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November 15, 2015 Vol. 20 No. 70 Back to Bulletin Main Page

EU Trademark Reform: Where We Are, How We Got Here and What it Means for Users

Many readers will be aware that a major overhaul of the European Union trademark system is imminent, affecting both Community trade marks (CTMs) and national trademarks of the European Union’s 28 Member States. This article seeks to explain the background and reasons for the reforms and INTA’s involvement in the process, and to summarize some of the key changes for users. Further articles dealing in more detail with standalone issues will be published in subsequent issues of the INTA Bulletin.

1. Where we are.
The reform package consists of a new Regulation on European Union trademarks, which will amend the existing CTM Regulation and related texts (the Regulation) and a new, recast Directive for the Member States to implement with respect to their national trademarks (the Directive).

Both instruments are currently going through the ordinary legislative procedure for European Union legislation. They were adopted by the Council of the European Union at first reading on November 10, 2015, with adoption at second reading by the European Parliament—acting in plenary—scheduled for mid-December 2015. Following a provisional political agreement on the texts jointly announced in April 2015 by the Parliament, the Council and the European Commission, it seems likely that both instruments will be adopted as they are without signifi-cant issue or delay.

Most provisions of the new Regulation, including changes to fees for European Union trademarks, will come into force by March or April 2016, 90 days after expected publication in the Official Journal of the European Union. The Directive, however, will require transposition by Member States into their national laws, and the Member States have a period of three years, extended to seven years for one particular provision, to complete that transposition.

Implementing regulations will also be adopted at a later stage (likely end of 2016/beginning of 2017) with respect to certain provisions of the Regulation which are delegated to the Commission via so-called implementing acts or delegated acts. These provisions concern the more technical aspects of implementing the reform.

2. How we got here.
The reform package traces its origins back more than eight years to May 2007, when the Council of the European Union published a Conclusions document calling on the Commission to reduce fees with respect to CTMs and to start work on a comprehensive study on the overall functioning of the CTM system. In a Communication of July 2008 on “An Industrial Property Rights Strategy for Europe,” the Commission announced its intention to “evaluate the functioning of the Community and national trade mark systems.”

By way of an Invitation to Tender dated July 22, 2009, the Commission called for tenders for a contract on a “Study on the Overall Functioning of the Trade Mark System in Europe.” The purpose of the study was to:
assess the current state of play of the Community trade mark system and the potential for improvement and future development. As the Community trade mark system is closely linked to national trade mark systems, the study shall also evaluate national sys-tems and, in particular, the relation and interaction between the two systems, including the need for further harmonisation. The results shall in particular serve as basis for future review of the trade mark system as a whole and enhanced cooperation between the Office for Harmonization on the Internal Market (OHIM) and the national trade mark offices of Member States.

The successful contractor was expected to fulfill two overarching tasks. The first was to assess the links between the CTM system and the national trademark systems of the European Union, including issues such as cooperation and fees. As part of this task, the contractor was to evaluate the need for further harmonization of the national systems. The second task was to evaluate the functioning of the CTM system and OHIM, and in particular to submit recommendations for improvements to increase the effectiveness, efficiency and added value of the system and to adapt it to the Internet age.

At the time of the tender, the instrument which partially harmonized national trademark Systems—the Trade Marks Directive (First Council Directive No 89/104/EEC of December 21, 1998, codified as Directive 2008/95/EC)—had not been amended on substance in the 20 years since its adoption in 1988. The regulation establishing and governing the CTM (Council Regulation (EC) No 40/94 of December 20, 1993, on the CTM, now codified as Regulation 207/2009) had, however, been amended six times since its adoption in 1994.

Given the statistics of CTM filings at OHIM, the Commission had every reason to consider the CTM system a success. This was all the more so given that, only a few months prior to launching the tender, the Commission had also significantly lowered fees for obtaining CTMs (Council Regulation (EC) No 40/94 of December 20, 1993, on the CTM, now codified as Regulation 207/2009).

In October 2009, the Commission awarded the contract to the Max Planck Institute for Intellectual Property and Competition Law based in Munich, Germany (the Max Planck Institute). The Max Planck Institute carried out a work program which included an extensive survey of users of the CTM system and detailed statements from relevant user associations, including INTA. Its study was presented on February 15, 2011, making numerous recommendations for reform while acknowledging that the CTM system was working well (and only minor changes needed to be made), focusing its recommendations for further harmonization of the Member States’ national trademark laws.

Armed with the conclusions of the study, the Commission conducted a public consultation process and, in March 2013, published its two legislative proposals for reform of the Regulation and Directive. The Commission’s proposals were aimed at upgrading and streamlining the existing legislation to make the European Union trademark registration systems more accessible and efficient for businesses in terms of lower costs and complexity, increased speed, greater predictability and legal security.

The Commission’s proposals were submitted to the European Parliament in March 2013 and assigned to the Legal Affairs Committee. Following a number of hearings, Parliament adopted its position at first reading on February 25, 2014. The Parliament’s position took issue with various aspects of the Commission’s proposals, particularly governance of OHIM and the use of implementing or delegated acts for certain provisions. The Parliament took the view, for example, that fees for European Union Trademarks were such a fundamental part of OHIM’s governance and of the European Union trademark systems that the fees ought to be set out in the Regulation itself, rather than being consigned to subordinate legislation.

The adoption of the Parliament’s position was followed by the Council’s Presidency Compromise Proposal of May 2, 2014, and adoption of the Council’s “common position” in July 2014. The Council mandated the rotating Presidency of the European Union to enter negotiations with the newly elected Parliament (following elections in late May 2014) with a view to reaching a final, agreed text between the three European Union institutions.

There followed months of inter-institutional negotiations among the Parliament, Commission and Council in what are called “trilogues.” While an agreed text was hoped to have been delivered by the end of 2014, certain issues proved difficult to resolve and it was announced that the trilogue meetings would be postponed until 2015.

Finally, a provisional political agreement was reached between the institutions in April 2015, with the institutions announcing a number of the key points of the agreement in their communications.

Users had to wait until June 2015, however, to see the draft legal texts embodying the provisional political agreement. Following additional checks and translations by the European Union’s “lawyer-linguists,” the final draft versions of the Regulation and Directive were published on October 28, 2015, with a view to their final adoption by the Council and Parliament in plenary.

3. INTA’s involvement.
INTA has closely followed, and actively participated in, the reform package at every stage of the process, engaging particularly with the European Union institutions to advance the policies and positions formulated together with its members and numerous volunteers. INTA’s Brussels office in particular maintained constant lines of communication with the various European Union institutions, as well as Member States, throughout the process.

Externally, INTA made detailed submissions to the Max Planck Institute in January 2010 and attended a multi-day hearing in Munich in June 2010, at which it had the opportunity to dis-cuss issues with the team at the Max Planck Institute conducting the study. In November 2010, it presented to the European Commission its comprehensive report conducted by its Policy Development and Advocacy group on the European Union trademark systems. In May 2011, it attended a hearing of the European Commission’s Directorate General MARKT, and followed up that meeting with comments to the Commission in June 2011.

In June 2013, INTA published its comments and recommendations on the European Commission’s proposals. It submitted several rounds of comments to the European Parliament’s Legal Affairs Committee. In May 2014, INTA submitted comments to the Council’s Presidency Compromise Proposal. In fact, INTA not only provided comments to every official draft of the Commission, Council and Parliament (available on the Association’s website), but it also took the opportunity to offer informal views or comments to officials from all three institutions when appropriate.

On various issues of fundamental importance and concern, INTA partnered with other user associations and stakeholders by way of open letters to urge the European Union institutions to change course. These issues included the question of counterfeit goods in transit and the pro-posals to divert OHIM’s surplus to activities unrelated to trademarks and designs.

Internally, INTA sought to place members as the driving force behind its positions and policies for the reform. It set up a “Steering Group” within the Policy Development and Advocacy Group, which was tasked—through multiple working groups—with analyzing and prioritizing the numerous substantive and procedural issues raised by the reform. At various stages of the process, discussion papers and positions were provided by the relevant Subcommittees. As the negotiations became more fast-paced, INTA set up a further “Rapid Response Group,” tasked with reacting to requests for information and recommendations from the institutions/Member States, often with very short turnaround times.

Now that the reform package is close to adoption, INTA is moving from advocacy to education, by way of activities such as a webinar, held on October 1 and events and articles such as the present series in the INTA Bulletin.

4. What does the reform mean for users?
The reform package is a significant step towards creating a more harmonized, modern and efficient trademark system fit for the European Union of today. Users of the system will begin to reap the benefits of the reform as early as Spring 2016.

Once adopted, the package will, among other things:
  • Significantly reduce the renewal fees for CTMs/European Union Trademarks (by up to 37 percent);
  • eliminate the requirement for a trademark to be capable of graphic representation, opening the door to the registration of more types of nontraditional trademarks, albeit extending existing grounds for refusal of shapes to “other characteristics”;
  • allow International Registrations designating the European Union to proceed to grant much more quickly, by bringing forward the opposition period;
  • allow trademark owners to seize counterfeit goods in customs situations in the European Union under defined circumstances;
  • further harmonize substantive and procedural law relating to national trademarks, including requiring Member States to make available Office-based cancellation actions, after a (somewhat lengthy) seven-year transposition period;
  • provide owners of European Union Trademarks with the possibility to clarify specifications of marks filed for the Nice Classification headings prior to June 22, 2012 (following the Court of Justice’s judgment in the co called IP TRANSLATOR case that class headings do not automatically cover all the goods/services in the relevant class);
  • facilitate searching of new trademarks in view of new provisions for intervening rights, namely creating defenses where later trademarks are adopted at a time when earlier conflicting trademarks were dormant, i.e., vulnerable to revocation for non-use.
  • establish a formal framework for cooperation between OHIM and national marks, including financial elements which allow the participation in greater convergence of prac-tices and common tools;
  • remove the possibility of entering disclaimers for CTMs/European Union trademarks; and
  • give rise to new governance provisions for OHIM, which will be renamed the European Union Intellectual Property Office (EUIPO).
INTA looks forward to seeing the adoption and implementation of these long-awaited reforms and will, in the short term, focus on monitoring and supporting the implementation of the reform in the new EUIPO and at EU Member State level. Nevertheless, the agreed package still leaves much room for further harmonization in the field of trademarks in the European Union, and INTA, its members and volunteers will, as ever, be vigilant and vocal for opportunities for further improvement in the future.

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.

© 2015 International Trademark Association