23 June 2015

EU trade mark reform on the horizon

An edited version of this article appeared in Intellectual Property Magazine's June 2015 issue. Shortly after publication, the agreed texts of the re-cast Trade Marks Directive and new Regulation were released, and the Council Permanent Representatives Committee (Coreper) approved the reform package.

On 21 April 2015, following some two years of seeking to reach political consensus, the European Commission, Parliament and Council issued separate press releases confirming that provisional agreement has been reached on an EU trade mark reform package. The trilogue discussions represent the almost end-point of a process which started with the European Commission’s tender in July 2009 (awarded to the Max Planck Institute), and its outline for reform issued in March 2013. Almost 20 years after the first CTM was awarded, and 25 years after trade mark law was substantially harmonised across the EU, the proposals represent the first major act of reform of the EU trade mark regime. In many ways, however, the changes focus on modernising and freshening current trade mark practice, rather than attempting a major overhaul of that system and of substantive legal principles. Whilst some may decry the absence of more ambitious reform proposals in the package, brand owners will welcome many of the aspects of reform, particularly those that will lead to costs savings, and increased streamlining and harmonisation of EU trade mark practice.

Current status of the reform package

The statements issued by the three EU institutions confirmed that a provisional agreement has been reached but it must still be formally approved by both the Council and the Legal Affairs Committee of the Parliament.  This was expected to take place "in the coming weeks". The package will then be subjected to a vote of the whole Parliament which, it is understood, should take place later this year.

Unfortunately, the final agreed text of both the re-cast Trade Marks Directive, harmonising national trade mark laws and practices across the EU, and the revised Community Trade Mark Regulation have not yet been released. Accordingly, much of the discussion on the likely reform proposals must, for now, be based on the statements issued by the three EU institutions.

Once the reform package is formally adopted, EU Member States will have three years in which to ensure that the new rules in the re-cast Trade Marks Directive, harmonising national trade mark law across the EU’s Member States, are implemented into their national laws. However, most of the amendments to the Community Trade Mark Regulation will take effect on it coming into force.

Proposals for reform

Some of the key changes are as follows:

EU TM and EU IPO

A cosmetic change for brand owners and their advisers to become accustomed to is a new name for the Community Trade Mark, which will become the ‘EU Trade Mark’ (EU TM). Likewise, OHIM will change its name to the ‘European Union Intellectual Property Office’ (no doubt, EU IPO). These changes make sense but will mean that brand owners will need to update relevant standard documents and any advertising materials that refer to CTMs and OHIM.  

Cheaper EU trade mark applications and renewals

Of particular interest to brand owners is the advent of reduced fees for EU trade mark applications and, more significantly, renewals. It is understood that there will also be reduced fees for opposing an EU TM application or seeking cancellation of an EU TM, and for filing an appeal.

The main change in the fee structure is the move from the current system, which allows applications to cover up to three classes of goods and services for the same price (EUR 900, if filed electronically) to a ‘one-class-per-fee’ system. Under the new system, an application for a single class EU TM will be EUR 850. There will be a separate ‘class fee’ for each additional class applied for beyond the first class (rather than the third as at present), meaning that the cost for three classes will rise to EUR 1050.

However, the cost savings are especially apparent in relation to renewals. Presently, it costs EUR 1350 to renew a mark registered in three classes. Under the new system, the fee to renew a single class EU TM will be EUR 850 (rising to £1050 for three classes).  

The agreed fees are set out in the table below (taken from European Commission Factsheet MEMO/15/4824).

Fee Current New
Application fee (electronic filing) 900 (3 classes)  850 (1 class) 
Class fees 2nd class  -- 50 
Class fees 3rd class  --  150 
Class fees 4th class and subsequent classes 150 150
TOTAL AMOUNTS
Application fee (1 class) 900 850 
Application fee (2 classes)  900  900
Application fee (3 classes) 900 1050
 
Renewal fee (electronic filing) 1350 (3 classes) 850 (1 class)
Class fees 2nd class   -- 50 
Class fees 3rd class    -- 150
Class fees 4th and subsequent classes 400 150
TOTAL AMOUNTS
Renewal fee (1 class) 1350 850
Renewal fee (2 classes) 1350 900
Renewal fee (3 classes) 1350 1050

The Commission notes that the consequences for those renewing an EU TM is a saving of up to 37% on current fees. There will be knock on effects also which will benefit third parties. Applicants who do not wish to obtain protection for three classes will no longer feel compelled to do so by the ‘three classes for the price of one’ aspect of the current system. This should therefore see a reduction in the congestion of the EU trade mark system caused by broad claims, assisted by provisions which seek to ensure increased clarity in specifications of goods and services based on the CJEU's decision in IP Translator (C-307/10). 

However, the reduction in fees may also have an impact on the popularity of national registrations as against EU TMs – if the fee differential between EU trade marks and national marks is reduced, this may encourage those businesses (mainly SMEs) that have previously focussed on national registrations in a limited range of territories to reconsider the cost/benefit analysis of obtaining EU-wide protection (to the extent, of course, that they are able to do so).

Harmonised procedures

The reform package aims to streamline and harmonise important aspects of trade mark practices before the EU IPO and the national offices, including in relation to filing date requirements, designation and classification of goods, and opposition and cancellation proceedings. However, this is unlikely to see many changes at the UK level. One area of debate has been whether administrative opposition and cancellation proceedings should be made obligatory in all Member States, so that it is not necessary to go to court to make such challenges. It is understood that some Member States have requested a seven year transition period in which to implement such a requirement.

Other areas of reform

The other main areas of reform include the following:

  • Modernised provisions which aim to facilitate registration of certain types of trade marks such as sound, motion or hologram marks. These provisions will see the outmoded graphical representation requirement updated to deal with digital branding.

  • More effective means to challenge counterfeit goods in the EU, in particular when they are in transit in the EU. The debate on this issue followed the CJEU’s in Philips and Nokia (C-446/09 and C-405/09) where the Court decided that goods entering the EU under a suspensive customs procedure could not be classified as 'counterfeit goods' under the Counterfeit Goods Regulation (1383/2003) unless the rights owner could prove that the goods were intended to be put on sale in the European Union. This followed its earlier case law which confirmed that CTM registrations and national registrations were not infringed when goods entered the EU under suspensive customs procedures because those goods had not yet been put on the market in the EU. 

In its 2013 proposals, the Commission provided that counterfeit goods should infringe simply by entering the customs territory of the EU in the context of commercial activity. The Parliament, however, was concerned that this proposal would also catch goods that might be legitimately marketed in other territories but were simply transiting through the EU. Following lengthy discussions, a proviso was included that a trade mark owner cannot prevent transit of such goods through the EU where the third party provides evidence that neither the proprietor, nor an entity economically linked to it, could prohibit the placing of the goods on the market in the country of final destination. 

  • Enhanced legal certainty by removing ambiguities, clarifying trade mark rights in terms of their scope and limitations, and the introduction of a certification mark at the EU level.

Areas for concern

An area of particular concern for brand owners – and where brand organisations such as INTA and Marques have been particularly vocal – is in relation to the proposals to deal with OHIM’s accumulated surplus, which is in excess of around EUR 300 million (its current annual budget is EUR 190 million).  

In particular, concerns include suggestions that some of the budget surplus will be diverted to services not legitimately relating to trade marks, including the Court of Justice of the European Union (given that only a small percentage of CTM owners bring cases before the European courts), the European School of Alicante, and to Member States to compensate them for services rendered in relation to CTM procedures and proceedings. The proposed ‘offsetting’ mechanism will allow 5% of OHIM’s revenue to cover national offices’ expenses as a result of CTM procedures, which may rise to 10% if there is a substantive surplus, with up to 15% of OHIM’s annual revenue earmarked for the funding of co-operation projects with the national IP offices.  

There has also been disappointment that bad faith does not appear to have been included as a relative ground for refusal for the EU TM, and at the possibility of a lengthy transition period for Member States to implement administrative opposition and cancellation procedures. Further, many will be disappointed that the opportunity has not been taken to deal with some of the problematic substantive questions of trade mark law (although some would argue that we are beginning to reach an equilibrium with fewer references to the CJEU on questions of interpretation of trade mark law in recent years). 

Overall, however, subject to these concerns, brand owners have welcomed the proposed changes. In particular, the significant reduction in application and renewal fees (which should go some way to reducing OHIM’s surplus going forward) is a very welcome development. The final agreed text should be published shortly and will be awaited with interest.  


Data Central

Have you checked out our new Data Hub? Data Central contains a range of resources to help our clients minimise the legal, regulatory and commercial risks this data-driven environment presents and ensure that its full value is being realised.

A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China
Share on LinkedIn Share on Facebook Share on Twitter
    You might also be interested in

    This note focuses on consent, and in particular consent requirements as set forth by the GDPR which are numerous.

    01 August 2018

    The European Commission has formally adopted the EU-US Privacy Shield; however will this provide legal certainty for transatlantic data transfers?

    19 July 2016

    The European Commission’s proposed Geo-Blocking Regulation fails to address some of the key e-commerce concerns the Commission had previously identified.

    21 June 2016

    European Commission refrains from imposing regulations specifically targeting online platforms, for now. General EU e-commerce rules will however apply.

    20 June 2016

    This site uses cookies to enhance your experience and to help us improve the site. Please see our Privacy Policy for further information. If you continue without changing your settings, we will assume that you are happy to receive these cookies. You can change your cookie settings at any time.

    For more information on which cookies we use then please refer to our Cookie Policy.