Some wise words from Eric Clapton which, believe it or not, can equally find application to the European Union trade mark system. Whilst an EU trade mark registration provides a useful mechanism to gain registered trade mark protection covering all of the member European territories by way of one single trade mark registration, there are also some important considerations to factor in when deciding whether to lodge an EUTM application, especially with regards to trade mark use.
EUTM non-use
While it may seem advantageous to obtain a registration covering all of the EUTM territories and to extend that protection to as many goods and services as possible, it is important to keep in mind that the majority of trade mark registrations, at some stage in the process, will have a requirement to prove use. Although the EU system does not require evidence of use prior to obtaining registered rights, an EUTM registration may be revoked where the trade mark in question has not been put to genuine use for a continuous period of five years and there are no proper reasons for non-use.
The term “genuine use” is not defined, however case law from the Court of Justice of the European Union ("CJEU") has provided important guidance on the meaning of "genuine use" in a number of cases:
- Genuine use means actual use by the proprietor or a third party authorised to use the mark.
- The use must be use as a trade mark, i.e. use indicating the origin of the goods or services.
- The use must be more than merely "token," i.e., it must not serve merely to preserve the rights afforded by the registration, however the use does not have to be significant for it to be deemed genuine.
- The use must be real commercial exploitation of the mark. Regard must be had to all relevant factors, including the nature of the goods or services. By way of example, racing cars are intended for a very specific market and it has been held that the existence of various preparatory tasks and advertising efforts would be sufficient to prove genuine use of the trade mark in relation to racing cars, even though no cars had been sold. In contrast, electric cars is not intended for a market as specific as racing cars and therefore the criteria relating to racing cars could not be used to support genuine use in respect of electric cars.
- Proof of genuine use of the trade mark includes proof of its use in a form differing in elements that do not alter the distinctive character of that trademark. Small changes in the font format, and small colour variants is not likely to affect the trademark’s distinctive character.
- The territorial borders of the EU Member States are disregarded. Use will be determined on a case-by-case basis, taking account of the territorial extent of use as well as all the other factors listed above. Use within a single territory is seldom considered to be sufficient but depending on the particular facts may be sufficient.
- "Proper reasons for non-use" are limited in scope and normally result from circumstances outside the control of the trademark owner (such as government intervention or force majeure).
Whilst parties may have great ambitions at the time of filing, it is important to continuously revise your trade mark portfolio post-registration not only to consider where there may be room for expansion but also to consider possible vulnerabilities, including non-use vulnerabilities. This takes us to the next important point for consideration. Whilst parties may want to protect themselves as broadly as possible from the outset and even devise strategies to try and mitigate the risk of non-use revocation proceedings, it is important to also keep in mind where these strategies may err on the side of bad faith.
Bad faith
Under EU trade mark law, a registered trade mark may be declared invalid if the applicant was acting in bad faith at the time that the trade mark application was lodged. The concept of bad faith does not have a clear definition in terms of the legislative framework although case law has confirmed that bad faith is a broad concept with various factors to be considered. Our traditional understanding of bad faith generally extended to matters where a party was attempting to secure rights in a trade mark belonging to a third party, and in doing so was acting in bad faith.
In recent years, the courts have been more flexible with expanding the possible application of bad faith principles. Examples of the expansion of these principles includes a consideration of the fact that parties were devising strategies to circumvent the prescribed trade mark laws for example by an indication that there was no commercial logic underpinning the application or the fact that the filing was done with the sole purpose of blocking third parties’ access to the market. The court is however guided by the facts in each matter to determine bad faith.
This takes us to the practice of evergreening. In order to cure trade mark registrations that may be vulnerable on the basis of non-use, trade mark owners will sometimes choose to re-file their trade marks in order to re-set the clock. By refiling the trade mark, they obtain a new registered right that will not be vulnerable to a non-use attack for a further period of five years after registration.
In the case of Hasbro, Inc. v EUIPO (T-663/19) (the Monopoly case), the practice of repeat trade mark filings was examined. In its decision, the Board confirmed that it is not acceptable that a trade mark proprietor could circumvent the genuine use requirement by disguising a re-filed mark through the mere adding of goods and services. In order to reach this decision, the Board considered the intention at the time of filing, including that Hasbro had stated it was “beneficial to be able to rely on a registration without the need to prove use”.
The Board and the General Court held that a filing strategy based solely on the intention to circumvent the obligation to prove genuine use of the mark is not a legitimate business activity but rather an abuse of law and that a commercial logic should underpin a “repeat filing”.
Another interesting recent case dealing with bad faith dealt with the possible bad faith where an applicant has no actual intention to use the mark for the goods at the time of filing. In the case of Sky v SkyKick (C-371/18), the CJEU held that where a trade mark is applied for without any intention to use it in relation to the specified goods or services it can constitute bad faith. This decision served as a sharp warning to trade mark applicants to limit their specifications to their actual goods and services, and not to file too broadly. However, this decision was overturned by the Court of Appeal of England and Wales which said that proprietors are allowed to file broadly, so long as they are using the mark for at least one thing in the category. Skykick will seek an appeal in the UK Supreme Court and it is advisable for trade mark applicants to heed the CJEU’s sentiments and properly consider their filing strategies, including whether it complies with bona fide trade mark practises.
EUTM and Brexit
As you may know, as of 1 January 2021, any existing registered EUTMs have automatically been cloned into comparable UK registered trade marks. Many of the advantages that were linked to the EU registration have likewise been attached to the cloned UK right.
Another important advantage that has been acquired by the clones is that they benefit from use made in the EU and vice versa. The general rule is that where a trade mark has not been used for five years after registration, it may be cancelled on the basis of non-use. This created a possible scenario where a titleholder would have obtained an EU registration with use in three European countries but no use in the UK. The withdrawal agreement has made provision therefore that any use of the mark that would have been deemed valid use of the EUTM before 1 January 2021 will also be deemed valid use of the UK cloned right, even if that use was not in the UK. Use of the relevant trade mark in the EU after 1 January 2021 will not be taken into account for the UK cloned trade mark and vice versa.
Likewise, if a reputation of the EUTM was acquired before 1 January 2021, even if not in the UK, it will be taken into consideration in regard to the cloned UK Trade Mark and vice versa.
Conclusion
For trade mark holders, it is important to keep in mind that a five-year grace period applies after registration of a trade mark. After the expiry of this grace period, a trade mark may be declared invalid on the basis of non use.
There are strategies that can be implemented ahead of time to manage some of these risks. It is important not only to consider filing strategies but the maintenance of your current trade mark portfolios. Speak to us to assist with suitable strategies to ensure your portfolio is not only well secured but also well maintained.
Please note that our blog posts are informal commentaries on developments in the law as at the time of publication and not legal advice. You should place no reliance on our blog posts; we look forward to discussing your particular matter with you.