European Perspectives

Enlargement of the European Union and OHIM

On 1st May 2004, the following ten countries are set to join the European Union, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic and Slovenia. The EU will then consist of twenty five countries and will have a population of about 450 million people. The change will also introduce up to ten new languages to the present, eleven official languages of the Union.

This major change will of course affect the CTM system and will have major consequences for OHIM. The Office has now published how it intends to deal with the various issues that will be raised by enlargement. The main points to note are set out below:

1. All CTM registrations and applications filed before or claiming priority before 1st May 2004 will be automatically extended to the ten new Member States as from the date of accession. No fee will be payable.
   
   
2. The owners of prior rights in one or more of the new Member States will be able to file an opposition based on those rights against any CTM application filed in or claiming a priority date in the six month period prior to accession, that is against CTM applications filed (or claiming priority) from 1st November 2003 to 30th April 2004. No such right will exist for CTM applications with a filing or priority date earlier than 1st November 2003.
   
   
3. It will not be possible to cancel CTM rights that are automatically extended under paragraph (1) above on the basis of grounds, either absolute or relative, that exist only in the new Member States. The one exception to this rule is that if an absolute ground of objection, such as the existence of a geographical indication in an accession country, applied before accession, then it can be used to cancel a CTM registration with a filing or priority date earlier than 1st May 2004. By contrast, a CTM registration with a filing or priority date earlier than 1st May 2004 cannot be cancelled on the basis of, for example,
   - A descriptive meaning in Polish, or
   - A prior Hungarian trade mark right.
   This concession will not, however, apply to CTM applications with a filing or priority date of 1st May 2004 or later.
   
   
4. Any potential harm caused to local traders by the provisions set out in paragraphs (1) and (3) will be addressed by existing provisions in the CTM Regulation. Thus, for example, if an automatically extended CTM does have 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 by a third party in the State concerned in view of the defences set out in Article 12. 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. In addition, the owner of a relevant prior trade mark right in, for example, Latvia should be in a position to seek to prevent the use of the automatically extended CTM in Latvia on the basis of Article 106. If the prior right exists only on a more local level, then Article 107 may apply.
   
   In order to be effective in this way against an automatically extended CTM, 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. The “infringement” rights, given to the owners of such prior trade marks in the accession States, will not apply, however, if the prior trade mark filing was made in bad faith. A definition of what constitutes such a bad faith filing has not, as yet, been agreed between OHIM and the relevant authorities in the accession States.
   
   As can be seen, the political compromise here is to separate the questions of registration and use. 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.
   
   
5. It will not be open to the owners of automatically extended CTM rights, to prevent the use of trade marks that existed in a new, accession State prior to the accession date.
   
   
6. If all ten of the accession States were to conduct national searches for OHIM under Article 39 of the CTM Regulation, this would add considerably to OHIM’s costs. No doubt these additional costs would eventually have to be passed on to CTM applicants in the form of increased filing fees.
   
   Under Article 39(7) of the Regulation, the Commission is required to review the search system operated by OHIM five years after the Office opened (in April 1996). A Commission report published in December 2002 included such a review and recommended, perhaps not surprisingly, that the searches produced by national offices for OHIM under Article 39 should be abolished. This change is almost certain to take effect before the accession of the ten new States.
   
   
7. CTM applications with a filing or priority date of 1st May 2004 (the accession date of the ten new States), or later, will have effect in all twenty five countries and will be treated in the usual way. Thus, from then on, it will be possible to raise absolute or relative grounds of objection that are applicable in any of the twenty five Member States. Accepted CTM applications will also be published in all of the EU’s official languages. After accession, this will be twenty, or possibly twenty one, languages. Further, the usual rules applying to, for example, seniority claims and conversion of a CTM application or registration will also apply in the ten new States after their accession.

Comment

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 twenty five countries and a potential market of 450 million people in a single trade mark application will far outweigh any disadvantages.

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.

Perhaps the most important practice points to note in the next few months, are

i) The transitional provision allowing the owners of prior rights in the ten new Member States to oppose CTM applications with a filing or priority date within the six month period up to the accession date (1st November 2003 to 30th April 2004). In view of this, if trade mark owners are planning filing programmes during 2003, there are significant advantages in bringing these programmes forward so that any CTM filing (or priority filing) is made earlier than 1st November 2003. CTM applications filed (or with a priority) before that date will be automatically extended but cannot be opposed (or cancelled) on the basis of prior rights in the ten, new States.

ii) The ability of prior rights owners in the ten accession States to prevent the use of the CTM in those States. This will, almost certainly, lead to a number of filings being made in the new States in the next year or so aimed at causing CTM owners difficulties after the accession date. A certain way to prevent this would be for CTM owners to ensure that their trade mark coverage in the accession States is adequate at this stage, rather than waiting for 1st May 2004 to arrive. Most of the new States are members of the Madrid Protocol (only Cyprus and Malta are not) and could therefore be protected in a single international application.