the CTM registration. However, he can prevent the sales of UNIMAX in Poland, because he has a good faith (Polish) trade mark registration dated prior to 1st May 2004.

    2These earlier rights could be national trade mark applications or registrations, international trade mark registrations designating one or more of the new States, well known marks, unregistered trade marks, trade names, company names, rights to personal names and images, copyrights, design rights or other distinctive signs or industrial property rights.

    8) A CTM owner should not be able to succeed in cancelling or opposing a national trade mark right in an accession state, when the national trade mark right was filed in good faith and has a filing date (or priority date) after the CTM application date, but before the accession date. For these purposes, the CTM registration should be viewed as having an “effective” filing date of 1st May 2004 in the accession states. This is inferred from Article 142a(5).

    Thus, in the UNIMAX/UNIMIX example set out in paragraph 7, the CTM owner of UNIMAX (filing date 1st May 2000) should not be able to cancel the Polish trade mark registration for UNIMIX (filing date 1st May 2002). Conversely, the owner of the Polish trade mark right cannot invalidate the CTM registration for UNIMAX.

    9) The owner of an extended CTM registration should not be able to prevent the use of a trade mark that existed in a new, accession State prior to the date of accession and that was acquired in good faith. A right to continue national use of an existing mark in the face of an extended CTM is not provided for in Article 142a, which is extremely odd, given the importance of this matter. Therefore, in order to confirm its existence, an analysis of the CTM Regulation is necessary.

    First, we have to assume that, based on the provisions of Article 142a(5), the “effective” date of an extended CTM registration in the ten new States will be 1st May 2004, rather than the actual date the CTM registration was filed. In other words, in the above UNIMAX/UNIMIX case, the effective filing date of the CTM in Poland will be 1st May 2004 (rather than 1st May 2000).

    Second, we have to note that, under Article 95(3) of the CTM Regulation, an alleged infringer of a CTM can raise a defence to infringement on the basis that the right of the CTM owner “could be declared invalid on account of an earlier right of the defendant”. If the effects of Article 95(3) and Article 142a(5) are combined, it appears to lead to an effective defence to CTM infringement for the owner of an earlier national trade mark right in one of the ten new States that predates 1st May 2004 (and was acquired in good faith). Even so, it seems perverse that this issue was not addressed head on in the primary, amending legislation (Article 142a).

    10) Any other potential harm caused to local traders by the provisions discussed in paragraphs (1) to (5) above should be addressed by existing provisions in the CTM Regulation.

    For example, if an automatically extended CTM has a descriptive meaning in one of the languages of the ten, new States, then the CTM owner should not be able to prevent the use of his mark in the State concerned in view of the defences set out in Article 12 of the CTM Regulation.

    Thus the CTM owner of the trade mark PALINKA for alcoholic beverages, should not be able to prevent its use for brandy in Hungary, since palinka is Hungarian for brandy.

    Further, if the CTM mark is immoral (or contrary to public policy) in one of the new States, then Article 106(2) of the Regulation could be used to prevent the use of the CTM mark in that country.

    11) CTM applications filed after 1st May 2004, but claiming priority before that date could present both OHIM and the Courts with problems.

    For example, consider the situation where a CTM application is filed on 1st June 2004 and claims priority from a US trade mark application filed on 1st December 2003. An intervening Czech trade mark application filed on 1st March 2004 is identified. Assuming that the Czech trade mark application was filed in good faith, who has the earlier right in the Czech Republic? OHIM suggests that it is the CTM owner. If this is correct, then such a CTM application (application date, 1st June 2004; priority date, 1st December 2003) seems to be in a better position than a CTM application filed on 1st December 2003. See paragraph (8) above.

    12) Under Article 50 of the CTM Regulation, a CTM registration can be revoked if the mark has not been put to genuine use in the Community in respect of the registered goods (or services) during the five year period up to the application for revocation. It is the accepted wisdom that genuine use in just one EU country during the relevant period will save a CTM registration from revocation. It is an open question whether this accepted wisdom will apply from 1st May 2004 onwards. In the interests of a unitary approach, will use of a mark in Malta (about 0.1% of the EU population) resist a revocation action against a CTM registration? Logic says no, but political expediency may dictate otherwise.

    13) The issue of bad faith will, almost certainly, figure prominently in future Court actions involving CTM registrations. Both the exceptional opposition right (paragraph (4) above) and the right to prohibit use of extended CTMs in the new Member States on the basis of rights acquired before accession (paragraph (7) above) depend upon the absence of bad faith in the acquisition of the conflicting right.

    At present, at a Community level, the definition of bad faith is rather narrowly drawn. See, for example, CTM cancellation action no. C000616979, (Senso di Donna’s TM). In many legal systems, a third party who noted a registered word mark in one country and filed an application for that word mark in another country would rarely be found to have acted in bad faith. This is particularly the case if the word mark is a dictionary word. It may be necessary to broaden this approach. In ECTA Newsletter No. 49 (October 2003) dealing with the question of enlargement, Dr von Mühlendahl wrote that “it may be appropriate to develop rules which could be called “knowledge plus” to support a bad faith defence in CTM opposition or infringement proceedings”.

    According to Dr Von Mühlendahl

    “In the enlargement context however the perspective changes because the earlier right exists elsewhere but nevertheless extends as of a given date to the new Member State. Therefore, it may be appropriate indeed to develop rules which could be called “knowledge plus” to support a bad faith defence.

    The “knowledge” element may have to be made more concrete, for example by requiring less than actual knowledge, such as availability of information through a simple search. Therefore, bad faith could well be found in cases of gross negligence even in the absence of actual knowledge.

    As regards the “plus” element, consideration should be given to looking at features of the case such as

    • knowledge or notoriety of the mark in the European Union prior to extension (notoriety in the new Member State will itself be a ground to defeat the right in the new Member State);

    • date of acquisition of the right in the new Member States; the closer to the accession date the less respectable would the acquisition of a conflicting right appear;

    • pattern of behaviour of the proprietor of the conflicting right in the new Member State – “genuine” trade mark pirates would not appear to merit any particular indulgence;

    • whether the conflicting signs are identical or almost identical; in these situations it may indeed be easier to adopt a bad faith finding (“identity as evidence of copying”).

    Whether such a radical change to the definition of bad faith will be prompted by this round of EU enlargement remains to be seen.

    14) CTM applications with a filing date of 1st May 2004 (the accession date of the ten, new States) or later will be treated in the usual way. Thus, from then on, it will be possible to file the CTM application in any one of the (20) EU official languages. In addition, it becomes possible to raise absolute and relative grounds of objection that are applicable in any of the 25 Member States. Searches will continue to be conducted by national Trade Mark Offices, even if, in the near future, it will be necessary to request such searches at the application stage. Accepted CTM applications will be published in all of the EU’s official languages. Further, the usual rules applying to, for example, seniority claims and the conversion of a CTM application or registration will also apply in the 10 new States after their accession.

    15) The enforcement of CTM registrations is left to national Courts. After 1st May 2004, actions involving such CTM registrations will therefore be possible in the Courts of the 10 new Member States. The new States are obliged, amongst other things, to

    • Establish a CTM Court which is operational at the date of accession, and

    • Provide appropriate remedies for infringement.

    Experience suggests that enforcement of trade mark rights (in particular, a CTM right) may be difficult in some of the accession states, but probably no more so than in some of the present EU states.

    In conclusion, the enlargement of the European Union will present both OHIM and the owners of CTM rights with a whole new set of problems (or should that be challenges?). There is no doubt, however, that for trade mark owners with international interests, the advantages of being able to cover 25 countries and a potential market of 450 million people with a single trade mark application will far outweigh any disadvantages. If, as expected, OHIM joins the Madrid Protocol later in 2004, these advantages will become even greater for trade mark owners.

    No doubt from 1st May 2004 onwards, we will hear hard luck stories of CTM applications being rejected because the mark is descriptive in Estonian or because of a prior trade mark right in Cyprus. For every hard luck story, however, there will be many more examples of CTM applications that progress to grant without hindrance.

    The trade mark world is changing. Those who embrace these changes will survive. Those who do not, will perish.

    Sources

    (Draft opposition guidelines: Part 7)

    • ECTA Special Newsletter No. 49 (Oct. 2003)

      (Dr. A. von Mühlendahl)

    • The CIPA Journal 2003, Volume 32, pages 688-697

      (Mr A. Parkes)

    ANNEX

    ARTICLE 142a

    Provisions relating to the enlargement of the Community

    1. As from the date of accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia (hereinafter referred to as “new Member State(s)”), a Community trade mark registered or applied for pursuant to this Regulation before the date of accession shall be extended to the territory of those Member States in order to have equal effect throughout the Community.

    2. The registration of a Community trade mark which is under application at the date of accession may not be refused on the basis of any of the absolute grounds for refusal listed in Article 7(1), if these grounds became applicable merely because of the accession of a new Member State.

    3. Where an application for the registration of a Community trade mark has been filed during the six months prior to the date of accession, notice of opposition may be given pursuant to Article 42 where an earlier trade mark or another earlier right within the meaning of Article 8 was acquired in a new Member State prior to accession, provided that it was acquired in good faith and that the filing date or, where applicable, the priority date or the date of acquisition in the new Member State of the earlier trade mark or other earlier right precedes the filing date or, where applicable, the priority date of the Community trade mark applied for.

    4. A Community trade mark as referred to in paragraph 1 may not be declared invalid:

    • pursuant to Article 51 if the grounds for invalidity became applicable merely because of the accession of a new Member State,

    • pursuant to Article 52(1) and (2) if the earlier national right was registered, applied for or acquired in a new Member State prior to the date of accession.

    5. The use of a Community trade mark as referred to in paragraph 1 may be prohibited pursuant to Articles 106 and 107, if the earlier trade mark or other earlier right was registered, applied for or acquired in good faith in the new Member State prior to the date of accession of that State; or, where applicable, has a priority date prior to the date of accession of that State.

    ANNEX

    ARTICLE 7

    Absolute grounds for refusal

    1. The following shall not be registered:

    (a) signs which do not conform to the requirements of Article 4;

    (b) trade marks which are devoid of any distinctive character;

    (c) trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service;

    (d) trade marks which consist exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade;

    (e) signs which consist exclusively of:

    (i) the shape which results from the nature of the goods themselves; or

    (ii) the shape of goods which is necessary to obtain a technical result; or

    (iii) the shape which gives substantial value to the goods;

    (f) trade marks which are contrary to public policy or to accepted principles of morality;

    (g) trade marks which are of such a nature as to deceive the public, for instance as to the nature, quality or geographical origin of the goods or service;

    (h) trade marks which have not been authorised by the competent authorities and are to be refused pursuant to Article 6ter of the Paris Convention;

    (i) trade marks which include badges, emblems or escutcheons other than those covered by Article 6ter of the Paris Convention and which are of particular public interest, unless the consent of the appropriate authorities to their registration has been given.

    (j) trade marks for wines which contain or consist of a geographical indication identifying wines or for spirits which contain or consist of a geographical indication identifying spirits with respect to such wines or spirits not having that origin.