Damages in cases of EU trademark application infringement

In the main proceedings from which the questions referred to the CJEU stem (judgment of 22 June 2016, C-280/15), the plaintiff –the holder of an EU trademark- filed a complaint for unlawful use of her trademark as a “hidden keyword” on an Internet website. The use in question had allegedly commenced prior to the publication of the plaintiff’s trademark application and had continued after publication of the registration of the mark.   

The plaintiff sought three orders, namely: (i) a declaration of infringement of her trademark; (ii) compensation for the advantage improperly obtained by means of the infringement, calculated by multiplying the duration of the infringement by the fee established in the licensing agreement; and (iii) compensation for the moral damages suffered on account of the infringement.

The relief sought by the plaintiff gave rise to some uncertainty, and so the court decided to refer the following three questions to the CJEU:

• First of all, the referring court asked whether Art. 102.1 EUTMR must be interpreted as meaning that an EU Trademark Court must issue an order which prohibits a third party from proceeding with acts of trademark infringement even though the trademark holder did not apply to the court for such an order.       

   

In reply to that question, the CJEU stated that Art. 102.1 EUTMR does not preclude an EU Trademark Court from refraining, pursuant to certain principles of national procedural law, from issuing an order which prohibits a third party from proceeding with acts of infringement on the grounds that the trademark holder concerned has not applied for such an order before that court.

• The referring court’s second and third questions concern the second sentence of Art. 9.3 EUTMR on compensations and specifically question the following two aspects: 

(i) Whether the holder of an EU trademark may claim compensation in respect of acts of third parties occurring before publication of the application for registration of the trademark concerned; and 

(ii)Whether, in the case of acts occurring after publication of the application for registration of that mark, but before publication of the registration, the concept of “reasonable compensation” in that provision means damages intended to compensate for all the harm suffered by that holder, i.e., recovery of the usual value derived by the third party from use of the mark and compensation for the moral damages suffered. 

The answer to the first question is clear: the second sentence of Art. 9.3 EUTMR establishes a strictly circumscribed exception to the rule that an EU trademark cannot prevail against third parties prior to the publication of its registration (Art. 9.3, first sentence). Therefore, no compensation can be demanded for acts that take place prior to the publication of the application for registration of the trademark.  

In order to reply to the second question, the CJEU makes an interpretation of the concept of “reasonable compensation”, based on the following points:

• The rights conferred by an application for registration of an EU trademark are conditional in nature, since at that point there is no certainty that the mark applied for will be granted.                                                       
• It thus follows that the reasonable compensation that may be claimed in an action based on a trademark application must be smaller in scope than the damages that may be claimed by the holder of a registered trademark. 
• Furthermore, a distinction is drawn in Art. 96 EUTMR between the actions in each case, i.e., (a) refers to any infringement action, whilst (b) refers to any action brought as a result of acts referred to in Art. 9.3, second sentence, EUTMR.  
• Also, Art. 13 of Directive 2004/48 establishes rules on the subject of damages which, on the one hand, provide for full compensation for the harm suffered, which may include moral damages, in the event of acts of infringement committed knowingly and, on the other, recovery of profits or the payment of damages which may be pre-established where the acts of infringement have not been committed knowingly. 

All this confirms that the “reasonable compensation” provided under Art. 9.3, second sentence, EUTMR must be smaller in scope than the damages that can be claimed by the holder of an EU trademark for acts of infringement committed after the registration of the trademark, and must be limited to the recovery of profits actually derived by third-party infringers from use of the mark during that period, with moral damages being ruled out.  

In light of the above points, the CJEU replied to the referring court’s questions as follows:

1)      Article 102(1) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark must be interpreted as not precluding an EU trade mark court from refraining, pursuant to certain principles of national procedural law, from issuing an order which prohibits a third party from proceeding with acts of infringement on the ground that the proprietor of the trade mark concerned has not applied for such an order before that court.
2)      The second sentence of Article 9(3) of Regulation No 207/2009 must be interpreted as precluding the proprietor of an EU trade mark from being able to claim compensation in respect of acts of third parties occurring before publication of an application for registration of a trade mark.  In the case of acts of third parties committed during the period after publication of the application for registration of the mark concerned but before publication of its registration, the concept of ‘reasonable compensation’ in that provision refers to recovery of the profits actually derived by third parties from use of the mark during that period.  On the other hand, that concept of ‘reasonable compensation’ rules out compensation for the wider harm which the proprietor of the mark may have suffered, including, as the case may be, moral prejudice.

Author: Ana Sanz

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EU Trademarks: CJEU obliges EUIPO to accept staggered partial renewal requests

In its judgment in case C-207/15 P, published on 22 June 2016, the CJEU found in favour of Nissan Jidosha KK and against the EUIPO in ex parte proceedings relating to the possibility of renewing an EU trademark in two stages.

Nissan had requested, within the six months preceding the due date, the partial renewal, in two classes, of a trademark registered in three. Subsequently, within the six-month grace period after the due date, the registrant submitted a further request for renewal in the remaining class, which the Office turned down.

Why was that? According to the EUIPO, the request for partial renewal in just two of the three classes in which the trademark had been granted registration entailed the surrender of the third class. The Office also maintained that reasons of legal certainty entered into play, given that the partial renewal in two classes had already been entered on the records, Nissan had been notified thereof, erga omnes effects had consequently been created and Nissan could therefore not be allowed to go back on its initial decision not to renew the trademark in the third class.

The EUIPO thus interpreted article 50 (relating to surrender) broadly and article 47 (relating to renewal) narrowly, contrary to the interests of Nissan in both cases.

However, in its judgment the CJEU has held that “it is not apparent from those provisions that the submission, during the periods referred to in Article 47(3) of Regulation No 207/2009, of requests for renewal of an EU trade mark, staggered over time and relating to different classes of goods or services, is prohibited”.

It seems strange that both the EUIPO and the General Court should have interpreted those provisions in a manner adverse to the interests of the trademark owner, rather than in favour thereof, when the controversy arose out of a gap in the regulations and the registrant and its representative acted entirely within the bounds of the law (at least according to the German, Portuguese, Finnish and Dutch language versions of article 47.3)

It is also rather surprising that the EUIPO should have come out so strongly in defence of legal certainty when we all know perfectly well that there is a six-month grace period for the renewal of an EU trademark and, therefore, that one should never assume that the registration may have lapsed until that term has expired. It appears to us that we should be equally cautious and draw no conclusions until after the expiry of that term in cases where the registration has been renewed but only partially.

We all look for legal certainty, but in doing so we ought to be consistent. From this standpoint, to deny a trademark owner the right to renew a registration in two stages, while the grace period is still running, would not seem logical when, in contrast, insufficient attention is paid to the need to keep the information on the status of the trademarks in the EUIPO databases current. On occasions updates are subject to delays of some months and this circumstance evidently generates uncertainty.

Author: Ramón Cañizares

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The Rubik’s cube: a shape necessary to obtain a technical result or a distinctive sign?

The outward appearance of goods is having an ever more important bearing on the decision of the consumer to make a given purchase. As a result, the filing of applications for three-dimensional trademarks, with a view to protecting shapes likely to influence that decision, has become a common practice.

However, the registration of marks of this type, consisting of the shape or representation of a product without anything else, has always been a controversial issue. The problem lies in striking a balance between granting an exclusive right to the trademark owner and avoiding the creation of a monopoly in the marketing of a given product.

From the prohibition on registration laid down in article 7.1e) EUTMR it follows that the three-dimensional trademark cannot and must not act as a system for the protection of technical results. For that purpose there are other more appropriate legal instruments, such as patents or utility models, whose limitation in time is essential to the proper functioning of the system for the protection of inventions.

That prohibition seeks to draw a line between the trademark and patent systems, preventing the grant of an exclusive right without limitation in time which would in practice entail the perpetuation of a monopoly in a technical solution.

At times, however, it is not easy to pinpoint those representations whose purpose is to protect the sign which identifies the business origin of a product rather than the technical features of that product.

The case of the “Rubik’s cube”, which has reached the Court of Justice of the EU, relates to that issue.

In 1999 the British company Seven Towns Ltd registered EU three-dimensional trademark No. 162784, in the shape of the Rubik’s cube, in respect of “three-dimensional puzzles” in class 28.

Elzaburu once again ranked among Spain’s most highly reputed law firms

In 2015 the firm registered a turnover of over 14 million euros for yet another year.

Madrid, 1 June 2016. Elzaburu once again figures among the most prestigious law firms in Spain according to the ranking published annually by the economic and business daily Expansión. A turnover of 14 million euros positions it among the country’s 20 top rated firms.

At the same time the firm has pursued its enlargement plans, increasing the number of lawyers on its staff by 14.3%. Elzaburu is thus among the 25 firms headquartered in Spain which most strengthened their workforce in 2015.

Elzaburu ranks fourteenth in terms of invoicing per practitioner with a figure of 235,000 euros. This is significantly higher than the average in Spain, which in 2015 was 190,887 euros per practitioner. In terms of invoicing purely by lawyer, Elzaburu moves up to tenth place on the ranking.

Year on year, experience and professionalism have proved to be the twin pillars of the firm, ensuring Elzaburu a place among the best in Spain.

Utility models under the new Patent Act: chemicals and can openers in the same bag for the first time (V)

One of the most striking features of the new Patent Act is the extension of the scope of what may be protected as a utility model. The new definition of utility models provided in the law includes the word “composition”, thus broadening the range so as to take in practically any product or composition, including chemical preparations or substances. At the same time, however, it is stipulated that inventions relating to biological material or pharmaceutical substances and compositions are excluded.

This new facet of utility models may well give rise to some controversy in the future, given that, on the one hand, the boundaries between the products which qualify for protection in this form and those which do not are unclear in some cases  and, on the other, to set the inventive step requirement at a level suitably lower than that applicable to patents could prove problematic when the invention relates to a chemical product (as it in fact already is in the case of inventions of a mechanical nature).

So from now on we shall have to become accustomed to seeing small mechanical inventions, such as can openers, which have traditionally been the subject matter of this form of industrial property, appear side by side in the Official Gazette with chemical products, when applicants opt for this manner of protection for these.

Not all the changes are so controversial, however. For example, the relative novelty requirement, confined to Spain alone, will no longer apply and utility models will therefore be on the same footing as patents with respect to the state of the art. This means that it will be easier to determine clearly which documents may constitute prior art for the purpose of assessing the novelty and inventive step of a utility model and we may therefore see an end to the uncertainty which had existed under the former Patent Act.

Another significant development to be introduced under the new Law lies in the possibility of requesting reports on the state of the art, containing a written opinion, for utility models. These reports will be necessary for the effective enforcement of the exclusive rights obtained through registration (for example, in infringement proceedings brought against a third party).

The grant procedure does not undergo any major amendment, although with respect to opposition proceedings it is to be noted that under the new Law it will be possible to request a two-month extension of time to complete an opposition by submitting evidence and supplementing the initial arguments. Another new (and undoubtedly positive) feature is that the examination of oppositions will be conducted by a panel of three technically qualified SPTO experts and, as the case may be, of a lawyer.

So how does the future look for utility models in Spain? The extension of their scope to chemical products, the possibility of claiming an internal priority and the fact that substantive examination is to become obligatory for patents may well prompt more applicants to protect their inventions as utility models, thus reversing the downtrend observed in recent years.

It would certainly appear, at all events, that a window is going to be open to different interpretations of some aspects of the new system on the part of applicants, agents, examiners and judges and it remains to be seen how they will be resolved in the future.

Blog entries dealing with the new Patent Act:

I. A new Patent Act … In two years'time? (Antonio Castán)

II. 180º turn in Spain's system of granting patents  (Francisco J. Sáez)

III. The importance of professional advice (Francisco J. Sáez)

IV. Lawsuits under the new Patent Act (Antonio Castán)

V. Utility models under the new Patent Act (Pedro Saturio)

Author: Pedro Saturio

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The new Trade Secrets Directive: a swift microanalysis bypassing the cosmetic surgery

After a lengthy passage, the EU Trade Secrets Directive finally received the approval of the European Parliament on 15 April 2016. The proposed text stemmed from a joint initiative with the Council and it is therefore to be expected that the Council will formally adopt it in the month of May, although the term for transposition into the laws of the Member States is two years.

The approval of the Directive has not received much coverage, as it coincided with the Data Protection Regulation which appears to arouse far greater interest. Thus, although the Directive is crucial for the promotion and defence of innovation in Europe, it seems in the end to have warranted lesser attention.

And yet the poor Directive had already come in for scrutiny and criticism on the part of a range of institutions and organizations and from various social and economic quarters. I refer to the media clamour created some months ago when some sectors of the press voiced the opinion that the directive could be a means of curtailing freedom of expression, while the trade unions in turn believed that workers’ rights were in jeopardy. Governmental groups subsequently joined in, claiming reasons of state.

Thus, some issues which initially had neither prompted debate nor had appeared relevant were made crucial. So, through an operation intended to satisfy all parties, the directive underwent a kind of cosmetic surgery, entailing the legislative equivalent of Botox injections and implants, to make it more attractive.

At some other time, perhaps, we may discuss the need for that operation, but at present I consider it more interesting to focus on the key aspects from the standpoint of the protection of innovative efforts. Thus, briefly, the salient points of the Directive are the following:

U.S. improves Federal Trade Secrets Act, while in Europe …

On 4 April 2016 the U.S. Senate gave its unanimous (yes, unanimous) approval to the Defend Trade Secrets Act (DTSA), amending the Economic Espionage Act (EEA), the aim of which is to strengthen the position of the holders of trade secrets by granting them protection, through federal legislation, comparable to that afforded under trademarks, patents and copyright. The bill now has to go through Congress, where surprises are not to be expected as it would appear that opinion, including that of the White House, is undivided on the question that this is an issue which has a bearing on the economy of the nation and warrants the closest attention.

This new law represents one further advance along the long road that the U.S. has already traveled in the protection of trade secrets. Once case law, with roots in the eighteenth century, set about defining and circumscribing the concept, the States of the Union began adopting laws for the protection of these intangible assets. More case law has been generated unceasingly through to the present day, but the various state laws were subsequently supplemented with a federal law, the Economic Espionage Act, which further harmonized the concept and the fundamental elements in the protection of trade secrets. However, the Economic Espionage Act had certain limitations, as it was only applicable in cases of criminal infringements committed by foreigners. Furthermore, the protection provided did not extend to various aspects of misappropriation of trade secrets.

Under the system laid down in the DTSA, complaints relating to local goods or services will be lodged with a state court, but cases relating to interstate or international commerce may instead be litigated in federal courts. The DTSA sets uniform rules as regards the definition of a trade secret, what is to be considered unlawful, damages and injunctions. It also stipulates that the term for commencing the action shall be three years from the time that the infringement of the rights became known.

In Europe, meanwhile, the Trade Secrets Directive, which was proposed back in 2013 and aroused criticism of a not entirely comprehensible nature in certain quarters, was finally approved by the European Parliament on 14 April 2016, although two more years will still have to go by before it is actually implemented in the legislation of all the Member States.

The comparison between the initiatives taken on the one side of the Atlantic and on the other should lead us to reflect, in this particular matter and in others, on how legislation contributes to the prosperity of nations.

The protection of trade secrets is of major importance for technological development and affects not only companies but also state research institutions. The new directive should provide us with a better legal framework than that hitherto offered by each state individually and should harmonize the protection afforded. However, it will also oblige us to tackle many issues, for the appropriate protection and defence of trade secrets, even before it is transposed into Spanish law. I hope to have the opportunity to speak of that on another occasion in the relatively near future.

Author: Javier Fernández-Lasquetty

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