Recording a license agreement in the EU requires consent of the currently registered trade mark owner

Recording a license agreement concerning an EU trade mark is not mandatory but has several benefits (see the EUIPO’s trade mark Guidelines):

• The license has effects vis-à-vis third parties (Art. 27(1) EUTMR).

• The owner cannot surrender the EU trade mark without showing that the licensee has been informed of the owner’s intention to surrender (Art. 57(3) sentences 2 and 3 EUTMR).

• The EUIPO informs the licensee of the expiry of the trade mark at least six months in advance (Art. 53(2) EUTMR).

The General Court recently dealt with the question if a license agreement can be recorded, although the licensed EU trade marks have been transferred after the conclusion of the license agreement and the new owner does not consent to the registration (case T-679/22).

Background

Brandavid Oy (‘Brandavid’) owned three EU trade marks, which it licensed exclusively to Oy Shaman Spirits Ltd. (‘Shaman Spirits’) in 2016. The license was not recorded with the EUIPO. Brandavid transferred the three EU trade marks to Global Drinks Finland Oy (‘Global Drinks’). The transfer was recorded in 2017 in the EUIPO’s register. Global Drinks was aware of the license agreement between Brandavid and Shaman Spirits when the trade marks were transferred.

In July 2020, Shaman Spirits filed a request for registration of the license agreement with the EUIPO along with a copy thereof. The EUIPO entered the license in the register and informed Shaman Spirits and Global Drinks of this recordal. Global Drinks filed two letters with the EUIPO objecting to the recordal.

In November 2020, the EUIPO announced that the license entry would be revoked unless Shaman Spirits provided evidence that Global Drinks agreed to the registration of the license.

Shaman Spirits submitted six documents to prove that Global Drinks accepted the license agreement. Apparently none of them contained written consent to the registration thereof.

The EUIPO revoked the recordal (Art. 103(1) EUTMR) and the Board of Appeal of the EUIPO (‘BoA’) dismissed Shaman Spirits’ appeal against this decision. Shaman Spirits brought the matter before the General Court. 

The General Court’s decision

The General Court dismissed the action.

Under Art. 25(5) EUTMR, the grant of a license can be registered with the EUIPO on request of one of the parties. There are no explicit provisions on the conditions for the recordal of licenses in EU law. Instead, according to Art. 26(1) EUTMR, the rules for the registration of a transfer of a trade mark apply mutatis mutandis, namely Art. 20(5)(6) and (8) EUTMR as well as Art. 13 EUTMIR.

Art. 20(5) EUTMR requires that the application for registration of a transfer of a trade mark be accompanied by documents establishing the transfer in accordance with Art. 20(3) EUTMR. The latter provision requires a written transfer agreement. Otherwise, the transfer is void. In order to prove the transfer in accordance with Art. 20(3) EUTMR, Art. 13(3) EUTMIR provides four alternatives, all requiring the signature of the registered owner and the new owner.

By applying Art. 20(3) EUTMR and Art. 13(3) EUTMIR mutatis mutandis, the General Court held that the recordal of a license agreement required the signature of the currently registered proprietor (i.e. Global Drinks). The signature of the formerly registered owner (i.e. Brandavid) on the license agreement was not sufficient. This conclusion was obvious to the Court because “the wording of [the applicable law] leaves no scope for interpretation”.

Shaman Spirits’ argument that the license agreement was binding vis-à-vis Global Drinks’ because the latter was aware of the agreement at the time of the transfer of the trade marks (Art. 27(1) EUTMR) did not convince the judges. Without assessing whether Global Drinks was bound by the license agreement, the Court argued that the license’s registration is only subject to the formalised conditions in the EUTMR and EUTMIR, i.e. the signature of the currently registered trade mark owner. A breach of the licence agreement’s clause applicable to successors could trigger contractual liability but does not have effect on the examination of the registration request.

The General Court also rejected Shaman Spirits’ contention that Finnish law was applicable to the license agreement under Art. 19(1) EUTMR, which did not require a license agreement to be in writing. The judges countered that the recordal of a license for an EU trade mark is governed autonomously by EU law.

Finally, the General Court confirmed that the EUIPO’s decision to register the license contained an obvious error in the meaning of Art. 103(1) EUTMR. The request for recordal did not meet the requirements set out above because there was no proof that the license was granted by the currently registered proprietor of the marks.

Comment

The phrase “the wording of [the applicable law] leaves no scope for interpretation” reminded me of Advocate General Tamara Ćapeta’s statement in her opinion in The KaiKai Company Jaeger Wichmann GbR (C-382/21 P, discussed here):

As beauty is in the eye of the beholder, the level of unambiguity is in the eye of the interpreter.

Is the interpretation of the EUTMR and EUTMIR really that obvious? One could make the argument that Art. 20(3) EUTMR (requiring a transfer of an EU trade mark to be in writing) is a substantive condition for the validity of the transfer of an EU trade mark. Thus, it makes sense to require proof of the written transfer agreement when recording the transfer in order to avoid registering a transfer that does not meet a substantive formal requirement. Art. 13(3) EUTMIR allows the parties to avoid submitting the transfer agreement by co-signing the recordal request or providing a written declaration showing consent of the party not submitting the recordal request. Therefore, these provisions deal with the proof of the validity of the assignment.

There is, however, no provision in Art. 25 EUTMR (or elsewhere in EU trade mark law) requiring a license agreement to be in writing. There is nothing in the decision suggesting that the validity of the license agreement and that it was binding on Global Drinks was disputed. Consequently, the General Court’s reliance on Art. 20(3) EUTMR and Art. 13(3) EUTMIR to justify the necessity of Global Brands’ (written) consent is not as compelling as it might seem at first glance.

In any event, it is advisable to register the license and any other right to an EU trade mark sooner rather than later. 

 

The pictures is by petfoto and used under the licensing terms of pixabay.