A Partial Look at the Relationship between National Trademarks and Community Trademarks in the European Union
Published article on LANDSLIDE – A publication of the ABA Section of Intellectual Property Law
When the first Regulation on the Community trademark came into force in 1996 (Council Regulation 40/94 (EC)—since replaced by Council Regulation 207/2009 (EC) (the Regulation), substantially identical, but updated in 2009), this new system landed like a supermodern,ultracomplex spaceship on a planet that had already been colonized and inhabited for at least a century by other smaller trademark registration systems.’ Its arrival had been to some extent heralded and prepared by a smaller exploratory space-ship, First Council Directive 89/104/EEC of December 21, 1988, to Approximate the Laws of the Member States Relating to Trade Marks (the Directive).
The rationale at the basis of the new system was (and is) rather clear: in the Common Market established with Community treaties, the free movement of goods and services was obstructed by industrial property rights. It was thus necessary to devise a way to ensure that these rights were uniform and preferably common to the whole Market. The starting point of this was to be the Community trademark.
Whereas the Directive deserves credit for getting the indi¬vidual national trademark systems to speak the same language, the Community trademark had the ambition of replacing the individual systems with a single, larger system.
However, Community legislators could not fail to reckon with the already existing national systems, nor was it possible to envisage a situation in which the latter would be abolished.4For this reason, they included a good number of provisions seeking to bridge the gap between the existing national and regional (BENELUX) systems and the novel Community trademark system.
References to the relationship between national trademarks (and other distinctive signs) enforce-able in the member states and the Community trademark rights are scattered throughout the Regulation; however, the most important references are undoubtedly those concerning the following provisions:
1. Opposition to Community trademarks and invalidity actions;
4. Acquiescence (tolerance); and
5. Conversion of the Community trademark
applications/registrations into national
It is not possible to address all the references in a brief article, so we will focus on two principles: seniority and conversion. For national trademarks, the former represents a gateway for recognition into the Community spaceship, while the latter represents a safety exit for abandoning it when there is no other way out.
However, it is necessary and useful for a proper understanding of the topics addressed in the rest of the article to mention what constitutes, perhaps, the most important aspect of the relationship between national trademarks and Community trademarks, namely, opposition. As everyone knows, national trademarks (as well as other nationally based rights) constitute valid grounds for opposing Community trademarks. In other words, an application to register a Community trademark is susceptible to refusal if opposed by the proprietor of an identical or similar trademark that enjoys an earlier filing or priority date in a member state of the Community. When we talk about a member state of the Community, we mean any country of the European Union (EU) indistinctly, ranging from geographically and economically powerful Germany to the smaller and less influential countries such as Cyprus or Malta.
This legislative situation explains the high number of oppositions filed against Community trademarks (around 20 percent according to the statistics) and at the same time, as we shall see, it makes the ‘cooling off’ period, mandatory under the Regulation, an essential element.
On this point it should be noted that in the Community system, the Office for Harmonization in the Internal Market (OHIM) does not conduct an examination of the prior rights recorded in its register (and in national registers), but rather limits itself to carrying out a search, on the applicant’ s behalf, in its own register (free of charge) and, if requested, in some national registers (for a fee). It is thus left completely up to the parties to decide whether or not to defend their trademark, and it is wholly possible that not only identical or similar national and Community trademarks, but also identical or similar Community trademarks, coexist in the market and in the registers. This coexistence could be absolutely fortuitous, resulting from the inaction of the proprietor of a prior trademark, or agreed on precisely during the ‘cooling off’ period in an opposition proceeding.
In the given case, i.e., of a Community trademark opposed by the proprietor of a national trademark (e.g., Italy) a possible agreement could be based on obligating the proprietor of the opposed trademark never to use the trademark in the member state in question (Italy).
A corollary of the rules mentioned thus far is the notorious difficulty of conducting a clearance search across the entire Community with the aim of using and filing a Community trademark. Cost is obviously an essential aspect; a search aimed at the filing of a new trademark must in theory regard: Community trademarks, national trademarks of the member states, international trademarks with a designation of member states, and prior rights applicable in the state and apt to be enforced against subsequent trademarks. To complicate mat-ters further, as the Single Market is united in its aim to allow the movement of goods, but completely divided in terms of language (the EU has 23 official languages, many more than are spoken in the individual member states), an assessment will have to be made by experts in each country, also on the basis of local phonetics, local legislation, and the case law applicable in the individual member states.
Conversion of the Community Trademark
As we have seen, an agreement would make it possible obtain a Community registration even where a prior right exists in a member state. But what happens if no such agreement is reached? The Community trademark can be considered lost. However, there is a way out, little known and little exploited: conversion of the Community trademark application into national trademark applications. According to article 112 of the Regulation:
1. The applicant for or proprietor of a Community trade mark may request the conversion of his Community trade mark application or Community trade mark into a national trade mark application:
(a) to the extent that the Community trade mark application is refused, withdrawn, or deemed to be withdrawn;
(b) to the extent that the Community trade mark ceases to have effect.
3. The national trade mark application resulting from the conversion of a Community trade mark application or a Community trade mark shall enjoy in respect of the Member State concerned the date of filing or the date of priority of that application or trade mark and, where appropriate, the seniority of a trade mark of that State claimed under Articles 34 or 35.
The system is very simple: if a Community trademark is refused on absolute grounds not applicable to the entire Community, or because of oppositions originating from one member state (or also in the case of surrender or nonrenewal of a trademark), the proprietor of a Community trademark may request the OHM, within three months from the date on which the trademark was refused (withdrawn) and against payment of the official fee of 200 euros, that his or her Community trademark application be converted into national applications in given member states (which must be specified in the conversion request). In the conversion request for each member state, a local representative must be designated.
The OHIM will examine the request and inform the national offices involved that the Community trademark application has been converted into a trademark application falling within its own jurisdiction. The Community trademark obviously cannot be converted in member states in which the grounds of refusal are to be considered applicable (opposition on the grounds that a national trademark exists in a certain member state, or else the trademark is descriptive in the language of a member state).
At this point, there will no longer exist a Community trademark application, but rather a number of trademark applications in the member states specified by the proprietor, with a filing date coinciding with that of the Community trademark application. The trademark applications submitted to national offices will then follow the route of normal national trademark applications. They will be newly examined by the national offices, republished, and local taxes will have to be
paid and letters of appointment presented as necessary. Finally, the applications will be potentially opposable by proprietors of national trademarks.
As can be easily imagined, the safety exit is costly. -However, in some cases it represents the only way to obtain protection of one’s trademark given the existence of national rights in some member states.
In addition, we have said that there are no fewer than 23 official languages in the EU and many languages spoken locally and recognized at various levels in the member states. Under article 7(2) of the Regulation, grounds for refusal that are applicable in a single member state are sufficient to preclude registrability of the Community trademark. For example, Nissan’s trademark PRIMERA for cars vas judged to be nonregistrable as a Community trademark because it is laudatory in Spain. The same word PRIMERA has, on the contrary, easily passed the examination of the Italian and other national patent offices because it has been evaluated on the basis of its connotation in the local language.
Therefore, bearing in mind that, as noted, conversion shall not take place ‘for the purpose of protection in a Member State in which, 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 Community trade mark application or Community trade mark,’ the rejected Community trademark application could be converted into a national application even if only in a single member state.
The Jack of harmonization of the criteria governing distinctiveness/descriptiveness in individual countries is another significant problem which has led to decisions that are questionable from a logical standpoint but absolutely legitimate from a formal standpoint. In any case, this is how the current legislative situation stands, and it makes the conversion of Community trademark applications a useful tool also in the cases just described.
Moreover, a correct knowledge of the conversion tool can serve as a basis for a valid search strategy, as well as enabling use of the conversion option as ‘blackmail’ during the opposition cooling off period. The difficulty of conducting priority searches for the purpose of filing Community trademarks has already been noted. Thanks to the rules on conversion, it is possible to carry out searches targeting markets that are of real interest or essential and offer direct business opportunities, in the awareness that in case of opposition arising in countries which no clearance search (or the always advisable identity search) has been conducted, there will always be the possibility of avoiding the loss of all rights by converting the trademark application.
The same investigation should serve to reveal any risks connected to the possible descriptiveness or deceptiveness of the trademark. In other words, if the markets of actual inter¬est for a product are solely those of Mediterranean Europe, a priority search and an assessment as to the inherent registrability of the trademark in Spain, France, Italy, and Greece should safely guarantee registration of the trademark, even in the event of oppositions filed by an inflexible opposing party based on German trademark rights. The conversion would in fact be a suitable tool for saving at least the territories of interest.
The priority guaranteed by the original filing date of the converted Community application will also prevent the proprietor of a national trademark used as grounds for opposition from expanding beyond the territory already protected. This consideration leads one to reflect on how the possibility of converting a Community trademark application could be used on its own as leverage in negotiating opposition proceedings when there is evidence that the opposing party, despite having protection only in a certain territory, might have an interest in extending his or her business to others where, thanks to the potential conversion of the Community trademark, the opposed party could enjoy a prior right. This threat often has positive effects, albeit at the expense of having to accept coexistences in given member states.
Claim of Seniority
Up to now we have considered the assumption of abandoning the Community trademark. From a diametrically opposed perspective, the Regulation also envisages a system for national trademarks to enter the system, but it is little known and probably has not had the success hoped for: seniority.
According to article 34 of the Regulation:
1. The proprietor of an earlier trade mark registered in a Member State, including a trade mark registered in the Benelux countries, or registered under international arrangements having effect in a Member State, who applies for an identical trade mark for registration as a Community trade mark for goods or services which are identical with or contained within those for which the earlier trade mark has been registered, may claim for the Community trade mark the seniority of the earlier trade mark in respect of the Member State in or for which it is registered.
2. Seniority shall have the sole effect under this Regulation that, where the proprietor of the Community trademark surrenders the earlier trade mark or allows it to lapse, he shall be deemed to continue to have the same rights as he would have had if the earlier trade mark had continued to be registered.
Through the seniority mechanism, legislators have endowed the Community trademark with what we might define as an all encompassing system, designed to bring together national trademarks registered in member states into a single and geographically extended Community trademark having roots extending back in time according to the registrations previously obtained in the individual countries.
Seniority is an option only when the so-called ‘triple identity” requirement is met: identity of the trademark, identity (or inclusion) of the claimed products, and identity of the proprietor. A seniority claim based on a prior national trademark in a member country must be submitted to the OHIM either at the time of applying for or of registering the Community trademark. It entails no costs and minimal formalities (the OHIM often checks the database without there being any need to present documents attesting to the right). The claim must obviously be submitted when the national trademark is still in force (or renewal is pending) and not after it has been surrendered. The OHIM conducts an examination to verify that the triple identity requirement is met, after which it enters the seniority in the Community database. At present, track of the seniorities is lost in the databases of many national offices, though nearly all offices retain the files.
The scant success of this tool is due to the fact that there is only minimal regulation and many uncertainties surrounding it. In particular, there is practically no experience with challenges of no longer registered national marks that provide the basis for a seniority claim. Also, there is still uncertainty about how national offices will preserve information about previously registered national marks that are no longer kept alive by their proprietors. In other words, few trademark owners feel inclined to abandon historical trademarks, which may have been renewed for a century, by linking them to the Community platform and abandoning the national right. And this choice is certainly understandable.
Nevertheless, the tool should not be completely consigned to oblivion. In fact, where the aim is to simplify one’s trade-mark portfolio, seniority could prove to be a valuable tool, especially in the case of nonprimary trademarks.
Registration of both a Community trademark and prior national trademark in one member state has the advantage of providing dual protection and endowing the trademark proprietor with two immediately enforceable rights. This suggests it would be advisable not to abandon historical trademarks identifying a company’ s main brand. However, in the case of secondary trademarks, or trademarks no longer in use but worth preserving, the possibility of applying for a conversion’ in the event of an attack through a cancellation action would render the risks calculable.
Use of the Community Trademark on a National Level
A brief discussion of the relationship between national trademarks of member states and Community trademarks cannot fail to mention what is probably the most topical issue with respect to the Community dimension of the Community trademark: the question of the geographic extent of ‘genuine use,’ a prerequisite for maintaining a Community trademark in the event of a cancellation action on grounds of nonuse.
One of the advantages always mentioned among the most immediate benefits of the Community trademark system is that use of the trademark in a single member state is considered use throughout the whole European Community. The question of whether the use, in order to be recognized, must extend beyond the borders of a member state has been widely dis-cussed before and after the adoption of the Regulation. At the time of the adoption, the Council and the Commission adopted a Joint Statement, which was entered in the minutes of the Council session at which the Regulation was adopted and reads as follows: ‘The Council and the Commission consider that use which is genuine within the meaning of Article 15 in one country constitutes genuine use in the Community.’
However, this principle, which has always been debated and is clearly of political origin (the EU is a single territory), has been increasingly under strain in recent years as a result of the successive enlargements of the EU and the inclusion of very small countries with a very small number of inhabitants.
The strongest blow against the Joint Statement was inflicted by the Benelux Trademark Office, which, in opposition proceedings between a prior Community trademark and a trademark filed with the Benelux Trademark Office, ruled that the use of a Community trademark in a single member state (the Netherlands) did not constitute ‘genuine use’ in the Community. The Benelux Trademark Office expressly pointed out that the Joint Statement is not legally binding, and that it stems from a time when the European Community consisted of fewer members. It was held that use in one member state should not ‘by definition’ constitute use in the Community»
The decision was obviously appealed in the Hague Court of Appeal, according to the rules governing trademark rights in Benelux. This court was careful to refer several questions to the European Court of Justice, the most important of which is undoubtedly the following:
Should Article 15(1) of Regulation (EC) no. 207/2009 on the Community Trade Mark be interpreted in such a manner that it is sufficient, in order to qualify as genuine use of a Community trade mark, for that trade mark to be used within the frontiera of a single Member State, provided that this use, if it concerned a national trade mark, would qualify as genuine use in that Member State?’
It is important to stress that Community regulations dealing with this subject already appear to suggest the possibility that use in a single member state may not be valid use for the purpose of maintaining the Community trademark, precisely in respect of the rules on conversion.
Pursuant to article 112(2)(a), conversion into a national mark is available even though a Community trademark has been revoked for Jack of genuine use if the use would suffice to maintain a national registration. Up to now, the only valid interpretation possible was based on considerations of a juris-prudential nature or tied to local legislation. The interpretation of the concept of genuine use is not in fact harmonized: what does not constitute genuine use for the OHIM could do so for the Italian or Portuguese office.
Pending the Court of Justice decision on this matter, it is worth mentioning an opposite case in Germany: a published decision of April 14, 2011, in which the Senate of the German Federal Patent Court not only held that use of a designation is sufficient use of Community trademark registration 001244557 TOMTEC (word), but also held that (significant) use of the trademark TOMTEC only in the Federal Republic of Germany established sufficient use according to article 15 of the Regulation.
Ultimately, the balance between national trademarks and the Community trademark, and thus the coexistence of the two systems, may be considered a work in progress, but the viewpoint set forth in the preamble of the Regulation must continue to apply:
The Community law relating to trade marks nevertheless does not replace the laws of the Member States on trade marks. It would not in fact appear to be justified to require undertakings to apply for registration of their trade marks as Community trade marks. National trade marks continue to be necessary for those undertakings which do not want protection of their trade marks at Community level.