EU trade mark law gets a revamp – increased harmonisation, stronger rights against counterfeiters and a new intervening rights defence

Trade mark law and practice in the European Union will be revamped over the next few years as the EU’s three legislative bodies, the Commission, the Parliament and the Council, have agreed final compromise texts for:

(a) a new replacement Trade Mark Directive, which partially harmonises trade mark law and practice across the EU’s member states; and

(b) revisions to the Community Trade Mark Regulation, which governs the law and practice of the EU wide Community trade mark.

The current texts still need to be reviewed for legal consistency and formerly adopted but the expectation is that no further substantive changes will be
made.

The new Directive and the revisions to Regulation are an evolution of the EU’s trade mark system and do not dramatically change the
legal landscape.  However, there are still a number of substantive changes to EU trade mark law and practice that will have a significant impact on trade mark owners.

The main changes include:

• New names for the Community trade mark and OHIM

The Community trade mark or CTM will be renamed the European Union trade mark.  This recognises that the “European Community” was dissolved into the European Union in 2009, when the Lisbon Treaty came into force.

The Office for Harmonization in the Internal Market or OHIM (the European Union’s trade mark and design registry) is also being renamed and will in the future go by the rather more prosaic moniker of the European Union Intellectual Property Office.

• Rights conferred by a trade mark

– Counterfeit goods in transit

At the moment EU trade mark rights are not infringed by goods that are merely transiting through the EU, even if those goods are counterfeits. This
means brand owners and customs authorities can find it difficult to seize counterfeit goods in transit and stop them making their way through the EU to other jurisdictions, where they may not be identified and detained.  It also makes it easier for counterfeit goods in transit to be diverted and to find their way onto the EU market.

The compromise texts provide that goods in transit will infringe EU trade mark rights where they bear without authorisation a trade mark which is identical to a trade mark registered for the goods concerned.  However, the trade mark owners’ right to take action against goods in transit will lapse
if the holder of the goods is able to provide evidence that the trade mark owner cannot prevent the sale of the goods in the intended final destination.

– Use of mark on packaging and other means

Trade mark owners have also been given a right to prohibit use of the same or similar trade marks on “packaging, labels, tags, security authenticity features or devices or any other means on which the mark may be fixed” where there is a risk that such packaging, labels or other means will be used to infringe the trade mark owner’s rights.

• Defences to trade mark infringement

– Honest practices defences

There have been a number of significant changes to the honest practices defences to trade mark infringement:

(a) the own name defence has been restricted to natural persons, meaning that it will no longer apply to company or trading names;

(b) the descriptive use defence has been widened to also cover non-distinctive uses; and 

(c) the defence that allowed for use of third party trade marks where it was necessary to indicate the intended purpose of a product or service (in particular as accessories or spare parts), has been widened so as to cover any use for the purpose of identifying or referring to goods or services of those of the owner of the trade mark. 

As previously, all of these defences are subject to the use being in accordance with honest practices in industrial or commercial matters.

– Intervening rights defence

Potentially one of the most significant changes to substantive trade mark law is the inclusion of a new intervening rights defence.  These new
provisions give a qualified defence to trade mark infringement to owners of later filed trade mark registrations. The circumstances in which the defence applies vary depending on whether the later mark is an EU trade mark or national mark.

For both EU trade marks and national trade marks, the intervening rights defence will apply if:

(a) the owner of the earlier trade mark has acquiesced to the use of the later trademark for a period of five years (this is essentially the same as the acquiescence defence that existed previously); and

(b) the earlier mark could have been revoked for non-use when the later mark was filed (so the defence will apply even if the earlier mark had started to be used by the time the use of the later mark was commenced).

For EU trade marks only, the intervening rights defence will also apply if:

(c) the owner of the earlier trade mark has expressly consented to the later trade mark’s registration or has previously unsuccessfully applied for a declaration that the later mark is invalid and/or made a counter claim on relative grounds.

For national trade marks only, the intervening rights defence will also apply if:

(d) the later mark could not have been declared invalid at its filing date or priority date because the earlier mark had not at that stage: 

i. acquired distinctive character; 

ii. become sufficiently distinctive to support a finding of a likelihood confusion; or

iii. acquired the necessary reputation (where the ground of invalidity relied upon concerns the enhanced protection provided to marks with a reputation).

The different application of the intervening rights defence to EU and national marks means that there could be advantages to holding one or the other in different circumstances. In particular, registered national marks will provide an intervening rights defence where the earlier trade mark had not yet acquired sufficient distinctive character or reputation at the filing date or priority date of the later mark, rather than when the use of the later mark is commenced. This appears to provide a significant additional benefit to owners of national trade marks.

• Graphic representation

The requirement that trade marks must be capable of graphic representation will be removed. This will remove some of the practical obstacles to the registration of non-traditional marks, such as sound, smell and dynamic marks. However, the removal of the graphic representation requirement does not mean that such marks will be any more likely to avoid an objection on the grounds that they are non-distinctive.

• Grounds for refusal and invalidity

– Shape exclusions widened to include other characteristics 

The absolute grounds for refusal that excluded certain shapes from registration have been widened so as to exclude signs which consist exclusively of a shape or another characteristic which (i) results from the nature of the goods themselves; (ii) is necessary to obtain a technical result; or (iii) gives substantial value to the goods. The exact implications of this change will be a matter for the Court of Justice but it clearly widens these exclusions and potentially catches characteristics such as colour, sound and perhaps even ornamentation.

– Greater protection for geographical indications etc. 

The holders of geographical indications or protected designations of origin are given a right to oppose or invalidate trade marks whose use would infringe those rights. In addition, trade marks will also be refused or invalidated on absolute grounds if they are excluded from registration by EU legislation or treaty commitments providing for the protection of: designations of origin or geographical indications; traditional terms for wine; or traditional specialities guaranteed. In the case of designations of origin or geographical indications, national legislation or treaty commitments providing for protection of the same can also be a relied on as a ground for refusal of either a European Union Trade Mark or a national mark in the Member State concerned.

• Increased harmonization 

The Trade Mark Directive also provides for a much greater level of harmonization, partly of substantive law but in particular in terms of a registry practice and procedure. These include mandatory administrative procedures for revocation and invalidity actions, which will require changes to the law in a number of Member States including Italy and Spain.

• Trade marks that cover Nice class headings can be extended 

Owners of Community trade marks filed before 22 June 2012 that cover one or more of the Nice class headings will be given a six month period during which they can expand the list of goods and services covered by their marks.

This provision follows on from the Court of Justice’s judgment of 29 June 2012, Case C-307/10 “IP Translator”, which ruled that, contrary to OHIM’s practice at the time, the use of the Nice class headings in trade mark specifications did not mean that the marks concerned covered all goods or services within that Nice class. Given that some trade mark applicants may have been relying on OHIM’s practice prior to the Court’s judgment, it has been felt desirable to allow them to add in other indications from the list of goods and service in the Nice alphabetical list. Provisions have also been included to ensure that these additional indications cannot be asserted against third parties who have obtained trade marks or commenced use prior to the amendment of the register.

• Certification marks 

It is already possible to obtain certification marks in the UK and some other EU member states but the revisions to the Regulation provide for the registration of EU certification marks. Certification marks are marks that do not indicate the trade origin of particular goods and services but rather certify that those goods or services possess particular characteristics.

• Fee changes 

– Application fees will mainly be rising 

OHIM’s fees for a Community trade mark application are currently €900 (if filed electronically or otherwise €1,050) for up to three classes, with an additional €150 for each additional class above three. This is set to change, so that there will now be a differential between one, two and three class applications. The cost of two class applications will effectively stay the same, with one class applications reducing by €50 and three class applications increasing by €150. The cost of applications covering four or more classes will also increase by €150.

– Renewal fees are falling 

The good news for trade mark owners is that renewal fees are coming down to the same level as the application fees – meaning that the fees for renewing a mark will no longer be higher than the application fees.

– Other fees are generally lower 

Many other fees are also being reduced, including the fees for filing an opposition, a cancellation action and an appeal.

Timeline

The European Commission has stated that it expects the new Directive and the revisions to the Regulation to be adopted “in the coming weeks”. Most of the substantive legal and procedural changes that arise from the revisions to the Community Trade Mark Regulation, will come into force 90 days after its publication in the Official Journal, which will be shortly after the revisions are adopted. However, the removal of the graphic representation requirement is not due to take place until 18 months after its adoption, presumably to enable the administrative changes necessary to allow non-graphical marks to be accepted.

The timescale for transposition of the Trade Mark Directive is longer, with Member States being given three years to put in place most of the necessary legal and administrative changes to comply with the new Directive (the exception being the requirement for administrative cancellation procedures, which Member States will have seven years to comply with). The substantive changes to trade mark law, including the rights enjoyed by trade mark owners, will not apply to national marks until the day after that deadline expires. The consequence of this is that there will be a period of almost three years in which there are significant differences between the rights enjoyed by holders of Community trade marks and holders of national trade marks.