Trade mark law in the EU will be modernised over the next few years with a new regulation and directive. Although the new legislation does not attempt to completely turn current practice on its head, it is a good time for trade mark proprietors to assess what impact the reforms will have on their organization before they become law. Deserving of immediate attention, is the fact that new regulation, likely to come into force in early 2016, affords the owners of community trade marks filed before 20 June 2012 a limited six month opportunity to expand the list of goods and services covered by those marks if they relied on Nice class headings to describe the goods and services covered.
Background
The European Commission started thinking about modernising European trade mark law back in 2008, but it wasn’t until April 2015 that the Commission, The European Parliament and the Council finally announced that they had reached provisional agreement on a trade mark reform package. The proposals were published shortly afterwards in June 2015 and consist of a new regulation and directive, reforming both the EU-wide trade mark system and national trade mark systems of individual member states respectively.
Although not revolutionary, the reform package comprises the biggest change to the legal landscape for European trade marks in over 20 years and aims to create a more efficient and predictable system for trade mark proprietors throughout the EU.
The published texts still need to be formerly adopted, hopefully by the end of 2015, but they are unlikely to undergo any major revisions. Most provisions of the regulation, dealing with trademarks covering the European Union, will come into effect 90 days after its publication in the Official Journal (likely early 2016), the remainder needing secondary legislation. Member states will have three years to transpose the new directive, which concerns national trade marks, into national legislation (but 7 years to provide for administrative opposition and cancellation proceedings).
We discuss some of the key amendments below.
Terminology
The Community trade mark (CTM) will become the ‘European Union trade mark’ (EUTM) and the Office for Harmonisation in the Internal Market (OHIM) will become the ‘European Union Intellectual Property Office’ (EUIPO).
Filing new EUTMs
The current application fee for a CTM covers three classes of goods/services. Under the new system, additional fees are payable for each class requested on both application and renewal of the EUTM. This is intended to discourage applicants from making broad claims for goods and services that they do not actually need. All applications for EUTMs must be made at the EUIPO, and fees will be payable on application.
A table showing the new fee structure for online applications is shown below:
Current (CTM) New (EUTM)
Online Application Fee €900 €850
2nd class - €50
3rd class - €150
4th and subsequent classes €150 €150
Proprietors may benefit from further cost savings renewing EUTMs. Currently, the fee to renew a CTM registered in up to three classes is €1350 – this will fall to €1050 under the new regime.
Registrability
A trade mark will be able to consist of any sign including colours and sounds in both national and EU trade mark applications. There will also be no requirement to represent marks graphically. This should make it possible to register unconventional marks, such as sound, smells, or motion, provided it can be “represented on the register in a manner which enables the competent authorities and the public to determine the clear and precise subject matter of the protection afforded to the proprietor”. This should encourage greater flexibility and allow the registration of new types of trade marks in the age of digital brands.
Amendments to both the directive and the regulation mean that absolute grounds for refusal or invalidity of either national trade marks or EUTMs will now include designations of origin, geographical indications, traditional terms for wine, traditional specialities guaranteed and plant varieties.
EUTMs or national trade marks will also not be registerable if they consist of any characteristic which results from the nature of the goods themselves, which is necessary to achieve a technical result, or which gives substantial value to the goods. The existing legislation only precludes shapes from being registered if they have these qualities - the revision could make non-traditional trademarks harder to register.
Nice class headings
Historically, OHIM’s practice was that a reference to a Nice class heading in the specification of a trade mark application constituted a claim to all the goods or services in that class. However, on 20 June 2012, the CJEU in the IP Translator case (C-307/10) held that only the goods and services clearly covered by the literal meaning of the class heading afford trade mark protection.
The new legislative package implements the IP Translator ruling, potentially limiting existing CTM owner’s rights. Importantly, however, the regulation gives registrants of CTMs that were filed using the Nice class headings prior to the IP Translator decision (i.e. before 20 June 2012) a six month grace period to amend the specification to make it clear that the proprietor intended to cover all the goods and services listed under that class. If no declaration is filed, the CTM will be deemed to cover only the goods or services covered by the literal meaning of the class heading. It would therefore be pertinent for CTM proprietors to start reviewing their trade mark portfolios now to consider if any amendments should be made. Note, however, that the regulation makes it clear that trade mark owners will not be able to prejudice the rights of any third parties affected by any expansion of the goods/services covered, provided that the third parties used the trade mark before the register was amended and such use did not infringe the proprietor's rights based on the literal meaning of the goods and services in the register at that time.
New provisions to deal with counterfeit goods
In 2011, CJEU confirmed that the constraints of the existing trade mark legislation were such that counterfeit goods in transit through the EU could only be seized if it could be shown that they were actually intended to be marketed within the EU.
Both the new regulation and new directive contain provisions that will prevent the entry of counterfeit goods into the customs territory of the EU (or Member State accordingly), regardless of whether or not they are intended for free circulation there. An importer will be able to avoid seizure of his goods if he can show that the trade mark proprietor would not be able to prevent the marketing of the goods at their final destination. This is a welcome development for brand owners although the implied requirement that the EUTM/ national trade mark courts will have to consider foreign trade mark law may result in some difficulties. The recitals to the both the new regulation and directive remind rights holders that the legitimate movement of generic medicines should be protected.
A further welcome addition for brand owners are the new provisions prohibiting the application of a trade mark to packaging, labels, tags, security or authenticity features when there is a risk that these items will go on to be used for infringing goods or services. This builds on the provisions set out in the recent Customs Regulation (No 608/2013) which expanded the definition of counterfeit goods to include packaging, labels, sticker, brochures, operating instructions, warranties even if not affixed or transported with the corresponding goods.
The provisions in earlier drafts of the legislation that would have prevented consumers from importing counterfeit goods from consignors acting in a commercial capacity (for example sales of counterfeit goods form overseas businesses via the internet) have been removed.
Company names and comparative advertising
Both the new directive and the new regulation provide that trade mark proprietors will not be able to prevent a natural person from using (in the course of trade) their own name or address – however, using a trade mark as a company or trade name will now constitute infringement. The new legislation also confirms that a trade mark proprietor can block the use of a trade mark in comparative advertisements that do not meet the requirements of the Comparative Advertising Directive (2006/114).
Harmonisation
Finally, it is worth recognising that one of the key outcomes of the reform package is to harmonise the approach to the registration of marks between the European and national trade mark offices, particularly filing date requirements and the designation and classification of goods. The rights of licensees for infringements of national marks will also be harmonised which will enable licensees (with the trade mark owner’s consent) to sue for the infringement of national marks. Within 7 years of the directive coming into force, all member states must also provide for administrative proceedings for the opposition and cancellation of trade marks to avoid expensive trips to court. Most of these provisions are already in place in the UK.
Conclusions
The reform package includes important changes to modernise and harmonise trade mark law across the EU.
Although any changes to national trade marks will take longer to implement, as we have discussed, changes to the CTM regime will happen quickly, most likely in early 2016. Consequently, proprietors of CTMs registered before 20 June 2012 and relying on Nice Class headings should get ready to clarify that they intended to cover all goods and services in that class – if such a declaration is not made within six months of the regulation coming into force, those CTMs will only cover those goods and services that can be understood from the clear meaning of the class heading used. This could severely limit the scope of some CTMs. Brand owners should also consider whether they have any non-traditional marks that could be registered as a EUTM following the removal of the requirement that marks need to be represented graphically.