A Brave New World: EU Trade Mark Reform: AIPPI Event

The IPKat is delighted to receive this event report from the Simmons & Simmons team of James Agnew, Phil Davies (Professional Support Officer), and Muir MacKean.

On 11 May, AIPPI and Oxford University’s Intellectual Property Research Centre organised a discussion (in front of a distinguished audience) between three well-known figures in the trade mark world - Professor Graeme Dinwoodie (Oxford University), Simon Malynicz QC (3 New Square) and David Stone (Simmons & Simmons) – to review the Trade Mark reform package passed by the EU institutions in December 2015. The first provisions of the reform package kicked in on 23 March 2016 (although some will not be in effect for a number of years).

As of 23 March 2016, various aspects of trade mark law have (it would seem) been broadened or narrowed in scope (based on the amended texts of the legislation). However, without judicial interpretation of the provisions, it is not always clear how the scope has changed. It is, therefore, currently in the interests of practitioners and academics to explore these provisions together in order to be prepared for future challenges.

As was noted on a number of occasions throughout the evening, many of the important changes are not subject to any transitional provisions, a fact which engendered a degree of unease for many in the room. The lack of any grandfather provisions may mean that marks or practices which were permitted prior to 23 March 2016 may no longer be permissible, and some marks may even be subject to cancellation.

The Headlines

The “headline” changes are (by now) well-known. The event began with David Stone providing a whistle-stop tour of the history of the reform package, with attention paid to key dates and some of the high level name and fee changes (including one particular question regarding the presence or absence of the definite article: are we to refer to “EUIPO” or “The EUIPO”?). More importantly, David highlighted a number of recommendations that were previously proposed for inclusion within the new package but unfortunately had not made the cut. While bad faith is still not a ground for opposing EUTM registration and Member States may still continue to examine trade marks on relative grounds, the user groups that campaigned for administrative cancellation procedures will be glad of their inclusion in the reforms – even if they must wait a period of 7 years (seven!) – for these to be introduced by all Member States.

Changes to Registration

Next, Professor Dinwoodie considered the changes to registrability, first addressing the removal of the requirement that a mark be “capable of being represented graphically”, to be replaced (from October 2017) with the requirement that the mark is “capable of … being represented on the [Register]” in a way that the authorities and the public can determine the mark’s clear and precise scope of protection. This change was deemed unlikely to open the floodgates to olfactory marks – Sieckmann still holds good, and technology remains underdeveloped with regards to methods of recording smells. Sound marks (such as the MGM Lion and Tarzan’s yell) and moving picture marks, however, were likely to be registered with much less difficulty now. Whilst the proportion of non-conventional marks is very small, it was suggested that this change to registrability is particularly important given that non-conventional marks have the potential to affect dramatically the competitive landscape. Having broached the subject of technology, one point for future thought presented from the floor was the potential consequence on registration when certain forms of recording become obsolete.

Expanded Functionality

Prior to 23 March 2016, under Article 7(1)(e) a mark could not be registered if its shape: (i) resulted from the nature of the goods; (ii) was necessary to obtain a technical result; or (iii) gave substantial value to the goods. This exclusion has now been extended beyond shapes to include any other characteristic of the mark. Several examples of marks which may now fall foul of this expanded functionality test were presented, including a US mark involving white and peach colouring for use on prescription medicines. It had been held in the US that the particular colour combination served a function in identifying the drug and its dosage to the patient. If the reform package has introduced this line of argument to EU law, many colour mark owners, in particular, should be concerned. It was possible, Professor Dinwoodie hypothesized, that sound marks might serve a similar function and therefore come similarly unstuck; the roar of a motorcycle engine, for example, might provide evidence on the quality of the engine. Beyond shape, sound and colour, it is relatively difficult to come up with examples of other characteristics which might be relevant here. However, it is concerning that the “any other characteristic” language may potentially be over-interpreted by the courts.

IP Translator

As David pointed out, most people involved in trade marks will know of the decision in IP Translator, and will also be aware that a six-month period, ending on 23 September 2016, is currently underway, during which EUTM holders who filed before June 2012 can seek to rectify their specifications to become IP Translator-compliant. David argued, however, that the opportunity to amend a mark’s specification does put practitioners in a small quandary: clients are unlikely to turn down rights that they could have had for free, but a question remains as to whether their advisers will wish to take on the incredibly labour intensive work involved in filing a declaration often for very small gain.

Comparative Advertising

Simon Malynicz QC mentioned on a number of occasions throughout the evening the Comparative Advertising Directive. The reforms have introduced a new infringing act, as Article 9(3)(f) of the Regulation, which states that using a mark in a manner which is contrary to the Comparative Advertising Directive is an infringement. But, as was pointed out by Simon, this had already been held to be the case by the Court of Justice on several occasions. Perhaps this was just a provision included “for the avoidance of doubt” to codify existing jurisprudence. This explanation, however, is not completely satisfactory: to use the mark “in a manner contrary to” the Comparative Advertising Directive merely begs the question of what it is to “use the mark”, which is what Article 9 is meant to be defining. The Comparative Advertising Directive should have been kept away from the definition of “infringement”, and introduced – even if it was to be included as a “for the avoidance of doubt” provision – in the context of defences.

Preparatory Acts

Drawing our attention to another piece of (perhaps) infelicitous drafting, Simon then considered the new “preparatory acts” infringement in Article 9(a) of the Regulation. In this new provision, where there is a risk that a label (say) could be used in a way which would infringe the trade mark rights, then that is infringement. This is incredibly broad. Whilst there will be some easy cases (eg, having hundreds of boxes bearing a brand owner’s mark apparently ready for use), there are difficult cases – what if the infringement would only be due to a likelihood of confusion? How grave does the risk need to be? The amendments are based on the solid basis of combatting counterfeiting, however, the inherent ambiguity in the drafting is problematic.

Own Name 

The Own Name defence has been withdrawn for non-natural persons: in effect, a corporation can no longer rely on its trading name as a defence to trade mark infringement. Simon emphasised that this change is contrary to two Grand Chamber judgments, and pointed to lines of case law in England and Wales where corporations had relied on this defence, and there did not appear to be any principled reason why this should have changed. Further, as this provision came into effect on 23 March 2016, it is possible that a company which has been happily trading for years has now “become an infringer”, which does not seem very equitable. There was even some discussion whether this involved an infringement of the European Convention on Human Rights. Ultimately, this (potentially important) defence has been cut down, and the rationale is questionable – should the application of the defence come down to ‘honest concurrent use’ as opposed to legal or natural personality? What about natural persons in partnership?

Conclusion

Doubtless there are many provisions in both the Regulation and the Directive which are going to be subject to guidance from the Court of Justice (and, in some cases, possibly the Strasbourg Court). This is by no means a mere cosmetic change to EU Trade Mark law, and it is imperative that we all engage with these sorts of discussions now – as the law is already in force! – in order that we can advise our clients what the likely impacts will be.