EU trademark reform: Change arrives at last
It was hardly a ringing endorsement. Just days after the ‘trilogue’ discussions produced a host of provisional changes to EU trademark law, the Netherlands once again expressed its “grave concerns” with the measures on goods in transit before saying that they were unacceptable and that the country would not be voting on the reform package.
Despite welcoming many of the agreed changes, the Netherlands said that the goods-in-transit provisions, which will allow EU trademark owners to prevent infringing goods from moving through the union when the goods’ holder cannot prove that the transit is legitimate, put a “disproportionate and unnecessary burden on holders of goods” and provide an “impediment to legitimate international trade, including for legitimate generic medicines”.
“The Netherlands has had a negative experience in 2008 with detaining medicines in transit and does not want that to happen again,” it added, in one of several grievances with the package, informally agreed by the European Council, Parliament and Commission on June 10.
Following years of discussion on reforming the EU’s trademark framework, the three bodies’ agreement paves the way for widespread changes to the Trade Mark Directive (2008/95/EC) and Trade Mark Regulation (207/2009/EC), as well as the associated fees. Pending final approval, registration fees will be lower, the scope of trademarks widened, the classification of trademarks clearer, and the Community trademark (CTM) itself will have a new name—the EU trademark.
Plenty to think about
There are many more changes to consider, including a mandatory requirement for member states to implement administrative actions for revocation and invalidation, although the provision is subject to a seven-year transition period. In some member states, such as Spain, trademark owners cannot file cancellation actions at the intellectual property office and must instead go to court.
“You must file evidence up front, so it can be quite expensive,” says Imogen Fowler, partner at law firm Hogan Lovells. “It’s ridiculous.”
She says it’s great news that the rules have finally been changed, as brand owners will save “a lot of money”, but “it’s a shame we have to wait up to seven years”.
Not everyone is happy with the change. In an official statement alongside that of the Netherlands, Estonia weighed in with its own criticism. In spite of its “full” support for the trademark reforms, and its pledge not to oppose the adoption of the regulation and directive, Estonia expressed its own concerns with the new rules on administrative procedures.
“We remain of the opinion that the proposed administrative procedure will not be efficient and will create additional administrative burden. Furthermore, it will completely change our current system, which has proved to be cost-efficient and effective, posing therefore systematic problems for our legal system,” it said.
Rounding off a trio of criticism was the commission itself, seemingly odd given it had agreed to the package just days before. The commission said it supported the overall agreement as it “significantly improves the existing situation”, but it “regrets in particular” that the co-legislators have been unable to agree on one of the key elements of its proposal concerning the budget of the Office for Harmonization in the Internal Market (OHIM), which will be renamed the EU Intellectual Property Office.
This element was the automatic review of the fee levels should there be a “significant recurrent surplus” and the automatic transfer of such surplus to the EU budget.
“Indeed, while the level of the fees will be fixed in the EU trademark regulation, the transfer of ‘substantive’ surplus will remain submitted to the discretion of the budget committee of the OHIM (vote at 2/3 majority),” the commission said.
“The commission recalls that such transfer would have taken place only after all types of use of the resources available ... have been satisfied, including the offsetting of central industrial property offices and other concerned authorities of member states for the costs that they incur in ensuring the smooth functioning of the EU trademark system,” it added.
“The commission will continue to review the level of the fees charged by the OHIM in view of proposing to adjust them as closely as possible to the costs of the services provided to the industry and of preventing the accumulation
of significant surpluses within the OHIM.”
According to the package, a single applied-for trademark will now cover just one class rather than the standard three, and will cost €775 ($863) to file electronically, down from €900 (which will still be the cost for three classes). A staggered fee schedule for more than one class will apply thereafter. Renewal fees will also be lower—from €1,350 in three classes to €1,050—while the single-class renewal cost will be €850.
Peter Müller, president of the European Communities Trade Mark Association, says the reduction in fees is one of the package’s biggest benefits for trademark owners and a “good solution”, but says one drawback is the requirement that any future changes would require the permission of the commission, parliament and council.
“If you don’t tell OHIM within that period, your CTM will be deemed to cover only the literal meaning of the class headings. That’s a potentially enormous narrowing.”
“This is cumbersome and takes a lot of time,” he says. “Therefore, where change is necessary the office might have to wait years before fees and rules can be changed, and needs a considerable reserve budget to accommodate such a delay.”
What’s in a name?
One of the most important changes—which trademark owners should be thinking about now—concerns class headings, says Fowler.
At the moment, CTMs covering the Nice Agreement class headings are deemed to cover all the goods and services in the associated alphabetical list that was in force when the mark was filed. But the change to the regulation is “quite drastic”, as it means that owners of CTMs which were filed before June 22, 2012 covering the class headings will have a six-month sunset period, beginning once the regulation has entered into force, to write to OHIM and specify which goods and services from the relevant alphabetical list that they intend to protect.
“If you don’t tell OHIM within that period, your CTM will be deemed to cover only the literal meaning of the class headings. That’s a potentially enormous narrowing,” she says.
Depending on the class, the alphabetical list has between roughly 100 and 200 terms, she adds. For example, if you have a mark from 2010 filed in class 41, which covers education, providing of training, entertainment, and sporting and cultural activities, you would be deemed to cover all the services in the alphabetical list at the time, she explains.
“That would include translation services because that’s in the list. After the sunset period, if you don’t amend your CTM it will only cover the literal meaning of education, providing of training, entertainment, and sporting and cultural activities. Now, translation does not fit within the literal meaning of any of those so your mark would be limited.
“It’s very important that you write to OHIM within the period, but if you’re really smart that is not enough—do it before the sunset period. Once the period comes into force you’ve got article 28(8)(a) of the regulation, which very much constrains your ability as a CTM owner to attack subsequent trademarks that are in use or subsequent filings, if the goods and services are those that you expand into,” she says.
“So the advantage of filing a limitation with OHIM before the regulation comes into force is that you can then avoid the consequences
of article 28(8)(a).”
More harmony
There are further changes of note. Gone is the requirement for trademarks to be represented graphically, which could open the door for more non-traditional marks protecting things such as sounds and smells. Certification marks will also be available. More generally, notes Müller, there will be more harmonisation between EU and national laws, and legal certainty will increase as the directive and regulation are adapted to European court decisions.
However, the changes “could have gone further on some things, for example, the directive doesn’t address lookalikes”, says Fowler.
Müller says there could have been better harmonisation of national laws and that despite the reforms’ benefits, it has taken too long to effect change.
Back in 2008, the commission kicked off a review of Europe’s trademark system, charging Germany’s famous think-tank, the Max Planck Institute, to report on the state of play. It delivered its verdict in March 2011, ruling that the EU’s trademark system was solid but that the laws and practices in its member states must converge more.
“From the first study of the Max Planck Institute until the last country has implemented the directive into national law, more than 12 years will have passed. Legislation and jurisprudence have to think about new ways of finding resolutions in order to serve the economy and the public quickly and effectively,” says Müller.
Now, the parliament’s Committee on Legal Affairs and the council have both adopted the new regulation and directive, and the full parliament itself is expected to approve them at the end of 2015. According to Florian Traub and Iliana Haleen, partners at law firm Squire Patton Boggs, many of the provisions contained in the regulation will come into effect within the following six-month period.
“Longer timescales are anticipated in relation to the directive as a result of the three-year transition period granted to member states to implement the provisions into their national laws; member states even have seven years to implement the changes to revocation and invalidity proceedings into their national laws,” they add.
Reform has been a long time in the making, and its full effects won’t be seen for some years yet, but now trademark owners operating in the EU have some concrete changes to consider. On the whole, they seem positive, but in some areas there is still much work to be done.
