The Community Trademark Office – OHIM: Opening Day To The Present

Apr 1997American Bar Association-Intellectual Property Law Section program of Patent, Trademark & Copyright Law: Litigation and Corporate Practice

April 1, 1997 marked the first year of the Community Trademark Office and the first full year of applications by filing date under the new system for trademark protection in Europe. Last summer when we considered the Community Trademark Office as a topic for a first anniversary review, we expected proceedings before the Office to be further along than they stand today. We thought we would have some experience with the examination process and at least an initial idea of how the oppositions would be conducted. However, the first batch of about 90 applications was just published for opposition on March 10, 1997, there have been serious delays in the system due to the unexpected number of applications filed, mostly from U.S. trademark owners, and the mechanics of the Office have gotten bogged down with automation and language difficulties.

A little over one year ago, there was a two day conference sponsored by the International Trademark Association on this topic, where, due to the uncertainties at the time, the theme, in answer to questions of the sort "Will it work this way?" or "Will this be possible? was "Maybe, maybe not!" I'm afraid that the theme for these remarks has only progressed to the point of "Probably, but we still don't know for sure."

The title of the Community Trademark Office itself is a bit presupposing and awkward at first, the Office for Harmonization in the Internal Market. The conference planners for this session thought there was a typo in the title of this topic when they read OHIM and, even after I explained what it stood for, they asked if I still wanted to keep it in the title. But if you think about it, this Office is the European Union's poster child for economic integration. Although Europe unionized in 1992, OHIM is ahead of the single currency and other visible initiatives and, provided they can deal with the serious backlog and become fully operational, the Office could become a centerpiece of the new Europe. This is why I don't believe the present delays will seriously affect the viability of the new regime.

We have to keep in mind that a new system of this nature has not been attempted before. Imagine if the thirteen original colonies all spoke a different language. It makes for a grand, but difficult experiment in federalism.

In order to provide you something substantive, I think it would be most useful to focus today on the opposition proceeding, as this has been the greatest unknown factor and of the greatest concern in assessing the value of the Community Trademark. It also serves to highlight the present status of OHIM and some of the remaining uncertainties, such as conversion and Seniority. While U.S. practitioners will not be conducting these proceedings without an agent, it will be important to understand the procedure.

While the Guidelines for the Opposition Procedure have not yet been issued in final form, we know that the Opposer must be the proprietor of an earlier trademark, meaning:

- a Community Trademark;

- a National trademark in one of the thirteen Member State jurisdictions; or

- an International (Madrid Agreement or Madrid Protocol) registration having effect in at least one Member State of the European Union,

any of these having a date of application that is earlier than the date of application of the Community Trademark, taking into account Paris Convention priority claims.

An opposition may also be based upon an earlier well-known mark in a Member State, "well-known" being defined as in Article 6 bis of the Paris Convention, or

an earlier unregistered, common law mark or other sign, such as a tradename, used in the course of trade, provided it is of more than mere local significance, and provided the rights to the mark were acquired prior to the CTM application or priority date, and provided the law of the Member State where the right exists would prohibit use of a subsequent confusingly similar mark.

The opposition is limited to relative grounds; no generic, descriptive, deceptive, functional or scandalous claims. These must be addressed through the "Observations" procedure, which is similar to our "Letter of Protest." The person or entity making Observations of absolute grounds for refusal takes no part in the proceedings. The Applicant is notified of the Observations and is given a chance to comment. Since there is no deadline for submitting Observations, they can serve to suspend an Opposition proceeding and cause a second examination on absolute grounds.

While the CTM Office conducts a search of its records and obtains searches from all jurisdictions, with the exception of France, Germany and Italy, it does not examine the applications or issue rejections on relative grounds. The Office will send the results of the CTM and national searches to the Applicant to give it an opportunity to withdraw the application and, upon publication, will advise the owners of CTM registrations appearing in its search report of the pending CTM application, but relative grounds must be raised by means of an opposition or, after registration, a cancellation proceeding.

A Notice of Opposition must be filed within three months of the date of publication in the CTM Bulletin. The three month period is nonextendable.

The Opposition Division must refuse to register a mark challenged by opposition if:

- the respective marks and goods are identical; or if

-the marks are identical and the goods or services are similar; or if

-the marks and the goods or services are similar, and there is a likelihood of confusion on the part of the public in the territory in which the earlier trademark is protected.

Likelihood of confusion includes a likelihood of association with the earlier mark. Likelihood of association has been defined in Benelux case law as follows:

There is similarity between a mark and a sign when, taking into account the particular circumstances of the case such as the distinctive power of the mark, the mark and the sign, each considered as a whole and in their mutual relation, show such a phonetic, visual or conceptual resemblance that due to this resemblance alone, a person who is confronted by the sign will think that there is an association between the sign and the mark. Union/Union Soleur May 20, 1983.

The comparison requires assessing whether, taking one trademark and the goods or services which it covers, the ordinary user of such goods or services would consider that the other trademark identifies the same or a related undertaking.

I am not certain how this differs from the "confusion . . . mistake . . . or decept[ion] . . . as to . . . association" of Section 43(a) of the Lanham Act. However, the best examples of likelihood of association seem to be trade dress situations where the goods may be completely unrelated, but the consumer may nonetheless associate the source of one product with that of another. "Phonetic" and "conceptual" similarities are sure to get interesting in 11 different languages. For more information on likelihood of association, there is an article in vol. 86, no. 5 of The Trademark Reporter by Charles Gielen and Benoit Strowel entitled The Benelux Trademark Act: a Guide to Trademark Law in Europe.

The Community Trademark Regulation also includes an anti-dilution provision. The owner of a Community Trademark with a reputation in the European Union, or the owner of a national trademark with a reputation in the Member State concerned, can oppose applications for identical or similar marks where the goods or services are not identical or similar to those for which the earlier trademark is registered, provided use of the later trademark, without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the earlier trademark. "Reputation" is a new concept which is not defined. Unlike "likelihood of association," there is no existing jurisprudence to look to.

The opposing party selects the language for the Opposition proceeding by filing the Notice of Opposition in the language of the targeted application or the second language chosen by the Applicant as long as the selected language is one of the five languages of the Office (English, French, Spanish , German or Italian), or by filing a translation within one month of the end of the opposition period. The parties can agree to conduct the proceeding in a different language, being any one of the eleven official languages of the European Community, provided they inform the Office prior to the commencement of the proceedings.

The opposition proceeding consists of five stages:

- filing of the notice of opposition;

- examination of the admissibility of the notice of opposition;

- notification of the opposition to the Applicant and opening of the proceedings;

- examination of the case, i.e., hearing of evidence from both parties as to the relative grounds for refusal; and, finally,

- the decision.

It is anticipated that the average duration of an opposition proceeding in easy cases without an oral hearing will be 12 to 15 months.

The Notice of Opposition must be expressed in writing, must identify the application being opposed (file number, the goods and services listed in the application that are being opposed and the name of the Applicant) and must specify the grounds (i.e., the details of the earlier right) on which it is based. Any deficiencies in these minimum requirements must be remedied within the opposition period or the Notice of Opposition will be rejected as inadmissible. Further, the opposition fee of 350 ECU ($455) must be paid within the opposition period, or the opposition will not be entered.

There is a two month cooling off period after the Office communicates the opposition to the Applicant. This gives the Applicant the opportunity to withdraw the application or restrict it to goods or services against which the opposition is not directed. If the application is withdrawn, the opposition fee is refunded and the Applicant avoids having to pay any costs to the Opposer. If the goods or services are limited, the Office will ask the opposing party if the opposition is to be continued.

Where a number of oppositions are entered against a single CTM application, the Opposition Division may deal with them in one set of proceedings or may, based on a preliminary examination, select the opposition with the most promise and defer making a decision on the others. If a decision rejecting the application becomes final, any deferred oppositions shall be deemed disposed of, with half of the opposition fee being refunded.

In regard to the opposition proceeding itself, the Applicant files its observations to the Notice of Opposition, unless the Notice does not contain particulars of the facts, evidence and arguments relied upon, accompanied by the relevant supporting documents. If that is the case, then the Office will call upon the opposing party to go first and the Applicant will reply. The process of filing statements and counter-statements within periods of generally two months time may be repeated as often as necessary. There is no discovery, per se.

However, the means of taking evidence include:

- hearing the parties;

- requests for information;

- the production of documents and items of evidence:

- hearing witnesses;

- opinions by experts;

- statements in writing sworn or affirmed or having similar effect under the law of the State in which the statement is drawn up; and

- inspection.

As a rule, the proceeding is to be entirely in writing. However, oral, but not public, hearings may be held if one or more parties request and/or the Office deems them absolutely necessary.

The Office may not go beyond the facts, evidence and arguments presented by the parties. It does not have the power to raise factual grounds or examine facts on its own motion.

If the opposition is based upon a Community Trademark application, the Office may suspend the proceeding until that application registers. If the opposition is based upon a Community Trademark registration or a National registration that registered more than five years ago, the Opposer has to furnish proof of use or excusable non-use. If such proof is not provided, the opposition will be rejected. This would also subject the Opposer to a revocation action regarding its registration, either before the Community Trademark Office or the appropriate National Office, or court. Where the evidence of use is not in the language of the opposition proceeding, translations of invoices, labels, advertising, statements, etc., may be required.

Community Trademark Regulation 43(4) reads: "The CTM Office may, if it thinks fit to do so, invite the parties to make a friendly settlement." The parties on their own can agree to settle, including who will pay the costs, at any time, and the contents of the agreement do not have to be submitted to the Office. There is little idea at this time of how settlement negotiations suggested by the Office will work. It does appear that the Office will be liberal in the extension of time limits, other than the deadline for the Notice of Opposition, even to the extent of re-establishing lost rights when time limits are missed. An "all due care" standard is set out in Regulation 78, Restitutio in integrum. There are, of course, time limits and fees for an application for restitution.

The Office can limit the grant of an opposition to certain goods in the application. Final decisions refusing application will be published. Appeals can be lodged by any dissatisfied party before the Office's Board of Appeal within two months of the decision. Decisions of the Board of Appeal may be appealed to the European Court of Justice. However, speculations on the appeal procedures, as well as cancellation proceedings and enforcement of Community Trademarks, will have to wait for at least a second anniversary.

The losing party must pay the essential costs of the winning party, including travel and subsistence expenses. However, costs are only awarded up to certain limits which are relatively low, for example: 250 ECU for representation and 300 ECU for taking evidence. Implementing Regulation 94.

There is one important factor that must be remembered in considering bringing a CTM opposition on the basis of a prior National right. That is the Applicant's Conversion right. If the Opposer has an earlier right in one or a few Member States, the Opposer can win the opposition. But the Applicant can convert the CTM application to regular, National applications in all of the remaining Member States where the Opposer has no rights. The Applicant has to pay individual country filing fees, but retains the CTM application filing date. Thus, the Applicant can preclude the Opposer from using his mark in any of these other countries. These countries may not be important to the Opposer. But if they are, the Applicant is in a good negotiating position.

The possibility of unclaimed Seniority rights (prior National registrations) must also be addressed before filing an opposition. This is done by conducting identical searches in the National Registers. Further, the rights derived from a Seniority claim are maintained in the conversion process. Seniority is the claim of earlier registrations of identical marks in a Member State for purposes of consolidating rights under the CTM registration. The theory is that you can allow the National registrations to lapse and retain the same rights under the CTM registration, thus saving the costs of maintaining individual National registrations. A Seniority claim may be made within two months of filing a CTM application, or at any time after registration. Seniority requires three elements:

- the same mark;

- the same goods or services; and

- the same owner.

Trademark owners whose marks are owned by, or, for tax purposes, may be assigned to related parties are already putting some pressure on OHIM to interpret "same owner" to include related parties.

There is no incontestability provision in the CTM Regulation. However, Article 53 places a bar on a cancellation action, or an opposition to the use of a later CTM mark, if the owner of an earlier CTM or National mark acquiesces in the later use for five successive years. The owner of the earlier right must be aware of the use by the junior party in the Community or in the Member State in which the earlier mark is protected. Further, there is no bar if the later CTM was applied for in bad faith.

Because of this acquiescence provision, it is advisable not to allow National Registrations that are the subject of Seniority claims to lapse until after at least five years of successive use after the CTM registers. A further reason is that a Seniority claim does not prevent the loss of rights if conversion occurs after the identification of goods or services has been narrowed during examination, opposition or cancellation. While a Member State is not to subject a CTM application or registration to formal requirements of national law that are different from or additional to the those of the CTM system, there are a lot of uncertainties as to how conversion requests, particularly with Seniority claims and changes in goods or services, will be treated by the National Offices.

So if you are an Applicant whose application is being challenged, remember your conversion rights and Seniority claims. And if you are a potential Opposer, watch out for conversion rights, Seniority claims and acquiescence, and make sure your mark is in use before proceeding.

This has been a basic outline of how the CTM oppositions probably will be conducted, but we still don't know for sure.

Presented at the American Bar Association-Intellectual Property Law Section program of Patent, Trademark & Copyright Law: Litigation and Corporate Practice, April 2-3, 1997. For complete program information please contact Ms. Mary Brassie at the American Bar Association at 312-988-5598.