EU Commission Study on the European Trademark System

1. EU Commission Study on the European Trademark System Roman Cholij Cam Trade Marks & IP Services San Francisco - May 17 2011

2. Context and Purpose of MPI Study • OHIM has accumulated a substantial financial surplus due to popularity and success of the CTM system • Apart from reduction of some fees it was decided in 2010 to distribute to national offices 50% of future renewal fees • In this context a decision was made to undertake an in-depth assessment of the overall functioning of the trade mark system in Europe (i.e. CTM system/OHIM administration; national/regional systems of Member States of the Community; how efficiently the two systems inter-relate) • Improvements to be identified and legislative amendments proposed for both the CTMR and EU Trade Mark Directive (‘TMD’)

3. Method and Report Structure • Max Planck Institute (Munich) entrusted with study • Fact finding • From national offices • From user organisations (including INTA, ECTA, MARQUES, LESI...) • Internet CTM user survey (‘Allensbach’ survey) • Legal analysis • General aspects of European trade mark law • Common issues for TMD and CTMR • Functioning of CTM system – issues of both substantial and procedural law, including Madrid Protocol • OHIM – fees, task and mandate • Harmonisation of national laws and practices • Coexistence and cooperation • Conclusions • http://ec.europa.eu/internal_market/indprop/tm/index_en.htm

4. Tour de force selected subject matter General issues and system competition • fees • cluttering • intent to use • seniority • some territorial issues • genuine use • acquired distinctiveness Selected (common) substantive issues • graphical representation • well-known marks Further harmonisation and future role of OHIM Cooperation between OHIM and national offices

5. General issues and system competition

6. Fees Article 144(2) CTMR: • “The amounts of the fees shall be fixed at such a level as to ensure that the revenue in respect thereof is in principle sufficient for the budget of the Office to be balanced” • Creation of reserve fund of 200 million euros • Additional 200 million euro surplus • Application and registration and renewal fees decreased (2005) – surplus continued growing • May 2010 50% of renewal fees to go to national offices • Value of rights and coexistence concerns to be taken into account in any revised fee setting • Separate fees for classes above one? Drop in national applications since 2005 • Mixed impact of fee reductions: e.g. Benelux hit hard, but not UK (increase in SME applications).

7. Cluttering Clutter/congestion (Getting rid of ‘deadwood’) • Absolute numbers of CTMs up • 3 classes for price of 1 • Class heading issues and over-broad specifications • 5 year non-use grace period • ‘Genuine use’ issue after grace period • An objective problem?

8. Cluttering “For the purposes of this Study it must be stated that the evidence gathered is imperfect and does not allow drawing definite conclusions. There is no sustainable documentation showing that access to trade marks is substantially impaired by congestion of registers” • OHIM and major business associations: ‘not a problem’ • Agents and attorneys: ‘you must be kidding!’- problem is virulent and growing • More candidate marks presented by big businesses for clearance • More efforts made (with more cost) to avoid conflicts ab initio - crowded classes e.g. 9, 35, 41 and 42 attract fairly low opposition rate at OHIM (14-15%) “The Study ... adopts as a general premise that amendments aiming at reducing the number of unused or partially unused marks may contribute to improvement of the system, where such measures appear sensible and balanced in view of the ensuing costs and benefits.”

9. Reducing cluttering “One-class-per- fee” system recommended. Spanish Office experience – substantial drop in the average number of classes covered by new trade mark applications Broad claims issue to be addressed: • Use of class headings generally found acceptable in Study but not the OHIM practice of including all possible goods and services (MPI states some headings do, others don’t; need to claim what is not evident, taking the ‘means what it says’ approach). • IP Translator case: Reference before the CJEU on whether goods/services must be identified with clarity and precision, whether class heading wordings do that, and if so, whether class headings mean what they say or cover the whole class? Awaiting result. (Class 41 covers ‘education; providing of training; entertainment; sporting and cultural activities”. Can ‘translation services’ be excluded if they are not there to be excluded (as being descriptive within the class headings)?

10. Cluttering: Intent to Use? A way of reducing over broad specifications – ‘possibly with a declaration specifying the way in which the use shall be made’ But would amount to radical innovation “Should therefore only be envisaged if the current legal situation leads to massive grievances which cannot be resolved by other, less radical means” What of ‘declaration of actual use’? • Submitting evidence of use at periodic intervals or at time of renewal would place burdens on proprietors and offices but would not be incompatible with the system (cf. recital 10) • Could be considered after thorough costs-benefits analysis and as an ‘ultima ratio’ when the cluttering issue has been ‘observed further’ Other ways to reduce cluttering: by natural death – non renewal; economic incentives for early surrender?

11. Seniority Seniority should be available, regardless of whether the national right is surrendered. Seniority should be available if the national mark is surrendered or abolished after the CTM filing date and before registration. The period for claiming seniority after filing should be abolished. There should be a fee for claiming seniority. The grounds of opposition should preclude oppositions based on national marks postdating seniority claims. OHIM should examine on formalities (but not goods & services) or send to national offices for examination. OHIM should maintain a record of the supporting documentation, including surrender of the national rights.

12. Some territorial issues (1) Scope of remedies While sanctions for infringement should extend in principle to the EU in its entirety, exceptions must be made if it can be established that due to the perception of the public (language, custom) or other factual circumstances (lack of reputation) the conditions for finding an infringement are not met in individual Member States

13. Some territorial issues (2) Genuine use ‘in the community’ Major issue in the context of co-existence between national and CTM systems Following principle of CTM as unitary right, national boundaries not decisive for genuine use questions (i.e. not just a question of ‘ in how many countries’?) Left to court to decide relevant part of EU under principle of proportionality MPI proposal: in exceptional circumstances and for reasons of equity, prolonged use (+15 years) of a CTM in a small part of the EU should result in coexistence with a younger mark which has been registered bona fide in a part of the EU which is remote from where the CTM was used

14. Acquired distinctiveness (1) The courts do not pay enough attention to the length of use: cf. Paris Convention Article 6 quinquies: “In determining whether a mark is eligible for protection, all the factual circumstances must be taken into consideration, particularly the length of time the mark has been in use’” Use throughout a Member State should mean use in the majority of the marketplace. Use throughout the EU should mean use in the majority of the markets.

15. Acquired distinctiveness (2) The Preamble should be amended so that the date for assessing distinctiveness of a mark is the date of the decision, NOT the date of filing. Article 7(3) CTMR should be amended so that acquired distinctiveness can be established in the period between filing and registration, in which case the date of filing should be adjusted.

16. Selected substantive issues

17. Graphical representation Article 4 CTMR should be amended to remove reference to graphical representation More liberal practice should be allowed for non-traditional signs as long as they allow for legal certainty (e.g. Sound recordings allowed) The Preamble should be amended to emphasise that abstract subject matter such as mere concepts are excluded from protection

18. Well-known marks (1) Article 4 (2)(d) TMD 'Earlier trade marks' ... means: “trade marks which..., are well known in a Member State, in the sense in which the words 'well known' are used in Article 6 bis of the Paris Convention” Cf. CTMR 8(2)(c); An unregistered well known mark that may not have goodwill in the country of protection can be an earlier mark for opposition/cancellation actions for identical/similar goods/services. Cf. TOSCA T-150/04, par. 51-53

19. Well-known marks(2) • Optional extended protection for marks with reputation - TMD Art 5(2) - is for registered marks only • CTMR does not give extended protection for unregistered well known marks: cf TOSCA par. 55-57 par. 55: ”It follows from Article 8(5) of Regulation No 40/94 which uses the expression ‘for which the earlier trade mark is registered’, that this provision only applies to earlier marks within the meaning of Article 8(2) of that regulation in so far as they have been registered” par. 56: ”Consequently .... Article 8(5) of Regulation No 40/94 protects, in relation to goods or services which are not similar, only those well-known marks within the meaning of Article 6 bis of the Paris Convention for which proof of registration has been provided”

20. Well-known marks - recommendations Owners of well-known marks (unregistered) should be entitled to claim Article 8(5) CTMR in opposition and cancellation (for dissimilar goods/services and without need for likelihood of confusion) Owners of well-known marks (unregistered) should be entitled to bring actions for trade mark infringement using the CTMR judicial system (not currently possible) • TMD to be amended and implemented in the CTMR and on national level • Achieved by considering that any mark that qualifies for extended protection based on reputation (using ECJ criteria and WIPO Recommendation Concerning Provisions on the Protection of Well-known Marks (1999)) also be considered as well-known in the meaning of Article 6bis of the Paris Convention

21. These have reputation...

22. Finally...

23. Harmonisation & future role of OHIM A number of currently optional provisions in the TMD (absolute and relative grounds for refusal) should become mandatory Harmonisation of protection for unregistered marks and other signs used in the course of trade should remain on the agenda – further studies needed Premature to embark on full harmonisation of procedures across the EU Future role of OHIM: administer register of designations of origin and geographical indications, participate more in the fight against counterfeiting and piracy – legislative change needed

24. Cooperation with national offices Development of common examination guidelines for greater consistency Cooperation on classification – set up permanent classification committee using internet platform for decisions National offices given the opportunity to raise objections to new applications via common Internet-based platform, or to contribute to likelihood of confusion analysis in inter partes cases Joint activities: examiner continuing education, training of staff through exchanges; strategies for reinforcing protection of TM rights

25. Thank you Please feel free to contact me with any questions: Roman Cholij Cam Trade Marks & IP Services E: camtm@camtrademarks.com T: +44 (0)1223 353299 W: www.camtrademarks.com Coming soon: www.camtrademarkshop.com (for easy UK and EU filing)