The IPKat's post on Friday ("When 'genuine' isn't genuine", here) has attracted a lot of interest. The notion that use of a Community trade mark in just one EU Member State might not constitute 'genuine use' in the territory of the EU as a whole -- as the Benelux IP Office has held -- has apparently been a bit of an accident waiting to happen. Anyway, the IPKat has received this very thoughtful piece from Ben Mooneapillay (partner, Fry Heath Spence), who is keen to know whether other readers agree with his analysis. He writes:
"I agree with the decision and have always thought that use in one Member State is insufficient. Here's why:Says the IPKat, do you agree with Ben's analysis? More to the point, would the Court of Justice of the European Union agree with it? Do let us know what you think!
1. The preamble to the Council Regulation 40/94 states that "legal conditions must be created which enable undertakings to adapt their activities to the scale of the Community whether in manufacturing and distributing goods or in providing services". By observing that the Community is a large market where undertakings need to adapt to its size ("scale"), the preamble provides a hint that use "in the Community" requires use than in more than one Member State.
2. The preamble to the Council Regulation 40/94 also states that "national trade marks continue to be necessary for those undertakings which do not want protection at the Community level". If use in one Member State is sufficient to uphold a CTM registration, then there is an inherent contradiction between this and the pre-amable to the Council Regulation because national trade marks would not really be necessary at all. Furthermore, the preamble acknowledges that there is a difference between registration at the national level and at the Community level; thus there must be a difference between use at the national level (by this I mean use in one Member State) and the Community level.
3. The First Council Directive of 21 December 1988 to approximate the laws of the Member States relating to trade marks (89/104) states that "whereas in order to reduce the total number of trade marks registered and protected in the Community and, consequently, the number of conflicts which arise between them, it is essential to require that registered trade marks must actually be used or, if not used, be subject to revocation". The reduction of the number of conflicts is an integral part of trade mark law at the Community level. Therefore, to permit a local trader to have a monopoly right throughout the entire Community on the basis of only localised use appears to go against the spirit of the Directive.
4. Whilst I note the joint statements by the Council and the Commission (of 20.10.1995, No B. 10 to 15, OJ OHIM 1996, 615) relating to use in one Member State, these are not binding and I agree with the BOIP that these statements are incorrect. Articles 15 and Article 50 are silent with respect to the geographical spread of use required; however, Article 108 (2) (a) envisages a scenario whereby a CTM will need to be converted even when proof of genuine use in one Member State has been submitted. Article 108 (2) (a) reads as follows:
"2. Conversion shall not take place:
(a) where the rights of the proprietor of the Community trade mark have been revoked on the grounds of non-use, unless in the Member State for which conversion is requested the Community trade mark has been put to use which would be considered to be genuine use under the laws of that Member State;"
Thus, the Regulation acknowledges that proof of use in one Member State is not sufficient, but provides an equitable remedy (conversion) in circumstances where a trader has used his mark in only one Member State.
5. The purpose of Article 108 (2) (a) is to allow conversion where proof of genuine use has been provided for the Member State concerned. That is not to say that the use is not genuine according to European standards, but that it must be genuine according to the standards of the Member State concerned (which are approximated by the Directive in any event). In other words, Article 108 (2) (a) does not say that the use must not be considered genuine at the Community level before the Article has effect.
6. In its opposition guidelines, OHIM states that "It must in any event be underlined that it is the European requirements or standards which must be complied with and not the national standards". A situation where the use is not considered genuine by local standards, but genuine by Community/European standards, would lead to a farcical situation where use in one Member State is sufficient to maintain protection throughout the entire Community, but would not be sufficient to uphold a national registration in the Member State concerned. Therefore, assuming I am right about the interpretation of Article 108 (2) (a), the Regulation and OHIM practice says, in effect, the Office can decide that genuine use in one Member State is proven (by European standards), but that such use is not sufficient to uphold a CTM registration. Such a registration may be converted, provided it complies with local use standards.
7. Article 109 (3) provides as follows:
The Office shall check whether the conversion requested fulfils the conditions set out in this Regulation, in particular Article 108(1), (2), (4), (5) and (6), and paragraph 1 of this Article, together with the formal conditions laid down in the Implementing Regulation. If these conditions are fulfilled, the Office shall transmit the request for conversion to the industrial property offices of the Member States specified therein.
Whether Conversion requirements are met is therefore decided by the Office before the application for conversion is transmitted to the national trade mark office. The Office is only in a position (I believe) to decide whether the proof of use is sufficient for its own purposes (i.e. by its own standards). Any request for conversion under Art. 108 (2) (b) that is transmitted to the local office must have been checked for genuine use by OHIM according to its standards. Thus, if genuine use in one Member State is sufficient to maintain a CTM registration, Article 108 (2) (a) would be redundant under current OHIM practice.
I appreciate that Art. 109 (3) relates to a procedural step and that this reasoning could be side stepped if OHIM is in a position to decide whether use is genuine according to local law/standards.
8. From a common sense perspective, if a CTM proprietor has only used his mark in one Member State in five years, then protection in one Member State is all that is required. Article 108 (2) (a) provides for this and if protection outside of one Member State is required going forward then the proprietor is free to re-file for his Community trade mark
I should perhaps add that I think the ECJ's decision in Pago (Austria is a substantial part of the territory of the Community) does complicate matters a little; it is difficult to see how genuine use in a "substantial part" of the territory of the Community cannot not be considered genuine use "in the Community". I guess if one interprets "in the Community " as "in the Community at large " that would remove Pago as a problem. Either that or we conclude that the ECJ was wrong to decide that one Member State is a substantial part ..."