5 Reforms to the EU's trade mark
regime
| (a)
(34807)
8065/13
COM(13) 161
+ ADDS 1-2
(b)
(34813)
8066/13
COM(13) 162
+ ADDS 1-2
|
Draft Regulation amending Council Regulation (EC) No. 207/2009 on the Community trade mark
Commission staff working document — impact assessment
Draft Directive to approximate the laws of the Member States relating to trade marks (Recast)
Commission staff working document — impact assessment
|
| Legal base | (a) Article 118 TFEU; QMV; co-decision
(b) Article 114 TFEU; QMV; co-decision
|
| Documents originated | 27 March 2013
|
| Deposited in Parliament | (a) 3 April 2013
(b) 5 April 2013
|
| Department | Business, Innovation and Skills
|
| Basis of consideration | EM of 17 April 2013
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| Previous Committee Report | None
|
| Discussion in Council | No date yet received
|
| Committee's assessment | Legally important
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| Committee's decision | Not cleared; further information requested
|
Background
5.1 European trade mark law is currently enshrined in Directive
2008/95/EC approximating the laws of the Member States relating
to trade marks; and in Regulation (EC) No. 207/2009 on the Community
Trade Mark. The Directive has not been amended on substance since
its adoption in 1988; the Regulation has been amended several
times but the changes have generally been of minor significance.
5.2 A trade mark is a sign which can distinguish
the goods and services of one undertaking from those of its competitors.
The trade mark system in Europe provides a broad framework of
trade mark protection. An EU wide trade mark is offered by the
Office for Harmonisation in the Internal Market (OHIM), a self-financing
executive and regulatory agency of the EU which provides protection
in all 27 (soon to be 28) Member States. Alongside this, national
trade marks are available from Member States' own registries (with
the exception of the Benelux countries which offer a combined
regional trade mark). This dual system allows businesses to decide
how they wish to protect their trade marks to meet their business
strategy — in one Member State, in several Member States
or across the entire EU.
5.3 According to the Government, business users
are broadly happy with the current system. Contrary to the current
economic climate demand for trade marks continues to be strong
with 105,000 applications for Community trade marks made at OHIM
in 2011, 10% of which were from UK businesses. The UK Intellectual
Property Office received 41,150 applications for new marks in
2012/2013 (an increase of 8% over 2011/12). There have been no
calls for radical reform by business but, according to the Government,
there are clear areas where improvements can be made to improve
accessibility and consistency by aligning rules on law and practice.
5.4 The Commission has been working on a trade
mark reform package for several years. In 2009 it engaged the
Max Planck Institute (MPI) to carry out a comprehensive study
of the system and identify areas for improvement. The MPI published
its final report in February 2011. In 2010, following publication
of the MPI's preliminary findings, Member States adopted a set
of Council Conclusions, which called on the Commission to present
proposals for legislative revision, in particular: (i) the introduction
of a specific provision to define the framework for cooperation
between OHIM and national offices; (ii) acknowledgement that the
harmonisation of practice is an aim which all trade mark offices
in the EU should pursue, supported by OHIM; (iii) the creation
of a legal basis for OHIM distributing to national offices an
amount equivalent to 50% of OHIM's renewal fees; (iv) amendments
to EU trade mark law and other measures aimed at supporting complementarity
between Community and national trade mark systems; (v) alignment
of the Regulation and the Directive to reduce areas of divergence
within the trade mark systems in Europe as a whole; and (vi) recognising
the complementary, not competing, nature of the frameworks for
protection of Community trade marks and national trade marks.
5.5 The Commission responded to the publication
of the MPI report by stating that it did not intend to make significant
changes to the EU trade mark system, acknowledging that it had
been a success story for business and was widely valued. Its intention
was rather to focus efforts on the existing regime — to
improve consistency, clarity and quality for users and create
measures that would help support the network of national offices.
5.6 Since then the Commission has widened the
legislative package to include new proposals. These encompass
changes to OHIM's institutional governance following the agreement
of a Common Approach to Decentralised Agencies by the Commission,
the Council and the European Parliament in July 2012. In a Joint
Statement the EU institutions agreed to take account of the Common
Approach in all future decisions concerning reform of EU agencies
and OHIM will be one of the first EU Agencies to have its governance
updated in line with that agreement. In addition, changes are
being proposed to the existing comitology arrangements in the
Regulation to reflect changes arising from the Lisbon Treaty.
5.7 In 2012 the Council and the European Parliament
agreed Regulation 386/2012[42]
which transferred the EU Observatory on Intellectual Property
Right (IPR) Infringements from the European Commission to OHIM
and assigned OHIM with a number of tasks to support its work.
The Observatory was intended to support more effective enforcement
of IP rights through a range of measures which included the promotion
of best practice, increased public awareness as well as data collection
and research. It was not involved in practical enforcement activities.
Document (a) — the draft Regulation[43]
5.8 The Commission describes the main aims as
follows:
- adapting terminology to the
Lisbon Treaty and provisions to the Common Approach on decentralised
agencies;
- streamlining procedures to apply for and register
a European trade mark;
- increasing legal certainty by clarifying provisions
and removing ambiguities;
- establishing an appropriate framework for cooperation
between OHIM and national offices for the convergence of practices
and developing common tools; and
- aligning the framework to Article 290 of the
Treaty on the Functioning of the European Union (TFEU) (comitology).
DETAILED EXPLANATION OF THE PROPOSAL
Adaptation of terminology and Common Approach on Union decentralised
agencies
5.9 As a consequence of the entry into force
of the Lisbon Treaty, the terminology of the Regulation needs
to be updated. This means changing "Community trade mark"
to "European trade mark".
5.10 The Regulation needs to be adapted to take
into account the Common Approach to as regards its provisions
on OHIM. The Commission plans to enhance the functions of its
Management Board, to align selection procedures for senior officials,
and to provide for annual and multi-annual work programmes and
regular evaluations. The name will change from OHIM to the 'European
Union Trade Marks and Designs Agency' (the Agency).
Streamlining procedures
Filing of applications (Article 25)
5.11 National offices receive relatively few
applications for European trade marks. Almost all applications
(96.3% in 2012) are now directly filed through OHIM's e-filing
system. In the light of this, the Commission suggests that the
option for filing these at national offices should be abolished.
Filing date (Article 27)
5.12 Most European trade mark applications are
examined before the expiry of the one-month period before applicants
have to pay the application fee. This allows applicants to file
"test applications" and not to pay the fee if a deficiency
or objection is raised by the Agency. Payments via current accounts
are deemed to be have been made on the last day of the month,
if applicants so wish. The Commission proposes to amend Article
27 to abolish the one-month period and to link the "obligation"
to pay with the filing of the application, so that applicants
will have to provide evidence that they submitted or authorised
their payment when they filed their application.
Searches (Articles 38 and 155)
5.13 The present regimes on searches provide
neither a reliable trade mark clearance tool, nor a fully comprehensive
monitoring of the Register. The weaknesses of national and EU
searches have become more acute over time, while IT advances mean
users can have access to better, faster and cheaper alternatives.
Applicants now have very little interest in obtaining the results
of national searches from national offices taking part in the
optional system. The Agency is in the process of developing, together
with national offices, a number of promising tools that offer
far better means of conducting priority searches and monitoring
the Register for infringements. Current search regimes would therefore
be abolished by the Commission's proposal.
Publication of the application (Article 39)
5.14 Abolishing the search system will also make
it possible to abolish the current one-month period between the
Agency notifying the applicant of search reports and publication
of the application. This will speed up the registration procedure.
Observations by third parties (Article 40)
5.15 To facilitate the submission of observations
by third parties, Article 40 would be amended by extending the
period over which observations can be filed. The reference to
the publication date would be deleted, taking into account that
European trade mark applications are already made available to
the public in the Agency's trade mark database "Community
Trade Mark online" within a few days of filing. To streamline
proceedings, third parties will be given the opportunity to file
observations as soon as they become aware of an application. The
deadline for filing observations would be at the end of the opposition
period or once opposition proceedings have concluded, following
current Agency practice.
Revision of decisions inter partes (Article
62)
5.16 Article 62 has turned out to be of no practical
relevance. Not a single inter partes decision has been
revised under this provision to date. The main reason is that
the other party has no interest in giving the approval required
by Article 62(2). Given that there are sufficient remedies to
correct an erroneous inter partes decision, Article 62
would be deleted.
Continuation of proceedings (Article 82)
5.17 The application of Article 82 has led to
some problems in practice and gave rise to a Communication of
the President of the Agency (No 06/05) Article 82 would be amended
to streamline its application and to incorporate the contents
of that Communication. As both Article 25(3) and Article 62 would
be deleted, all mention of them is also deleted from the list
of excluded time limits. The mention of Article 42 would also
be deleted to enable all time limits in opposition proceedings
to continue, with the exception of the opposition period laid
down in Article 41(1) and the period for payment of the opposition
fee set out in Article 41(3).
Opposition period for International Registrations
(Article 156)
5.18 As there is no need to maintain the six-month-long
period currently provided for, Article 156 would be amended to
shorten the time between publication under Article 152(1) and
the start of the opposition period for international registrations
to one month.
Increasing legal certainty
Definition of a European trade mark (Article
4)
5.19 Article 4 is amended to remove the requirement
of "graphic representability". The prerequisite that
it should be possible to produce a graphic representation of the
sign applied for is out of date. It creates a great deal of legal
uncertainty with regard to certain non-traditional marks, such
as mere sounds. In the latter cases, representation by other than
graphical means (e.g. by a sound file) may even be preferable
to graphic representation, if it permits a more precise identification
of the mark and thereby serves the aim of enhanced legal certainty.
The proposed new definition leaves the door open to registering
matter that can be represented by technological means offering
satisfactory guarantees. The idea is not to go for a boundless
extension of admissible ways to represent a sign but to provide
for more flexibility in that respect while ensuring greater legal
certainty.
Protection of geographical indications and traditional
terms (Article 7)
5.20 Article 7(1)(j) and (k) do not offer the
same degree of protection for geographical indications as provided
for by:
- Articles 13 and 14 of Regulation
(EU) No 1151/2012 on quality schemes for agricultural products
and foodstuffs;
- Articles 118l and 118m of Regulation (EC) No
1234/2007 establishing a common organisation of agricultural markets
and on specific provisions for certain agricultural products,
as amended by Regulation (EC) No 491/2009; and
- Article 16 of Regulation (EC) No 110/2008 on
the protection of geographical indications of spirit drinks.
5.21 To ensure that EU law protecting geographical
indications is given full effect in proceedings relating to the
registration of European trade marks, the grounds for refusal
should be fully aligned with EU law on geographical indications.
Grounds for refusal would also be extended to cover protected
traditional terms for wine and specialities.
Rights conferred by a European trade mark (Articles
9 and 9a)
5.22 Rights conferred without prejudice to
prior rights: neither the Regulation nor the Directive contains
a clear rule stating that the trade mark 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 line with
Article 16(1) of the TRIPS Agreement, Article 9 of the Regulation
would be amended to clarify that infringement claims are without
prejudice to earlier rights.
5.23 Cases of double identity: the recognition
of additional trade mark functions under Article 5(1)(a) of the
Directive (Article 9(1)(a) of the Regulation) has created legal
uncertainty. In particular, the relationship between double identity
cases and the extended protection afforded by Article 5(2) (Article
9(1)(c) of the Regulation) to trade marks having a reputation
has become unclear.[44]
In the interest of legal certainty and consistency, the proposed
re-draft clarifies that in cases both of double identity under
Article 9(1)(a) and of similarity under Article 9(1)(b) it is
only the origin function which matters.
5.24 Use as a trade or company name: according
to the Court of Justice,[45]
Article 5(1) of the Directive is applicable where the public considers
the use of a company name as (also) relating to the goods or services
offered by the company. It is therefore appropriate to treat trade
name use of a protected trade mark as an infringing act, if the
requirements of use for goods or services are met.
5.25 Use in comparative advertising: Directive
2006/114/EC concerning misleading and comparative advertising
regulates the conditions under which advertising,
which explicitly or by implication identifies a competitor or
goods or services offered by a competitor, is permissible. The
relationship between Directive 2006/114/EC and EU legislation
on trade marks has given rise to doubts. It is therefore appropriate
to clarify that the trade mark owner may prevent the use of his
trade mark in comparative advertising where such comparative advertising
does not satisfy the requirements of Article 4 of Directive 2006/114/EC.
5.26 Consignments from commercial suppliers:
it should be made clear that the importing of goods into the Union
is also prohibited where it is only the consignor who acts for
commercial purposes. This is to ensure that a trade mark owner
has the right to prevent businesses (whether located in the EU
or not) from importing goods located outside the EU that have
been sold, offered, advertised or shipped to private consumers,
and to discourage the ordering and sale of counterfeit goods in
particular over the internet.
5.27 Goods brought into the customs territory:
according to the Court of Justice in the Philips/Nokia judgment,[46]
the entry, presence and movement of non-EU goods in the customs
territory of the EU under a suspensive procedure does not, under
the existing acquis, infringe intellectual property rights as
conferred by substantive law of the Union and its Member States.
Such goods can only be classified as counterfeit once there is
proof that they are the subject of a commercial act directed at
EU consumers, such as sale, offer for sale or advertising. The
judgment has been met with strong criticism from stakeholders
as placing an inappropriately high burden of proof on rights holders,
and hindering the fight against counterfeiting. It is evident
that there is an urgent need to have in place a European legal
framework which can fight more effectively against the counterfeiting
of goods, a fast-growing activity. The Commission proposes to
fill the existing gap by entitling right holders to prevent third
parties from importing goods bearing a trademark which is essentially
identical to an EU registered trade mark registered into the customs
territory of the Union, regardless of whether they are released
for free circulation.
5.28 Preparatory acts: neither the Directive
nor the Regulation contains any provisions allowing proceedings
against the distribution and sale of labels and packaging and
similar items which may subsequently be combined with illicit
products. Some national laws have explicit rules covering this
activity. Including a rule on this in the Directive and the Regulation
would further contribute to the combat against counterfeiting.
Limitation of the effects of a European trade
mark (Article 12)
5.29 The limitation in Article 12(1)(a) would
be restricted to cover the use of personal names only in accordance
with the Joint Statement of the Council and the Commission. For
reasons of consistency, the limitation in Article 12(1)(b) would
be extended to cover the use of non-distinctive signs or indications.
Article 12(1)(c) would provide an explicit limitation covering
referential use in general. Finally, a separate paragraph clarifies
the conditions under which use of a trade mark is not considered
to comply with honest business practices.
Designation and classification of goods and services
(Article 28)
5.30 Article 28 would be amended to provide essential
rules concerning the designation and classification of goods and
services in the Regulation. These rules would be introduced into
the Directive. They follow the principles established by the Court
of Justice[47] according
to which goods and services for which protection is sought need
to be identified by the applicant with sufficient clarity and
precision to enable the relevant authorities and businesses to
determine the extent of protection the trade mark confers. The
general indications of the class headings in the Nice Classification
may be used to identify goods or services provided that such identifications
are sufficiently clear and precise. The amendment clarifies that
the use of general terms has to be interpreted as including all
goods or services clearly covered by the literal meaning of the
term. Finally, the amendment allows proprietors of European trade
marks which were filed before the date of publication of the Agency's
new classification practice
to adapt their specifications
of goods and services in accordance with the case law of the Court
of Justice in order to ensure that the content of the register
meets the requisite standard of clarity and precision.
European certification marks (Articles 74b-74k)
5.31 While various national systems offer protection
for certification marks, the European trade mark system currently
provides only for the registration of individual and collective
marks. Some public and private bodies that do not meet the conditions
to be eligible for collective trade mark protection also need
a system for protection of certification marks at EU level. Such
a system would also remedy the current imbalance between national
systems and the European trade mark system. A specific set of
rules covering the registration of European certification marks
would be added to the Regulation.
Tasks of the Agency (Article 123b)
5.32 To ensure comprehensive cover, legal certainty
and greater transparency, all the Agency's tasks would be defined
in the new Article 123b, including those which stem from other
legal acts and are not related to the EU trade mark system.
FRAMEWORK FOR COOPERATION (ARTICLE 123C)
5.33 Article 123c would provide a clear framework
for mandatory cooperation between the Agency and Member State
intellectual property offices with the aim of converging practices
and developing common tools. It states that the Agency and Member
State offices are obliged to cooperate, and identifies the main
areas for cooperation and specific common projects of EU interest
that the Agency will coordinate. It sets up a funding mechanism
enabling the Agency to finance those common projects by means
of grants. This funding scheme represents a legally and financially
feasible alternative to the approach suggested by the Council
in its May 2010 Conclusions, the Commission says.
ALIGNMENT TO ARTICLE 290 TFEU
5.34 The Regulation confers powers on the Commission
to adopt certain rules. Those rules are currently provided in
the Commission Regulation (EC) No 2868/95 implementing Council
Regulation (EC) No 40/94 on the Community trade mark, Commission
Regulation (EC) No 2869/95 on the fees payable to the Office for
Harmonisation in the Internal Market, and Commission Regulation
(EC) No 216/96 laying down the rules of procedure of the Boards
of Appeal of the Office for Harmonization in the Internal Market.
The entry into force of the Lisbon Treaty makes it necessary to
align the powers conferred upon the Commission under the Regulation
to Article 290 TFEU (new Articles 24a, 35a, 45a, 49a, 57a, 65a,
74a, 74k, 93a, 114a, 144a and 161a).
Document (b) — the draft Directive
Aim of the proposal
5.35 The proposed recast of the Directive is
intended to:
- modernise and improve the existing
provisions of the Directive, by amending outdated provisions,
increasing legal certainty and clarifying trade mark rights in
terms of their scope and limitations;
- achieve greater approximation
of national trade mark laws and procedures to make them more consistent
with the EU trade mark system, by introducing (a) further substantive
rules and (b) procedural rules in accordance with principles contained
in the Regulation; and
- improve cooperation between the offices of the
Member States and OHIM for the purpose of converging practices
and developing common tools, by putting in place a legal basis
for this cooperation.
DETAILED EXPLANATION OF THE PROPOSAL
Modernising and improving existing provisions
Definition of a trade mark (Article 3)
5.36 At present, signs must be capable of being
represented graphically in order to be protected as a trade mark.
This requirement of "graphic representability" is out
of date, says the Commission. It creates a great deal of legal
uncertainty around the representation of certain non-traditional
marks, such as mere sounds. In the latter case, representation
by other than graphical means, such as a sound file, may even
be preferable to graphic representation, if it permits a more
precise identification of the mark and thereby serves the aim
of enhanced legal certainty. The proposed new definition does
not restrict the permissible means of representation to graphic
or visual representation but leaves the door open to register
matter that can be represented by technological means offering
satisfactory guarantees. The idea is not to permit a boundless
extension of the admissible ways to represent a sign, but to provide
for more flexibility in that respect while ensuring greater legal
certainty.
Rights conferred by a trade mark (Articles 10
and 11)
5.37 The same changes would be made to the Directive
as for the Regulation.[48]
Achieving greater approximation of substantive
law
Protection of geographical indications and traditional
terms (Articles 4 and 5)
5.38 Contrary to the Regulation, the grounds
for refusal contained in the Directive do not address conflicts
with protected geographical indications, traditional terms for
wines and traditional specialities. Consequently, there is no
guarantee that the levels of protection afforded to those rights
by other instruments of EU law
are actually being applied
in a uniform and exhaustive manner in trade mark examination throughout
the EU, in particular, when applying absolute grounds for refusal.
The Commission therefore proposes to insert corresponding provisions
relating to geographical indications, traditional terms for wine
and traditional specialities in the Directive.
Protection of trade marks with reputation (Articles
5 and 10)
5.39 Articles 5 and 10 convert extended protection
into mandatory provisions in order to ensure that, in all Member
States, national trade marks with reputation enjoy the same level
of protection as that afforded to Community trade marks.
Trade marks as objects of property (Articles
22, 23, 24, 25, 26 and 27)
5.40 Apart from some basic rules concerning licensing,
and unlike the Regulation, the Directive does not comprise provisions
regarding other aspects of trade marks as objects of property,
such as transfers or right in rem. As a result, vital aspects
of the commercial exploitation of trade marks are regulated poorly
or differently across the EU. It is therefore proposed that the
Directive be complemented by a corresponding body of rules addressing
trade marks as objects of property as contained in the Regulation.
Collective marks (Articles 28, 30, 31, 32, 33,
34, 35, 36 and 37)
5.41 In order to come into line with the Regulation,
the amendments to these Articles of the Directive provide for
a set of specific provisions for the registration and protection
of collective marks. They are protectable in a number of Member
States and have proved to be particularly successful in protecting
the economic value inherent in such commercial instruments. Although
at EU level, and in most Member States, collective marks require
a holder — normally an association — whose members
use the mark, this is not so in all Member States, and this makes
it difficult to keep this type of trade mark clearly apart from
certification marks.
Achieving alignment of principal procedural rules
Designation and classification of goods and services
(Article 40)
5.42 In line with the proposal on the Regulation,
this Article lays down common rules for the designation and classification
of goods and services.
Ex officio
examination (Article 41)
5.43 In line with the Regulation, this Article
provides that the ex officio examination of whether a trade
mark application is eligible for registration shall be confined
to the absence of grounds concerning the mark itself. The ex
officio examination of relative grounds creates several unnecessary
barriers to the registration of trade marks. Companies are obliged
to undergo superfluous expenses and delays and they often fall
victim to extortion. The earlier right on which the objection
is based may not be used by its owner, which means that the offices
concerned raise an objection on the basis of a right that could
not have been validly relied on by its proprietor to prevent the
registration or use of a later mark. Hence, the ex officio
system leads to artificial disputes, and distorts competition
by erecting unjustified barriers to market entry.
5.44 Finally, the ex officio approach
creates legal uncertainty, since offices applying the ex officio
system raise objections, as far as earlier rights are concerned,
only on the basis of earlier registered rights that have been
filed for identical or similar goods and services. Accordingly,
they cannot offer a guarantee that an application which successfully
passes the ex officio control will not subsequently be
opposed on the basis of a mark which has acquired reputation in
the marketplace and/or on the basis of an earlier well-known mark
that has not been registered. This, the Commission argues, leads
to an unacceptable duplication of procedures which are both time
consuming and inefficient.
Fees (Article 44)
5.45 In order to reduce the potential of cluttering
of the registries, this Article aligns the fee structure of national
offices by making the registration and renewal of a trade mark
subject to the payment of an additional (class) fee for each class
of goods and services beyond the first class which should be included
in the initial (application/registration) fee.
Opposition procedure (Article 45)
5.46 This Article requires Member States to provide
for an efficient and expeditious administrative procedure to oppose
the registration of a trade mark application on the basis of earlier
rights before their offices. An administrative opposition procedure
is already available under the Regulation and in almost all Member
States.
Non-use as defence in opposition proceedings
(Article 46)
5.47 In line with the Regulation, this Article
enables the person applying for registration of a trade mark to
raise the defence of non-use in relation to an opposition filed
by the proprietor of an earlier trade mark where, at the filing
date or date of priority of the later trade mark, the earlier
trade mark has been registered for not less than five years.
Procedure for revocation or declaration of invalidity
(Article 47)
5.48 This Article obliges Member States to provide
for an administrative procedure to challenge the validity of a
trade mark registration before their offices. In some Member States,
trade mark applicants and owners cannot challenge the validity
of the earlier rights relied upon against their trade mark in
the same proceedings, but need to contest the validity of a prior
trade mark in court proceedings. These systems are exceedingly
long, cumbersome and expensive. In comparison, the administrative
cancellation procedures, as applied at OHIM and the national offices,
are much simpler since the validity of earlier rights can be raised
as a defence in the same proceedings and without the need for
professional representation. In practice, this means that applicants
for a Community trade mark may successfully defend themselves
against an opposition and obtain a trade mark years earlier and
at considerably less expense than a national applicant.
Non use as defence in proceedings seeking a declaration
of invalidity (Article 48)
5.49 In line with the Regulation, this Article
enables the person in whose name a trade mark has been registered
to raise the defence of non-use in proceedings for a declaration
of invalidity based on earlier trade mark, where at the date of
the application for a declaration of invalidity the earlier trade
mark has been registered for not less than five years.
Facilitating cooperation between offices
5.50 As a complement to the legal framework for
cooperation proposed in the Regulation, Article 52 provides a
legal basis for cooperation between OHIM and the intellectual
property offices of the Member States.
The Government's view
5.51 In an Explanatory Memorandum dated 17 April
2013, the Parliamentary Under-Secretary of State at the Department
for Business, Innovation and Skills, and the Minister for Intellectual
Property (Lord Younger), says that the Government welcomes the
publication of the trade mark reform package.
POLICY IMPLICATIONS
5.52 He explains that the Government is still
considering the proposals and is consulting with stakeholders
and across Whitehall to inform its views. It will be important
that the proposals work for UK and EU businesses and deliver high
quality practice solutions, and that the package appropriately
reflects the 2010 Council Conclusions and the original agreement
between Commission and Council in 2008. The Minister groups the
main issues into five categories.
Changes to Trade Mark Laws
5.53 The precise impact of some of the proposals
is still unclear to the Government and needs to be examined more
closely. With regard to some of the measures identified above
the Minister says it is difficult to assess their full impact
because of gaps in the Commission's impact assessment. The impact
assessment does not provide sufficient information about the expected
impact on existing rights-holders and public authorities as well
as other affected parties; the Government will be seeking further
information from the Commission on these points in order to be
able to fully assess them.
5.54 The proposed changes to Article 28 of the
existing Regulation regarding classification practices will need
to be considered carefully to assess their impact on third parties,
for example in situations where the specification for an existing
trade mark will be subsequently deemed to include goods/services
that are not apparent from the list recorded in the public register.
Cooperation between national offices and OHIM
5.55 The Minister states that:
5.56 These proposals are an important opportunity
to establish a proper framework of support and cooperation between
national offices and OHIM. The UK has been supportive of existing
collaboration which is currently organised and funded by OHIM
on a voluntary basis. This cooperation has resulted in the development
of useful IT tools, such as an EU wide database of trade marks,
and new common practices on classification of goods/services.
The establishment of a framework under which cooperation can
take place will help secure its long term future and is welcomed
by the Minister. The existing voluntary arrangements do not provide
a proper governance framework for decision making and the development
of solutions or for financing of projects. However the Government
does not consider that this framework should compel national offices
or OHIM to adopt the outputs from the projects: such a requirement
is not necessary. The use of a mandatory framework is particularly
inappropriate given that the areas listed for cooperation are
very broad.
5.57 The Government is seeking a balanced framework
that supports voluntary cooperation and establishes clear governance
structures to aid participation by offices and decision making
on projects and priorities. OHIM should facilitate and support
these cooperation activities but it is not appropriate for OHIM
to direct them. The Government will also be seeking greater clarity
on the extent to which projects linked to the Observatory on IPR
infringements are covered by Article 123c.
5.58 New Article 123c in the Regulation will
provide the national offices of Member States with a revenue source
for cooperation activities in the form of Cooperation Grants.
A total amount equal to 10% of OHIM's yearly income is available
(approximately €18 million (£15 million)-€20 million
(£17 million)) per annum and rising, the proposal does not
explain how this money will be apportioned or who will make the
decisions on how it is distributed.
5.59 These arrangements replace the expected
provisions to distribute 50% of OHIM's Community trade mark renewal
fee income between Member States under a defined distribution
key. The Government's assessment of the likely value of 50% of
the renewal fees for Community trade marks is approximately €20
million (£17million) per annum and rising. This is a notable
departure from the Council's May 2010 Conclusions and the agreement
reached between the Commission and Council in 2008 when OHIM's
fees were last reviewed. The Government will need to assess its
impact carefully, both in terms of the overall sum of money that
is available for Member States and the arrangements for setting
the level of grants (including risks arising from the fact that
final amount recoverable by a Member State will depend on the
Cooperation Grants requested by the other offices).
OHIM fees and finances
5.60 OHIM is funded by the fees that are paid
for the registration and renewal of Community trade marks and
Community registered designs (the EU laws on designs are not part
of this reform package but the changes to OHIM's structure and
organisation will also affect registered designs).
5.61 As a result of fee reductions in 2009, new
activities such as the IPR Infringement Observatory, investments
in infrastructure and OHIM's financial support for cooperation
activities it is projected that OHIM's annual budget will be in
closer balance in future years and that its existing surplus will
be considerably reduced. Another important element of this "balance"
was the agreement to distribute 50% of OHIM's Community trade
mark renewal fees to Member States.
5.62 The proposed new Article 144 of the Regulation
reinforces the need for OHIM to have a balanced budget and specifies
that OHIM can hold structural reserves of up to one year's operating
costs. It also includes a provision which would allow for future
OHIM surplus funds to be transferred to the EU budget in certain
circumstances. This provision can be expected to raise concerns
for both users and Member States given that this money comes from
the fees paid by businesses applying for IP rights registered
by OHIM.
5.63 In parallel to the proposed Directive and
the proposed Regulation, the Commission is seeking to adjust OHIM's
current fees through a new Regulation on fees that would be made
under the current comitology rules under Article 144 of the existing
Regulation. This proposal is intended to make immediate adjustments
to OHIM's fee structure and to reduce fees for initial registration
and for renewals (a trademark lasts for ten years but can be renewed
indefinitely for subsequent ten year periods). The Commission
wish to see these fee changes agreed by the end of 2013.
Changes to OHIM's governance and institutional
arrangements
5.64 The Government has been a strong advocate
for the work carried out by the Inter Institutional Working Group
over the past few years to improve the governance of EU agencies.
As such it is likely that it will be able to welcome many of
the improvements that are proposed, including the enhanced role
of the Management Board. The proposal also provides an opportunity
to enshrine the current good practice adopted at OHIM which operates
in line with good corporate governance principles. These proposals
are part of a wider plan to reform the governance of all EU Agencies
following the agreement of the Common Approach in June 2012 and
the Government is mindful of the need to ensure a consistent approach
across the agencies. However, in considering these proposals
it recognises that OHIM is different from many of the EU agencies
in some key aspects as it is a business-focused, self-funded agency
that employs over 800 staff which will need to be retained as
long as the Community trade mark regime is in place. As such
there may be some instances where a revised approach is needed
for OHIM.
Delegated Acts
5.65 The proposed Regulation contains a number
of changes to the Regulation to introduce a large number of delegated
acts. The delegations relate to a wide variety of procedural issues.
These include prescribing requirements for application forms,
detailed procedures for filing transfers of ownership of a trade
mark and setting out the rules for establishing a certification
mark. It also covers the setting of fees and arrangements relating
to administrative appeals. Some of these delegations are likely
to be acceptable, but others, such as the setting of fees (including
fees for third parties to oppose applications or seek to cancel
Community trade marks and appeal fees) will be of concern and
will need to be considered carefully to determine whether they
relate to "essential elements" of the legislation.
The Government will be looking to ensure that their scope, objective
and duration are sufficiently clear and will also be seeking improvements
to time limits and consultation arrangements in Article 163.
NATIONAL IMPACT
5.66 The proposed Directive is expected to result
in some changes to UK trademark law where substantive or procedural
law requirements are being harmonised. In many instances provisions
that are being made mandatory under the Directive are already
in place under UK law but some adjustments will be required.
In other areas the Directive proposes rules which will be new
to UK trade mark law — for example on the division of registrations
and on the treatment of small packages and goods in transit.
5.67 To the extent that the changes to national
trade mark law are needed to improve alignment of substantive
and procedural law for the benefit of existing and future trade
mark owners, the Commission's assessment is broadly correct.
However, Article 41 of the proposed Directive appears to preclude
national offices from operating a system of notifying applicants
for new trade marks where their trade marks conflict with other
earlier marks. The UK currently operates such a system to the
benefit of SMEs in particular, which may not be able to afford
the costs of undertaking their own search for earlier marks.
Such a mandatory requirement is undesirable and may not meet subsidiarity
requirements.
CONSULTATION
5.68 The Commission has carried out a range of
consultations in developing the proposals although it is unclear
what consultation has taken place recently (in the last 12 months)
and what level of detail was discussed. The Commission's consultations
included a study by the European Business Test Panel (EBTP) in
2008 gathering views of companies, including SMEs as well as the
MPI Study referred to above and a hearing with user representatives
in May 2011.
5.69 The Government has already started to engage
with stakeholders, and will hold a series of round tables and
stakeholder meetings in April and May. Requests for written comments
have been made with a deadline for response by the end of April.
Plans are in place to continue to engage with stakeholders through
the process as it is important that any changes made are good
for UK businesses.
IMPACT ASSESSMENT
5.70 A UK Impact Assessment of the measures in
the proposed Directive will be completed in advance of UK implementation.
FINANCIAL IMPLICATIONS
5.71 Changes to OHIM's activities and remit will
not have a negative impact on the EU Budget as OHIM is self-funded
through the payment of fees paid for EU trade mark and designs.
The proposal includes a provision for any future surplus of OHIM
funds accrued to be transferred to EU budgets thereby increasing
available funds in the EU Budget. OHIM has in the past generated
a surplus of around €25 million (£21 million) per annum.
5.72 Changes to domestic trade mark law which
are required to implement the agreed Directive may have a financial
impact on the UK government but this has not been quantified.
In many areas the changes proposed match up to existing UK law
and so implementation costs are likely to be minimal. However,
some of the proposals would require changes to UK law, such as
arrangements for division of applications. The cost of such changes
has not been quantified at this stage but could include IT costs
to adapt existing electronic systems.
5.73 In terms of cooperation activities OHIM
funds the involvement of Member State experts and delivery of
IT changes. The overall cap on funds set out in the proposed
new Regulation in Article 123c could result in the UK's national
office, the Intellectual Property Office, having to fund any additional
costs. Any obligation on the UK to collect and provide new data
to OHIM to feed the IT tools that are developed could have a significant
financial impact — as any need for new data collection systems
could incur significant costs which could exceed the overall cap
on Cooperation Grants.
5.74 In terms of the financial impact on users
of the trade mark system there is no clear figure provided by
the Commission. Some of the proposed changes are likely to reduce
transaction costs for users by reducing inconsistencies between
trade mark offices, by reducing cluttering, and by increasing
accessibility through e-services. However some of the changes
are likely to increase costs. For example the removal of an obligation
on OHIM to notify existing trade mark owners of a new application
which is identical to or similar to their existing trade mark
will mean that existing rights holders will have to constantly
monitor new applications to determine whether they wish to oppose
an application. This will have a transaction cost — in particular
for SMEs. Failure to resolve such issues prior to registration
could lead to increased uncertainty and litigation when the conflict
is identified after registration of a Community trade mark and
the costs involved in getting a trade mark cancelled.
TIMETABLE
5.75 The Commission has indicated that it would
like to see these proposals adopted before the European Parliament
elections in the spring of 2014. This is a package of legislation
that is overdue but, whilst the Government would support efforts
to deliver change quickly, there are a significant number of issues
to be resolved. At this stage it is unclear whether adoption
will be possible in the current European Parliament. A clearer
timetable is expected to emerge in the coming weeks.
Conclusion
5.76 We report these documents in detail because
of the manifest importance of reforms to the EU's trade mark regime
to British business and to the IP professions.
5.77 We note that, though its analysis is
at an early stage, the Government generally welcomes the proposed
reforms, and comments that national law and practice are already
consistent with many of them. Nonetheless, it outlines several
concerns.
5.78 We share the Government's concerns in
relation to:
- the logic of Article 41
of the Directive in precluding national offices from notifying
applicants for new trade marks where their trade marks conflict
with registered marks. Whilst we do not think the subsidiarity
argument raised by the Government is strong, we do think this
provision would have a disproportionate effect on SMEs, which
the policy objective does not appear to justify;
- compelling national offices to comply with
the outcome of projects arising out of the revised framework of
cooperation with OHIM. We agree with the Government that OHIM
should facilitate and support such cooperation activities but
should not be able to enforce the results; and
- the basis for calculating revenue to national
offices from the renewal of Community trade marks. The Council
agreed in 2010 that 50% of OHIM's renewal fees should be distributed
between Member States under a defined distribution key, the value
of which appears to be considerably higher than for the Commission's
proposal. We think that the Council Conclusions of 2010 should
form the basis for calculating this revenue.
5.79 We look forward to the Government updating
us on progress in the negotiations, and on these aspects in particular,
in due course.
5.80 We ask the Government to send us a summary
of the responses it receives to its consultation and of the outcome
of its round tables with stakeholders; we will be interested in
their views.
5.81 In the meantime, both proposals remain
under scrutiny.
42 OJ No. L129, 16.5.2012. Back
43
The explanation of the contents of both proposals is taken from
the respective explanatory memorandums of the Commission (see
headnote). Back
44
Opinion of AG Jääskinen in Case C-323/09, Interflora,
para. 9. Back
45
Judgment of 11 September 2007, Case C-17/06, Céline,
ECR I-07041. Back
46
Judgment of 1 December 2011, Cases C-446/09 Philips and
C-495/09 Nokia. Back
47
Judgment of 19 June 2012, Case C-307/10, "IP Translator". Back
48
See paras 5.22-5.28 above. Back
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