The EU trademark reform: a galvanizing storm or a fresh wind?

Published on: 03 October 2013
by Ms. Clemence Le Cointe, Trademark Lawyer at Dennemeyer & Associates, Munich

Over the past few months the whole Intellectual Property Community has been analyzing and discussing the recent changes regarding the Community Trade Mark (CTM) that are currently being reviewed at the European Union (EU) level. Indeed, the European Commission published on March 27, 2013 a Proposal introducing a series of fundamental changes in the European Trademark system. These changes would lead to amendments of the Community Trademark Regulation 207/2009/EC as well as the Trademark Directive 2008/95/EC. The European Commission’s proposal aims to modernize and harmonize the trademark system in Europe and wishes to “make trademark registration systems all over the EU more accessible and efficient for businesses in terms of lower costs and complexity, increased speed, greater predictability and legal security”.

Trademark applicants and professionals will have to adapt to two main new terminological changes: the Community Trademark will be renamed “European Trademark” and the Office for Harmonization in the Internal Market (OHIM) will be renamed the “European Union Trade Marks and Designs Agency” (Agency hereafter).

Even though there is still some time before these changes enter into force (the hope is that the proposal will be adopted by Spring 2014), it is very important for our clients to have awareness of the ongoing progress.

Clémence Le Cointe, Trademark Lawyer at Dennemeyer & Associates in Munich, addresses key questions and provides answers of central importance to our clients.

How is the proposed system aiming to streamline trademark applications and registration procedures for CTMs?

The streamlining of the trademark application and registration procedure for CTMs will mean a reduction of the waiting time as well as the paperwork. This is foreseen at different stages of the registration process:

  • Filing of applications: Taking into account that more than 96% of the Community Trademark applications are now directly filed through the OHIM’s e-filing system, the option for filing applications for European Trademarks at National Offices will be abolished. All applications will directly be filed through the OHIM.
  • Searches: Current search regimes allowing applicants to obtain results of national searches from National Offices will be abolished. Conducting priority searches and monitoring the registry for infringements will be performed via a number of tools developed by the Agency together with National Offices.
  • Filing date: the one-month period allowing applicants for “last minute” fee payments will be abolished and the ‘obligation’ to pay will be linked with the filing of the application. The applicants will have to provide proof that they submitted or authorized their payment when they file their application.
  • Publication of the application: The current one-month period between the Agency notifying the applicant of search reports and publication of the application will also be abolished, facilitating the speedup of the registration procedure.
  • Non Use grace period: The five years non-use grace period will now begin from the date of registration instead of the previous reference to the “completion of the registration procedure”.
  • Observations by third parties: The deadline for filing observations by third parties will be extended to the end of the opposition period or once opposition proceedings have concluded. Third parties will have the chance to file observations as soon as they become aware of an application, rather than after the publication date.
  • Opposition period for International Registrations: The time between publication and the start of the opposition period for international registrations is shortened from six months to one month.

What are the top three changes proposed by the new European trademark system that you believe will have the most significant impact on trademark owners/ those who wish to register their trademarks in the EU?

  • The admission of additional signs to the protection of a trademark is one of the most significant advancements proposed by the Commission. Indeed, as mentioned above, Article 4 of the COUNCIL REGULATION (EC) No 207/2009 of 26 February 2009 on the CTM is amended to remove the requirement of “graphic representability”. Before this amendment, it was only possible to obtain protection for a trademark if it were possible to represent the sign in a graphical manner. As more and more non traditional trademarks are created (such as sounds for example), this criterion has become more and more criticizable. It has become clear that there were more precise identification ways (technological means for instance) that could be used. The suppression of this requirement gives applicants more flexibility in that respect and therefore also provides them a greater legal certainty. This concerns mostly sounds and smells. According to the new proposal, the mark applied for should be capable of “being represented in a manner which enables the competent authorities and the public to determine the precise subject of the protection afforded to its proprietor”.
  • When preparing their trademark application, applicants will have to adapt their list of goods and services according to the recent IP Translator Decision. As some national offices are accepting class headings and some other not, it was a necessity, in order to achieve the harmonization aim of the Commission that the rule applicable to the CTM applications since the IP Translator Decision (Case 307/10) rendered on June 19th, 2012 is made mandatory on the national level. Therefore, Article 28 of the Regulation 207/2009/EC is modified in this sense and provides expressely that the list of goods and services shall be sufficiently clear and precise.
  • The new system seeks an amelioration of the anti-counterfeiting system through the introduction of three new measures :
    • Goods may not be imported into the EU even if only the consignor is acting for commercial purposes. The aim of this proposal is to avoid the sale of counterfeit goods from overseas via the Internet.
    • Proceedings against the application of a sign to “get-up, packaging or other means” and dealing with such items, where it is likely that they will be used for infringing goods or services.
    • In order to fight the tendency that counterfeit goods can currently pass through the EU, sometimes leaking on to local market without trademark owners being able to stop their transit unless they have proof that they will be sold or offered for sale to EU consumers, and following to the Philips/Nokia decision rendered by the European Court of Justice (Joined Cases C-446/09 and C-495/09) on suspensive procedures, the burden of proof will be reversed so that the importer must now prove that the counterfeiting goods are destined for territory outside the EU.

Which are the proposed changes that you consider to be less favorable for trademark applicants?

  • The European Commission, in its draft regulation (Art. 1, (12)), proposes to modify Article 9 of the COUNCIL REGULATION (EC) No 207/2009 to reduce the protection of trademarks against identical marks for identical goods and services (Cases of so-called “double identity”). In such cases, the protection will only be refused when the “origin function” of the earlier trademark is affected. In this respect, the proposed amendments foresee that “double identity” protection is subject to the requirement that the trademark’s “use affects or is liable to affect the function of the trademark to guarantee to consumers the origin of the goods and services”. This provision could lead to uncertainty for trademark owners, for example, as mentioned in the International Trademark Association´s (INTA) comments to the EC proposal in cases of clear counterfeiting such as cheap fake luxury products that could not be confused with the actual brand, if only based on price or point of sale. Indeed, consumers cannot expect a 50 € Prada handbag to be genuine.
  • In the new proposed Article 8 § 3 (b) of COUNCIL REGULATION (EC) No 207/2009, it is foreseen that bad faith can be basis of the opposition when the earlier trademark is protected outside the EU. This introduces of course an additional ground of protection for non-EU trademarks. Nevertheless, as mentioned by the European Community Trade Mark Association (ECTA) in its preliminary comments to the reform, there is a lack of explanation “why the bad faith is a ground for opposition when the earlier right is from outside the EU, but not when it is inside the EU”. Furthermore, bad faith is a vague criterion that is difficult to define. It can definitely bring uncertainty and insecurity also for new trademark applicants that will fear to see their application attacked without real reasons.

What will be, in your opinion, the main concerns or challenges that the new legislation raises for trademark owners?

  • Regarding the new provision relating to the “IP Translator classification”, a period of four months from the entry into force of the new regulation is currently foreseen in the proposal to enable the owners of trademarks filed before June 22nd, 2012 to reformulate their list of goods accordingly so that the goods or services designated are included in the alphabetical list for that particular class of the Nice classification edition in force at the date of filing. We can definitely say it will be a challenge, as the trademark owners will not be notified personally of the need to reformulate their list of goods and services and the period of time they have to do so is quite short when you have to evaluate and reformulate a list of goods and services.
  • The admission of further signs to the protection such as sounds and smells will most probably not always work in the sense of providing more legal certainty to the use of the new named Agency as for example smells can be represented through chemical formulas that are very difficult to understand for the public and also very difficult to search.

How will trademark registration fees/costs will be affected?

The new proposal foresees a reduction of the number of classes covered by the application fee from three classes to one class. Will this impact the trademark owners in the budget forecast for their CTM applications?

If the proposition finally enters into force, here is a comparison of the costs:

Cost of a CTM application in three classes according to the current system

Cost of a CTM application in three classes after reform

EUR 1050 EUR 1050

The positive aspect of the one-class structure in the basic fees is that the trademark owners will be able to reduce the costs and will not feel obliged to file their trademarks in three classes because it is already included in the basic fees.

Nevertheless, the problem is that the renewal costs still remain the same and still more expensive than the application fees! Indeed, a renewal fee of EUR 1.000 will be applied if the CTM registration covers one product class, EUR 1.100 for two classes and EUR 1.250 for up to three classes.

It is to be noted that the proposed revision of the fees structure will most probably be implemented sooner than the rest of the proposed measures, as aimed by the Committee on OHIM fees.

Regarding the very extensive character of the changes proposed by the European Commission, the proposals described above are not exhaustive. Our aim is to report on the main and most relevant changes in our opinion, remain at the disposal of our clients to report on a regular basis on the evolution of the process, and respond at any moment to their questions in this respect.