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Sunday, 2 June 2013

IP TRANSLATOR One Year On: Quo Vadis?

A week has famously been said to be a long time in politics, but when measured against the prospect of perpetual legal protection even a year seems a fairly short time in trade mark law.  In June 2012 Europe's trade mark fraternity was anxiously awaiting a ruling which, it seemed, would have monumental consequences for owners of granted national and Community trade marks, for applicants for new rights and for the operational and administrative side of trade mark grant and opposition processes.  A year late, what has changed -- and what perhaps remains to be changed?  In this thoughtful guest post, Katfriend Richard Ashmead takes us through the issues:
Before and after IP TRANSLATOR 
With the Appointed Person’s (“AP”) May 2013 appeal decision, CIPA’s IP TRANSLATOR case is all but over, with the appeal being upheld. The AP concluded that the refusal of the application was based on the erroneous assumption that translation services fell within the scope of the class 41 heading words used in the application, in essence as the “class-heading-covers-all” (“CHCA”) approach to construing the list of services was incorrect in EU law while the literal, “means-what-it-says” (“MWIS”), approach was. It is now time for some thoughts on what has changed in law and in practice, and whether the two agree.   
Before IP TRANSLATOR 
The core issue was how to construe the scope of the list of goods/services in an EU application or registration. Not difficult, you might think, in a system requiring a verbal claim to define the monopoly rights sought, and indeed most intellectual property offices (IPOs) applied the literal MWIS approach to all applications and registrations before them (eg UK, France, Germany and Benelux). OHIM largely agreed but made a single exception for Nice class headings in registrations, construing them as having the same scope as “All goods in class XX” ie as CHCA, while generally applying MWIS to all other registrations before it. This two level approach, confirmed in OHIM’s Presidential Communication 4/03 (in effect its practice guidance), was followed by some other IPOs too, eg Finland and Hungary. 
This is the “class heading dispute”, really a matter of differing IPO practices, but it had ramifications on infringement too although I have yet to see any collated report of the attitudes of CTM and national courts to the dispute. The current Trade Mark Directive  (“TMD”) at recital 10 says that it is 
“.... fundamental, in order to facilitate the free movement of goods and services, to ensure that registered trade marks enjoy the same protection under the legal systems of all the Member States”
a statement supported by a trenchant UK court comment that: 
“I do not think that there is room for them [ie MWIS and CHCA] to coexist within the framework established for the co-ordinated protection of trade marks in the Member States and at the Community level”. 
Recital 10 makes OHIM’s two level internal approach questionable at the least, and makes the adoption across the EU of MWIS here and CHCA there a breach of a fundamental harmonisation requirement. In practice we had no certainty in law on the goods/services scope of EU class heading registrations, of which there are many. 
Angels, dancing and pin heads 
Is the number of applications and marks based on class headings a real concern? A brief run through the TMView database shows nearly a million CTMs accounting for about 37% of the trade mark coverage of Germany (ie nationals plus CTMs), 64% for UK and 96% for Slovenia, and an OHIM speaker recently reported that about one third of CTM applications are based on class headings. I cannot say how uniformly that ratio applies across the whole EU register, but it seems that somewhere around 300,000 class heading CTMs is a fair place to start, all effective in each EU member state. Most if not all EU national IPOs also allow or encourage class heading filings, and all class headings, being avowedly exemplary, are narrower than their full class content, so applying the CHCA approach to class heading registrations necessarily gives broader scope than MWIS. The numbers of class XX goods not within the class XX heading wording may not be large but that can belie commercial importance, for example for computer software, clearly in class 9 but not until recently in the Nice class 9 heading. Significantly, the same OHIM speaker reported that 50% of CTM oppositions have a class heading aspect. Uncertainty of the legal scope of class heading applications and registrations certainly matters. 
The IP TRANSLATOR case 
Its substance is really of no great import now, but it was designed to get a TFEU Article 267 reference to the Court of Justice of the European Union (CJEU) for a ruling on which of MWIS and CHCA was correct in EU law. We sought and expected no more than clarification of existing EU law in that regard, ie did not see the likely outcome as being new law. The case on appeal produced a neat progression of three reference questions from the AP, Geoffrey Hobbs QC, which the CJEU answered in its June 2012 judgment. The result was the demise of CHCA in application practice with a finding that lists of goods/services must be clear and precise of scope as they stand on filing whether class heading wordings or not (see answers 1 and 2 of the CJEU judgment). 
Unfortunately the court failed specifically to answer the AP’s third reference question, essentially “Is OHIM’s CHCA practice correct in law?” possibly seeing “No” to be implicit from its answers 1 and 2, but OHIM rescinded its practice guidance 4/03 immediately after the court’s judgment. What the court did though was to present, in place of an answer to the third reference question, a wholly new application practice whereby an applicant can file with a class heading wording but indicate that it wants that wording to be construed instead as some or all of the wording of the alphabetical list for the relevant class. So a class XX heading application is read by default as MWIS as any other list of goods/services, but if the applicant says that what it meant on filing was the current Nice class XX alphabetical list, that is acceptable – as another form of special case treatment for class headings.
All the classes’ alphabetical lists contain goods/services which are not within their class heading wordings, so add scope (although may also narrow in other ways), resulting in widespread concern among practitioners and IPOs that this new practice is in conflict with the court’s answers 1 and 2, and may (and probably does) involve broadening . 
The IP TRANSLATOR case necessarily targeted CHCA. Although not stated as such reference question 1 reading 
“Is it necessary for the various goods or services covered by a trade mark application to be identified with any, and if so what particular, degree of clarity and precision?” 
was aimed at setting the scene at why CHCA was not good in law, with eyes on the Sieckmann requirements for mark-definitions and on the fundamental TMD requirement for registrations to enjoy the same protection under the legal systems of all the Member States. The new alphabetical approach to determining goods/services scope from rather than in the applicant’s wording merely seeks to replace one example of special case treatment (CHCA) with another, and with it less clarity and precision. 
 After IP TRANSLATOR 
The CJEU judgment has, sadly, not fully settled the class-heading dispute. It has been accepted throughout the EU as requiring MWIS as the base approach to construing the scope of a list of goods/services, and has for the most part been taken to kill CHCA, but IPOs around the EU are struggling with how to implement the court’s anomalous third answer. Most have put in hand an official practice allowing an option on filing to use a class XX heading wording with an indication of intent to cover the class XX alphabetical list -- whereupon the application will be amended by the IPO concerned to the wording of the class XX alphabetical list, probably with a degree of resignation that the will of the CJEU must be heeded, albeit likely to cause challenge at some point. Interestingly Germany has not introduced this new “class-heading-covers-alphabetical-list” filing practice as unclear in the light of the third answer’s conflict with answers 1 and 2. OHIM has made several attempts to adopt it, currently now amending a class XX heading on the applicant’s request to the totality of the wording of the class XX heading and the class XX alphabetical list, with no apparent concern on broadening. 
OHIM has though gone further in an official view that existing CTM class heading registrations benefit from the court’s alphabetical-list application practice and can now be deemed to have been intended (eg in 1996 pre-IPT or 2004 post-IPT) to mean not the full class content under CHCA, but the same as the relevant class alphabetical list. OHIM’s justification seems to be that the court’s June 2012 judgement established new law so that CHCA as an opinion made official practice still stands as legally correct at the time.
I mentioned earlier that, in designing the IP TRANSLATOR case, we sought and expected no more than clarification of existing law, and I confess that my expectation was that CHCA would not prevail, eg in view of legal problems like its rendering similar goods in a class as identical goods through being “directly related” (thus over-riding the concept of similarity within a class), its inconsistency with the Sieckmann mark criteria, and its scope broadening effect. It is no surprise, then, that I see the court’s requirement for clarity and precision as a statement of correct pre-existing EU law against an incorrect CHCA opinion, ie not as a statement of new law. 
An AP’s decision may not cast a long shadow across the EU, but I would suggest that the views of an AP with the personal experience and authority of Geoffrey Hobbs QC are worth serious thought. He found in his appeal decision that the CJEU’s judgment gave no temporal limit to its effect so that its requirements for clarity and precision applied as EU law throughout the term of the current Directive and CTMR. That, if correct, means the CJEU killed CHCA as an impermissible special case treatment for any EU application or registration, including all extant CTMs, and must likewise render stillborn the “class-heading-covers-alphabetical-list” approach in the same way, whatever OHIM thinks. 
That said, OHIM evidently wants to keep some sort of broadening class heading special treatment if it possibly can. I have come across suggestions of an OHIM liability in effect for mis-selling class XX heading CTMs as covering “All goods in class XX”, although I am unclear whether there is any such liability in law. Liability or no, I have heard OHIM and others proposing that existing class XX heading registrants may be entitled to “All goods in class XX” coverage under a legal right of expectation based on OHIM’s official espousal of the CHCA approach in 4/03 and, less formally, earlier.  The extra scope of CHCA “lost” through the affirmation of MWIS could indeed be a concern for some registrants, but what of the equivalent expectation of a third party who correctly assessed an infringement risk on the basis of the MWIS approach? Should the latter now be found to infringe? 
Further AP guidance? 
Readers will have taken on board my feeling that the views of Geoffrey Hobbs QC on trade mark legalities are most likely to be authoritative and, well, right, but I do have some trouble with one aspect of his June 2013 appeal decision. The main interest by then was whether the court’s third answer could be ignored as anomalous, if not whether it had any effect on the straightforwardness of answers 1 and 2, and whether a re-reference was needed to resolve the conflict. My trouble, perhaps more puzzlement, was that I could not see how the court’s answers could be reconciled. The AP did not re-refer the case as he did not accept that the: 
“…. judgment of the Court is unclear or inconsistent with regard to any of the matters on which there appear to be differences of approach between and among the competent  authorities”.  
In that his point seems to be that a class heading application may in itself lack the required clarity and precision because of the existence in parallel of two conflicting interpretation approaches (ie MWIS and CHCA) such that a class heading list of goods/services 
“might or might not be intended to identify less than 100% of the goods or services falling within the relevant class”
With due deference I am not convinced that the currency of two irreconcilable opinions, one of which has now been held by the CJEU to be incorrect, needs to be accommodated in a new filing procedure which itself introduces a lack of clarity and precision. Why not just tell applicants as part of the filing procedure that CHCA, and any other special interpretation of class headings, is now dead in law and that all lists of goods/services will only be read literally to means what they say?  Significantly Article 40(5) of the new directive proposal (discussed below), which the AP may well not have seen when concluding his decision, is specific on that, reading thus: 
“The use of general terms, including the general indications of the class headings of the Nice Classification, shall be interpreted as including all the goods or services clearly covered by the literal meaning of the indication or term. The use of such terms or indications shall not be interpreted as comprising a claim to goods or services which cannot be so understood”. 
Does that wording, if it becomes law, kill the ongoing attempts to use the court’s third answer to afford class heading applications/registrations special case treatment of scope? 
In conclusion (nearly) 
The need we faced in bringing the IP TRANSLATOR case was to target the CHCA practice and support MWIS, for application and registration practice.  The case has given us a CJEU judgment which endorses MWIS and probably kills CHCA legally, but has left us in its third answer with:
·         a new application procedure allowing special case treatment of class headings not that dissimilar to CHCA, and
·         wording in which OHIM and others see support for a continued special case, broader, reading of class heading registrations.
This is all, I suspect, the result of the court failing to spot or road-test the legal and practical consequences of conflict between answers 1 and 2 and its third answer, the latter having been conjured in-house without relevant argument or evidence before it on current practices, legalities or indeed treaty requirements. The appointment by the court of its own volition of the case to a Grand Chamber seemed a good sign of its view of the importance of the issue, but the arrival out of the blue of the third answer has, I am afraid, served the trade mark world ill, and left us overall with more problems than clarification. 
The new alphabetical list filing practice is of course optional, and as such perhaps a bit of a side-show. Provided the official IPO systems make clear on the official record that a list of goods of an application or registration has come from a class heading list under the new practice I doubt that much harm will result to third parties, although I  wonder whether the innate inconsistencies within an approach to use one form of wording to mean another are much more than a legal accident waiting to happen. 
Construing the scope of existing CTM class XX heading registrations as some or the entire class XX alphabetical list is another matter. If my earlier rough calculations from TMView are reasonable there are over 300,000 CTM class heading registrations in the UK’s total registration cover (about 21% of nationals plus CTMs), all of which may have a different scope than shows from their wordings, and possibly a broader one. I doubt that UK IPO, or the courts here, would apply that construction to goods/services scope, but it will most certainly be argued. 
New CTM top-up provisions 
There is finally (really) a further sting in the European Commission's proposal for the new Community Trade Mark Regulation (CTMR). It contains at Article 28 provision for CTM class heading registrants to request a top-up of their list of goods beyond the literal meaning of their class heading wordings, based I assume on OHIM’s view that all class heading CTMs from before the IP TRANSLATOR judgment can be deemed to have been made with an intention to obtain full class goods scope. The likelihood of there being upwards of 300,000 class heading CTMs dated before June 2013 gives a measure of how many CTMs could be topped-up into a broader goods/services scope. Would the UK IPO and courts have to apply those CTMs as broadened? 
I gather that wording similar to this top-up provision may also have been in some recent earlier drafts of the new Directive, but it is not now and the published Directive proposal seems pretty fixed on MWIS across the board, eg at Article 40(5) mentioned above.   Does that mean that the EC approves of a CTMR broadening top-up provision inconsistent with its own Directive provisions, or that it does not but was prepared to go along with OHIM liability etc concerns to develop a debate? If the latter I truly hope the debate follows lest we find in all EU member states numbers of past user decisions based on MWIS being turned from arguable similarity matters to unarguable infringement for identical goods under new CTMR  Article 28.

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