Pros and Cons of a Community Trademark Author(s): Coralie Smets-Gary and Katharina von Woellwarth Source: Franchise Law

Journal, Vol. 20, No. 1 (SUMMER 2000), pp. 17-21 Published by: American Bar Association Stable URL: http://www.jstor.org/stable/29541877 . Accessed: 11/04/2013 09:56
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Pros
The

and

Maitre Coralie

Cons

Smets-Gary and Rechtsanw?ltin

of a Community Katharina

von Woellwarth

Trademark

creation of an "internal market" in the European Community1 was complet? ed by effecting the free move? ment of goods, persons, services, and capital in January 1993 as a

ment

of goods throughout the European Union and "to open up restricted economic activity in the whole of the common market for

result of the implementation of A the Treaty of Maastricht. trademark (CTM) Community was established to overcome the barrier that national trademark rights constitute to the freemove?

Madrid Agreement Concerning the International Registration to the Madrid of Marks10 and the Madrid Protocol of the World Intellectual Property Organization Agreement11 inGeneva. The Madrid Agreement and the Madrid Protocol enable trademark owners to obtain a trademark registration, based on an application in one member country, in all signa? tory countries chosen by the owner. However, the interna? tional registration is only available to trademark owners that maintain headquarters, or a real and effective establishment, in one of themember countries of the Madrid Protocol or the Madrid Agreement. Thus, trademark owners from theUnited States are still unable to profit from international registra? tions under the Madrid Agreement because theUnited States has adopted, but not yet ratified, the Madrid Protocol. The EU submitted a proposal for a link between the

paid, translations into the official language of each country must be obtained, and representation before the national trademark offices by local representativesmust be secured. The international trademark registration is based on the

the benefit of undertakings."2 The attempt to create a CTM dates back to 1964 when a Preliminary for a Draft of Convention European Trademark3 was pro? the Member posed. However, States of the European Union (EU) did not reach a compromise

Madrid

until December 20, 1993, when the Council of Ministers of the Union adopted Regulation No 40/94 on the European Community trademark.4 Two Commission regulations were promulgated in late 1995: Commission Regulation (EC) No. of December the 2868/95 13, 1995, implementing on the Community and the trademark Regulation Commission Regulation (EC) No. 2869/95 of December 15, 1995, on the fees payable to theOffice forHarmonization in the InternalMarket (Trademarks and Designs).5 The Office for Harmonization in the Internal Market (Trademarks and Designs) (Office)6 began operations in September 1994 inAlicante, Spain.7 Applications forCTMs were accepted by theOffice starting on January 1, 1996, and processing began as ofApril 1, 1996. Prior to the introduction of the CTM, trademark owners could register trademarks on only a national or an internation? al level. The sole exception was the Benelux countries,8 which established a common trademark protection system in 1971 inThe Hague.9 National trademark registrations (nation? al registration) involve the registration of identical trademarks in each country where the trademark owner wishes to protect its trademark. If sought inmore than one country, such regis? trations are costly and time-consuming. Fees for the trade? and registration in each country must be
and Katharina von Woellwarth are associates

tain the original priority date of the CTM application. This proposal would have given trademark owners the choice of converting theirCTM application into an international regis? tration instead of converting an unregistered CTM into as many as thirteen national applications. An added attraction of international is the fact that they are applications in only two working languages, English and processed French, instead of up to eleven languages in case of a conver? sion intomultiple national applications. However, the acces? sion of theEU to the Madrid Protocol has not been complet? ed due to political opposition by certain EU Member States. Registration of a CTM, even without the EU's being a member of theMadrid Protocol, has many advantages for franchisors. Itmeans complete protection of their trademarks within the EU by combining legal harmonization of trade? mark systems with an international registration in one proce? dure. The CTM registration coexists with national registra? tions12of trademark offices in theEU Member States. This is a cause of concern and confusion for trademark owners seek? ing to protect their trademark rights in theEU. However, the statistical likelihood of a Community trademark being opposed by earlier national trademarks, Community trade? 18 percent. Of all marks, or both, is approximately Community trademarks published, approximately 82 percent proceed to registrationwithout opposition. The CTM registration offers, as an alternative to the national and international registration, the advantage of uni? form protection in all Member States on the basis of a single registration procedure. Summer 2000 ? Franchise Law Journal

Protocol and theCTM in 1996. The proposal provid? ed for the possibility of conversion of a CTM application into an international application pursuant to theMadrid Protocol inwhich theCTM would not be registered, but would main?

mark application
Coralie Smets-Gary

with the Brussels,Belgium. firm ofPaul D. Sher & Associates in

17

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a CTM to Obtain and Procedures Premises The Office is exclusively responsible for the entire applica? tion procedure and all procedures on the validity of CTMs. Decisions by theOffice are binding throughout the entire ter? ritoryof theEU. The regulations13 governing CTMs are uni? form to all Member States of the EU and do not require implementation by each Member State.14 A CTM may be obtained only by registration with the Office. However, a trademark must fulfill certain criteria towarrant registration as a CTM: Itmust be a sign that can be represented in graph? ic form capable of distinguishing the goods or services of one undertaking from those of other undertakings. Among the signs thatmay be registered as a Community trademark are words invented or belonging to a known language, names and firstnames, signatures, letters,numbers, acronyms, com?

absolute grounds for refusal, e.g., whether a trademark is not protectable as a Community trademark, devoid of any dis? tinctive character, contrary to public policy or morality, of such nature as to deceive the public, or has not become cus? tomary in the current language or in the bona fide and estab? lished practices of the trade.18The lack of distinctive charac? ter,or the qualification to have become customary in the cur? rent language or in the practices of trade,may be overcome if it can be shown that the trademark has become distinctive as a consequence of its use. Following such examination, the Office and the national trademark offices (except for trade? mark offices in France, Germany, and Italy) will conduct a search citing earlier trademark rights.19The search reportwill be sent to the applicant within six months of the issuance of the filing date. The CTM application will then be published20 in the Trademarks Bulletin to allow trademark owners of ear? lier rights to file theirobservations or opposition within three months of the date of publication, based on so-called relative grounds for refusal.21 Prior rights of trademark owners include prior CTMs or CTM applications, prior national trademarks or national trademark applications in a filed or registered

binations

ciating verbal and graphic signs (labels, three-dimensional trademarks such as shapes of goods or their packaging, col? ors or combinations of colors, and sound marks, in particular music marks).15 The signs may be used as manufac?
turer's marks, marks for ??^m^^^^mmmm

of letters, numbers and signs, logos, slogans, designs, figures and pictographs, portraits of people, collec? tions of words or graphic elements, and complex signs asso?

lective trademarks. The procedure for regis? tration of a CTM is simple, efficient, and cost-effective. However, before applying for a CTM registration, should assess companies

goods of a trading compa? ny, service marks, and col?

The CTM registration offers the advantage of uniform protection inall Member States on the basis of a single
registration procedure.

will help a trademark owner assess its chances of successful? ly obtaining a CTM registration. It will also help determine whether the effortwould be better spent on a national or international registration. A CTM

their trademark portfolio and business plan with respect to the EU with the help of industrial property advisers, advertising experts, graphic designers, and marketing experts to obtain the best protection for a trademark. Although the CTM filing fee possible includes a limited trademark search, companies should con? sider an independent trademark search prior to the applica? tion for a CTM registration. Independent trademark searches cover all EU Member States, thereby allowing a trademark owner to evaluate the potential registration of its trademark in the EU marketplace. The result of an independent search

marks that are well known in aMember State.22 CTM appli? cations may be opposed on the basis of relative grounds for refusal, which include identity of the CTM application with an earlier trademark and its goods or services, the likelihood of confusion by the public because of the identityor similari? ty of the CTM application with an earlier trademark and its goods or services, or identity or similarity with an earlier trademark registered for goods and services that are not simi? lar to those forwhich a CTM application is filed but where the earlier trademark has a reputation and would sufferunfair advantage or detriment in respect of its distinctive character or its repute. Should an opposition be filed by a trademark owner of an earlier right, a cooling-off period of twomonths will be given prior to the commencement of the actual opposition proce? dure. The cooling-off period is designed to allow parties to

Member State of the EU, international registra? tions under the Madrid Agreement or theMadrid Protocol with effect in a Member State of the EU, unregistered marks used in the course of trade of more than local signifi cance valid in a Member State of the EU, or trade?

application, together with a basic filing fee of approximately $960, must be filed with the Office. The application will be examined by the Office for compliance with formal requirements, such as payment of the application fee; submission of a power-of-attorney, if necessary; and completeness of documentation.16 Once the application com? plies with the formal requirements, a filing date will be issued upon which claims for seniority and priority can be based.17 The Office next examines the application under 18 Franchise Law Journal ? Summer 2000

negotiate, evaluate the eventual success of the opposition, and consider the possible withdrawal of the CTM23 applica? tion (at no additional cost). The possible withdrawal may be combined with converting the CTM application into one or more national trademark applications. If no opposition is filed within the three-month period or if an opposition even? tually is rejected, the CTM will be registered upon payment

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of a registration fee and will be valid for ten years from the date of filing. The procedure takes about eight months from the date of publication of theCTM application.24 The CTM is obtained by payment of an initial application or filing fee of 975 for three classes of goods or services, with an additional 200 for each additional class, plus, when a 1,100 for three classes. registration fee of requested, Renewal fees are payable in an amount of 2,500 for three classes, and an assignment and license registration fee of 200 each, capped at 1,000 in the case of multiple assign? ments or licenses. Additionally, trademark owners from the United States need to add costs for one representative who will conduct the procedure. Compared to national registra? tions, a CTM registration is less expensive and time-consum? ing. For example, a national registration in the United Kingdom will cost a trademark owner ? 200 for the filing of the trademark application for one class and an additional fee

of ? 50 for each additional class. The registration fee is ? 115, the fee for renewal for one class is ? 200 and ? 50 for each additional class. A trademark owner would pay ? 415 730) for one national registration plus the (approximately cost additional for a local representative. Moreover, commu? nication with theOffice is easy and informal and can be con? ducted by fax or e-mail.

trademarks or CTMs thathave a laterfiling date. A national trademark or a series of national trademarks may be registered as a CTM, regardless of their age. Furthermore, a CTM registration does not imply abandon? ment of a national registration. Both may be upheld on a par? allel basis. It is also possible to claim so-called seniority of

mark offices will automatically include prior CTM applica? tions and registrations as a basis for refusing applications on the basis of earlier trademark rights. Furthermore, prior CTM registrations may be used as a basis for filing oppositions, cancellations, or infringement proceedings against national

Trademark owners may choose to apply initially for a CTM registration to theOffice or through any of the national trade? mark offices of the Member States. Regardless of where the application is filed, the file will nonetheless be processed only by theOffice. Previous national or international registrations are not revoked by applying for a CTM registration. To the contrary, the CTM registration renders the national or international registration even more effective. For example, national trade?

single procedure that simplifies trademark policies at the level.25 By applying for a CTM registration, a European owner obtains coverage and protection in fifteen trademark Member States26 of the EU, comprising 380 million con? sumers using one application, procedure, registration, lan?

of the CTM Advantages The CTM is obtained solely through registration at theOffice while trademarks in theUnited States are obtained on a use based system. The CTM registration has a unitary character, i.e., ithas equal effect throughout theEU on the strengthof a

guage, and representative. The effect of a CTM registration, its surrender or transfer, as well as its revocation, invalidity, or eventual prohibition against use is EU-wide.27 An additional advantage, especially for franchisors thatdo not operate throughout theEU but plan to expand theirbusi? ness, is thatuse of the trademark in one Member State is suf? ficient to ensure the validity of the CTM in the entire EU

earlier national trademark rights existing in any of the EU Member States under the common aegis of a CTM by claim? ing the date (seniority) of those earlier trademark rights to the extent that the trademarks, goods and services, and trade? mark owner are identical. Following the successful claim of seniority, the trademark owner may decide to abandon its parallel national registrations by maintaining the same rights as if the national trademark had been renewed. Thus, the claiming of seniority may lead to a substantial reduction in costs and administration because trademark owners may abandon their national registration after successfully claim? ing seniority and uphold only theCTM registration. If theOffice refuses to register, revoke, or annul a CTM, applications for national trademarks may be made in all countries of the EU inwhich there are no such grounds for refusal, revocation, or annulment. The advantage of such a procedure is that the priority, i.e., the filing date of a CTM is preserved, togetherwith any investment and advertising cam?

earlier identical national registrations and integrate national and CTM registrations, therebymaintaining all the advan? tages of the national registrations without having to renew them. The so-called seniority of a national trademarkmay be claimed at theOffice, even if the national trademark is subse? quently canceled or surrendered in favor of theCTM. Previously unknown to any form of a filing system, the seniority enables the trademark owner of a CTM to gather

Trademark owners may directly protect a newly created as a word or logo by applying first for registration

(following registration). The CTM may be assigned for the entire territoryof the EU and may be licensed for some or all goods or services for which it is registered for thewhole or part of theEU.28

Community trademark at the Office, or, alternatively, at a national office of a country party to the Paris Convention or to the TRIPS Agreement,29 where the word or logo has already been filed. In the latter case, trademark owners may claim priority for a CTM application if they choose to file a national registration first. The filing date of the national application is used as the filing date of theCTM application, that priority is claimed within six months.

paigns previously carried out in those countries. As a general rule, any natural or legal person may register a CTM.30 It is not necessary to be a businessperson or to use the trademark oneself on themarket. Access is open to pri?

provided

persons that are domiciled, have their seat, or have a real and effective establishment within a country that is either an EU Summer 2000 ? Franchise Law Journal

vate companies or associations for theirdirect use, to holding companies for use by the companies under their control, and to associations or other public bodies thatwant to identify their members' goods and services through a collective trademark. A CTM may be registered by all natural or legal

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Member State, a party to theParis Convention, or a signatory to theTRIPS Agreement. Where none of these conditions are met, access to the CTM remains possible, subject to reciprocity with the trade? mark proprietor's country. The Office is open to the public. Anyone is free to deal directly with theOffice, provided the trademark owner is a natural or legal person of a Member State. Those whose countries are not Member States of the EU must be represented by a professional representative or a legal practitioner within the EU. As noted above, trademark owners from theUnited States are not eligible to apply for an international registration under theMadrid Agreement or Madrid Protocol. Thus, it is hardly surprising thatmany of the CTM applications are filed by or on behalf of natural or legal persons originating in theUnited States. The Office's official languages31 are Spanish, French, German,

process of enlargement with regard to the six new EU mem? bers34 as well as any future expansion of theEU. The general principle of the automatic extension is that the already exist? ing trademarks will be extended automatically to the new Member States of theEU with no administrative intervention or bureaucratic procedure.35 Bilateral treaties between theEU and the joining country may be an exemption to the general principle of automatic extension.

English, and Italian.32 However, the initial CTM application may be filed in any of the eleven official lan? guages of the EU. Subsequent application and registration proceedings, however, must be in one of the above five offi? cial languages. Franchisors from theUnited States are, there? fore, able to obtain a CTM registration without having to worry about transla?

of CTM Registration Disadvantages A CTM registrationmay be blocked by any opposition from a natural or legal person having an earlier right. If relative grounds for refusal exist in any part or country of theEU and the trademark owner of earlier rights opposes an application, the CTM may not be registered as a whole. National trade? mark offices within the EU may refuse applications on the basis of earlier rights registered as Community trademarks, and such trademarks may be used as a basis for bringing or infringement proceedings cancellations, oppositions, against national trademarks with subsequent filing dates. This result can constitute a double-edged sword, depending on whether the trademark owner has an earlier right or is an applicant for either a CTM or a national

tions. Communication with the Office and its local legal representative be conducted in may

A CTM

between two courts within theEU. Depending on the tactics and strategy, the plaintiffmay either choose the court of the Member State where the infringement was committed (in which case jurisdiction is limited to the territory of the Member State where the court is located) or the court of the Member State in which the defendant is domiciled. The advantage of the latter scenario is that all disputes may be combined into one single proceeding for infringements com? mitted within the EU. However, even if the first alternative is

English. of the Infringement rights conferred by the CTM is sanctioned by spe- CTM cially designated courts in each Member the State.33 Denmark, Sweden, United Kingdom, the Benelux, and Germany have already specially designated CTM courts. The otherMember States are still considering which court will deal with CTM States, CTMs infringements. Thus, in the latterMember must still be enforced before traditional commercial courts. In theMember States that have already designated special CTM courts, any revocation or invaliditymay be judged by specialized judges to ensure unitary and coherent case law. The plaintiff in a CTM infringement case may choose

registration may be blocked by any opposition from a natural or legal person having an earlier right.

registration. A CTM applicant must deal with eventual opposi? tionswithin a limited peri? od of time as stated in the

implementing regulation. - In the three general, month opposition period is not extended by the Office, even ifmultiple oppositions are filed. Applications for a CTM registrationmay not be split into multiple applications if an opposition is filed for one or more classes. An opposition by a trademark owner with an earlier right for one class may, therefore, delay the entire registra? tion process. By way of comparison, the national trademark laws of theUnited Kingdom allow the separation of a trade? mark application upon payment of a ? 100 fee. An opposition not only delays the registration procedure but also increases costs. The losing partymust pay the essen? tial costs (including legal fees) and those actually incurred by the successful party.However, costs are limited by the imple? menting regulation to certainmaximum rates. A CTM registration may be canceled if the trademark owner or the licensee has not made genuine use of the trade?

chosen, the decisions of theCTM courts may be enforced in other Member States of the EU by application of the Brussels Convention on Jurisdiction and Enforcement of Judgments inCivil and Commercial Matters. A CTM registration will substantially 20 Franchise Law Journal ? facilitate the

mark for a period of five years36 after the registration. The cost of the registration procedure will increase if the trademark owner decides to withdraw the CTM application and convert it into national trademark applications. In addi? tion to a conversion fee, the national trademark offices will

request payment of their own fees. There is no credit for the nonrefundable CTM fees. The process takes approximately two years from the date

Summer 2000

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reveal earlier rights. Why incomplete? The search report itself is only partially useful because the national trademark authorities of Germany, Italy, and France do not conduct trademark searches. However, opposition proceedings have a long tradition in Germany while other legal systems in Member States of the EU, e.g., the Benelux or France, did not deal with oppositions before theCTM was introduced. It is hardly surprising that a substantial amount of oppositions originate in Germany. German trademark owners and their

of theCTM application to issuance of the certificate of regis? Most of this delay is caused by an unnecessary and tration. incomplete search that is conducted by the Office prior to publication of theCTM application in its official Trademarks Bulletin. Why unnecessary? Once the CTM application has been filed, theOffice cannot file an opposition on its own ini? tiative on behalf of a thirdparty.Moreover, application or fil? are nonrefundable. ing fees for CTM registrations Unopposed applications will be registered, even if searches

on March 14, 1994, enforced 15, 1994, and amended No. 3288/94 of December 22, 1994. Regulation official 5. More documentation has been published, e.g., January Commission Regulation implementing dure of the boards of appeal of the Office; Decision the president of the Office of March 5, 1996, concerning No. 216/96

by the

the rules of proce? No. EX-96-3 of the evidence

to be provided Communication (Examination March 26, November

1996; and theGuidelines concerningproceedings before theOffice

Part B; Decision Guidelines) 1996, and Part A, Decision 1, 1996. for more to Art. pursuant No. EX-96-2 issued on No. EX-96-8 issued on

on by the on claiming priority and seniority, commented No. 3/96 of the president of the Office of March 22,

6. See <www.oami.eu.int> 7. Established

information.

(EC) No. Regulation trademark. 40/94 on the Community the Netherlands, and Luxembourg form the Benelux. 8. Belgium, the Netherlands, and Luxembourg 9. In 1962, Belgium, signed a to coordinate the trademark law of the three countries. The Convention 2 of Council in 1971. legislation was introduced and implemented 10. Dating from 1891 currently with members representing more forty-five countries. 11. International Treaty adopted on June 28, force in 1996. than into

legal representatives are experienced with oppositions and have reputations to defend in protecting their trademark rights. This means that unexpected oppositions may be filed if trademark owners do not conduct individual searches prior to applying for a CTM registration. The so-called seniority claim of theCTM does not recog? nize the economic reality of the structure of medium-sized and larger businesses because seniority cannot be claimed if identical trademarks are owned by companies that are part of the same group.

1989, and entered

trademark. Community 13. See endnotes 4 and 5, supra. 14. Directives adopted by the European ed in each Member State.

12. See Preamble of Council Regulation (EC) No. 40/94 on the

Council must be

implement?

trademark. Community 16. See Art. 26. 17. See Art. 27. 18. See Arts. 19. See Art. the Office 36-38. 39.

15. See Art. 4 of Council Regulation

(EC) No. 40/94 on the

Conclusion Because a CTM registration is valid for the entire EU and Member States, the simple CTM reg? currently covers fifteen istration is cost-effective and efficient. The registration pro? cedure allows a trademark owner to register a single trade? mark in a market with approximately 380 million consumers, even if the owner uses theCTM in only one Member State.

because

20. See Art. 40. 22. Within

trademark searches Ireland may stop conducting and time-comsuming. they are too expensive

for

21. See Arts. 41-43.

trademark. Community 24. See Arts. 45 and 46. 25. See Art. 26. The Belgium, 1 (2). fifteen Member

23. See Art. 44 of Council Regulation (EC) No. 40/94 on the

themeaning

of Art. 6 of the Paris Convention.

mous potential of a CTM registration, which will be further enhanced by the enlargement of theEU and by U.S. ratifica? Madrid Protocol. tion of the Endnotes
1. The

Since the beginning of the Office's activities in 1996, it has received more than 115,000 applications and has regis? teredmore than 40,000 CTMs from throughoutworld. Most applications for CTM registrations are filed by natural or legal persons from EU Member States. A significant number are filed from abroad with applications from the United States accounting for nearly 25 percent of all applications. Only 18 percent of the applications involve the filing of an opposition. This means that 82 percent of all CTM applica? tions are registered without the need to conduct an opposi? tion procedure. This statistic alone demonstrates the enor?

are Austria, Union States of the European Denmark, Finland, France, Greece, Germany, Ireland, Italy, and the the Netherlands, Sweden, Luxembourg, Portugal, Spain, United Kingdom. The Member States have altogether thirteen different have used a single uni? trademark systems and offices. The Benelux form system and office trademark.

27. See Art. 1 (2) of Council Regulation (EC) No. 40/94 on the 28. See Art. 22 (1) of Council Regulation (EC) No. 40/94 on the
aspects of intellectual under GATT. property rights

since

1971.

Community

trademark. Community on trade-related 29. Agreement concluded

trademark. Community 31. See Art. 115. 32. The other

30. See Arts. 88 and 89 ofCouncil Regulation (EC) No. 40/94 on the

Portuguese,

33. See Art. 91 of Council Regulation (EC) No. 40/94 on the

trademark. and Cyprus. Estonia, Hungary, Poland, Slovenia Republic, does that the Association 35. Provided Treaty with each new member

six languages, Finnish, Greek, Danish, Dutch, can be used in the registration procedure. and Swedish,

Community 34. Czech European Community was transformed into the European not make Community

of the MaastrichtTreaty in December 1992. Union with signature 2. Preamble of Council Regulation (EC) No. 40/94 on the
Community 3. Under trademark.

36. See Art. 15 of Council Regulation (EC) No. 40/94 on the

trademark.

an exemption.

4. Published in theOfficial Journal of theEuropean Union on

the Chairmanship

of the Dutch

Patent Office.

Summer 2000

Franchise Law Journal

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