The Community Trade Mark - what changes lie ahead?

Following the recent publication of the new Trade Mark Directive (EU) 2015/2436 and the amended Trade Mark Regulation (the Regulation) in the Official Journal, we consider imminent changes to the Community Trade Mark (CTM) system.

What is the background to these reforms?

In recognition of the need for modernisation, in 2008 the European Commission began to examine the CTM system and consider how it interacted with the national trade mark systems of Member States. After two years of negotiation between EU institutions, the EU Presidency reached a provisional agreement with the European Parliament on reform of the European trade mark regime on 21 April 2015. On 10 June 2015, the European Council’s Permanent Representatives Committee (Coreper) approved a compromise agreement on the reform package. The latest installment is the publication of the recast Directive and amended Regulation which appeared in the Official Journal on 23 December and 24 December 2015 respectively:

• Directive (EU) 2015/2436. This Directive repeals Directive 2008/95/EC with effect from 15 January 2019
• Regulation (EU) 2015/2424 amending Council Regulation 207/2009/EC on the Community Trade Mark. This Regulation will enter into force from 23 March 2016

What changes will come into force on 23 March 2016?

Regulation 2015/2424 comes into force on 23 March 2016. In respect of the Directive (which largely mirrors the Regulation), Member States are required to transpose into national law the bulk of the Directive by 14 January 2019, namely arts 3–6, arts 8–14, arts 16–18, arts 22–39, art 41, arts 43–50 by 14 January 2019. In respect of the revocation and invalidity procedure laid down in art 45, the deadline for transposition is 14 January 2023.

This article highlights some key reforms that will come into effect on 23 March 2016. This list is non-exhaustive and statutory references are to the Regulation unless otherwise stated.

Terminology

The title 'Community trade mark' is replaced by 'European Union trade mark' or EUTM (art 1(1)) and 'Community trade mark court' is replaced by 'European trade mark court' (art 1(2)).The Office for Harmonization in Internal Market (OHIM) will become the 'European Union Intellectual Property Office' or EUIPO (art 1(7)).

Filing and fees

The current fee for filing a CTM application is €900 (or €1050 by paper application) for three classes with a fee of €150 for each additional class. Consequently applicants who seek protection in one or two classes are encouraged to extend the application to cover three classes because the effect is cost-neutral resulting in some unnecessarily broad trade mark registrations. The new fee regime is as follows:

• application for a single class of goods and services—€850 (electronic application), €1000 (paper application)
• addition of a second class of goods and services—€50
• each additional class of goods and services exceeding two—€150

A one or two class EUTM registration will be cheaper whereas three or more classes will be more costly. A full schedule of fees, including renewal fees, is set out in Annex 1 to the Regulation.

The little-used option of filing an application in a national trade mark office has been removed. EUTM applications must be filed at the EUIPO (art 25).

Representation

The requirement to include a graphic representation in EUTM applications is removed (recital 9 and art 4). Furthermore, the parameters of a EUTM have been broadened slightly to specify that a trade mark may consist of a colour or sound (art 4) as long as the clear and precise subject matter may be determined. These provisions will facilitate the registration of unconventional marks such as colours, sounds and smells and will allow applicants to take advantage of available technologies such as sound files or holograms to the extent that the trade mark can be identified with sufficient precision and clarity.

Classification of goods and services

Following the controversial IP Translator case (C-307/10 Chartered Institute of Patent Attorneys v the Registrar of Trade Marks), there has been much discussion as to the significance and meaning of Nice class headings of goods and services. The debate has been whether Nice headings should be read literally (‘means what it says’ approach) or, whether the class heading should be inferred to mean all goods and services covered by that particular class (the ‘class heading covers all’ approach). Art 28 of the Regulation states that goods and services in respect of which a trade mark is applied for should be 'identified with sufficient clarity and precision to enable the competent authorities and economic operators, on that sole basis, to determine the extent of protection sought'. Accordingly, the use of class headings should be interpreted as including only all the goods and services clearly covered by the literal meaning of the term—a clear rejection of the ‘class heading covers all’ approach.

Registrants of CTMs predating the IP Translator decision (ie prior to 22 June 2012) are given a six month grace period—ie by 24 September 2016—in which to file a declaration amending their specification of goods and services where they are registered in respect of a Nice class heading only. Where no declaration is filed, the CTM will be deemed to cover only the goods or services covered by the literal meaning (art 28(8)).

End to search for earlier registrations

OHIM currently conducts searches to identify earlier CTM rights that may conflict with a CTM application as a matter of course. Once the Regulation takes effect, applicants must specifically request an EU search report (art 36).

Proof of use period in oppositions

In the case of oppositions, the opponent will be required to prove genuine use of its earlier trade mark during the five-year period preceding the date of filing or the date of priority of the EUTM application. Currently, the five-year period runs from the date of publication.

End to own name defence for corporate names

Using a sign as a trade name or a company name can infringe a CTM. The honest use of a natural person’s name may be a defence to infringement while use of a company name is not (art 12). This partially reverses the current position where corporations or other trading bodies may benefit from the 'own name' defence eg Maier and another v ASOS plc and another company [2013] All ER (D) 185 (Sep).

Proving acquired distinctive character in invalidity cases

Under the new law, registrants will be able to rely on evidence of acquired distinctive character from after the date of trade mark registration. Previously, this evidence had to relate to the period before the date of trade mark application. Consequently, when seeking to overcome objections for invalidity based on lack of distinctive character, it will be easier to rely on the ground of acquired distinctiveness since the pool of prospective evidence is greater.

Anti-counterfeiting

EUTM registrants will benefit from stronger protection against infringing goods in transit in the EU. The Regulation introduces an express right to prevent infringing goods entering the EU without being released for free circulation (art 9(4)). This reverses the decision in C-446-09 and C-495/09 Phillips and Nokia . There is a defence where the importer can show that the EUTM registrant is not entitled to prevent sale in the country of final destination.

Further, EUTM owners will have the right to prohibit preparatory acts in relation to the use of packaging or other means (art 12). This would apply where materials such as packing, labels, tags, authenticity features carry the registrant's mark and could be used in relation to goods or services where such use would constitute infringement.

Is there anything practitioners should do now?

Overall, the Regulation and Directive provides clarification to trade mark law, more simplicity and in some aspects strengthens a trade mark owner's rights. In terms of next steps, there are a few points to consider:

owners of CTMs filed before June 2012 should consider filing a declaration ahead of the September 2016 deadline if the trade mark specification includes Nice class headings that were intended to cover all the goods and services in that class

while overall filing fees should reduce, registration costs are slightly higher for a trade mark that covers three or more classes. Consider applying before 23 March 2016 in order to take advantage of slightly lower fees

consider scope and budget to register non-traditional marks if appropriate—eg sounds, smells, colours, fluid marks. Note that until the Directive is transposed into UK law, it may be easier to register non-conventional marks as EUTMs because there is no requirement for graphic representation

Jessica Stretch, solicitor in the Lexis®PSL IP & IT team.

This article is republished with kind permission of WIPIT’s sister site, Lexis®PSL IP & IT. For a free trial click here.

The views expressed in this article are not necessarily those of the proprietor.