The European Union calls for a “Deluxe” decision

Through a decision dated 22 January 2014 EUIPO’s Second Board of Appeal confirmed the refusal of the application for the trademark

EU Trademark No. 011253044 (Refused)

which had been filed for a broad range of goods and services in classes 9, 35, 39, 40, 41, 42 and 45.

The reason for the refusal is that EUIPO found that the mark was devoid of distinctive character and that it merely informed consumers of the quality of all the goods and services at issue, without exception. The Office thus adopted a general reasoning in respect of all of them.

This decision was annulled by the General Court (case T-222/14 (in Spanish) which, after considering whether the Office had examined in sufficient depth the distinctive character of the sign at issue in relation to all the goods and services for which the application had been filed, held there to be a flaw in the reasoning of the Board of Appeal.

The appeal to the Court of Justice (case C-437/15P) therefore centered on the question of whether EUIPO should assess the capacity of a sign to identify a given business origin  with respect to each and every one of the goods or services, or whether, on the other hand, a global analysis of the goods or services will suffice if the Office finds them to have some relevant characteristic in common.

As we are all aware, EUIPO is under an obligation to state the reasons for its decisions, in order that the interested parties may know why their trademark is being refused access to the register and also that the courts of the EU may be in a position to oversee the legality of the decision.

When a trademark application is filed, the Office should indeed carry out an assessment of the capacity of the sign in question to distinguish the goods and services it covers. This will entail, in principle, an analysis of each and every one of those goods and services. 

However, an exception to this rule arises when the goods and services are interlinked in a sufficiently direct and specific way, to the point where they may be grouped in homogeneous categories. In that event the Office may confine its assessment to each of those categories.

The General Court relied on the order of 18 March 2010 (in case C-282/09P) to distinguish different categories into which the goods and services of the rejected mark could be grouped (cinema, advertising, storage and transport of goods, etc.), maintaining that they were very different in their nature, characteristics and purpose and that the Office should therefore at least have analyzed each of the homogeneous categories within the application.

EUIPO’s position, in contrast, was that if all the goods and services have a characteristic in common, which in the present case would be that they are all of superior quality, they may be regarded as forming a single category and, therefore, a general statement of reasons will suffice. The systematic repetition of the basic ground for the refusal, which is that the sign is devoid of distinctive character in respect of each and every one of the goods and services, may thus be avoided.

The Court of Justice annulled the judgment of the General Court, holding that the latter should have:

1. Checked whether the mark applied for, which comprises a word and a figurative element, could be perceived, directly and immediately, as a claim of superior quality or a laudatory message, rather than as an indication of the business origin of the goods and services. In the affirmative, the refusal of the application would be fully justified without the need for an examination of the sign in relation to all of the goods and services.

2. Checked whether the word element of the sign, “deluxe”, indeed conveyed the idea of superior quality or whether it could have a different meaning. In the latter event the mark could have a sufficient degree of distinctive character in respect of some of the goods or services. In that case an assessment of each of them would be required and different conclusions could be reached.

The Court of Justice held that the General Court had failed to appreciate that, despite their differences, all the goods and services at issue could have a common characteristic relevant to the analysis of the absolute prohibitions on registration which could justify their being grouped in a single homogeneous category and the consequent use of general reasoning in relation to them all.

The case has been referred back to the General Court and we shall therefore have to wait for a final decision on the substance. 

Author: Soledad Bernal

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Getting to grips with functional marks

The Court of Justice of the European Union (CJEU) issued a judgment on 11 May 2017 (Case C-421/15P) in relation to the interpretation of the prohibition on registration as a trademark of “signs which consist exclusively of the shape of goods which is necessary to obtain a technical result” laid down in Art. 7.1 e) ii) of the Regulation on the European Union trade mark.

In 2002 and 2003 the Japanese company Yoshida Metal Industry secured the registration of two figurative European Union trade marks, for certain items of cutlery in class 8 and kitchen utensils and containers in class 21, consisting of the two-dimensional representation of a series of black dots:

(EUTM No. 001371244)

EUTM No. 001372580

The marks were used in practice on the handle of the knives sold by Yoshida and represented a series of concave dots or dents on the handle of the cutlery which performed a non-slip function when cutting (and which were also protected by various patents):

In 2007, the companies Pi-Design AG, Bodum France SAS and Bodum Logistics A/S applied at the EUIPO for the marks to be declared invalid on the basis of Article 7.1 e) ii), given that the signs consisted exclusively of the shape of a product which is necessary to obtain a technical result.

The EUIPO accepted the applications for a declaration of invalidity and cancelled the registrations of the trade marks.

The CJEU has now dismissed the appeal lodged by Yoshida, upholding the invalidity of the trade marks.

The judgment accepts and confirms, on the one hand, the arguments previously asserted by the General Court in its judgment of 6 March 2014 (C-337/12 P y C-340/12 P) (see a comment in this blog), establishing that the prohibition on registration laid down in Art. 7.1 e) ii) must apply both to two-dimensional and three-dimensional trade marks and declaring that said prohibition on registration was in the public interest, insofar as companies cannot use trade mark law to extend indefinitely the protection of technical solutions. Moreover, it states that for a correct application of the provision it is necessary to identify the essential characteristics of the trade mark, carrying out a case-by-case assessment.

Moreover, it is important to mention the CJEU’s current interpretation of Art. 7.1 e) ii), holding that registration as a trademark should only be refused where “all of the essential characteristics of the sign are functional”, that is, the Court considers that in the disputed trade marks, the specific configuration of the black dots is a significant functional element, which means that they cannot be registered as trademarks and, consequently, they must be declared invalid. In this regard, the Court specifies that the prohibition on registration laid down in Art. 7.1 e) ii) may be overcome and the sign may be registered as a trademark where it includes other relevant non-functional components (such as, for example, decorative or fanciful elements).

The Court has undertaken a strict interpretation of Art. 7.1 e) ii) with regard to registration of this type of mark consisting of the shape of a product, to thus prevent companies achieving a monopoly on the technical solutions or functional characteristics of the product. The judgment is also interesting in terms of the detailed definition of all of the mandatory requirements for this type of mark to qualify for registration as a trademark.

Author: Ana Pérez-Prat

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How will Brexit affect the rights of EUTM holders?

The practical implications of Brexit as far as the rights of EU trademark holders are concerned will likely only be felt around 3 years following the United Kingdom’s formal notice of withdrawal from the EU; they nevertheless compel EU trademark holders to take certain measures to ensure that the changes that will follow in the wake of Brexit do not adversely affect the protection of their trademarks.

It will likely be at least 3 years before the UK actually breaks off from the EU, based on the various phases established for a Member State’s departure.  Indeed, having made the decision to leave the EU, the UK -under Art. 50 of the Treaty on EuropeanUnion- has just formally notified the European Council of its withdrawal.  It now has a period of two years in which to conduct the negotiations that will enable it to establish the new legislative framework, which will be voted on by the Member States and also, apparently, by the British Parliament.  The new situation will therefore depend on the outcome of the negotiations between the UK and the EU and on the mechanisms that are ultimately put in place.

For now, therefore, the familiar landscape of trademarks in the EU remains unchanged: there are still national trademarks, international registrations under the Madrid System, of which the UK is a member, and European Union trademarks covering the 28 EU Member States, including the UK.  

The UK Intellectual Property Office has announced that it intends to maintain ties with the EU, and so it will likely establish a process whereby EU trademarks are converted into UK national trademarks, or the rights conferred by EU trademarks are automatically recognised.

The EU trademark’s filing date will likely be retained as the priority date, as in the case of the conversion of EU trademarks into national registrations provided for in Art. 112 EUTMR where, following refusal of an application to register an EU trademark due to opposition based on one or several national trademarks, the applicant decides to apply for protection of the trademark in the countries in which no obstacles have been encountered.  This conversion is carried out by paying a conversion fee, equivalent to an application fee, and by submitting the application to the local examination system as if it were a new national trademark, except for the fact that it retains the filing and priority date of the EU trademark.  If the conversion were requested for an EU trademark registration and not a mere application, the national trademark could be granted without further ado.  It all depends on the terms of the negotiations and domestic policy decisions adopted by the UK.  

For the time being, EU trademarks are still fully effective in the UK, and only once the estimated 3-year period has elapsed will companies have to decide whether their interest in the British market is strong enough to warrant filing a new UK trademark application, extending an international registration to the UK or requesting the conversion of their EU trademark registration into a UK national trademark registration.

Nevertheless, we can, at this stage, anticipate cases in which companies will have to take measures to avoid losing their trademark rights, both in the UK and on a European level, as a result of Brexit.

For instance, EU trademarks that were granted over 5 years ago and have only recently been converted into UK national trademarks could be vulnerable to revocation actions for non-use in the UK if they have not been used in that territory.  It cannot be ruled out, however, that the 5-year grace period will start to run as of the date on which the conversion was requested or granted.   

Similarly, once the UK no longer forms part of the EU, the holders of EU trademarks granted over 5 years ago and only used in the UK could find that their trademark rights have no effect when it comes to filing opposition against a new EU trademark application, since they will be unable to validly demonstrate use of their trademark in the EU.  They may even lose those rights if they are targeted by a revocation action for non-use before the EUIPO.

Consequently, businesses must now start to reassess their trademark protection strategy in light of the country in which they are putting their trademarks to genuine use.

Furthermore, in order to be in a position to block the registration of EU trademarks, UK companies will have to register their marks as EU trademarks, or do so in an EU Member State, since their national registrations will not be able to serve as a basis for opposition against an EU trademark application.

EU companies that are not from the UK will have to weigh up how important the UK market is for them.  In the event that those companies had a particular interest in that market, they should move to register any EU trademarks that they hold as national trademarks in the UK before the effect of Brexit on the existing EU trademarks is clarified in order to avoid the possible, albeit rather unlikely, loss of rights.

Also, all companies should now keep their UK registrations in force, even if their seniority has been claimed in an EU registration of the same mark, since it is uncertain whether it will be possible to recover the validity of those rights –once they have been abandoned on a national level- after the UK has left the EU.

It will also be necessary for any new agreements signed in relation to EU trademarks to include clauses expressly providing that the agreements shall continue to apply in the territories that formed part of the EU in the event that they subsequently ceased to be members, and clauses stipulating that not only do those agreements apply in the territory of the EU on the date of signature of the agreement but also in future EU Member States.

These are just some of the thoughts that we can offer now, following activation of the mechanism provided for in Art. 50 TEU.  There is still a long way to go before the applicable legislation, the terms of the agreements reached in respect of trademarks and the measures that companies will have to take in order to secure the best protection for their rights in the UK come to light.

Author: Catherine Bonzom

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