Never leave that till tomorrow which you can do today. Or alternatively, as Cromwell is alleged to have said, trust in God but keep your powder dry. As elements of case preparation, both timely action and a judicious assessment of just how much is needed to win the case are both essential ingredients for the practitioner and brand owner. However, recent conflicting OHIM decisions on the admissibility of late evidence flag up dangers for those whose evidence at first instance is not all that it should have been. The resulting muddle has users perplexed.
Sounding the All (Not Quite) Clear
In a decision handed down in the autumn (Cesea Group Srl v OHIM, Case T-250/09), the General Court ruled that OHIM’s Board of Appeal should have excluded additional evidence of use filed before it for the first time.
The action concerned an application to invalidate a CTM, which was met with a demand that the challenger file proof of use.
The Cancellation Division rejected the copy invoices filed as insufficient to prove the extent and nature of the use. Before OHIM’s Second Board of Appeal, the challenger sought to answer the criticisms by filing, for the first time, a copy of a consent agreement authorising related companies to use the earlier mark, as well as turnover figures, copies of packaging and advertising and evidence of attendance at trade exhibitions in Germany during the relevant period. The Board admitted the late evidence and overturned the first instance decision.
On appeal by the CTM proprietor, however, the General Court took a stern line. It held that, although OHIM (including the Boards of Appeal) could in principle consider late proof of use, this only applied if the evidence was filed in response to some new factor that had emerged or if it had not been available before the original deadline. In this case, there was no suggestion that the new evidence had not previously been available, and the only new factor was the decision of the Cancellation Division finding the original evidence inadequate. In the General Court’s view, this was not a "new factor" that justified the admission of late evidence on appeal; to hold otherwise would be to open the door to new evidence on appeal in all cases that had failed at first instance on the basis that the evidence was wanting.
U-Turn If You Want To
Surprising indeed, therefore, was the General Court’s more recent decision in Bufalo Milke Automotive Polishing Products, Inc. v OHIM (Case T-308/06), in which the Court reached the opposite conclusion.
In this judgment, handed down in December, the Court admitted late proof of use filed for the first time on appeal. This action arose from an opposition, in which the opponent relied on proof of use consisting of an affidavit from the managing director, turnover figures, price lists, and undated brochures and packaging. The Opposition Division held that the documents filed were insufficient to prove genuine use, and on appeal the opponent filed, for the first time, copies of nine invoices from the relevant period. The Board of Appeal admitted these and overturned the decision to reject the opposition.
On appeal by the applicant, the General Court upheld the Board’s finding. It noted that OHIM, including the Boards of Appeal, had a discretion to take late evidence into account in all cases unless otherwise specified (Case C-29/05 P, OHIM v Kaul). The admission of late evidence was, however, a privilege and not a right. In deciding whether to exercise the discretion in a party’s favour, OHIM may take into account factors such as whether the new evidence is relevant, the stage at which it is adduced, and whether there are any circumstances that make its admission inappropriate.
Even though the decision in Kaul had not dealt with proof of use per se, the Court regarded the discretion as equally applicable to it. Although Rule 22 (2) IR states that "If the opposing party does not provide such proof before the time limit expires, the Office shall reject the opposition," this rule could not be taken to override Article 76 (2) in the CTM Regulation, which states "The Office may disregard facts or evidence which are not submitted in due time by the parties concerned."
The Regulation contained no specific prohibition on the possible admission of late evidence, and to infer one from Rule 22 (2) would be to allow the Implementing Regulation to override the discretion permitted by the main legislation it was intended to implement.
So far, the Court was in step with its position in Cesea, except that it went Lingering Uncertainty ... continued somewhat further in elucidating the circumstances, already foreshadowed in Kaul, that could militate for or against the admission of late evidence. Where the Court now diverged, though, was in admitting the late evidence on the basis that it had, indeed, been filed in response to a new factor that had emerged – namely, the first-instance decision finding that the original evidence had been insufficient.
The Court ruled, in essence, that the new evidence was relevant and served merely to confirm, support and clarify evidence that had been timely filed at first instance. The opponent had in good faith filed evidence at first instance that it thought would be sufficient, and only learned that it had misjudged matters when the Opposition Division pronounced the evidence inadequate. The Court did not consider that the opponent had filed the evidence late out of negligence or with any intent to unduly prolong the proceedings.The opponent’s late invoices were admitted, the appeal was dismissed and Buffalo Milke’s failed arguments were turned out to pasture.
In Bufalo Milke, the Court observed, "The argument that opponents, which assume the burden of proof …, are in general able to submit complete evidence from the beginning … is unconvincing."
That statement resonates in the wake of Cesea and Bufalo Milke, whose outcomes are hard to reconcile. It is indeed difficult to be sure that one is submitting complete evidence at first instance, given the unpredictability of decision-making at OHIM; indeed, it is now clear that the unpredictability extends beyond OHIM and to the General Court itself.
It is of course possible that these two decisions can be distinguished on their facts, since in Cesea the challenger filed a great deal of new evidence, whereas in Bufalo Milke the new evidence was considerably more focused. When presented with late but focused and highly relevant evidence, the rejection of which could lead to a bad decision or further proceedings down the line, it would be a hard court indeed that was immune to the temptation to admit it somehow. But hard cases make bad law, and it is difficult to discern a clear line of authority now on the admissibility of late evidence of use.
One thing that is clear, though, is that parties to OHIM proceedings are unwise to keep their powder too dry at first instance. If it is possible to get relevant evidence now, then the cost and trouble of obtaining it must be balanced against the uncertainty of its admissibility later on appeal, if its omission turns out to have lost the case. Given the lack of a clear and consistent line of authority, it is unwise to risk running the gauntlet.