What's the issue?

One of the “big" issues in EU trade mark law at present is, what happens if a prior right relied on in an opposition or invalidity action ceases to exist during the proceedings or any appeal? We know that prior rights must be in existence (valid and subsisting) at the priority/filing date of the later mark under attack and that, if a prior right is invalidated, then it is deemed never to have existed and falls away. But does it matter if the prior right is revoked, not renewed, surrendered or otherwise ceases to exist (other than by way of invalidation) during an action or appeal? 

The question has met with conflicting decisions from both the EUIPO and CJEU over the years. Some argue that it ought to be sufficient that the prior right exists at the priority/filing date of the later mark under attack and that the legislation does not say otherwise. Others argue that it is a fundamental principle of EU trade mark law that a registered trade mark owner must use its mark or risk losing its rights.       

What's the relevance of Brexit?  

The issue came into sharper focus with Brexit. This is because, at the end of the Brexit transition period, the EUIPO dismissed all pending EUTM opposition and invalidity actions based on UK prior rights (or the portions of such actions based on such rights) on the basis that such rights had ceased to be relevant now that EU law no longer applied to the UK. 

According to the EUIPO, it did not matter that the prior UK rights were valid and subsisting at the priority/filing date of the later EUTMs under attack or that EU law still applied to the UK when the opposition/invalidity actions were filed. Subsequent developments had changed the position.

What's the development?

A small number of UK prior rights holders who were adversely affected by this decision appealed. What has followed - yet again - has been conflicting decisions from different Boards and Chambers of the EUIPO and General Court (respectively) in these appeals. Now, three cases are pending before the ECJ - and today the Advocate General issued his Opinion in one: EUIPO v Indo European Foods. 

The Advocate General has agreed with the approach of the General Court - that it is entitled to take the prior UK passing off right in issue into account because that right was still in existence when the Board of Appeal issued its ruling in the action. Since the purpose of the General Court is to review the legality of the Board of Appeal ruling, is is sufficient that the earlier right still exists at the time of that Board of Appeal ruling. In other words, in the Indo European Foods case, the Board of Appeal had issued its ruling before the end of the Brexit transition period and so the prior UK passing off right was still relevant. 

What exactly did the Advocate General say?

• The General Court was right to hold that the action before it retained its purpose. The prior right was still in existence at the time the Board of Appeal decision was issued and the "…extinction of the earlier right due to the withdrawal of the United Kingdom from the European Union… cannot have any effect on the proceedings before EUIPO, since it cannot be considered to eliminate the earlier right such that it is deemed to have never existed.”
• The General Court was right to hold that Indo European Foods had a continuing interest in bringing the action (although the General Court's reasoning was wrong). The question was not about whether the registration of the mark was “capable of harming the legal interest” of the prior right holder at the time of the appeal, but whether the prior right holder had a continuing interest in the action at the time of the EUIPO Board of Appeal decision. Even if he was wrong on that, the registration of the mark was capable of harming the legal interest of Indo European Foods because of the possibility that – if the mark opposed was registered - the owner could claim reasonable compensation from Indo European Foods under Article 11(2) of Regulation 2017/1001.
• The EUIPO was wrong to argue that the Board of Appeal and General Court decisions were based on a conflict of rights that can never occur. This was another way of arguing that Indo European Foods lacked a continuing interest in the action, which had already been dealt with. 

What does this mean for brand owners?

The Advocate General's Opinion is not binding on the ECJ and only considers what happens if a prior right relied on in an action ceases to exist after the Board of Appeal decision in that action has been issued. It says nothing about what the position would be if the prior right ceases to exist before that time. (Although it could arguably be inferred from the Opinion that the Advocate General considers that the action should fall away if the prior right ceases to exist before that time. If that approach is followed by the ECJ, it would represent something of a compromise position.)   

We expect the ECJ ruling (which will be determinative of the matter) in three to six months. Two other appeals - Nowhere Co. and Shopify - raising similar issues are also pending before the ECJ and Opinions and decisions in these cases should also follow within the next year.

What are the wider implications?

It is hoped that the decisions will finally determine what happens if a prior right relied on in an opposition or invalidity action (and potentially also an infringement action) ceases to exist during the proceeding or any appeal. This question has much wider implications than Brexit. 

If a prior right must be in existence during an action or any appeal then we can expect many more attempts to try to revoke prior rights (eg for non-use) by defendants to opposition and invalidity actions. This effectively introduces an additional proof of use requirement for the owners of prior rights when enforcing their rights. We can also expect such defendants to try to drag out actions based on prior rights that have not yet been used (or only used sporadically) so as to give them more time to file such revocation actions. It would be a significant change to the way oppositions and invalidity actions are run.  

The outcome should not impact UK law which has always been fairly clear that (except where a prior right is invalidated), it does not matter what subsequently happens to that right.