Article 31 January 2013

Use it or lose it

A recent ruling by the Court of Justice of the European Union (CJEU) could mean trouble for many Community trade marks.

There is now a heightened risk that national courts will invalidate these trade marks if they have not been used extensively enough in the European Union.

Is broader protection better?

A Community trade mark (CTM) confers protection in all 27 EU member states. A CTM registration is granted based on a single application. Conversely, obtaining a bundle of national registrations in a group of member states generally requires filing separate applications in each jurisdiction.

As the cost of obtaining a CTM is not much higher than obtaining national trade marks in two to three member states, CTMs have become an increasingly popular choice. Many companies favour CTMs over national registrations, even when their business is limited to only one member state.

For these companies, CTM protection is sensible in instances where expansion into other EU markets is planned in the relatively near future. However, in light of the CJEU’s ruling, it may be worthwhile to consider national protection in the home market if plans for expansion are uncertain or likely to take more than five years to carry out.

The battle lines are drawn

The ruling referred to above was given by the CJEU on 19 December 2012, in case C-149/11 (Leno Merken BV AG v Hagelkruis Beheer BV). The core question in the case was how geographically widespread the use of a CTM must be in order to qualify as genuine use supporting a CTM registration.

Leno Merken had a CTM registration for the mark ONEL. The dispute arose when Hagelkruis filed an application to register the mark OMEL in the Benelux countries. Leno Merken promptly opposed the application. In response, Hagelkruis demanded that Leno Merken provide proof of use of its mark in the EU – failing which the opposition would be rejected.

Leno Merken complied. However, it could only provide proof of use regarding the Netherlands, where it was undisputed that the mark had been put to genuine use. Hagelkruis’ argued that use of a CTM in a single member state is not sufficient to prove genuine use in the EU, as required by the Community Trade Mark Regulation. The Benelux Intellectual Property Office agreed.

Finding the middle ground

The view that use in only one member state is never enough to sustain a CTM registration has been supported by the national trade mark offices of many other member states. On the other hand, the CTM registry, The Office of Harmonization for the Internal Market (OHIM), has maintained that use of a CTM in even just one member state is always sufficient.

In its ruling, the CJEU rejected both of these extremes. It held that territorial borders should be disregarded in assessing whether a trade mark has been put to genuine use in the EU. The territorial scope of the use is only one element of genuine use in the EU.

The CJEU also repeated its earlier finding in case C-40/01 (Ansul BV v Ajax Brandbeveiliging BV) that a mark is put into genuine use when it is used in accordance with its essential function to distinguish the origin of the goods and services covered by it, and for the purpose of maintaining or creating market share in the EU.

Reading between the lines

The CJEU’s ruling has been interpreted to mean that use in a single member state may suffice when the market for the goods and services concerned is limited in scope. For example, it is not necessarily justified to require that a CTM associated with a local delicacy should be used also outside of its home member state.

On the other hand, when the relevant market is more widespread – as is the case with, for example, the financial services market – it could be difficult to claim that the use of CTM in only one member state constitutes genuine use in the EU.

Winner: national trade marks

The reasoning behind the CJEU’s ruling appears to be that the use of a CTM must be extensive enough to warrant its protection in the EU as a whole.

However, the CJEU did not specifically require that a CTM should always be put to use in more than one member state. This position would have resembled the concept of interstate commerce applied in US federal trade mark law. In practice, it would have almost automatically rendered a large number of CTMs void.

The CJEU’s ruling serves as a reminder that companies should consider carefully before deciding to opt for a CTM registration instead of national protection. National trade marks certainly still have their place in the trade mark system in the EU.

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