EUIPO Grand Board finally confirms Nightwatch decision on EUTM conversions

In response to the first referral from the Executive Director of the EU's Intellectual Property Office (EUIPO), the EUIPO's enlarged Board of Appeal (the Grand Board) has confirmed that an EU Trade Mark (EUTM) application which is withdrawn during the appeal period following a refusal decision from the EUIPO, can proceed to conversion to a national application.   

Background

The Executive Director's referral was covered by the IPKat here, but by way of quick recap, this case concerns the process of so-called ‘conversion’; namely the process by which an EUTM application or registration can be converted into national applications in EU Member States, should issues arise in specific Member States which block the EUTM from being registered across the whole of the EU. 

The requirements for conversion of an EUTM are set out in Article 139(2)(b) of the EU Trade Mark Regulation (EUTMR), which prohibits conversion in Member States where: "in accordance with the decision of the Office or of the national court, grounds for refusal of registration or grounds for revocation or invalidity apply to the EU trade mark application or EU trade mark." 

However, the Fourth Board of Appeal (the Fourth Board) recently decided, in the 'Nightwatch' case (Case R 1241/2020-4), that the EUIPO must allow conversion where there is an EUTM application is withdrawn before a refusal decision becomes final (i.e. before the appeal period has elapsed) - something which was at odds with the long-standing practice of the EUIPO and its Trade Mark Guidelines. 

The Executive Director considered it appropriate to refer the case to the Grand Board for a reasoned opinion, in the interests of legal certainty and consistency, particularly given that the EUIPO's practice had been largely based on the Grand Board's 2006 decision in Optima (Case R 331/2006-G).  The Grand Board had decided in that case that, although it was possible to withdraw an EUTM application during the appeal period, the refusal decision should "remain in the files", and may have "possible effects" on the applied-for mark.

They key question therefore for the Grand Board to opine on was whether the expression "the decision of the Office" in Article 139(2)(b) EUTMR includes decisions where no appeal is brought under Article 66 EUTMR and the EUTM is withdrawn during the appeal period. 

The corollary question was whether the position would be different where an appeal is filed before the application is withdrawn - in which case Article 139(2)(b) EUTMR is not triggered 

It is worth noting that a number of associations, namely APRM, ECTA, INTA and MARQUES, and the Benelux IP Office, all filed written observations generally agreeing with the Fourth Board's decision in Nightwatch.

 

The Grand Board's Reasoned Opinion

In giving its reasoned opinion, the Grand Board began by summarising the relevant legislation, and the Optima and Nightwatch decisions referred to by the Executive Director, as well as its recent decision in Zara (Case R 1508/2019-G), in which the Grand Board had found that "conversion is the process of transforming an EUTM (application or registration) into one or more national applications only after this EUTM has been refused by final decision or has ceased to produce any effect."

"Decision of the Office" 

The main question which the Grand Board had to address was whether "decision of the Office" in Article 139(2)(b) EUTMR should be interpreted as referring to a final decision, as the Fourth Board had held in Nightwatch. 

In order to address this question, the Grand Board placed particular importance on Articles 66(1) and Article 71(3) EUTMR, which prescribe two types of events which cause a decision to "take effect" (and therefore become final. The first is the expiry of the statutory period for filing and appeal, and the second is the dismissal of any such appeal by the higher instance court. 

If one of these two prescribed events occurs, the decision "takes effect and acquires the authority of a final decision". Accordingly, the Grand Board found that, given there was little room for interpretation in the reading of Articles 66 and 71 EUTMR, it necessarily had to be the case that Article 139(2) must be interpreted as referring to a final decisions, because it was the only interpretation which respected: 

1. the suspension of the legal effects of Office decisions pending challenge; 
2. the legal effects produced by a final decision; 
3. the jurisprudence stating that inoperative decisions have no legal effects; 
4. an EUTM applicant's right to withdraw their EUTM application at any time; and
5. the smooth and effective interface between the EU and national trade mark systems as foreseen in Recital 16 to the Preamble of the EUTMR. 

Contrary to what was suggested in the Executive Director's request, nothing followed from the fact that the word "final" was missing from Article 139(2)(b), as there was no legislative need to repeat the word in light of the above mentioned Articles 66(1) and 71(3) addressing the general principle of finality of decisions. 

Further, the mere grounds of a decision are not in principle capable of producing legal effects (Dalmine v Commission, Case T-50/00).

 

Kats able to rest peacefully now we have the Grand Board's view on conversion

 

When the decision is challenged

Addressing the second part of the Executive Director's questions, regarding the circumstance in which an appeal is filed before an EUTM application is withdrawn, the Grand Board reiterated that an applicant is free to withdraw their application at any point before the refusal decision had become effective - regardless of whether not an appeal had been filed. 

By withdrawing the EUTM application pursuant to Article 49(1) EUTMR, the examination proceedings become moot, and the refusal decision never "takes effect" nor does it produce any legal effects beyond the simple fact of being available for review (i.e. "remain on the files" for consultation by the general public). 

Circumvention of the law

Finally, the Grand Board clarified that a request for conversion could not be seen as an attempt to circumvent the limitations of Article 139(2)(b) EUTMR, as the EUTM regime is an autonomous system which exists independently of national trade mark systems, and EUTM application cannot be considered to be "superior" to any national decisions. The national trade mark authorities are neither obliged nor prevented from coming to the same conclusion as the examiner in its refusal decision; there is therefore no circumvention.

 

Comment

It appears that the matter of conversion following a refusal decision has now been resolved fairly incontrovertibly by the Grand Board and, as opined by this Kat in an earlier post, it would appear to make sense that the mere question of whether an EUTM application is withdrawn before or after filing an appeal, should not of itself have a substantive effect upon the conversion process.

What this should mean in practice is that applicants wishing to convert their EUTM application into a national application following a refusal decision will not have to incur the unnecessary cost of preparing and filing an appeal, for the sole purpose of withdrawing immediately afterwards. 

 

It is worth exercising caution however in the short term given that the status of the EUIPO's Guidelines, and whether they will be changed in light of the Grand Board's opinion, remains unclear.