For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

Two of our regular Kats are currently on blogging sabbaticals. They are David Brophy and Catherine Lee.

Wednesday, 29 September 2010

"No comments", but plenty of comment: more on "genuine use" in Europe

Not just a European debate: even "outsiders"
from the old colonies are welcome to have their say
"No news is good news", according to the proverb, but "no comment" gives less ground for celebration.  The IPKat's post yesterday, "A kick in the gulyás? Hungary, Benelux stewed by Europe's finest" (here) attracted just one posted comment, but his email has been bubbling with ideas, suggestions and opinions from readers, some of whom are reluctant to be identified with the position they have taken in case what they say is considered legally incorrect by others with whom they work or because they don't want to alienate respected persons and firms in which prominent trade mark lawyers have taken a line which strongly opposes their own.

One correspondent who bravely agrees to be named is the highly experienced and well respected Dan Bereskin (Bereskin & Parr, Toronto), a man whose reputation [unlike that of certain trade marks which have been invoked in recent oppositions based on earlier Community trade marks, says Merpel] extends a good deal beyond the national boundaries of the country in which he practises.  Dan writes as follows:
"For me, the issue boils down to whether, after five years, a CTM that is used only in Malta [explanation for non-EU folk -- a very small EU Member State] should entitle the proprietor, even in theory, to block the use and/or registration of a similar sign elsewhere in the EU where the Maltese sign has neither been used nor made known. Any formulaic approach for determining what constitutes "genuine use in the Community" seems unlikely to be successful. My view, innocent as it is of any real understanding of EU law, is that the geographical extent of use sufficient to justify the continuation of a CTM is not really the issue. It is geographical extent to which a CTM should be enforceable after five years, and the ability of the original CTM proprietor to block registration of similar signs for use in regions where the prior CTM has neither been used nor made known.

If the CTMR were amended to allow for a concurrent CTM after five years restricted to geographical areas where the prior CTM has neither been used nor made known to a reasonable extent through advertising, publicity, etc., and if the prior CTM is not enforceable in regions where it has neither been used or made known (such that there would be no likelihood of confusion in fact), I think the question of whether use in one state is sufficient diminishes substantially in importance. Personally, I'd still like to see a requirement for use in commerce between at least two EU states after five years, but that issue seems less important to me than the issue of concurrent use/registrability".
Coincidentally, Australian-in-England solicitor and blogger Rebecca Dimaridis has posted the following suggestion on her weblog this morning:
"I am thinking along the following "compromise" position. If I was to start up a small business, and wanted a CTM, I would think the following genuine use requirements would be fair:

* within 5 years in at least 1 member state;
* within the next 5 years in at least I other member state.
So essentially requiring genuine use in a 2nd member states within the first 10 years. That way, I could get myself up & going in 1 member state within the first 5 years. But what I can't say with enough authority is just how difficult or long it would take to start up a business in another member state.Would a total of 10 years actually be enough? Would it be right to say that if I'm not ready to launch in the next member state after the first 5 years, I probably won't be ready to launch at all? Or would it be more reasonable to allow for say 8 or 10 years for the 2nd member state?"
The IPKat suspects that we may be seeing more discussion along these lines.  It would be good to hear some comment, whether attributable or anonymised, from some brand owners themselves and not just from practitioners in private practice.

12 comments:

Anonymous said...

Hopefully a lively discussion will take place on this subject. The issue of genuine use of a European trademark is a rather difficult question as both sides have good arguments.

Anyhow, I presume that the Court of The Hague will render her decision early October on the appeal against the Benelux Opposition ONEL./.OMEL. We are looking forward to this, of course.

Arnaud Bos
Onel trademarks

Hastings Guise said...

Following up on Dan Bereskin's example of the Maltese business, I think it is worth noting that in the context of a smaller EU state the high permeability of borders for consumers and businesses(which is obviously part of the overarching motivation for the CTM system) is, I would imagine, likely to have a much more pronounced effect.

This means that the Maltese business may be much more threatened by the effect on its brand of conflicting brands in neighbouring countries (even there is no direct competition and those products only enter Malta in the hands of peripatetic consumers) than a business operating solely within a much larger EU state, such as Germany, where its market may well remain relatively self-contained.

On this basis, it is arguably even more important and justifiable for a business in a smaller EU state to be able to maintain an EU-wide right than for a business in a bigger state. Otherwise it seems to me that the harmonized TM system would rapidly tilt in favour of national brands from larger EU states who would both find it both easier to maintain CTMs and easier to maintain the value/integrity of their national brands within single member states.

Allowing a CTM to be supported by use in a single member state does make clearance projects profoundly frustrating on occasion, but maybe we just have to live with that as part of the price we pay for aiming at a relatively balanced single market.

RW Cumming said...

The fundamental pillar on which the European Union is founded is to encourage unity through trade.

The CTM system enshrines this principle and the only way it can operate is if the distinction as to the policitical boundaries of member states is removed (as is currently the position).

The absence of physical wars within the EU's borders since its inception, means we live in perhaps the most peaceful period for Europe in the last 1,000 or so years; some would suggest this is a price worth paying for the "genuine use in the Community" problem we face.

Gareth said...

Inter-state use of a mark is a principal requirement of US federal trademark registrations, so I'd say the absence of any similar provision in the CTMR was deliberate and therefore is unlikely to change.

Does anyone know if a registered Canadian mark would be restricted to, say, PEI if it was only used there? (PEI is Canada's smallest province (0.43% of total population), and its population is almost exactly one third of Malta (which has 0.09% of the EU's population), so it could be an interesting case study.)

Anonymous said...

Inter-state use of a mark is a principal requirement of US federal trademark registrations, so I'd say the absence of any similar provision in the CTMR was deliberate and therefore is unlikely to change.

There is a US constitutional reason for this, namely that the federal government is to a great extent restricted to regulating inter-state commerce.

This sometimes has quite strange effects. For instance, it's illegal to sell raw milk over state borders. And some remnants of Prohibition-era regulations apparently make shipping alcoholic beverages over state borders a legal nightmare.

Curiously enough, the EU is in some aspects a much more integrated market than the US, not least because, when the Single Market was introduced, the member states make sure that the EU could also regulate trade within the individual states. Of course, not because they were so keen on integration and the European ideal, but because they didn't trust each other one little bit...

Anonymous said...

I am afraid that the compromise solutions completely overlook that the EU's internal market is one single market that has nothing to do with the borders of the various EU Member States. So, genuine use in Wales (which is larger than Malta) is genuine use in the EU, so that the EU trademark cannot be invalidated for lack of genuine use after 5 years once there has been genuine use in Wales or whatever other part of the EU.

Norman said...

To respond to Gareth, in Canada use only in PEI would entitle the user to exclusive use of the mark throughout Canada. This is usually seen as one of the main advantages of registration as opposed to relying on common law rights, both because it allows the owner to establish rights based on use in one province before expanding nationally and because confusion may arise due to the ‘high permeability of borders’ (to use Hasting Guise’s phrase). PEI is a good example; despite its size it is a very popular summer tourist destination and visitors from other provinces might be confused by similar marks used in PEI and their home province.

The rights are geographically restricted only in two narrow circumstances. One is where a prior user has failed to challenge the validity of the registered mark within five years of the registration. The Court has the discretion in such a case to permit the prior use to continue to use the mark concurrently within a defined area. The second is that a surname or descriptive mark is prima facie not registrable, but if it has acquired distinctiveness in a territorial area, it may be registered with rights that are restricted to that area.

Anonymous said...

The scope of the monopoly granted by a CTM is so great that the EU must closely scrutinise the circumstances in which that monopoly is granted and then maintained to ensure that the EU maximises its potential for trade.

The first paragraph of the preamble to the CTM Regulation makes clear that a CTM is intended to be a tool in a system designed to encourage trade within the EU, removing barriers to the free movement of goods and services.

It seems entirely logical and consistent, therefore, to require the owner of a CTM to have crossed at least one barrier in the 5 year post-registration period in order to retain its CTM.

If it has so manifestly failed in using the CTM as a tool to trade outside of one country, it should have no more than a national right and others should be free to do what they can with the mark elsewhere in the EU; the removal of the monopoly would have a greater net benefit for trade within the bloc than if it were maintained.

Having said that, there are no doubt some circumstances where trade in one country would constitute use in a significant part of the EU for the purposes of the goods/services in question, but this should always be a matter of proof.

Tove Graulund said...

Why are we still talking countries? How many countries are there in the internal market? NONE!

Gabrielle Olsson said...

Hi I agree. We have IKEA Stores for example located in Heerlen in NL that has a market area covering NL, Germany and Belgium, and in Arlon (Belgium) covering also Luxembourg, Germany and France. Lots of more examples exists. With a common currency, free movement of people and the internet, country boundaries are less important. In some of the areas the language is also common around the borders.

francois.griesmar said...

What occurred in the EU parliament on September 21, 2010 was not a debate but a 'sorcery trial': not wanting or not being able to seriously study this quite intricate matter, some persons more or less accused the Benelux and Hungarian TM Offices of being 'anti-European' (the ‘Unforgivable Mortal Sin’) to try to scare off anyone from openly debating. Just 2 samples of this rampaging rhetoric:
- Malcolm Harbour (MEP): ''...we will make sure that we ask this question and ask them [the Minister for the Internal Market and the Hungarian Minister] to go directly to their trademark offices and say this is not acceptable.''
- Seán Kelly (MEP): '''...all political pressure, and possibly sanctions must be brought to bear on Member States who are not embracing it, to bring them to their senses ...'
Barefoot, wearing a penitent monk's hair shirt, on the Road to Canossa you go, you irresponsible Hungarian and Benelux TM officers!

And, even if Mr Barnier used more courteous terms, he indeed endorsed these positions (''And so I say to President Harbour for all the reasons he has given with others, that the Commission will not let unravel one of the important elements of the internal market.'') which is most regrettable to say the least. .

Who remembers there is an ongoing study (conducted by the Max Planck Institute selected... by the European Commission) on the TM systems in the EU (and not only on the CTM)? Who remembers that one of the core issues is precisely the balance between the different TM systems existing in the EU?

One may think that all national and Benelux TM systems should be abolished so that the CTM becomes the sole source of TM rights in the EU. Why not? But this will then incur a much more difficult access to TM registration as in the USA. And if one is not in favour of this abolition, one must draw logical consequences in particular stop shouting that there are no more borders nor countries.

A serious debate has been going on essentially since 2005; detailed analysis were already made as well as various proposals. This is why such unashamed 'TM Office bashing’ and defiling combined with an increasing pressure on the national governments, on the Courts and on the Max Planck Institute are totally unacceptable. Everyone following up this issue knows that some high-ranking officers have been ‘touring’ across the EU, in particular in Benelux, to assert sometimes in most aggressive terms how shocking and unacceptable the ONEL decision is and that it should be wiped out in order to save the CTM; of course, these persons never condescended to honestly going into the debate: now this is unacceptable for all persons who – sometimes for several years – are seriously thinking about this question, researching, studying, proposing and discussing without restriction. This somehow paranoid monologue by persons benefiting from their considerable and unbalanced institutional, political and ‘mediatic’ power has been going on too long.

I do hope that all this "racket" and intimidation will not distort the work of the Max Planck Institute which, I repeat, was requested by the Commission itself to carry out this study: a basic rule for a honest and impartial consultation is to avoid giving answers after having asked a hopefully open question.

I intend to revert to this subject more in detail as soon as possible. In the meantime Long Live an open and free discussion and down with ideological excommunications!


François GRIESMAR
IP Lawyer

francois.griesmar said...

Strange, I expected some more debates or comments: is this big hush due to the imminent finalisation of the report by the Max Planck Institut? Anyway here is in the meantime some "food for thought".

Since once of the harsh critics against the ONEL and C City Hotel decisions was that they would weaken anti-conterfeiting actions, I reproduce here after the end (§5 & Conclusion) of a position by the Hungarian TM Office published around April 2010 on their website (see http://www.mszh.hu/English/hirek/hirek_201006261349_1.html) in answer to already agressive questions by MPEs on March 31, 2010:

"5. It should be noted that the proof for genuine use of a CTM is not relevant in the proceedings of customs authorities; it may only gain significance in the case of a trade mark infringement action filed at the relevant courts. In accordance with Article 95 of CTMR, the Member States shall designate in their territories national courts which shall act in case of Community trade mark infringement cases (in Hungary, it is the Metropolitan Court that has jurisdiction on first instance and the Budapest Court of Appeal that has jurisdiction on second instance in CTM infringement proceedings). Under Article 99(1) of CTMR, the Community trade mark courts shall treat the Community trade mark valid, unless its validity is put in issue by the defendant with a counterclaim for revocation or for a declaration for invalidity.

Pursuant to Article 15 of the CTMR: “If, within a period of five years following registration, the proprietor has not put the Community Trade Mark to genuine use in the Community in connection with the goods or services in respect of which it is registered, or if such use has been suspended during an uninterrupted period of five years, the Community Trade Mark shall be subject to the sanctions provided for in this Regulation, unless there are proper reasons for non-use.”

Pursuant to Article 51(1)(a), failure to comply with the genuine use requirement is a ground for revoking a CTM either on application to the OHIM or on the basis of a counterclaim in infringement proceedings as defined in Article 100 of the CTMR.

Under Article 100 of the CTMR, a counterclaim may be based on the grounds for revocation or invalidity mentioned in the CTMR and the rules of examination of the request for revocation or invalidity defined in Article 57 [paras. (2)-(5)] are applicable for the counterclaims as well. Pursuant to Article 57(2) of the CTMR, if the proprietor of the Community trade mark so requests, the proprietor of an earlier Community trade mark, being a party to the invalidity proceedings, shall furnish proof that, during the period of five years preceding the date of the application for a declaration of invalidity, the earlier Community trade mark has been put to genuine use in the Community in connection with the goods or services in respect of which it is registered and which he cites as justification for his application, or that there are proper reasons for non-use, provided the earlier Community trade mark has at that date been registered for not less than five years.

********

Based on the above, it can be established that customs authorities will never examine in their procedure whether the genuine use requirement enshrined in Article 15 of the CTM is fulfilled or not, as that question may only arise in civil court proceedings following the suspension or detention of goods supposedly infringing intellectual property rights, thus the “introduction of a new requirement” concerning the genuine use of a CTM bears no effect on either the number of “seizures” carried out by customs authorities, or on the efficiency of the measures taken by the customs authorities (or on customs enforcement in general)."

I am afraid that, as this is unfortunately often the case, the partisans of the Dogma of sufficient use in 1 member State did not pay attention to this argumentation...


François GRIESMAR
Juriste en PI/IP Lawyer

Subscribe to the IPKat's posts by email here

Just pop your email address into the box and click 'Subscribe':