Documents considered by the Committee on 21 July 2015 - European Scrutiny Contents

43 Reforms to the EU's trade mark regime

Committee's assessment Legally important
Committee's decisionCleared from scrutiny; drawn to the attention of the Business, Innovation and Skills Committee
Document details(a) Draft Regulation amending Regulation 207/2009 on the Community trade mark

(b) Draft Directive to approximate the laws of the Member States relating to trade marks (recast)

Legal base(a) Article 118 TFEU; ordinary legislative procedure; QMV

(b) Article 114 TFEU: ordinary legislative procedure; QMV

DepartmentBusiness, Innovation and Skills.
Document numbers(a) (34807), 8065/13 + ADDs 1-2, COM(13) 161

(b) (34813), 8066/13 + ADDs 1-2, COM(13) 162

Summary and Committee's conclusions

43.1 A trade mark is a sign which can distinguish the goods and services of one undertaking from those of its competitors. 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 207/2009 on the Community Trade Mark (CTM).

43.2 The Regulation provides for an EU wide trade mark,[ 340] administered by the Office for Harmonisation in the Internal Market (OHIM),[ 341] a self-financing executive and regulatory agency of the EU. A CTM provides protection in all Member States. Alongside this, national trade marks, providing protection in the Member State of registration, are available from Member States' own national intellectual property offices (IPOs).[ 342] 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. According to the Government, business users are broadly happy with the current regime.

43.3 These proposals make extensive, albeit largely technical, changes to the two trade mark regimes, by aligning them more extensively, improving co-operation between IPOs and OHIM, and updating the governance of OHIM. Our first report on these proposals sets out the details.

43.4 When our predecessor Committee last considered these proposals it cleared them from scrutiny in anticipation of a vote on a general approach in the Council, subject to the conditions that (a) the text to be agreed would make no provision for the transfer of OHIM surpluses to the EU general budget; and (b) the percentage of OHIM revenue to be redistributed to Member States would result in no decrease of such money being redistributed to the UK. The Government, whilst supportive of the outcome of negotiations in the Council, did not vote in favour of a general approach in the Council because it retained provision enabling OHIM's surplus to be paid into the EU general budget.

43.5 The Minister for Intellectual Property (Baroness Neville-Rolfe) now provides an update on the outcome of the trilogue negotiations with the European Parliament.

43.6 We thank the Minister for the further update. We are grateful for the full and timely information both she and her predecessor have provided this Committee and its predecessor.

43.7 We note that the Minster generally considers the outcome of the negotiations satisfactory in most respects, but that the UK will not vote in favour of the package as it permits the surpluses of OHIM, derived from its fee income, to be distributed to the EU budget.

43.8 We now formally remove the conditions from our earlier clearance of these documents, although we anticipate that the UK will continue to express its opposition to the redistribution of OHIM surpluses. As the Regulation and Directive are likely to be formally adopted later this year we draw them to the attention of the Business, Innovation and Skills Committee.

Full details of the documents: (a) Draft Regulation amending Council Regulation (EC) No. 207/2009 on the Community trade mark: (34807), 8065/13 + ADDs 1-2, COM(13) 161; (b) Draft Directive to approximate the laws of the Member States relating to trade marks (Recast): (34813), 8066/13 + ADDs 1-2, COM(13) 162.

The Minister's letter of 2 July 2015

43.9 In her letter the Minister confirms that a first reading agreement for the adoption of both proposals was reached between the Council and the European Parliament. They will be formally adopted later this year, and are expected to come into force in early 2016. The UK will then have three years to transpose the Directive, which will require changes to the Trade Mark Act 1994.

43.10 She characterises the overall outcome as "a good one for the UK" — except for the provisions in the proposed Regulation to permit the transfer of budget surpluses of OHIM to the EU general budget, to which she objected on the grounds that this surplus is derived from trade mark and design registration fees which should be retained for the benefit of users of intellectual property.

43.11 On a previously outstanding point raised by our predecessor concerning the potential change in the amounts redistributed by OHIM to IPOs, the Minister explains that currently Member States are only able to bid for funds to implement common projects. Therefore the redistribution of OHIM revenue would be, effectively, new funding. She further explains:

    "The final text does include using part of OHIM revenue to offset costs incurred by national offices resulting from procedures related to the EU trade mark system. This is capped at 5% of OHIM revenue, but in the event of a budgetary surplus may be increased up to 10%. The agreed text includes a condition introduced by the European Parliament, that offsetting of costs should not cause a budgetary deficit for OHIM. This provision is likely to have implications in determining the years in which payments to national offices may be payable."

43.12 Other issues arising from the trilogues are the following:

·  The European Parliament succeeded in restoring the use of the delegated legislation procedure[ 343] for some of the powers conferred on the Commission to adopt EU subordinate legislation. Nevertheless the final text includes fewer than 20 delegated legislation powers. The majority of non-technical delegated legislation powers including, crucially, a power for the Commission to set the level of fees, has been removed.

·  There will be a variation in application fees reflecting the fact that a separate application will have to be made for each class of goods or services to be protected by the trade mark. The result is a slight reduction for applications concerning one class of goods or services, but an increase for three classes. The Minister describes the overall outcome as "a sensible balance between reducing the costs to businesses and maintaining the integrity of the system".

·  The UK had previously opposed mandatory cooperation between OHIM and IPOs. In what the Minister describes as "a significant negotiating win" the requirement will be for OHIM and IPOs to cooperate to promote convergence of practices and tools in the field of trade marks, but permits IPOs to opt-out, restrict or temporarily suspend their cooperation in projects.

·  The outcome of trilogue negotiations has resulted in slightly less managerial independence for OHIM than the UK was aiming for in negotiations. There will be two Commission representatives and a European Parliament representative on the Management Board, with votes. Previously there was one Commission representative who did not have a vote. European Parliament representation is consistent with the Common Approach to decentralised agencies, and the other concessions are balanced by (a) the fact that the Commission will have less control over candidates for the post of President of OHIM, (b) the Executive Board will not be reduced in size (which would have increased the risk of Commission influence) and (c) the fact that all Member States have a seat, with voting rights, on the Management Board.

·  The outcome also protects the Council's earlier approach to goods in transit, namely that it would be a defence in any action against infringing goods in transit through the EU for the owner to prove that the trade mark is not protected in the country of destination.

·  The package will still involve a change in name of OHIM to the European Union Intellectual Property Office albeit that this was not a priority for Member States and not favoured by OHIM itself.

·  The Minister regards the small number of other more detailed technical changes resulting from the trilogue as improvements.

Previous Committee Reports

Thirty-seventh Report HC-219-xxxvi (2014-15), chapter 20 (18 March 2015); Thirteenth Report HC 219-xiii (2014-15), chapter 7 (15 October 2014); Eighth Report HC 219-viii (2014-15), chapter 2 (16 July 2014); Forty-fourth Report HC 83- xxxix (2013-14), chapter 4 (26 March 2014); Third Report HC 83-iii (2013-14), chapter 5 (21 May 2013).

340   Currently called a "Community trade mark" but to be renamed a "European trade mark". Back

341   To be renamed the European Union Trade Marks and designs Agency. Back

342   With the exception of the Benelux countries which offer a combined regional trade mark. Back

343   Article 290 TFEU; under this procedure a proposal by the commission for EU subordinate legislation can be blocked by the European Parliament (by a majority of its members) or the Council acting by qualified majority). Back

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