Mis-Sold Community Trade Marks

Following the judgement of Mr Justice Hacon in The Sofa Workshop Ltd v Sofaworks Ltd [2015] EWHC 1773 on 29 June 2015, there have been a flurry of case notes from the great and the good of the UK trade mark profession drawing attention to the fact that community trademark registrations maybe inappropriate for many clients who don't maintain a presence on the European Union market, but something rather smaller and more local. These case reports include ones from  Cleveland, Marks & Clerk, Dehns, Mewburn Ellis and others.

Those links will take you to the articles which describe the background to the case and the decision.  Essentially, since the mark had been used and promoted only on the UK market for sofas, it was held not to have been used in the manner required by the European Court of Justice when it decided C 149/11 Leno merken, the ONEL reference from Benelux. This was in December 2012, so why the long hiatus before we realised what this all meant.

But wait, the opposition divisions of OHIM and national patent offices have been trying to apply Leno merken all this time. Opposition decisions, though, do not create precedents and are frequently not studied in any detail by academics or the trademark profession.

Leno merken was a clever academic decision that said (unhelpfully, if politically correctly) that we were to  ignore the territorial borders in the European Union. This rather detracted from the important point that it was the use in accordance with its essential function and for the purpose of maintaining or creating market share within the European Community for the goods or services covered by it we had to look at. In particular we should  a"take into account the characteristics of the market concerned, the nature of the goods or services protected by the trade mark and the territorial extent and the scale of the use as well as its frequency and regularity".

The European market for anything is typically bigger for most goods and services like sofas, but it is often quite difficult for a trade mark agent to provide evidence of the European market for their goods. The CJEU did recognise that some markets could be restricted to a single member state (paragraph 50) but in this world we need to know more about the economic features of a market and (perhaps) provide evidence about it. Help!

On 20 May 2014 in a first instance case 000008263  - the Cancellation Division considered the board game market and made this damning assessment:

The remaining invoices which are dated within the relevant period only show sales to customers in Germany which is a relatively small part of the European Union. In territorial terms and in view of the unitary character of the CTM, the appropriate approach is not that of political boundaries but of markets. As the Court indicated in 'Leno Merken', it is impossible to determine a priori and in the abstract what territorial scope should be applied in order to determine whether the use of the mark is genuine or not (para. 55). All the relevant facts and circumstances must be taken into account, including the characteristics of the market concerned, the nature of the goods or services protected by the trade mark and the territorial extent and scale of the use as well as its frequency and regularity (para. 58)....     these 15 invoices are only billed to customers in Germany and as such invoices for three years for a low amount in one country are not sufficient to prove genuine use of the earlier mark.

Nevertheless on 27 February 2015, paying lip service   to Leno the Fifth Board of Appeal decided in RAPIDO  a case concerning goods and services related to lotteries, said:

The evidence submitted in the present case essentially covers France, which considering its geographical size and population density constitutes a substantial part of the European Union. The evidence, therefore, shows that the contested CTM was used in the territory of the European Union

One might have thought that the characteristics of the lottery market in a world of EUROMILLIONS  were such that a presence on it required a little more to sustain a Community Mark as opposed to a French national mark, but no.

The principle of  use relative to the market has brought in a de minimis standard by the back door (not a rule, you understand, a relative standard that takes into account all the circumstances).  This even applies in judging genuine use of national registrations. See Case C-141/13 Reber WALZERTRAUM from 17 July 2014. The case is in German but you can refer to the IPKAT report here.

Nike has added a interesting dimension in its heroic fight to register JUMPMAN in Europe. Its CTM succumbed in  Case T‑233/10 to an opposition based on earlier Spanish registration and was duly converted to national marks, at least in the UK and Benelux, and the same opponent raised an opposition based on an earlier community trade mark for JUMP which was subject to proof of use.

The shopping in Varna

In the UK in October 2014 Oliver Morris assessed the evidence and found it wanting to show genuine use on the market for shoes in the European Union. He applied Leno Merken  with the same aggressive verve as Mr Justice Hacon did later, and also considered Reber. The decision in O/451/14 is here. It was appealed to the Appointed Person and the hearing was on 21 July 2015. Rouse, who acted for the opponent at first instance, have provided an interim report here. The real decision is awaited.

Meanwhile, in Benelux, on a parallel case, where we must assume the evidence was pretty similar, the Benelux IPO decided exactly the same way on 12 August 2015. 

In both cases the decisions stopped at the proof of use stage and did not consider what would have happened if they had been wrong. I suppose there was no need with Case T‑233/10 lurking in the background.

Now did these two independent tribunals stretch Leno Merken for the benefit of a big brand owner or are their decisions correct. They deny genuine but small use in a shop in Varna, Bulgaria as an  insufficient presence on the European Union footwear market, which Mr Morris held was manifestly huge. He was supplied with a Euromonitor report, but he said its hugeness was self-evident. This leaves us a little in the dark as to when evidence may be required and when not. The Benelux decision does not refer to any evidence about the European footwear market.

OHIM's cancellation division on 30 June 2015 in the case of CECCONI'S had to consider the EU market for celebrity restaurants. The Decision in C000008943 held that one location in Mayfair was enough to sustain a CTM for "restaurant and bar services" but they revoked it for the broader category of "Services for providing food and drink; catering services.". In this case the characteristics of this esoteric market and a nice continuous stream of TRIPADVISOR reviews across the relevant period and from other Europeans,saved the validity of this CTM.

It would be interesting to have input on other cases if you have suffered any surprises.

Although consistency may not always be there in a Europe, which doesn't believe in precedent, it does seem that the selling spiel we were all encouraged to give that the CTM was validated by use in a single country is now wrong. OHIM has become extremely wealthy on the back of a misrepresentation.

Indeed if your client is a lifestyle business with a local footprint and no intentions to expand, the right advice may be to leave even the UK Trade Mark register alone. After all most fights start when a big brand notices and opposes a  startup. Of course, that leaves the lifestyle business relying on a section 11(3)  or Art 111 defence if someone else later registers the same or  a similar mark in the UK or OHIM respectively.

For other clients we now need to make a more careful choice before opting for the hitherto bargain CTM. In some cases it might be wise to surrender and convert a vulnerable CTM. What say you?

Affording Regulation

If you wish to object to your regulator, IPReg, increasing your practice fees, then by 7 September you need to email IPReg

Earlier this month you probably received an email about the 2016 business plan and budget. It contained a link to this page which includes a nice little letter from Mr Heap the chairman of our regulator, a draft business plan, draft budget and, significantly, a table showing the proposed increases in fees.

Now the proposed increases don't look much, but they do amount to 7% which in a time of 0% inflation is quite stonking. Due to the fact that everybody pays more than one fee the precise impact is going to vary from firm to firm.

I was surprised to see that attorneys who are retired or inactive are paying to remain on the registers £147 for one or £236 for two . I suspect they won't be for much longer. What is the purpose of being on a register if you are retired, so I suppose this means unemployed and looking for a job - so raising that fee is to encourage them into the unregulated world?

Stop Discrimination against Patent and Trade Mark Attornies

In 2014 I paid  as a solo practitioner with no employees £390 and next year they will want £459. If I could limit my practice to one or other of patents and trademarks, then I could make a saving. However, I'm not too sure why I am penalised for offering more comprehensive service to the consumer. This structure encourages over specialisation and should STOP

Amongst the more interesting things the draft  business plan promises is a policy on stale examinations. They've been promising this for a while (might even be a little stale itself) but I am not sure if it has anything to do with the notorious  CIPA biscuit pixies.

Under Communications they propose to meet with registrants at regular open meetings - which is the same as last year's plan but I can't recall any.


Another thing they intend to do is monitor the enterprise court small claims procedure which is intended to widen access to the lay applicant.  Lay applicants do not use regulated people, why am I funding this?

One thing that isn't there is any review of the Insurance sector. At present rule 17 requires any new entity requiring approval to use PAMIA. Isn't it about time they reviewed the market and approved at least one competitor?

While regulation is necessary it seems desirable that we should stop the cost of it escalating. The Chairman's letter acknowledges that mining into ABS structures costs money. This year perhaps their review of what they did will reveal that it had little regulatory benefit. If IPReg is really too small to be cost effective, it should be looking to merge. Put that in the business plan.

Are we UPP to speed on on Unified Patent Strategy

Patent applications filed at the EPO today could emerge on grant as Unitary Patents or European

High Tech Lemon Squeezing

Patents of Unitary Effect - abbreviated to UPP (which really stands for Unitary Patent Protection). So far most of the news on this exciting topic has concentrated on the preparations for the Unified Patent Court (UPC) and its procedure. UPC even has its own website and its news machine is very exciting and efficient. The date it all goes live could be in 2016.

My latest copy of the CIPA Journal -available to members using Safari or Internet Explorer here contains at page 59 an interesting article by Ellie Purnell reporting on the Manchester meeting which  encouraged us all to keep up-to-date. (If you read it you will understand what I mean when I say "I am squeezing her lemons").

We even know what the renewal fees of the UPP will be when one is eventually granted as this was agreed back in June. They are really very interesting. If you could get an UPP granted quickly you could save a bundle on awful EPO renewal fees on pending applications. Not until the 12th year does a UPP cost more to maintain than an application languishing before the EPO. This is a serious wake-up call to patent attorneys: we need to get patents granted or abandoned. I like their thinking.

Now I expect that all the big firms have been brainstorming their strategies for their clients and are able to advise on whether EPO applications or national applications are the right route on each individual case. However, solos might be a little bit less well positioned for brainstorming so I thought I'd look and see what resources were available to help clients and solo strategists.

The EPO has some useful FAQ here but they are not in the business of offering strategic advice.

The companies filing their priority applications now, the UPP is something they need to take into account, especially if they think they might want national patents rather than put all their eggs in one basket at the unitary patent court. Judging by the is the concern amongst big business for opting out their classical European patents and their distress about the possibility of paying €80 for each opted out patent family, we must expect that industrial patent departments are well abreast of the issues, so are they abandoning the EPO in droves?

The real decision time if you are on the EPO route is after grant. At that stage you have to choose whether to go for a UPP (patent with unitary effect) or national patents or a combination. Combination is necessary because the UPP does not cover all EPO states and will never do so since some of them like Switzerland are outside the European Union. Therefore, you may think it's safe to carry on with the standard PCT EPO route, but is it? If the EPO is going to stall applications with an adverse search report, sticking with the EPO could be an expensive option. Maybe long pendencies are quite attractive to an applicant and therefore choosing our now under-resourced national patent offices for examination might be an interesting option for keeping hopeless patent hopes alive and your competitors wondering.

What do you think. Please draw attention to any relevant articles?