DOING BUSINESS IN EUROPE?

Build a strong Trade Mark and avoid the pitfalls arising from the European Jurisdiction

European Trade Mark Jurisdiction and current proposals to reform EU Trade Mark law.

Things to keep in mind when you go to Europe:

  • arrange a preliminary Trade Mark search (similarity/identity)
  • use non descriptive and highly distinctive wording/logo
  • build a strong trade mark portfolio by registering various national Trade Marks in European countries or one single community Trade Mark
  • use a European Trade Mark as a “home country registration“ and expand internationally
  • draft either a broad or narrow list of goods and services (depending on the circumstances)
  • claim priority where possible

Before Australian companies or businesses commence trading in the European Union, Trade Mark registration is one of the most essential tasks to accomplish. However, it has to be taken into account that every jurisdiction has its own aspects that influence the process of Trade Mark registration. Due to the diversity of aspects to be considered, this article can only give a comprehensive overview with regard to European Trade Mark law. The following articles will focus on particular aspects in more detail.

History of European Trade Mark Law

The European Community Trade Mark originated back in 1964, when the Convention on European Trade Mark Law was drafted. The first proposal for a regulation concerning these marks appeared in 1988, and the first step of EU harmonisation of national laws in this area was the EU Directive89/104EEC. Trade Mark legislation within the EU is largely affected by the international conventions to which the Community has acceded. The Member States of the Community are members of the Paris Convention of 1967 and the TRIPS Agreement of 1994 (‘TRIPS’). Also almost all EU states are members of the Madrid Agreement for the International Registration of Marks or the related Protocol to the Madrid Agreement respectively. The European Union has now adopted the Madrid Protocol. This means that one can use home country Trade Mark registration in Australia and file one single application with the World Intellectual Property Organisation (WIPO) to cover all member states of the European Union.

The EU Trade Mark Directive has not resulted in full harmonisation in the EU member states. Harmonisation of European Trade Mark Law has been limited to those national provisions that may obstruct the free movement of goods and services within the European Community directly.

The basic rule in EU law is the “first to file principle”, which means that Trade Marks are granted to the first to file an application, rather than first to use a word or logo in trade. In principle, Trade Marks have to be registered to be enforceable. However, there are exceptions to the OHIM registration system, such as prior use of a well-known Trade Mark, which defeats an application for registration. In order to protect a trade mark through registration, a few requirements need to be fulfilled.

Community trade marks are defined as:

‘…any signs capable of being represented graphically… provided that such signs are capable of distinguishing the goods or services of one undertaking from those of other undertakings.’[1]

Therefore a Trade Mark consists of a sign that refers to or can be attached to goods or services by way of use as a badge of origin, including words, symbols, shapes and packaging. These signs need to be capable of graphical representation. This requirement does not, however, imply that only visually perceptible signs are acceptable.[2]In the Sieckmann case – Sieckmann v. DPMA – the Court of Justice of the European Union it was concluded, that such signs must be possible to represent in a way which is ‘clear, precise, self-contained, easily accessible, intelligible, durable and objective’. This means that single colours may be referred to using an internationally recognised identification code and musical tunes may be represented by a clef or musical notes. Further, registration also requires that the mark is distinctive, meaning that the sign is capable of distinguishing goods or services of one firm from another.

In the application process for registration of a Community trade mark or when the EU has been designated in an international registration, OHIM investigates whether there are any absolute grounds against registration. If this is the case, the application is refused, either in part or in its entirety.[3]

Pursuant to Article 7(1)(b) CTMR signs without distinctive characters are excluded. These are signs that are composed of elements that describe the product or service and thus do not separate one brand from another or one company from the other. A second ground for refusal is indication of the origin, quality, kind, or value of a product. The scope of registrability was significantly broadened in the Baby-Dry[4] case which stated that evocative and suggestive signs as well as descriptive elements are accepted if combined with non-descriptive ones. This almost opened the flood gate to merely descriptive trade mark applications and is greatly advantageous to applicants with descriptive or allusive marks, who were not able to obtain trade mark protection elsewhere. As long as an applicant can provide an address of service within Europe, it is worthwhile exploring whether or not a Community Trade Mark should be used as home country registration in order to expand trade mark protection to other countries around the globe. This is, because it has been observed, that a Community Trade Mark is relatively easy to obtain, even for allusive and almost descriptive terms.

However, Article 7(1) CTMR states that customary or generic signs for the product as such or some of its properties are excluded from protection as Trade Mark. Another ground of refusal is functionality, meaning signs (generally shapes or packages) resulting from the nature of the good, which are necessary to obtain a technical result or are substantially valuable for the good themselves. Additionally, signs cannot be deceptive or mislead customers. They can also not contradict public policy be of high symbolic value. The last absolute requirement is that they have not been filed in bad faith. Presumptive lack of intent is however not deemed to be considered bad faith by the Office for Harmonization in the Internal Market (OHIM).

In addition to the absolute grounds of refusal previously mentioned, there are also relative grounds that may hinder protection.

One of the relative grounds for refusal is the existence of an identical or confusingly similar Trade Mark for identical or confusingly similar goods or services. Existing Trade Marks are comprised by previously registered trade mark, prior applications and unregistered well-known marks. Another obstacle to registration arises, if the sign is identical or similar to an existing reputed Trade Mark and the registration would tarnish the reputed Trade Mark or take unfair advantage of its reputation without due cause. The last situation that would constitute a relative ground for refusal is a conflict with earlier non-Trade Mark rights, such as copyright, patent, name, or design.

As an exception to the registration process described above, the owners of a well-known mark may enjoy a broader protection.

The element of similarity was adressed in case C-375/97 – General Motors v. Yplon and C-408/01 – Adidas-Salomon. In these cases, the Court established the need of a link between the two Trade Marks, which made the average consumer associate the later mark with the first one. The threshold of this association was interpreted as lower than that of confusion, and was elaborated upon in case C-257/07 – Intel v. CPM. This case established that the assessment of association needs to be executed globally, taking into account all relevant circumstances in which the marks are used.[5]These factors are exemplified by the nature of the goods or services, the degree of distinctiveness, the strength of the earlier marks reputation, and the existence of likelihood of confusion.

Protection was discussed in relation to similar or identical goods in cases C-292/00 – Davidoff II and C-408/01 – Adidas-Salomon. Both cases supported the understanding that subsection 2 and an extended protection also exists toward the same type of goods. In other words, well-known marks enjoy a broader protection, even in accordance with similar or identical commodities.

The meaning of the prerequisite of reputation is illustrated by case C-375/97 – General Motors v. Yplon. In this judgement, the Court of Justice of the European Union (CJEU) criteria had been established to be considered for assessing whether a mark has reputation in a member State. The earlier mark must be known by a significant proportion of the public concerned by the products or services covered by that Trade Mark in the territory of the member state. The ‘public concerned’ is defined on a case-by-case basis, but can generally be said to constitute the individuals concerned with the product or service covered by the registered mark which allegedly is infringed. There is no given percentage which defines a ‘significant part’, as, in defining the reputation of the mark. According to the indication made by the CJEU in case C-301/07 – PAGO International v. Tiromilch, a reputation in one member state may be sufficient. Lastly, further aspects to consider are the market share held by the Trade Mark, the intensity, geographical extent and duration of its use, and the size of the investment made by the undertaking in promoting the sign. The hurdle for this is rather low. The Advocate General has stated that it is lower than the threshold for well-known Trade Marks.[6]

For an extended protection regarding unregistered well-known marks, EU legislation requires that there is an unfair advantage or detriment to the reputation. In case C-375/97 – General Motors v. Yplon, the Court stated that the more distinctive character and reputation a mark has, the easier it will be to ascertain the detrimental effect.[7] In case C-487/07 – L’Oréal v. Bellure, CJEU stated that this prerequisite does not require a likelihood of confusion or a likelihood of detriment to the distinctive character or reputation of the mark. It is sufficient that a third party of a similar mark is seeking to ‘free-ride’ on the well-known mark, without paying financial compensation to the proprietor.

The Trade Mark registration is subject to revocation in three cases. These circumstances occur after registration. One revocable situation is when the right holder fails to put the trade mark into use for five years after registration, unless justified. Another ground covers the case where the Trade Mark, due to passivity or the business of the rights holder, has become generic for a good or service for which it is registered. A third circumstance leading to revocation is when the trade mark is likely to mislead consumers.

The legal consequences for revocation are left to the discretion of national legislation. For collective community trade marks, there are additional grounds for invalidity and termination. In order to be able to revoke a registered Trade Mark due to loss of distinctiveness, this lost feature must be a result of the rights holder’s action or lack of action. The same requirement applies to the revocation of a registered Trade Mark, due to the fact that it has become misleading to customers. In this case, however, an action by the rights holder, or by somebody acting with consent from the rights holder, is required.

Distinctiveness may be lost if the right holder uses the mark in a way that makes it descriptive of the good or service as such, rather than constituting a sign for the commercial origin of the product or service. In order to prevent this effect, the proprietor should not use the mark as a description of the commodity type as a whole, e.g. by creating new words out of original

The five year period stipulated in Trade Mark Directive (TMD) Article 10 has been elaborated upon by the CJEU in case C-246/05 – Armin Häupl v. Lidl Stiftung & Co. In the relevant case, the court stated that in Article 10, that the starting point of the time of use is ambiguous. In accordance with the wording of the provision, the court found that the initiation of the five-year period should be defined in relation to the registration procedure.

Current Proposals to reform EU trade mark law

The European Commission has published proposals to reform EU Trade Mark law which, if implemented, would amend the Trade Marks Directive (2008/95/EC), the Community Trade Mark Regulation (207/2009/EC) and the Trade Mark Fees Regulation (2869/95/EC).

The principal aim of the reforms is to resolve inconsistencies between Community and national laws. The proposals involve some really significant legislative changes. Legislative changes include:

  • Removal of the requirement to represent marks graphically,
  • Revision of the “honest practices” concept so as to exclude practices which insinuate that there is a commercial connection between the third party and the proprietor of a trade mark; or take unfair advantage of, or are detrimental to, the reputation or distinctive character of a mark.
  • Improved legislation targeted at combating counterfeit goods by
    • making counterfeit goods that are in transit throughout the EU subject to infringement proceedings, irrespective of whether these goods are to be marketed within the territory and
    • by making infringement rules applicable to goods that are ordered via the internet by consumers outside the EU, where the distributor is acting in a commercial capacity.

Further the following changes are supposed to come into effect:

  • OHIM is named as the “European Union Trade Marks and Designs Agency”;
  • Community Trade Mark is renamed as the “European Trade Mark”.

The Commission’s aim is to adopt the proposals by spring 2014 and to allow EU member states two years to incorporate the necessary changes into national law.

About the author

[1] CTMR, Article 4.

[2]CJEU, Case C-273/00, Sieckmann v. DPMA.

[3] CTM Articles 34 and 154.

[4]CJEU, Case C-383/99, Procter & Gamble Co v. Office for Harmonization in the Internal Market (OHIM).

[5]CJEU, Case C-257/07, Intel Corporation Inc v. CPM United Kingdom Ltd.

[6]Opinion of Advocate General Jacobs, Case-375/97 (1999), General Motors Corporation v. Yplon, Case C-375/97.

[7]Case C-375/97 , General Motors Corporation v. Yplon, S 4 para 30.