Pursuant to the treaty establishing the European Community, the counsel of the European Union issued a regulation establishing a European Community trade mark law. The Community trade mark law (CTM) does not replace the laws of the member states on trade marks, but it does establish a registration system enforceable throughout the European Union with several advantages including reduced costs if all countries are to be covered, a single application for 15 countries, a single renewal and exclusive jurisdiction for all infringement actions for acts of infringement committed or threatened in the CTM territories.
Countries Covered and Language
The countries covered by the CTM are the present members of the European Union - namely, Austria, Belgium, Denmark, Finland, France, Germany, Great Britain, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain and Sweden. The Community trademark office is located in Alicante, Spain.
Any application filed for a CTM must be filed in one of the official languages of the European Union. However, the applicant must also indicate a second language on each application chosen from five official languages--namely, Spanish, German, English, French and Italian. Any opposition, revocation or invalidity proceedings affecting the application or registration must be in one of the five official languages of the CTM unless the parties agree otherwise. The only way to ensure that such post-application proceedings, if any, are conducted in English is to file the application in a non-official language and then select English as the official language. On the other hand, if the application is filed in English, a second official language must still be designated which could be selected by the opposing party for the opposition, revocation or invalidity proceeding.
The CTM System
The CTM is a registration based trademark system in contrast to the use based system adopted in the United States. In other words, if a CTM registration is obtained, the registration itself will determine ownership. As in all registration based systems, as a general rule, the first-to-file wins in a priority battle. The CTM also recognizes the early filing date afforded to members of the Paris Convention (including the United States) where a later filed CTM application is filed within six months of the national application for the same mark and goods.
As stated earlier, in order to avoid a race to the CTM office, all applications filed between January 1, 1996 and April 1, 1996 will receive the first CTM filing date of April 1, 1996. However, if a U.S. or another national application was filed after October 1, 1995, it will be possible to claim an earlier priority filing date based upon the filing date of the national application.
Marks Subject to CTM Registration
Marks are defined as "signs capable of being represented graphically" and include words, personal names, designs, letters, numerals, and the shape of goods or their packaging, provided that such "signs" are capable of distinguishing the goods or services from those of others. Unlike the United States, the CTM does not, presently include sounds, colors or smells. However, the minutes of the council meeting at which the regulations were adopted do not rule out the possibility of eventually registering a combination of colors or a single color or sounds as trademarks.
Grounds for Refusal of Registration
There are both absolute and relative grounds for refusal of a registration. The absolute grounds include, among others, marks which are devoid of distinctive character, marks which designate exclusively the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of goods or the rendering of services or other characteristics of the goods or services, and marks consisting exclusively of signs or indications which have become "customary" in the current language or in bona fide and established practices of trades. Each of the above grounds, however, can be overcome by proving distinctiveness which, contrary to the United States, would seem to indicate that generic terms could acquire distinctiveness.
On the other hand, there are certain "signs" which are subject to absolute grounds for refusal and are not deemed capable of being registered with proof of distinctiveness. These consist of configurations of goods which result from the nature of the goods themselves, the shape of the goods required to obtain a technical result or the shape which gives substantial value to the goods; marks which are contrary to public policy or accepted principles of morality, marks which are of such a nature as to deceive the public as, for example, in connection with the nature, quality or geographical origin of the goods or services, marks which have not been authorized by competent authorities and are refused registration under the Paris Convention, and marks including badges, emblems or escutcheons other than those covered by the Paris Convention and which are of particular public interest.
Relative grounds for refusal include situations in which the trademark applied for is identical to, or likely to cause confusion with respect to, an earlier trademark. An earlier trademark means a previously filed CTM mark, trademarks registered in member states or trademarks registered under international arrangements having affect in member states, previously filed applications for the preceding marks subject to their eventual registration or marks which are well known in a member state.
Search for Conflicting Marks
The CTM office conducts a search of CTM registrations and applications and prepares a report for the applicant. Simultaneously, the CTM office transmits a copy of the application to the central industrial property office of those member states which conduct a search of their own register. Currently, this includes all of the member states except Germany, France and Italy. Each individual trademark office has three months from the date of receipt of the CTM application to issue a search report. Following the three month search period, the results of the CTM search and national searches are forwarded to the applicant, who then has a period of one month to withdraw, restrict, or amend the application if desired. After the one month period, the application is published for opposition, and the CTM office also informs the proprietors of any earlier CTM registrations or applications of their citation in the search report so that they can file an opposition if desired.
Oppositions, Revocation and Invalidity
Within a period of three months following publication of the CTM application, any third party may file an "observation" or an "opposition". Written observations are directed to absolute grounds for refusal. The third party submitting the observation does not become a party to the proceeding, but the observations are communicated to the applicant who may comment on them. Again, the applicant may at any time withdraw his CTM application or restrict the list of goods or services contained therein.
Oppositions, on the other hand, are directed to relative grounds for refusal - i.e., prior rights in a confusingly similar mark. It will be important for any owner of a CTM registration or a registration in one of the fifteen members of the CTM to maintain a watch service for published CTM applications in order to oppose any application which might conflict with an existing registration.
Many registrations in member countries broadly define goods. If the applicant requests, the proprietor of an earlier CTM mark or national mark who has given notice of opposition must furnish proof that during the period of five years preceding the date of publication of the opposed application, the earlier registered mark has been put to genuine use in the Community or in the member state for which protection is sought. If the earlier registered mark has only been used in relation to part of the goods or services for which it is registered, it shall, for the purposes of the examination of the opposition, be deemed to be registered only with respect to those goods or services for which genuine use has been proved.
If the opposition reveals that the pending mark may not be registered with respect to some or all of the goods or services, the application will be refused with respect to those goods or services.
Of particular significance is the fact that the losing party in the opposition automatically bears the fees incurred by the other party as well as all costs including attorneys' fees and expenses subject to certain limitations. This also applies to a situation where a party terminates the proceedings by withdrawing the application or opposition.
The grounds for opposition comprise all of the relative grounds upon which an application can be refused registration. Additionally, a proprietor of a non-registered mark or other sign used in the course of trade of more than mere local significance can oppose an application where, pursuant to the law of the member state governing the mark or sign, the rights to the sign were acquired prior to the date of application for the CTM mark and the mark or sign confers on its proprietor the right to prohibit the use of a subsequent trademark. In other words, if a right exists in a "first-to-use member state", such right can be advanced in an opposition. It is also possible to oppose a mark filed by an alleged agent or representative of the opposer without the opposer's consent.
Where a CTM application has been successfully opposed on the basis of rights in a member state, it shall be rejected.
The rights of the owner of a CTM mark can be revoked or invalidated on application to the CTM office or on the basis of a counterclaim in an infringement proceeding. Grounds for revocation include non-use within a continuous period of five years, the mark has become a common name in the trade of a product or service, the use of the mark is liable to mislead the public as to the nature, quality, or geographical origin of the goods, or the owner of the mark no longer satisfies the conditions of those who may be proprietors of CTM marks. Use again is defined as genuine use. Grounds for invalidity include those absolute and relative grounds for which an application could be refused registration. The provisions requiring the losing party to pay all costs are equally applicable to proceedings for revocation or for a declaration of invalidity.
Conversion into National Applications
If the CTM application is refused, withdrawn or deemed to be withdrawn or to the extent that the CTM registration ceases to have effect, the applicant or registrant may request conversion of the CTM application or registration into national applications in one or more of the member states. Conversion cannot take place if the rights of the proprietor of a CTM registration have been revoked on the grounds of non-use unless the member state for which conversion is requested accepts the use to which the CTM mark has been made as being genuine use under the laws of that member state.
There are separate government filing fees in each member state for the converted national applications plus a conversion fee paid to the CTM office. An agent in the member countries will have to be appointed with additional fees for taking over representation of the application in that member state.
Where a request for conversion is filed within three months from the date the CTM application is deemed to be withdrawn or refused by a decision of the Office which has become final or from the date the CTM registration ceases to have affect as a result of a decision of the Office which has become final, the national applications will be accorded the original filing date of the CTM application. After the three month period, the effective filing date of the CTM application is lost for national applications.
Use Requirements
If, within a period of five years following registration, the proprietor has not put the CTM to genuine use in the Community in connection with the goods or services for which it is registered, and there are no proper reasons for non-use, the CTM is subject to revocation. The regulations do not define "genuine use". A mark can be used in a different form so long as the distinctive character of the mark is not altered. Use can be established by affixing the CTM to goods or to the packaging thereof in the Community solely for export purposes. Use can also be accomplished through licensees. The minutes of the council meeting at which the regulations were adopted also indicate that genuine use in one member country constitutes genuine use in the Community.
Term and Renewal
The registration term for a CTM is ten years from the date of filing of the application. Registrations can be renewed for further periods of ten years. Evidence of use is not required, but the registration remains subject to cancellation if there is no "genuine use". Renewal is accomplished by filing a renewal application within a period of six months prior to the last day of the month in which protection ends. There is a six month period for renewal following termination provided that an additional late fee is paid during that period. The renewal takes effect from the day following the date on which the existing registration expires.
Infringement
Each of the member states shall designate one or more national courts and tribunals of first and second instance which shall govern trademark disputes within that territory. The CTM courts have exclusive jurisdiction for all infringement actions, declarations of non-infringement and for all counterclaims for revocation or for a declaration of invalidity. There are various provisions relating to the proper court in which an action can be brought.
There are special regulations relating to jurisdiction and venue. Actions must be brought where the defendant is domiciled or, if the defendant is not domiciled in any of the member states, in the state in which the defendant has an establishment. If the defendant is neither domiciled nor has an establishment in any of the member states, the action can be brought in the courts of the member state in which the plaintiff is domiciled or, if not domiciled in any of the member states, in the state in which the plaintiff has an establishment. If neither party is domiciled nor has an establishment in the member states, the action must be brought in Alicante, Spain. It is also possible to bring an action for infringement or threatened infringement in the courts of the member state in which the act of infringement has been committed. In this situation, the decision of the court will extend only to the territory of the member state in which the infringement has been committed or threatened to be committed. In all other situations in which jurisdiction is based upon the domicile or situs of an establishment in a member state, the decision of the court will extend to all fifteen member states.
Cost
The desirability of filing a CTM application must be weighed against its cost. Generally, the cost of a CTM registration will be considerably less than the cost of individual registrations in all member states, assuming that no opposition is filed. On the other hand, if an opposition is filed and the CTM application has to be converted to national applications in those countries where there is no conflict, the cost will obviously be greater than that which would have been incurred by simply filing in each national country.
The cost will vary depending upon the exchange rate of the ECU, which is the unit of currency of the European Union in which official fees are paid. This unit of currency will soon be known as a Euro. With a rough approximation of 1 ECU equaling $1.30 U.S., the various fees are set forth below.
APPLICATION/REGISTRATION 1. A. FILING FEE ECU U.S. (1) Up to 3 classes of goods/ services 975 1,268 (2) Each additional class 200 260 B. REGISTRATION FEE (upon approval of the application) (1) Up to 3 classes 1,100 1,430 (2) Each additional class 200 260 2. OPPOSITION FEE 350 455 3. CONVERSION TO NATIONAL APPLICATIONS 200 260 4. RENEWAL FEE (applicable in 2006) A. Up to 3 classes 2,500 3,250 B. Each additional class 500 650 To these CTM fees must be added our attorney fees and those of our European agents. Initial fees for preparing, filing and tracking a CTM application will be approximately $900-1,200 altogether.
In summary, therefore, it is contemplated that the total filing and attorney fees for an unopposed CTM registration for up to 3 classes will be approximately $4,000 - $5,000, or approximately three times the average cost of a national registration.
If the CTM application has to be converted to national applications, the CTM registration fee will of course be saved, but the filing fees and agent fees for each country will have to be incurred.
When to Select the CTM System: Advantages/Disadvantages
The obvious advantage of a CTM is that a single case covers fifteen countries. When the CTM registration issues, it is enforceable throughout Europe and can be maintained with a single renewal every ten years. Use in a single member state will be sufficient to maintain the registration in all member states. Enforcement of a CTM registration is apt to have greater consistency. If the applicant intends to file in all fifteen countries, there will be substantial savings in filing fees and future renewal fees.
With respect to disadvantages, it is obvious that to obtain and maintain a CTM mark, the mark must be registrable in all fifteen countries not only with respect to prior conflict but also with respect to distinctiveness. The filing of a successful opposition will cause the applicant to have to convert the CTM application into national applications, thereby resulting in a much higher overall filing cost than that which would have existed if national applications had been filed in the first instance. There is also an element of uncertainty in that a prior registrant in any of the fifteen can seek to invalidate a CTM registration at any time.
In the end, an applicant should evaluate the desirability of proceeding with a CTM application on the following grounds:
- potential conflicts as determined by a search for direct marks in the applicable classes,
- a determination of the actual countries for which protection is sought,
- the likelihood of expansion into other countries,
- the distinctiveness of the mark, and
- the cost/risk factor.