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In 2012 Member States and the European Parliament agreed on the "patent package" - a legislative initiative consisting of two...

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Max Planck Hands Down Judgment on CTM System

Hot off the presses, the Max Planck Institut released its report on the functioning of the CTM system just before we went to print. Some of the most important recommendations from its 290 pages are distilled below. The European Commission is now undertaking a legislative review, and some of the MPI proposals could soon become law.

"Cluttering" of the CTM Register

The MPI recommended introducing fees for each class beyond the first claimed, with a view to discouraging applicants from making claims that exceed actual commercial interests.

It also proposed a new requirement for an intention to use, but not for a formal declaration of use, which would be administratively burdensome and out of step with the procedure in E.U. member states.

OHIM's interpretation of class headings as covering all goods or services in a class was not expressly covered. The report touched briefly on it, though, and was generally critical.

Genuine Use: Is Use in One Member State Enough? 

On this politically-charged issue, the MPI sided with OHIM and the Commission in concluding that use in a single member state should suffice to sustain a registered CTM against non-use attack.

The MPI recognised, though, that CTMs used in only a single member state created obstacles for third-party use and registration in other member states where there was no actual commercial conflict. To address this it proposed that new national applications should not be refused on the basis of CTMs registered for 15 years or more which have been used only in a part of the E.U. remote from the member state of the new filing, provided the latter was made in good faith.

This proposal is complex and raises many questions, including the meaning of "remote" and how issues of possible future conflict on the marketplace are to be resolved. Meanwhile, ONEL on the effect of use in a single member state is still pending review by the ECJ. Given the political importance, it is very possible that the Commission will amend the law to make it express that use in one member state will sustain a CTM regardless how the ECJ rules. There may well also be some new provision designed to reduce the number of theoretical conflicts arising from Community-wide protection for marks used only in a small part of the E.U.

Definition of a Registrable Trademark 

The study recommended scrapping the requirement that a CTM be "graphically represented" in order to allow room for the law to accommodate new forms of marks.  

Priority and Seniority Claims

The study concluded that OHIM should continue to conduct a limited examination of priority and seniority claims.

Currently, seniority claims only backdate CTM protection in member states once national registrations have been surrendered or lapsed. The MPI, however, has also proposed that seniority claims should take immediate legal effect so that if a third party opposes a CTM that claims seniority in the country of the opponent's rights, the aopposition will fail if the seniority pre-dates the opponent's rights. If adopted, this is likely to enhance the attractiveness of seniority claims at the filing stage.  

Searches and Notifications

Curiously, the study concluded that OHIM should retain the current optional national searches despite their low take-up. Likewise, the study recommended that OHIM should retain the CTM search and continue to notify existing CTM holders and applicants of later conflicting CTMs.

Opposition Term 

The MPI concluded that the opposition period should remain at 3 months rather than being reduced to 2. The retention of the status quo would be welcomed by most, since it does not substantially delay the progress of CTMs and affords more breathing space to consider possible oppositions.

Costs in CTM Proceedings

Surprisingly to many, the MPI did not recommend any change to the current scale of costs awards. However, the report noted that many such awards were never paid or enforced because the cost of enforcement often outstripped their value. It recommended that the law be reviewed with a view to facilitating enforcement.  

Bad Faith 

The study recommended that bad faith should become a ground for opposition, as well as a ground for invalidity. It also recommended that bad faith should become an absolute ground for refusal where an applicant's bad faith is "obvious" and does not rely on a complex evidential assessment.

While elevating bad faith to a ground for opposition would be welcomed, the prospect of examiners raising bad faith objections is concerning given their serious and fact-dependent nature. Bad faith has been an absolute ground of refusal in the U.K. since 1994, but examiners rarely, if ever, raise it as an ex parte issue. If this change is made OHIM examiners should be circumspect about raising such objections in all but the most self-evident cases.

Acquired Distinctiveness for Non-Traditional Marks

On this controversial issue, the report concluded that applicants should no longer have to prove that non-distinctive or descriptive non-verbal marks have acquired distinctiveness in every country of the E.U. in order to secure CTM protection.

It concluded that this "compartmentalised" approach was contrary to the unitary nature of the CTM, and recommended that proof of acquired distinctiveness for such marks should apply to the E.U. "as a whole".

On a practical level, this is one of the most important recommendations in the report. While the details still need consideration, redressing the current approach would help bring down costs for applicants seeking to protect non-traditional trademarks, and would make E.U.-wide protection for such marks a more realistic goal.