A storm seems to be brewing in the Low Countries that threatens the outlook for CTM owners throughout the EU.
In a recent decision, the Benelux IPO rejected an opposition based on an earlier CTM that had been used only in the Netherlands, holding that use in only one EU country was not genuine use "in the Community."
The decision in Leno Merken B.V. v Hagelkruis Beheer B.V. has stirred up a legal maelstrom, with critics and brand owners in consternation against a ruling that threatens one of the most fundamental perceived benefits of CTM ownership over national rights.
It has long been assumed that genuine use of a mark in a single EU country would sustain a CTM against non-use attack, and that conviction, in combination with the low cost of securing EU-wide protection, has catapulted the CTM system to a level of popularity never imagined before OHIM opened in 1996.
If the Benelux IPO is right, that understanding will have to change, and CTM owners will need to revisit whether they do in fact still need national rights too. The owner of a CTM subject to use requirements but used in only one member state should still be able to convert to a national application there under Art. 112 (2) (a) CTMR if attacked for non-use, but conversion is unlikely in oppositions and invalidations where the earlier CTM is not itself under revocation proceedings, and in those cases such a CTM might simply be disregarded. The CTM owner with a business in one country only may find, to its dismay, that it has no effective way to block a later conflicting national or CTM right in the absence of a parallel national registration.
The real position will not be clear until the ECJ gets its teeth into the issue, and there is no word yet of a pending reference. This key issue deserves an airing soon, though, and brand owners and advisors will be watching keenly for a resolution.
Meanwhile, it is hard not to detect a whiff of protectionism about a national IPO decision along the Benelux line. National IPOs stand most to lose from the overwhelming popularity of the CTM system, and cynics might (and do) see the BIPO's ruling as a gambit to encourage greater use of the national systems. While the EU's growing membership and population rightly give pause to the view that very geographically narrow use should sustain pan-EU rights, nonetheless a national office is not, in the eyes of most, an objective authority on the issue.
For now, CTM owners who have use in only one EU country might wish to shore up their position with a relevant national right pending guidance from the ECJ. Meanwhile, for the benefit of all involved, the eventual, inevitable reference to that Court will hopefully come soon.