1. Background of the Reform

Since its introduction in 1996, the CTM system has become a very successful instrument for the protection of trademarks in the European Union.

Its development has created growing expectations on the part of stakeholders for more streamlined and high-quality trademark registration systems, with greater consistency, which are publicly accessible and technologically up to date.

In 2007 the EU Member States stated that there was a need to address the increasing budget surplus of the OHIM and to review the overall functioning of the EU trademark system. (CTM Regulation + Harmonization Directive)

The European Commission (DG Internal Market and Services) commissioned a study to evaluate the current functioning of the system and to assess improvement and further harmonization needs from the Max Planck Institute. The study was published in 2011.

In March 2013, the European Commission formally adopted its proposals to review the Regulation and the Directive.

The object of the revision of the EU trademark system is to modernize and make the trademark systems more accessible and efficient for businesses in terms of lower costs and complexity, increased speed, greater predictability and legal security.

The key issues of the reform include:

• - Harmonization of trademark law and practice
• - Cooperation between the OHIM and national trademark offices
• - Governance and finances of OHIM (including how to deal with the OHIM surplus)
• - Trademark enforcement (namely, how to tackle counterfeit goods in transit and small consignments).

On April 21, 2015, the European Commission, Parliament and Council announced a provisional agreement on the “trademark package” following the final discussions.

On October 28, 2015 an agreement was reached on the text (with linguistic changes).
The Council is expected to officially adopt the text by 10 November 2015. Subsequently, the text will be approved by EU Council, the Juri Committee (EU Parliament) and by the EU Parliament in Plenary session on 23 November 2015 (second reading).

The official signature of the text is planned for December 1, 2015.

The texts should be officially published between Christmas and early January and will enter into force 20 days later.

The Implementing Regulation should be available around April-May 2016.

2. Key changes to EU Trade Mark Law

Terminology

New names

• - Community trade mark ? European Union trade mark
• - OHIM ? European Union Intellectual Property Office (EUIPO or Office) (Art 2 EUTMR)

References to the Community are replaced by European Union, therefore, Community trademarks, or CTMs, will now be known as European Union Trademarks or EUTMs.

OHIM (which stood for the Office for Harmonization in the Internal Market) will also have a new name, the European Union Intellectual Property Office or EUIPO. The new CTM Regulation (CTMR) will be now referred as EU Trademark Regulation (EUTMR).

Streamlining procedures in EUTMR

EUTM applications may be filed at Office only. It will be no longer be possible to file EUTMs with the national offices (Art 25 EUTMR)

Filing date requirements left unchanged (Art 27 EUTMR) i.e. applicants to continue having 1 month to pay application fee.

Non Traditional Marks

Deletion of the requirement for graphic representation - The requirement for trademark applicants to file a graphic representation of the mark has been deleted and replaced with a requirement that the sign applied for “be represented on the register in a manner which enables the competent authorities and the public to determine the precise subject matter afforded to its proprietor”.

This is intended to provide a system that is more flexible and enables marks to be represented in any appropriate form using generally available technology. Sound and motion marks, for example, could be filed using sound and video files.

However, whilst this amendment may assist in the administrative process of filing non-traditional trademarks, we can still read in the preamble to the revised Directive and of the Regulation that signs must still meet the “Sieckmann” criteria and must therefore be represented in a manner which is clear, precise, self-contained, easily accessible, intelligible, durable and objective.

3D Marks

Article 7(1)(e) EUTMR

(i) Signs which consist exclusively of the shape or another characteristic which results from the nature of the goods themselves.

(ii) the shape or another characteristic of goods which is necessary to obtain a technical result

(iii) the shape or another characteristic of goods which gives substantial value to the goods

Absolute prohibition on characteristics with a technical function - Article 7(1)(e) EUTMR contains an absolute prohibition (which cannot be overcome by providing evidence of acquired distinctiveness) for signs which consist exclusively of the shape which results from the nature of the goods; or is necessary to achieve a technical result, or which gives substantial value to the goods.

This provision has been extended to apply not only to shapes, but also to signs which consist of any other characteristic.

The provision is aimed at the public interest issue not to allow the indefinite protection of exclusive rights in technical solutions, such as extending the rights of patents and registered designs.

Reinforced protection of Geographical Indications as absolute grounds but also as the basis of an opposition or invalidity as Relative Grounds.

Geographical indications, traditional specialties and traditional terms are included as absolute grounds for refusal in Articles 7(1)(j)(k) and (l) EUTMR.

Plant variety denominations are also included as an absolute ground under Article 7(1)(l) EUTMR

Geographical indications are also included as relative grounds in inter-partes proceedings– Article 8(4) EUTMR

Marks with reputation

New Article 8(5) of EUTMR has clarified the protection granted to reputed marks irrespective of whether the goods or services for which the later mark is applied are identical with, similar to or not similar to those for which the earlier mark is registered.

Clear provisions on designation/classification of Goods & Services (Art 28 EUTMR)

The new TMD and EUTMR have been adapted further to the ruling in the IP TRANSLATOR case.

Article 40 of the new TMD and 28 of the EUTMR provide that the goods and services for which protection is sought must be identified by the applicant “with sufficient clarity and precision to enable the competent authorities and economic operators, on that sole basis, to determine the extent of the protection sought”.

Prior to the IP Translator, the indication of the class heading of the Nice classification in an application meant that all the products/services in that class were designated.

Following the CJEU decision in IP TRANSLATOR and although general indications included in the class headings of the Nice Classification or other general terms may still be used, they must be clear and precise.

Class headings will now be interpreted as including all the goods or services clearly covered by the literal meaning of the indication or term, but no further.

Once the new EUTMR will enter into force, a Transitional period of 6 months will be granted to EUTM owners for marks filed prior to the IP translator decision for clarifying old lists.

In the absence of any declaration, the marks will be deemed to protect only the goods and services covered by their literal meaning.

Searching and surveillance letters will become optional and will be requested when filing the application.

The Search regime is maintained (Art 38 EUTMR) but EU searches become optional as well (i.e. opting in both for EU and national searches);

Observations by third parties

Article 40 CTMR provided the ability for third parties to file observations following the publication of the application as to why a trademark application should not be granted on absolute grounds.

This provision has been amended to enable observations to be filed at any time (not only following publication) and now provides a deadline until the end of the opposition period within which observations must be filed.

Third party observations shall be without prejudice to the ability of the EUIPO to re-open examination of the trade mark application at any time prior to registration on its own initiative.

EU Certification Mark will be now available

The previous Regulation only contained the possibility of collective marks but it was not possible to protect certification marks. (Art 74b – 74ja EUTMR)

Representation before Office to extend to EEA

Representatives from Liechtenstein, Iceland and Norway will now be able to act in EUTM proceedings before the OHIM. (Art 92, 93 EUTMR)

Reproduction of marks in dictionaries

If the reproduction of a trademark in a dictionary or similar reference work gives the impression that the name is generic in relation to the registered goods or services, the publisher must, as soon as possible, ensure that the trade mark is accompanied by an indication that it is a registered trade mark.

This provision already included in the CTMR will be now incorporated into the new TMD and will assist the owners of national trade marks in preventing the dilution of their marks, and avoid third parties relying on dictionary entries in invalidity claims brought against national registrations.

Rights conferred without prejudice to prior rights. Article 9(2) EUTMR

Neither the CTMR nor the TMD contained a clear rule stating that the trademark proprietor cannot successfully invoke his rights against the use of an identical or similar sign which is already the subject of an earlier right.

In this respect, however, in line with Article 16(1) of the TRIPS Agreement, Article 9(2) of the EUTMR and 10(2) of the new TMD provide that the enforcement of rights conferred by a registered trademark should be without prejudice to rights acquired prior to the filing or priority date of the trademark.

This is to ensure legal certainty and full consistency with the principle of priority, under which an earlier registered trademark takes precedence over later registered trademarks.

This means that the owner of a later filed European Union Trade Mark (“EUTM”), for example, may not prevent the use of an earlier identical or similar registered mark, or unregistered mark in which there are protectable rights.

Infringing Uses

Prohibited acts are included in article 9 of the EUTMR

• - Use as a company name - Use of the registered mark as a trade name or company name or part of a trade name or company name is now specifically included in the examples of infringing uses. Article 9(3)(d) EUTMR

• - Using the registered mark in comparative advertising in a way which does not comply with the Comparative Advertising Directive (2006/114/EC) Article 9(3)(f) EUTMR

• - Preparatory acts – Trade mark owners may also now bring infringement actions in relation to preparatory acts where there is a risk that packaging, labels, tags, security or authenticity features will be used in relation to infringing goods or services. This is to enable proprietors to fight counterfeiting more effectively. Article 9(3) EUTMR

• - Goods in transit – In addition, EUTM owners may prevent third parties from bringing goods into the EU bearing the EUTM but which are not released for free circulation in the EU, including their placement in all customs situations such as transit, warehousing, free zones, temporary storage, inward processing or temporary admission. This entitlement of trademark owners will lapse if the holder of the goods involved in the subsequent customs proceedings provides evidence that the EUTM owner is not entitled to prohibit the use of the trade mark in the country of final destination. Article 9(5) EUTMR

This facilitates the seizure of counterfeit goods stated to be in transit, putting the onus on the holder of the goods to prove the goods are not infringing, rather than (in accordance with the CJEU decisions in Philips and Nokia) the trade mark owner having to show that the goods were intended to be put on the market in the EU.

If the seized goods are subsequently found not to infringe, the trademark proprietor may be liable for damages.

Sanctions for Infringement

The provisions in relation to sanctions for trade mark infringement other than an injunction have been amended so that in respect of all other sanctions, instead of applying the law of the Member State in which the infringement was committed, the EU Trade mark court may now apply measures or orders under the applicable law which it deems appropriate under the circumstances. Article 102 (2) EUTMR

Limitations or Defences to infringement

Article 12 contains the limitations to the effects of a EUTM

• - Own name defence - There is a significant change to the ability for a defendant in infringement proceedings to rely on the fact that it is using its own name (in accordance with honest business practices). This defence will now apply only where the defendant is a natural person.

Legal entities will no longer be able to rely on the fact that they are using their company name.

• - Use of non-distinctive signs – The descriptive use defence ( on the kind, quality, quantity, intended purpose, value, and geographical origin, time of production or other characteristics of the goods) has been extended to apply also to use of signs which are not distinctive.

• - Comparative advertising and referential use - Article 12 CTMR has been amended so that it provides a defense for any use of an EUTM for the purpose of identifying or referring to goods or services as those of the proprietor, in addition to use of an EUTM where it is necessary to indicate the intended purpose of a product or services, in particular as accessories or spare parts.

In each case the use must be in accordance with honest business practices.

Exhaustion of rights

A European Union Trademark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the European Economic Area under that trademark by the proprietor or with its consent (Article 13(1) EUTMR)

Intervening rights as a defense to infringement

Under Articles 17 and 18 of the new TMD and Article 13(a) EUTMR, the proprietor of a EUTM will not be entitled to prohibit use of a later filed EUTM or National registration in the EU where the later mark could not be invalidated:

(a) because the proprietor of the earlier mark has expressly consented to the registration;
(b) because the proprietor of the earlier mark has previously sought to invalidate the EUTM on the basis of another mark and did not rely on the mark in question when he could have done so;
(c) because the proprietor of the earlier mark could not have opposed the later mark at the time of filing on the basis that the earlier mark lacked distinctive character at the relevant time (see below);
(d) (d) as a result of acquiescence to the use of the registered mark for a continuous period of 5 years (unless the later mark was applied for in bad faith); or
(e) where the earlier EUTM has been registered but unused for more than 5 years (and would therefore be liable to be revoked) – i.e. non-use.

In the above circumstances, the owner of a EUTMR cannot prohibit the use of the latter EUTM in infringement proceedings.

No invalidity based on marks which lack distinctive character

Under Article 8 of the new TMD, Trade mark proprietors will not be able to bring invalidity proceedings on the basis of an earlier mark if that earlier mark could not have been relied upon at the date of filing or priority of the later mark because the earlier mark:

(a) was not inherently distinctive and had not acquired distinctiveness at the filing or priority date of the later mark;
(b) was not sufficiently distinctive to support a finding of likelihood of confusion where the invalidity is based on Article 5(1)(b) of the CTMR; or
(c) had not yet acquired a reputation where invalidity is based on Article 5(3)(a).

No Seniority where national rights were vulnerable to cancellation

Seniority claims under which the earlier rights of national marks are subsumed into the EUTM cannot be maintained where the earlier national right was vulnerable to an invalidity claim at the time it was surrendered or allowed to lapse. The invalidity or revocation of the national mark may be established after the event. Thus if a national mark for which seniority is claimed was vulnerable to cancellation for non-use at the time it lapsed or was surrendered, the rights cannot be maintained through seniority of the equivalent EUTM.

Seniority will also lapse if the earlier national mark is revoked with effect from a date earlier than the priority or filing date of the EUTM. In accordance with the general principles of revocation for non-use, if use of the national mark recommences, the seniority claim will be unaffected. (Article 34(3) EUTMR and Article 6 of the new TMD.

Administrative Changes

The following procedural matters contained within the Implementing Regulation (No. 2868/95) (the “Implementing Regulation”) have been integrated into the EUTMR:

• - claiming priority
• - claiming seniority
• - dividing applications
• - renewals
• - surrender
• - conversion
• - form of decisions and communications of the EUTMR

3. More harmonization of National law in the TMD

The new Directive will imply a greater harmonization in Substantive law, e.g. as

• - Protection of GIS (Art 4(1)(i), 5(3)(d) TMD)
• - Protection of TMs with reputation (Art 5(3)(a) TMD)
• - TMs as objects of property (transfer, licensing, rights in rem, & levy of execution, Art 22 – 27 TMD)
• - Collective marks (Art 30 – 37 TMD).

Furthermore, the new Directive will also imply a more important harmonization Procedural law, e.g.

• - Designation/classification of G&S (Art 40 TMD)
• - Mandatory office opposition procedures (Art 45, 46 TMD)
• - Mandatory office cancellation procedures (!) (Art 47, 48 TMD), Member States will have to introduce these proceedings before the national offices. The latter however will be given 7 years for putting such revocation/invalidity procedures in place (4 years more than for the rest of the provisions).

4. Cooperation frame to promote convergence

The New Regulation establishes the legal bases to promote the convergence of practices in the European Union.

• - Explicit task for OHIM as set out in new Art 123b(1)(c) EUTMR
• - Project based framework in new Art 123c EUTMR
• - Concept of mandatory cooperation finally accepted but with the nuance that national offices may still opt-out, restrict or suspend cooperation (need to explain reasons in writing though);
• - Funding based on grants and up to 15% of annual Agency income;
• - Obligation on Office to consult users, in particular when defining projects and evaluating their results!

5. Legal base for offsetting costs of Member States

Legal basis for offsetting costs of Member States have been adopted:

• - New Article 139(3a)(a) for the Agency to be able to offset parts of the increasing costs incurred by national IP offices and other authorities as the result of specific tasks they carry out as functional parts of the EUTM system

• - Overall offsetting of costs to correspond to 5% of the yearly revenue of the Office (subject to not causing a budgetary deficit!) and may be increased to a maximum of 10% of the yearly revenue in case of a budgetary surplus.

6. Alignment to the Lisbon Treaty

Complex adaptation of present Commission powers to Articles 290 (delegated acts) and 291 (implementing acts) of the TFEU necessary:

A large number of rules currently part of COM Regulations 2868/95, 2869/95 (entirely absorbed!) & 216/96 are being integrated in EUTMR

Amending Regulation to provide for numerous conferrals of both Delegated Acts and Implementing Acts powers to substitute remaining regulations in near future.

7. Improved governance of the agency

The Reform is to bring about major improvements in the governance and accountability of the Agency:

• - Strengthened role of Management Board (incl. AIPN powers, Art 124 EUTMR)
• - Full-fledged membership of 1 European Parliament & 2 Commission representatives (Art 125(1) EUTMR)
• - Draft multi-annual strategic programmes to require view of European Parliament & Commission.
• - Office to report on biannual basis to European Parliament, Council & Commission on finance.
• - ’Safety valve’ allowing to transfer recurrent new surplus to European Union budget
• - Review clause in Art 165a EUTMR requiring regular evaluation

8. Fees

The amount of fees and rules on payment currently in Regulation 2869/95 will become an integral part of the basic Regulation

It has been agreed to move to one-class-per-fee system at EU level (only optional in Directive).

The adjustment of fee levels focused on bringing renewal fees down to level of accession fees corresponding to strong call from users however other fees are affected too.

Changes imply savings up to 37% (in case of renewal for 1 class only)

However, accession to EUTM protection also to become more expensive when applying for more than 2 classes!

Agreed new levels of main fees:

Reduced fees are a fundamental element of the EU trademark reform (not least owing to the considerable surplus held by OHIM). The fee reductions are said to lead to savings of up to 37% for businesses that seek protection for registered EUTMs beyond the initial period of 10 years.

Changes to the most commonly required fees are shown below:

	Before (in €)	Now (in €)
EUTM application in one class	1050 (900*)	1000 (850*)
EUTM application in two classes	1050 (900*)	1050 (900*)
EUTM application in three classes	1050 (900*)	1200 (1050*)
EUTM application per additional class	150	150
Opposition fee	350	320
EUTM Renewal in one class	1500 (1350*)	1000 (850*)
EUTM Renewal in two classes	1500 (1350*)	1050 (900*)
EUTM Renewal in three classes	1500 (1350*)	1200 (1050*)
EUTM Renewal for each additional class over three	400	150
Declaration of invalidity or revocation	700	630
Appeal	800	720

(*) if filed electronically