Big ECJ ruling: oppositions/invalidity actions will fail if the prior rights cease to exist

ECJ rules that prior rights relied on in opposition/invalidity actions must be valid and subsisting at the date the EUIPO rules. Ruling gives greater scope for defendants to thwart claims by counter-attacking for revocation for non-use.

What has happened?

• One of the big questions in EU trade mark law recently has been: what happens if 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)?
• After numerous conflicting decisions, the ECJ has just answered: if a prior right ceases to exist for any reason during an action before the EUIPO (including the Board of Appeal), that right is no longer taken into account (and if all prior rights cease to exist, the action fails).
• The decision means that it is not just the priority/filing date of the mark under attack that is relevant. Now, prior rights holders must consider whether there is scope for the rights they have relied on to be struck down during the course of the opposition/invalidity action, particularly as a result of counter-attacks for revocation for non-use.
• The decision will be particularly significant where a prior registration relied on becomes vulnerable to revocation for non-use during an EUIPO action/appeal (eg where it turns 5 years old or use is stopped/not resumed). We can now expect to see more 'dragging out' of opposition/invalidity actions, tactical appeals, and requests to stay so that defendants can attack prior rights for non-use.
• Those involved in disputes in the EU (and in EU member states) should review them carefully to see whether this ruling presents new opportunities or threats. Ensuring that prior rights are used and renewed will be key.
• The decision means that the EU and UK are now partially out of step with one another on this issue.

Want to know more?

The background

The  ECJ ruling in EUIPO v Nowhere (Ape Tees) arises from a decision by the EUIPO to dismiss an EUTM opposition at the end of the Brexit transition period as that opposition was based on a prior UK passing off right. The EUIPO was of the view that, at the end of the Brexit transition period, all actions based on UK prior rights should be dismissed as the prior rights holders no longer had a continuing interest in the actions and the actions were devoid of purpose.

This decision to dismiss these actions was appealed by at least four UK prior rights holders – and this is the first of the appeals that really matter to reach the ECJ.

The ECJ ruling

The ECJ ruled that, if a prior right ceases to exist for any reason during an action before the EUIPO (including the Board of Appeal), that right is no longer taken into account. It based its decision on numerous factors, including the wording of relevant trade mark legislation and the aims of opposition/invalidity actions to ensure that conflicting rights do not appear on the register.

While the decision relates to prior UK passing off rights relied on in an opposition that ceased to exist as a result of Brexit, it is fairly clear that the ruling extends beyond Brexit and to all prior rights whether raised in opposition or invalidity actions. It also applies not only to opposition/invalidity actions before the EUIPO, but also those in national EU member states (both administrative and court).

What is ignored?

The prior right is only ignored if it ceases to exist 'before' the EUIPO (including Board of Appeal rules). It would still be taken into account if it ceases to exist 'after' the EUIPO/Board rules, since the role of the CJEU is to review the legality of the EUIPO/Board's decision.

What are the implications?

• Prior rights will need to be kept alive during the course of EUIPO actions (including appeals to the Board of Appeal). Simply showing that the prior right was valid and subsisting at the priority/filing date of the mark under attack is no longer sufficient. By way of example, it means that a prior right holder could win an opposition at the EUIPO but - if an appeal is filed and the prior right ceases to exist before the appeal is decided by the Board of Appeal - the opposition would fail.
• As a result, we can expect to see more actions to revoke prior trade mark registrations by defendants to opposition/invalidity actions during the course of the EUIPO action/appeal. 

• Since most EUIPO opposition/invalidity actions last several years (and more with appeals), most prior registrations will be subject to proof of use requirements at some point during the action. To make doubly sure, defendants might 'drag out' actions and file speculative appeals. This will, in turn, mean more stays of opposition/invalidity actions (which the EUIPO is usually happy to agree) while revocation actions are played out.

• The development will therefore particularly impact cases where a prior registration relied on becomes vulnerable to revocation for non-use during an EUIPO action/appeal (eg where it turns five years old or use is stopped/not resumed). The previous approach of not worrying about proof of use where a prior registration relied on was less than five years old at the priority/filing date of the mark under attack now no longer works.
• Those involved in disputes in the EU (and in EU member states) should review them carefully to see whether this ruling presents new opportunities or threats.
• There will also 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 in an opposition/invalidity action.

• The ruling will also impact opposition/invalidity actions based on prior registered and unregistered designs, which are relatively short-lived (up to 25 years and 3 years, respectively). If such a design expires during the course of the action, the action will now seemingly fail. It means that the (albeit rare) reliance on unregistered designs in EU trade mark opposition/invalidity actions might now be pointless.
• The impact of all of this for infringement actions in EU member states needs further thought – a likely complex issue.

• The decision means that UK and EU law now partly diverge on this issue (although the issue has not been much argued in the UK). The RIVIERA case makes clear that subsequent revocation of a prior right is irrelevant in the UK - as long as the registration was valid and subsisting at the priority/filing date of the later mark, that is sufficient. (However, the UKIPO has held that an action will fail if the prior right lapses due to non-renewal (Transpay) or is surrendered (Sundip) during the course of an action as these are positive actions by the trade mark owner to relinquish their rights.)