European Union: Reforms to trade mark legislation

On 23 and 24 December 2015, the EU Council approved a package of reforms to the laws governing trade marks within the European Union. The reforms are anticipated to have wide-reaching consequences for holders of and applicants for trade mark rights within the EU.  Many significant changes have already taken effect as from 23 March 2016, with particular impact upon the system for unitary EU-wide registration of trade marks.

Background

Trade mark law within the EU is governed by both European Union law and the national laws of EU member states. These laws underpin the two main systems for obtaining trade mark protection in the EU, i.e. that most recently known as the “Community” trade mark system (through which protection can be obtained throughout the whole EU through a single application) and the national registration systems of EU member states which have continued to exist in parallel with the unitary EU-wide registration system.

The package of reforms approved by the EU Council at the end of last year consists of a new EU Trade Mark Directive (EU) 2015/2436, along with a series of amendments to the existing Community Trade Mark Regulation by means of Regulation (EU) No 2015/2424. These will affect both unitary EU-wide and national trade mark rights.

New EU Trade Mark Directive

Although national trade mark laws of individual EU member states have for many years had their roots in an older “harmonisation” Directive (Council Directive No. 89/104/EEC), there remains some divergence. The new EU Trade Mark Directive has been introduced with a view to better harmonising the trade mark laws of member states.

Some of the important provisions within the new Directive are as follows:

• Graphical representation: The requirement for a mark to be capable of “graphical representation” will be removed, potentially paving the way for an increased uptake in the filing of non-traditional types of trade mark – such as smells and holograms. However, applicants will still need to present their marks in a manner which is deemed, inter alia, to be clear and precise. It therefore remains to be seen whether more non-traditional marks will be accepted for registration under the new Directive.
• Administrative procedures: The national trade mark offices of EU member states will be required to introduce opposition, revocation and invalidity procedures, if they do not already offer them. In some member states it is currently only possible to bring such actions at Court, which can result in longer and more expensive proceedings.
• Own name defence: Companies will no longer be able to cite honest use of their own name as a defence to infringement of another party’s trade mark. The ‘own name defence’ will only be available to natural persons (i.e. individuals) who use their personal names.
• Non-use of registered marks: Owners of trade marks that are more than five years old will only be able to enforce their rights to the extent that they are in use. The Directive will introduce a mechanism for respondents to request proof of use of such earlier rights enforced against them.
• New anti-counterfeiting measures: holders of EU trade marks will be able to seize counterfeit goods in transit through the EU, even if the goods are not targeted at EU consumers. Rights holders will also have means to prevent others from affixing trade marks to packaging, labels, security or authenticity features and from selling, stocking or importing such packaging, labels, tags, security tags, if this is without authorisation. The entitlement of an EU trade mark holder to prevent transit of goods through the EU would lapse, however, if the party responsible for the goods is able to prove that the EU trade mark holder would not be entitled to prohibit use of the trade mark in the country of final destination.

It will be some time before the changes prompted by the Directive filter through to the national level; for most of the provisions, member states have at least three years to implement them into their local laws.

Amendments to existing Community Trade Mark Regulation

The package also consists of a number of amendments to the existing Community Trade Mark Regulation, which governs Community trade marks (the unitary right that affords holders trade mark protection throughout all EU member states – until recently known as the CTM).

The amended Regulation came into force on 23 March 2016, and so the changes associated with it may be more acutely noticed by trade mark applicants and right holders in the EU.

The following are perhaps the most significant changes of which to be aware:

• Terminology: the Community Trade Mark (CTM) has been renamed the European Union Trade Mark (EUTM). This reflects the geographical scope of this right in a more meaningful way.

On 23 March 2016, all Community Trade Marks automatically became European Union Trade Marks; holders of existing CTM applications and registrations have not needed to take any action to effect this change.

The EUTM is now administered by the European Union Intellectual Property Office (EUIPO) – formerly known as The Office for Harmonisation in the Internal Market (“OHIM”) or the Community Trade Marks Office.  Again, this is a more accurate description as the EUIPO does have responsibility for protection of other intellectual property rights than trade marks, namely, designs.

• Application and renewal fee changes: under the amended Regulation, application fees for EUTMs will in some cases rise, but renewal fees will fall across the board.

Previously, the basic fee for a Community trade mark application was EUR 900, which included three classes of goods and services. Each subsequent class added EUR 150 to the basic fee.

The amended Regulation has introduced a lower basic application fee of EUR 850, which only covers one class of goods and services. The cost of filing in two classes is EUR 900, and each class included thereafter will add EUR 150 in fees. It is therefore more expensive to file in three or more classes under the amended Regulation.

The above change should prompt the filing of EUTM applications for better focussed specifications of goods and/or services than has previously been the case.  Historically, Community trade mark applicants would often include more classes than needed due to the ability to include up to three classes for one fee.  This caused issues later on, due to the inability to prove, if challenged on non-use grounds, genuine use of the registered mark upon all goods or services registered.  It also led to uncertainty for third parties looking to clear their own marks for use and registration, when the true goods and services of interest to an existing Community trade mark owner were difficult to ascertain.  Also, these earlier trade marks would continue to pose a registered trade mark infringement risk for all goods and services covered until sufficiently mature for challenge on non-use grounds.

Renewal fees, however, have fallen, regardless of the number of classes covered by a registration. The fees set out above for new applications will also apply to renewals, whereas previously renewal fees always exceeded the equivalent cost of a new application.

• Interpretation of class headings: the amended Regulation clarifies the Office’s established position that trade mark specifications are to be given a literal interpretation.

Under the Nice classification system, goods and services of trade mark specifications are grouped into 45 administrative ‘classes’. Each class is assigned a general description of the goods and services that fall within it, known as a ‘class heading’. For instance, the heading of class 15 is musical instruments.

In the past, applicants may have filed for the class heading to secure protection in relation to all goods or services that were deemed to fall within that class. However, the amended Regulation will confirm the Office’s position that protection for a class heading only extends to the specific terms named in that heading, or that fall within its scope.

For example, under the amended Regulation, a specification consisting of the class 15 heading musical instruments will be deemed not to extend to other class 15 goods such as music stands and tuning forks, as they fall outside the literal interpretation of the heading. If and when a registration covering such goods is more than 5 years old, and absent genuine use of the mark on the registered goods or proper reasons for non-use, the registration could be cancelled in its entirety.

Right holders beware: The restricted interpretation of specifications applies to Community trade mark applications and registrations filed before the amended Regulation came into force, as well as to any EUTM applications filed thereafter.

Holders of EUTM registrations that were filed before 22 June 2012, and which are registered in respect of the entire heading of a Nice class, have the opportunity to file a declaration clarifying the goods and services that they intended for the heading to cover. Such declarations will need to be filed by 24 September 2016 according to the wording of the Regulation; but many are taking the 6 month window for declarations to close on 23 September 2016, and it would be prudent to address any required specification amendments in good time prior to either date.  After the September deadline, class heading terms will be given their literal meaning, with the associated risks detailed above.

Other provisions for the EUTM system include potential for registration of “Certification” trade marks, as already available in certain EU member states, and the offering of mediation services.

For International Trade Mark Registrations designating the EU for protection, the three month period for third party opposition following publication will commence one month after publication rather than six months.   This too should be a welcome change in the long run, as it will shorten the long period it was previously necessary to wait for an EU designation to be able to proceed to full protection.  However, those interested in lodging oppositions to an EU designation will need to be mindful of the change to calculation of opposition deadlines.

Looking ahead

Whilst some of these changes will take time to implement, others, particularly those associated with the amended Regulation, are already in force.  Changes to address the scope of specifications of goods or services of a registration will ultimately lead to more legal certainty but in the short term will require close attention of existing rights holders to ensure that the scope of protection of their registrations is exactly what they need.

The Community/unitary EU-wide trade mark registration system has been an enormous success since its creation around two decades ago.  This has placed the newly named EUIPO in an excellent position to assist other member states with improvement of their systems and towards true harmonisation of trade mark law and practice within the jurisdiction.

What will the next decade bring?