CONSIDERATIONS OVER THE SUFFICIENT GEOGRAPHICAL … · CONSIDERATIONS OVER THE SUFFICIENT...

TOO MUCH OF A GOOD THING?

CONSIDERATIONS OVER THE SUFFICIENT GEOGRAPHICAL USE OF COMMUNITY

ECTA - WARSZAWA 2006 1

GEOGRAPHICAL USE OF COMMUNITY TRADEMARKS

Francois Griesmar & Dr. Alliana Heymann

PLANINTRODUCTION: Reasons for this debate

• I - Practical Context– A - The Problem: the clogging of the TM registers and its various negative

consequences– B - Growing awareness of this problematical situation– C - Guiding Principles

F. Griesmar & Dr A. Heymann ECTA - WARSZAWA 2006

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• II - The actual situation– A - The Legal Context– B - Reasons why the use in one or just some member States is not

convenient

• III - What could be done?– A - We have to overcome our fears!– B - We have to think about adapted solutions: some propositions

• CONCLUSION

INTRODUCTION

- less a "theoretical study" than a practical analysis;

- this is a contribution to a debate which should be pursued untilanswers to the main issues are found;

- this is a real question and we hope to convince in particular thisaudience about this.

- what could be a geographically sufficient use of a CTM, in


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- what could be a geographically sufficient use of a CTM, inparticular in relation with cancellation actions for lackof/insufficient use of a CTM;

- This question must clearly be distinguished from the issue ofgenuine use, even if there can be interactions between these 2notions:

→ Is the unquestionably real/genuine use of a CTM in Bavariaor in Denmark + Sweden a geographically sufficient use?

I - PRATICAL CONTEXT

A- The PROBLEM: the clogging of the TM registers and its variousnegative consequences

1°) There is an increasing number of CTMs:→ since 1999 more than 40'000 CTM applications/year;– January-March 2006: 17'997 CTM registrations (x 4 = 71'988): "The number of

trade mark registrations is further expected to increase as the link between theMadrid Protocol and the Community Trade Mark becomes increasingly morepopular." (ECTA paper, p.9).

2°) CTMs can be bars to:


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2°) CTMs can be bars to:– "global" projects (ex: on a European scale = simultaneously in 23

countries/territories) unlike the national or even the WIPO trademarks whichcan be dealt with country per country;

– more "local" (in 1 or a few EU countries) projects.

3°) And to be able to register or at least to use safely a trademark, a proper "liberationstrategy" must be implemented:

– prior rights searches,– investigations,– negotiations,– cancellations.

The "Cynthia" [ship] caught in the ice : 19th century engraving by Roux illustrating Jules Verne's novel L'épave

du "Cynthia" (The waif of the "Cynthia")

The “clogging” of the TM registers

Will the TM protection systems in the E.U


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end up

← like THIS?

B - Growing awareness of this problematical situation

1°) Before 2004:– the authors would write only about genuine use;– some stated that use in one country is sufficient,– very strong wish that the at last created CTM succeeds.

→ So there was a general consensus to make the CTM as attractiveas possible:


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as possible:– low official taxes,– rather simple examination procedures,– strong “incentive”: once a CTM is registered, use in only one

member State would be sufficient to avoid a cancellation for lack ofuse (general belief 10 years ago).

→ In this context: aim to "legitimate" the CTM and no space left fordoubt.

2°) Since 2004:– times have changed;– in 2006: success of CTM is obvious, (296'661 CTM Reg. at the end

of 2005),– more tranquility and distance;– today we must manage a huge "institution" and face risks

generated by "overdevelopment" and not by "underdevelopment".

LOGICAL CONSEQUENCES:


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– first opinions focusing (or containing a development) more preciselyon this issue,

→ generally against the idea that use in one country issufficient, with of course various analysis:

– more particularly: papers of F. Angelini and of L-A.Duran andspeeches made by J.Kulikowski and V.O'Reilly;

– some speakers at FICPI's sessions said that they regarded the userequirement in the CTM system as too generous to owners.

C - GUIDING PRINCIPLES

1°) Monopoles vs. Free competition:

– There is no "ideal solution" which will please everybody,

→ it is more realistic and useful to seek a "healthy" balance between themaintenance of TM rights and the freedom of trade and business.

– IP right = a monopoly granted to proprietor to the exclusion of all otheractors on the market.


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→ the strength of an IP right must be proportional to the scope of its use.

– In other words:a great scope for use of a CTM : 25-State Community & 450 million inhabitants

→ implies drastic requirements in terms of intensity and scope of suchuse.

– It is legitimate to block this vast Community market,→ but only if the trademark is genuinely used on a community level.

2°) A farewell to cancellation actions for non use?

• Most necessary to ensure a balanced "legal environment" fortrademark owners (current and future):

– cf. sustainable natural environment: there must be "mechanisms","legal predators" ensuring that none of the living beings within thesystem will "overdevelop" and impede the existence of the others→ BALANCE ...

– No/not enough “legal predators” --> “legal eutrophication” like


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– No/not enough “legal predators” --> “legal eutrophication” likepolluted lakes

• Of course, none of these visions is "good" or "bad":

– in a "clogged" legal environment, the "destruction" of existing TMsis as "normal" as their "creation" process: more and more often apart of the "creation/protection” process.

→ Thus the rules and their implementation be actually neutral toensure a real dynamic protection system.

JANUS• Like the Roman god Janus, a TM Reg.

(in particular a CTM) has 2 indivisible"faces":

- for its owner it is a "blessing” = thepossibility to peacefully use a brand and the


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possibility to peacefully use a brand and theright to forbid any third party from using orregistering an identical or similar trademark;

- but, reciprocally, for third parties who needto secure TM rights, this same CTMregistration is a "curse" = it is a bar to theirproject, either in one or in a few memberStates or on a Community scale.

II- The ACTUAL SITUATION

A - LEGAL CONTEXT1°) Specific points

a) The other TM PROTECTION SYSTEMS ARE FULLY ALIVE a nd COEXIST– TM protection is first of all a territorial right and any territory is delineated by

borders; – national, WIPO and community trademarks coexist in the same area (the

European Union): the national borders simply cannot be wiped out.

Cf. § 5 of the Preamble of the CTMR: "Whereas the Community law relating to trademarks nevertheless does not replace the laws of the Member States on trade marks;whereas it would not in fact appear to be justified to require undertakings to apply for


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whereas it would not in fact appear to be justified to require undertakings to apply forregistration of their trade marks as Community trade marks; whereas national trademarks continue to be necessary for those undertakings which do not want protection oftheir trade marks at Community level;".

→ the CTM did not replace the previous TM protection systems, → on the contrary, from 1995 :

– all member States (except Malta) joined the Madrid Protocol– 2 (Cyprus, Latvia) joined the Arrangement;– even the EU joined the Protocol in 2004:

→ Nobody can deny interactions between these various TM systems

DO WE REALLY WANT THIS?


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As in harmonious city planning ensuring a good inse rtion of new buildings into the existing landscape...

... The CTM must not „harm“ the existing „legal environnement“ (cf. §§§§5 of the CTMR‘s Preamble)

b) COMPLETE AUTONOMY of the CTM PROTECTION SYSTEM vis-a-vis national TM systems

• Of course many common points between CTMR and Directive→ some interpretations, implementations of the Directive can be transposed

as regards the CTMR.

• But similarities are not identity→ different situations, different problems

• Indeed the whole difference is the approach:


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• Indeed the whole difference is the approach:CTM: - much broader protection geographically than national TMs

- must not “disrupt” the other TM protection systems→ the criteria should be different / stricter in a certain number of cases

• "The Community trade mark regime is an autonomous system ... “ (CFI, ELECTRONICA (December 5, 2000; T-32/00)

• "The Community trade mark and national trade marks are conceptually different.” (Advocate general Sharpston, ECJ, EUROPOLIS, March 30, 2006, C-108/05)

c) CONSEQUENCES TO BE DRAWN

→ "Since a CTM...now provides protection in such a vast territory the questionarises whether the use of these regimes are appropriate in allcircumstances." (ECTA paper).

– on a EU level, the TM applicants have the -unique- possibility to choose between:

- national TMs, - use of the WIPO system "à la carte" (except in Malta) - or the CTM.


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- or the CTM.

– if the TM applicants do not need or cannot register a CTM,– they have several fall-back options– in many cases these will correspond more to the actual geographical scope

of their business (= in one or a limited member States):

→ not all TM applicants "want protection of their trade marks at Communitylevel" because they often simply do not need such a geographically wideprotection for activities performed in a limited area.

2°°°°) OBJECTIVE LEGAL SITUATION

a) 30 years negotiations to create the CTM - the text s:

- 1964: Preliminary Draft Convention for a European Trade Mark,Article 110.1: "serious use...in the territory of atleast three Contracting States";

- 1976: "Memorandum on the Creation of an EEC Trade Mark“:


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- 1976: "Memorandum on the Creation of an EEC Trade Mark“: "use in a substantial part of the common market";

- 1977: Pre-draft of the CTM Regulation: "genuine use within the common market".

→ Apart from the specific case of "export purposes" (Article 15.2.b), all articles (15.1, 43.1, 50.1.a, 56.2) of the CTMR mention the "genuine use in the Community" without being more precise.

Indeed, the only article from which something more can be understood is Article 108.2.a :

“Conversion shall not take place: (a) where the rights of the proprietor ofthe Community trade mark have been revoked on the grounds of non-use,unless in the Member State for which conversion is requested theCommunity trade mark has been put to use which would be considered tobe genuine use under the laws of that Member State;".

→ a CTM can be revoqued for non-use even if it has been used in one (ormore) member State ("genuine use under the laws of that Member State").


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more) member State ("genuine use under the laws of that Member State").Or, as our colleague, Luis-Alfonso Duran rightly states in a paper of 2005,"...it is possible to obtain the revocation on the grounds of non-use of acommunity trade mark even if it has been put to genuine use in one ormore member States ...".

→ we see at least from this article that one simply cannot state that use in one(or even in a few) member State(s) is sufficient to avoid a cancellation for lackof sufficient use.

• Nothing special relevant in any other Community or International text

• Attempts to “validate” use in one member State:

- joint statement N°10 about Art. 15 CTRM:"...use which is genuine within the meaning of Article 15 in one countryconstitutes genuine use in the Community".

BUT such statement has no legal value, cf. ECJ, Antonissen(February 26, 1991, C292/89):” The declaration therefore has no legal

significance ."

- OHIM: → Opposition Guidelines: refer to the joint statement and follow it...


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→ Opposition Guidelines: refer to the joint statement and follow it... ... even if they state "While these statements only have an interpretative

value and are not legally binding,...”

→ OHIM’s website: "Ten Good Reasons for Using the Community Trade Mark”: N°6 states that genuine use in a single Member State is sufficient.Daring statement which could be overruled or cancelled, for example, by a court decision

→ In such a context there can only be room for doubts and critical faculties and not for unfounded beliefs...

b) Decisions by the Courts or the OHIM

– several decisions concerning genuine use ; almost nothing about géographical sufficient use:

• The only "explicit" decision: CFI, December 12, 2002: HIWATT/Kabushiki Kaisha Fernandes (T-39/01), Cf. § 37: "...genuine use means that the mark must be present in a substantial part of the territory where it is protected...").

– What does "substantial" mean? Cf. Webster: ”... Relating to the main part of something”

– this decision concerned national TMs and not a CTM;


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– this decision concerned national TMs and not a CTM;→ this decision should be considered as a relevant hint and not as an answer to

the question of geographically sufficient use of CTMs.

• Ansul, La Mer (also about use of a "national" TM ): no reference to any territorial criterion: genuine use can exist even if the use of the trademark is not quantitatively significant, as long as it is not a token use.

Legal Situation: rather intricate & “unclarified” → no clear conclusion can be drawn...

B - REASONS WHY „USE IN ONE MEMBER STATE“ IS NOT SUFFICIENT

� let us be coherent:– the problem (e.g. clogging of registers ) is real and more and more

serious– we cannot refuse to think of solutions!

� strictly legally speaking: if use in a part of a country or in 1 or 2countries is deemed as sufficient, one simply cannot understandthe "raison d'être", the legitimacy of Article 108.2.a which allows


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the "raison d'être", the legitimacy of Article 108.2.a which allowsconversion of a CTM cancelled:– "on the grounds of non-use,– "in the member State(s) where the Community trade mark has

been put to use”.

� the validity of the use in one country can be a powerful "incentive"for CTM owners who want to "twist" this tool

� Increased risks of confusion for the consumers

III - What could be done?A- We have to overcome our fears!

– Some persons are in favour of a "low level" requirement asregards the geographically sufficient use,

– others even reject as a matter of principle the idea of ageographically sufficient use of CTMs.

� We will now review these arguments and fears and explain why theyare generally not justified:


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- 1°) Discrimination between small/poor and big/rich CTMapplicant/owners?

- 2°) Discrimination between small and big member States?

- 3°) Discrimination against new member States?

- 4°) Is the concept of borders/countries obsolete or irrelevant?

1°°°°) Discrimination between small/poor and big/rich CTM

applicant/owners?

Cf. OHIM‘s Opposition Guidelines: ”Any other rule [then use in 1 State or a part thereof] would discriminate between small and big enterprises.”

– wrong debate: the nature or size of CTM applicants is irrelevant→ What matters is the size of the business for which the CTM is us ed!

– a clogged register is particularly harmful for SMEs→ because liberation strategies are complicated and expensive.


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– first registration of a CTM should be rather easy→ “healthy” anticipation of extension of business

but after at least 6-7 years, if the business is still limited to one or a few States→ it should be easy to eliminate this CTM:

• conversion (Article 108) is a real fall-back solution,• another CTM can be filed later and seniority can be used,• business is evolutive (forward/backward): TM laws must not contradict

this!

2°°°°) Discrimination between small and big member Sta tes?– RISK: “Use only in France is sufficient; only in Malta: no.”– The biggest CTM applicants/owners are generally in big member States.– CTMs represent a much bigger % of the TM reg.

• in small member States:75% - 97%,• than in big member States: 43% - 63%

3°°°°) Discrimination against new member States?– Cf. Counter-arguments in 1°) & 2°).– more specifically: there are currently not many CTM applicants/owners, but

this will likely increase with economic expansion.


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→ Newcomers must also have a real chance to register CTMs in the future!

4°°°°) Is the concept of borders/countries obsolete or irrelevant?– reminder: TM rights are territorial (protection, conversion, ....)– ignoring borders → you could be satisfied with a use for 40 millions persons

even if they are all in 1 country– reminder: the CTM must „respect“ the other TM protection systems→ unlike national scale no „all-or-nothing situation“– “use in the Community": cf. also US concept of „inter State commerce”

B - We have to think about adapted solutions: some proposals

1°) General Principles

a) The GOOD MIX

– EASY ENTRY: cost/difficulty for acquiring TM rights = not too high,

– More request for MAINTENANCE of TM rights


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b) What could be a GEOGRAPHICALLY SUFFICIENT USE?

– „Genuine use“ (vs. token use) rather obvious, most interesting isits association with:

– “in the Community”: thus for a use in one or a few memberStates, national/WIPO TMs are appropriate

NO LORRY FOR DELIVERING A PIZZA!


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USE THE ADEQUATE TM PROTECTION SYSTEM !

Use in 1 member State National + WIPO TM


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Use in a few member States CTM

Use in majority of memberStates or more

National TM

2°) A few ideas

→ GEOGRAPHICAL SUFFICIENT USE:

– „double minimum“: States and population?– substantial = majority

→ EXPORT (CTMR Art. 15.1 b) should not constitute a v alid use within the EU


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use within the EU

→ Filing periodically proofs of use?

→ Filing periodically statements of use?

→ Transposing mechanism of Canadian TM Act (Art. 45)?

CONCLUSION→ Purpose of IP regulations and decisions:

– ensure a balanced protection for current and future TM owners andapplicants,

– minimise the risks of confusion among the consumers stemming from ananarchic proliferation of trademark rights.

→ regulations and decisions must provide realistic and "sustainable" solutions tothe conflicts between the different players on the market: cf. ECTA paper, p.14:"Now, is it not the time to keep the systems effective and to avoid being


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"Now, is it not the time to keep the systems effective and to avoid beingself-destructing and watered down? ...“

→ "No matter if one disagrees with my answers as long as one cann otdisregard my questions." (André Malraux).

→ whenever regulations are not or no more adapted to the practical situation,uncritical acceptance is no more possible.Kant: "Do not accept anything without having checked it" ...Let us draw the consequences of this "discrepancy" and think how to adjust theregulations to meet the current needs of the market.

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