All change for EU trade mark law? First ECJ ruling on date for assessing relative grounds

What's the issue?

One of the big issues in EU trade mark law currently is what happens when a prior right relied on in an opposition or invalidity action ceases to exist before a decision is issued. We know that, if a prior registered right is invalidated, it is deemed never to have existed and falls away. But what happens if a prior right is revoked, surrendered, not renewed, or otherwise ceases to exist (eg because a member state is no longer part of the EU)?

Why is this important?

The answer is important because - if a prior right can only be relied upon if it is still valid and subsisting at the date a decision is issued - there will be an incentive for defendants to apply to revoke prior registered rights cited against them during the course of the action so as to defeat the claim. 

In other words, prior rights holders will no longer have to think only about being able to evidence use of their registrations during any applicable proof of use period; use during an action may also become relevant. That might mean more dragging out of actions, stays, and tactical appeals.

Surely the only relevant date is the priority/filing date of the mark attacked?

The ECJ has consistently held (in a variety of legal contexts) that a court action must retain its purpose and the claimant must retain a continuing interest in the outcome of the action at the decision date.

In the context of trade mark law, some have argued that this means that prior rights relied on in opposition and invalidity actions must be in existence at the date the opposition/invalidity decision is issued. Others have argued that the only relevant date as regards trade mark law is the priority/filing date of the later mark attacked - the date that substantive issues such as likelihood of confusion are considered. What happens during the course of the action is irrelevant (unless the registration is invalidated).

What have the EUIPO and CJEU said in the past?

There have been conflicting rulings from the EUIPO and General Court on this issue over the years. However, the issue came into sharp focus at the end of the Brexit transition period when the EUIPO dismissed all pending opposition and invalidity actions to the extent based on UK prior rights. 

Its rationale was that, since the UK was no longer part of the EU trade mark system, these actions no longer retained their purpose, and the UK prior right holder no longer had a continuing interest in their outcome. Put differently, if an EUTM no longer covers the UK, what does it matter if there is a conflicting UK prior right?

A small number of UK prior right holders appealed against the dismissal of their actions by the EUIPO, and four appeals have been pending before the ECJ on the issue. The ECJ has now issued the first of the four expected decisions - in Indo European Foods v EUIPO.

What did the ECJ say in the Indo European Foods case?

The ECJ held that this particular action retained its purpose, and the prior right holder retained a continuing interest in its outcome, since:

• the prior right did not fall away until after the EUIPO (including Board of Appeal) rulings, and 

• the appeal to the ECJ had not been withdrawn.

What can we glean from this?

The decision confirms that there is no requirement for a prior right to be in existence at the date of any CJEU appeal ruling. That's because the role of the CJEU is to review the legality of the EUIPO (including Board of Appeal) ruling, not to rule - as such - itself. However, the decision says nothing about whether or not a prior right must be in existence at the date of the EUIPO (including any Board of Appeal) ruling. The ECJ simply did not need to answer that question in this particular case (because the prior rights were still in existence at that time).

Fortunately, the question should be answered in two of the other pending ECJ appeal decisions - Nowhere Co and Inditex – expected between late this year and mid next year.

What are the potential implications for brand owners? 

If the ECJ holds that prior rights must be in existence at the date of the EUIPO (including Board of Appeal) decision, the implications would be far-reaching. In particular, it would mean that:

• There will be more actions to revoke prior trade marks registrations by defendants to opposition and invalidity actions during the course of the action. 

• Since most EUIPO opposition and invalidity actions last several years (and more with appeals), the owners of prior registered marks will (if requested) almost certainly have to prove use at some point if the right is to be successfully relied upon. To make doubly sure, defendants might drag out actions and file speculative appeals. 

• This will, in turn, mean more stays of opposition and invalidity actions while revocation actions are played out.

• The practice of asserting a prior registered right and then refiling for the same right undertaken by some brand owners might not work anymore.

• There will be even more incentive to ensure that registrations are kept alive and that renewal deadlines are not missed where the registration in question is being enforced.

• If a prior registered and/or unregistered design that is relied upon in an opposition or invalidity action expires during the course of the action, the action would fail – an odd result.

The above consequences would apply not just to opposition and invalidity actions at the EUIPO but also to those in EU member states (both administrative and court). The impact of all of this for infringement actions in EU member states would also need to be considered – a likely complex issue.

Conversely, if the ECJ holds that the only relevant date is the priority/filing date of the mark under attack then it will be business as usual. Unfortunately, those brand owners who had their actions dismissed by the EUIPO at the end of the Brexit transition period are unlikely to have any means of redress.

What's the position in the UK?

The issue hasn’t been much argued. However, the UKIPO has held that:

• It does not matter if a prior registered right is revoked with effect from a date during the course of an action – the right can be taken into account as long as it was valid and subsisting at the priority/filing date of the later mark under attack (RIVIERA). 

• A prior registered right cannot be relied upon where it lapses due to non-renewal (Transpay) or is surrendered (Sundip) with effect from a date during the course of an action – non-renewal and surrender being positive steps taken by the trade mark owner to relinquish its rights (including its right to take action). 

If the ECJ holds that a prior right must be in existence at the date of the EUIPO (including any Board of Appeal) ruling, then UK and EU law will be partially different on this point.

What should brand owners do?

Brand owners involved in actual or potential cancellation or infringement actions (in and out) in the EU should monitor for developments and factor the potential impact of the ECJ's rulings into their strategy and decision making.

A separate but related issue of whether enhanced distinctiveness/reputation must be present at the decision date is also being considered by the ECJ in the Shopify case. The implications of that are potentially significant for those with legacy, declining or borderline enhanced distinctiveness/reputation.