Gone but Not Forgotten: How to Combat Phantom Rights

When an infringement risk looms, it pays to cover all bases in planning how to minimise or avoid it. A revocation action may remove the rights, but the vestiges that remain can still pose a very real threat. Invalidation actions, which leave no vestigial rights, may prove a safer option.

O2 Holdings v T-Mobile

In a recent UK-IPO appeal, O2 Holdings Ltd. v T-Mobile (U.K.) Ltd. (O-364-07), the tribunal reversed the IPO’s decision to reject an application by O2 to invalidate trade mark registrations in the name of T-Mobile. As reported in our Autumn 2007 issue (“Snippets”), O2 had already succeeded in revoking the registrations, and the IPO concluded that there was nothing left to invalidate.

O2 appealed on the basis that the revoked registrations were still deemed to constitute valid rights up to the revocation date. Consequently, T-Mobile could sue now for infringement and damages relating to that pre-revocation period. In contrast, if the registrations were invalidated, they would be deemed never to have been granted and no such claim would be possible.

On appeal, the tribunal overturned the IPO’s decision, holding that the IPO could declare revoked registrations invalid. It would be inequitable for T-Mobile to be able to sue for infringement and damages for the pre-revocation period, but for O2 to be unable to counterclaim that those rights were invalid.

Comment

This case makes it plain that phantom rights are a real threat. When attempting to clear an infringement risk, a revocation action on non-use or other grounds may be an attractive (and sometimes the only) option. However, if there are grounds for invalidation, it may be sensible to plead this too in order to ensure that the rights are well and truly gone.

Fully-fought invalidations often cost challengers more than non-use revocations, as the challenger bears the burden of proving invalidity. However, if a U.K. invalidity action is not defended, costs would now be very low since under a new IPO practice (reported in this issue) undefended invalidity actions are now granted by default provided the grounds if true would provide a basis for invalidation. In this case, O2 gambled on a simple revocation which later proved not to be enough. Its miscalculation resulted in the need to fund an IPO action and appeal to enable it to mount a further invalidity challenge in order to protect itself from T-Mobile’s phantom rights.

O2 ultimately succeeded, but other challengers may not lead such charmed lives. It is not at all clear, in particular, that OHIM would follow O2 and allow an invalidation against a revoked CTM. The same logic which it already employs to disregard unrenewed rights in oppositions, even where live on the opposed mark’s filing date, can be extended to show that a revoked CTM cannot be the subject of a challenge. The mere fact that “gone” rights may not be forgotten by the courts may not be enough to force OHIM’s hand unless the issue reaches the CFI or ECJ.

The importance of clearing conflicting rights once and for all is therefore of prime importance. With the right actions at the right time, the cost of clearance can be controlled, and phantom rights may turn out to be only vapour.