EU Trade Mark Law Reform

The EU Council has recently published the latest and almost finalized reforms including revisions to the new Community Trademark Regulation (‘CTMR’) as well as a new Trademark Directive (‘TMD’).  Member States will have a period of 3 years in which to implement most of the provisions of the Directive into national law and in the case of providing an administrative procedure for cancellation proceedings (which is pertinent to Italy) an extended period of 7 years.

The reasoning behind these changes is the desire 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”. There is a perceived need to modernise the current trademark registration system to make it more streamlined, consistent, user friendly, publicly accessible, up to date and adapted to the Internet era.

Changes of Name

The first change is that the references to ‘Community’ are to be replaced by European Union so that the current CTMs will be known as ‘European Union Trade Marks’ (EUTMs) and OHIM – the Office for Harmonisation in the Internal Market will become known as the European Union Intellectual Property Office or ‘EUIPO’.  

Reduction in Fees

For many brand owners the overall reductions in fees and the change in rules so that there is no longer an incentive to file in 3 classes but rather a more gradual increase from one to three classes will be welcomed. The intention here is not to clutter the registers with registrations in a third class merely to take advantage of the previous cost benefit in the system.  Renewal fees are significantly less costly. Also the declaration of invalidity or revocation and appeal costs will be reduced. It has been announced that the savings for businesses seeking protection for registered EUTMs beyond the initial period of 10 years will be as much as 37%.

The reforms bring with them some substantive changes which are set out in more detail below:

Revisions to Requirement for Graphic Representation

The requirement for trademark applicants to file a graphic representation of the mark has been removed and replaced with the requirement that the sign applied for “be represented on the register in a manner which enables the competent authorities and the public to determine the precise subject matter afforded to its proprietor”

The logic here is to provide a more flexible system allowing representation using available technology especially for sound and motion marks which can now be filed using sound and video files.  Notwithstanding this change the criteria set out in Article 4 EUTMR ensure the marks must be represented in a manner which is clear, precise, self-contained, easily accessible, intelligible, durable and objective (the so-called Sieckmann criteria set down by the CJEU 2002).

Broadening of Technical Function Prohibition

The problematic provision in the current law aimed at the public interest issue not to provide trademark protection -  and hence exclusive rights  - in technical solutions has been broadened to apply not only to shapes but also to signs which consist of any other characteristics so that there is an absolute prohibition on signs which consist exclusively shape or any characteristics which results from the nature of the goods, or is necessary to achieve a technical result, or which gives substantial value to the goods is prohibited.

This is likely to limit non-traditional trademarks even where they have acquired distinctiveness.

Principle of Priority of Earlier Rights

The principle of priority under which an earlier registered trademark takes precedence over later registered trademarks  - while already included in the previous legislation  -  is stated with more legal certainty in Article 9(2)  of the EUTMR and the Article 10(2) of the TMD.

Widening of Scope of Infringing Uses

1. Company names and Use in Comparative Advertising

Use of the registered mark as a trade name or company name is now specifically included (Article 12(a) EUTMR in the examples of infringing uses, as well as using a registered mark in comparative advertising in a way which does not comply with the Comparative Advertising Directive. The provision on company names is likely to generate a greater need for companies to carry out company names clearance searches before expanding into a new EU territory and companies will be well advised to apply for trademark registration as a defensive mechanism since they can no longer rely on their company name as a defence;

2. Preparatory Acts

With a view to fighting counterfeiting more effectively infringement actions will be possible if there is evidence of preparatory acts ie: where there is a risk that packaging, labels, tags, security or authenticity features will be used in relation to infringing goods or services;

3. Goods in Transit

This has long been a difficult area for brand owners so it is good to see that a resolution has been found. Going forward, EUTM owners may prevent third parties from bringing goods into the EU bearing trademarks which are not released “for free circulation in the EU including placement in all customs such as transit, transhipment, warehousing, free zones, temporary storage, inward processing or temporary admission” although such goods will be released if the owner of the goods provides evidence to this or any other Customs proceedings that the goods or services were not for the EU market. Seized goods not liable for infringement may be liable to pay damages.

Sanctions for Infringement

The sanctions (apart from injunctions) have been revised so that instead of applying the law of the Member States in which the infringement was committed, the EU Trademark court may now apply measures or orders under the applicable law which it deems appropriate in the circumstances Article 102(2) EUTMR.

Limitations or Defences to Infringement

The own name defence may only be used where the defendant is a natural person so that legal entities will no longer be able to rely on the fact that they are using a company name.

Use of non-distinctive signs

The descriptive use defence has been extended to apply to use of signs which are not distinctive Article 12(1) (b) EUTMR.

Classification

As expected, the TMD and EUTMR now take their lead from the ruling in the IP Translator Case C-307/10 19 June 2012. Prior to this case many jurisdictions followed the practice that the class heading covered all services.  Art 40 of the new TMD and 28 of the EUTMR provide that the goods and services for which protection is sought must be identified by the applicant “with sufficient clarity and precision to enable competent authorities and economic operators, on that sole basis, to determine the extent of the protection sought”.

Class headings will now be interpreted as including all the goods and services clearly covered by the literal meaning of the indication or term but nothing more. In the future trademark owners will be well advised to specify exactly the goods and services for which they are using or intend to use the trademark.

With a view to this change, owners of EUTMs applied before 22 June 2012 which are registered for entire Nice class headings, may declare (within 6 months of entry into force of the EUTMR) that their intention at the time of filing had been to seek protection in respect of goods and services beyond those covered in the literal meaning of the heading of that class provided that the particular goods and services designated are included in the Nice Class at the date of filing. This declaration must specify clearly and precisely the goods and services intended to be covered but which can’t be ascertained from the class heading. Without prejudice to the application of the provision on non-use, the EUIPO will amend the Register accordingly.

Procedures for Revocation and Declarations of Invalidity

The EUIPO provide for a means for applying to revoke or cancel trademark registrations through an administrative procedure which will be completely new to Italy since it is currently only available through the courts and can be both lengthy and costly. Art 47 of the new TMD provides that Member States must provide for an efficient and rapid administrative procedure before their offices for revocation or declaration of invalidity of a trademark and this should be a very useful and less costly means of removing unused and invalid marks cluttering up the register and preventing other registrations for valid marks.

However given that this will mean setting up and funding a new arm of the Opposition division of the Trade Mark Registry, Member States will have 7 years from the entry into force of the TMD in which to implement Article 47.

This article only covers some of the main changes which will affect Trademark law in the EU and may be subject to further changes between now and final implementation.  For further information please contact Julia Holden.