High Court rules that the relevant date for assessing absolute grounds for re-filed UK trade mark applications is the EU - not UK - priority/filing date. Brand owners should consider whether the decision impacts the registrability/validity of such marks and any disputes involving them.
What has happened?
- In Parabolica v Tesla, the High Court has decided an important point concerning the correct date for assessing absolute grounds for UK trade mark applications filed on the back of EUTM applications pending at Brexit.
- This particular case concerned the relevant date for assessing bad faith, but the ruling implies that it applies to all absolute grounds.
- The Court held that the relevant date for assessing bad faith is the EU filing date, not the UK filing date. This is important because there can be a big gap between these dates. In this particular case, for example, the EUTM application had been filed in 2007, while the UK application was filed much later, in 2021. The circumstances and intentions of the applicant might differ across these dates, impacting whether the mark was filed in bad faith and is therefore registrable/valid.
- Before this decision, the UKIPO had been assessing absolute grounds at the UK filing date, with the earlier EU dates only being relevant for assessing relative grounds (ie which right takes precedence). Assuming that there is no appeal, UKIPO practice will now have to change.
- It means that some re-filed marks will now be subject to objections/attacks (or be able to defend objections/attacks) when they would not have been under 'old' UKIPO practice. Estimates suggest that around 15,000 EUTMs were re-filed in the UK, so this will not affect huge numbers of rights but will still be significant for some.
- Brand owners should review re-filed UK marks and any disputes involving them to determine if this decision offers any opportunities or threats – more on this at the end of this article.
Want to know more?
The background
Parabolica filed an EUTM application for the word mark TESLA in 2007. When it remained pending at the end of the Brexit transition period, Parabolica filed a corresponding UK application under Article 59 of the Withdrawal Agreement, which permitted applicants to claim the earlier EUTM's priority/filing date, provided the UK application was filed within nine months.
The UK application was opposed by Tesla Holding (unrelated to the car company) on several grounds, including bad faith. The UKIPO upheld the opposition, assessing bad faith at the UK filing date of September 2021 - consistent with previous UKIPO rulings that absolute grounds should be judged at the UK filing date for re-filed marks. Parabolica appealed, arguing bad faith should be assessed at the earlier EU date.
The High Court decision
The Court ruled that the wording of Article 59 itself clearly deems the EU priority/filing date as the relevant date for assessing both absolute and relative grounds. While the title to Article 59 and Schedule 2A of the Trade Marks Act (which implements Article 59) both suggest that the EU dates are only relevant to assessing relative grounds, that could be explained by the fact that Article 59 was amended/broadened during its drafting. Indeed, the Explanatory Notes to Schedule 2A do not suggest that the effect of the earlier EU date is restricted to relative grounds. Whether relying on Article 59 alone (which has direct effect in the UK) or using it as an aid to the interpretation of Schedule 2A, the result is the same – the EU dates are relevant for all purposes.
The Court drew support for this interpretation from the equivalent provisions of the Registered Designs Act (which expressly fix the relevant EU dates for all purposes) and from the fact that the UKIPO Registrar of trade marks (an intervener in the case) had, on reflection, favoured this interpretation.
What does this mean for Parabolica?
As a result, the judge referred the Parabolica case back to the UKIPO for it to reconsider whether there was bad faith, this time at the EU application date of 2007. It will be interesting to see how the UKIPO approaches the issue, in particular, whether it will be enough that the EUTM itself was filed in good/bad faith or whether an assessment of the applicant's intent specifically as regards the UK in 2007 is required.
Thoughts on the decision
While it is submitted that the designs legislation is not a completely relevant comparator, the wording of Article 59 does seem to suggest that the EU priority/filing date is relevant for all purposes (unless the title to Article 59 is deemed to qualify that wording). The ruling would therefore seem correct as a matter of pure statutory interpretation.
From a policy perspective, the position is more complex. While there are pros and cons of using each date, it does not seem completely right that bad faith is judged at the EU filing date. Take the example of an applicant who files an EUTM in good faith with a genuine intention to use the mark in some continental EU countries, but re-files the mark in the UK solely to block a competitor (which it did not know about at the EU filing date) and with no genuine intention to use the mark in the UK. There would be a finding of good faith here, even though the positive act of re-filing in the UK was undertaken in bad faith. Having said that, there are also good arguments that EUTM applicants should not be prejudiced by Brexit – just as EUTM registrants were not.
Leaving policy issues aside, the bigger issue is that there will now be a change of practice at the UKIPO, which could alter the outcome of objections and attacks.
What does this mean for you?
- Overview. Some re-filed UK marks will now be subject to objections/attacks (or be able to defend objections/attacks) when they would not have been under 'old' UKIPO practice. This will be particularly so where there is a significant gap between the two dates.
- Bad faith - evidence. Those involved in bringing/defending bad faith attacks against re-filed marks should now be considering whether they need to submit additional evidence and arguments to establish good/bad faith (as appropriate) at the EU as opposed to UK filing date. Additional evidence and changes to arguments are likely to be required as a result of the change of relevant date.
- Bad faith – merits. They should also consider whether the change of date could impact the outcome of the bad faith claim. For example, where there was bad faith at the UK - but not EU - filing date for a re-filed mark, the bad faith claim should now fail when it would have succeeded under 'old' UKIPO practice. Likewise, where there was bad faith at the EU date but not at the UK date (unlikely), the claim might now succeed when previously it would have failed. If the bad faith claim is part of a wider dispute, the outcome of that dispute could also be impacted. This will need to be checked on a case-by-case basis.
- Acquired distinctiveness. Those involved in disputes about distinctiveness should also consider the impact of the ruling on the evidence/arguments filed and merits of the claim. They should now be focusing their efforts on the distinctiveness of the mark at the EU priority/filing date, not UK filing date. At the very least, evidence and arguments will need to be reviewed to see if they need to be changed or supplemented. Thought should also be given to whether the change affects the outcome of the claim and any wider disputes. For example, where a mark was not distinctive at its EU priority/filing date but had acquired distinctiveness through use at its UK filing date, it could now be refused registration (when it would have been accepted under 'old' UKIPO practice). Fresh applications should be considered. Remember that the UKIPO can raise absolute grounds objections of its own volition (and third parties can file observations) at any time up to registration, so new distinctiveness objections can always be raised. (Note that this issue should only affect pending applications – registered marks should be able to fend off any invalidity attack on the basis that they have acquired distinctiveness through use in the UK, post-registration.)
- Loss of distinctiveness. It is rare for a mark to lose distinctiveness, but it can happen where it becomes generic. Again, this should be considered. Any objections/oppositions to pending re-filed marks (or invalidity actions against registrations) that have lost distinctiveness between the relevant EU and UK dates will now fail (as the mark will have been distinctive at the relevant EU date). The only option will now be to apply to revoke marks (once registered) for genericism. That's not ideal as genericism is not easy to prove. Those with pending applications that have lost distinctiveness in this way might now decide to push the mark to registration and leave it to third parties to try to revoke the registration. Those involved in disputes out should consider whether a claim of revocation for genericism is now required (given that any objection/opposition/invalidity action based on lack of distinctiveness should now fail).
- Other absolute grounds. For a belt and braces approach, re-filed marks could be reviewed against other absolute grounds objections to see if the change of date has any impact.
- Refusals. Those who have had re-filed applications (wrongly) refused/invalidated (eg for bad faith) based on the UK filing date will not be able to do anything about it unless they are still within the appeal window.
- Developments. Brand owners should watch for any appeal to this ruling and for any changes to UKIPO practice. It would be sensible to wait to see if any appeal is filed and for guidance/case law from the UKIPO before committing to any actions, where possible.
