Almost there: European trademark reform edges closer

The EU trademark reform package is one step closer to home. International Trademark Association (INTA) weighs in on the details

The EU’s top decision makers have reached provisional political agreement over the long-mooted trademark reform package, signaling their intent to have revisions of two trademark legal instruments formally approved later this year.

Proposals for reform of the 1989 Trademark Directive and the 1994 Community Trademark Regulation were first made in 2013, in a bid to modernise EU trademark law.

Now, after two years of inter-institutional discussions, the European Commission, Parliament and Council have provisionally agreed to adopt the package of reforms, which they hope will make trademark registration systems all over the EU more accessible and efficient for businesses in terms of lower costs, increased speed, more predictability and greater legal certainty.

They also hope the reforms will improve conditions for businesses to innovate and to benefit from more effective trademark protection against counterfeits, including non-authentic goods in transit through the EU.

Cecilia Wikström, who is steering the legislation through European Parliament, commented on 21 April: “I’m glad that after almost two years of hard work and tough negotiations we managed to reach a balanced approach on the trademark legislation, which will be simple and flexible enough to provide businesses and entrepreneurs protection that meets their needs.”

“[The] deal will ensure that the trademark registration will be quicker, cheaper and smoother for businesses in future. The new protection rules will also ensure better protection of trademarks by taking into account new technologies and enable flexible solutions facilitating companies to expand and develop their businesses.”

Others will equally buyout. Commissioner Elżbieta Bieńkowska said: “The agreement on the EU trademark reform package will lead to a modernised and more efficient legal framework. This will promote entrepreneurship and competitiveness, which is good news for Europe. And we will be better equipped to stop the flow of counterfeit products effectively.”

Dzintars Rasnačs, justice minister for Latvia, which currently holds the EU presidency, said: “I am proud that the modernisation of the EU's trademark framework can be politically concluded under the presidency of Latvia, building on joint efforts deployed by previous presidencies and EU institutions.”

“Our action has been guided by the need to put the interests of final users at the core of the reform. Those companies, particularly small and medium-sized ones, have been calling for a more clear, streamlined and affordable registration system for the handling and protection of their innovative industrial assets.”

What does it all mean?

The trademark reform package still needs to be formally endorsed by the European Council and Parliament, and is subject to a full vote in parliament. The International Trademark Association (INTA) expects this to happen by September 2015.

The association welcomed the provisional agreement, backing the reform package’s 36 percent reduction in Community trademark (CTM) renewal fees, to €850 for one class. “The fee reduction will help prevent future accumulation of budget surplus at the Office for Harmonization in the Internal Market (OHIM), which stands today at almost €500 million.”

The association added in an announcement largely backing the agreement over the reform package: “The provisional agreement also includes mechanisms to finance cooperation between OHIM and national trademark offices and for ‘off-setting’ any future surplus. Specifically, 5 percent of OHIM’s annual revenue will be used to cover expenses of national offices for handling activities and procedures involving CTMs; this amount can be increased by another 5 percent if OHIM accumulates a surplus.”

“INTA will be monitoring this mechanism closely, as trademark owners will be seeking transparency and accountability to ensure that surplus generated from user fees is reinvested in improving the performance and efficiency of the EU trademark system. Even so, the legality of the compensation mechanism remains an open issue.”

The EU trademark reform package will also include provisions that will provide new stronger ways to combat counterfeit goods in transit. EU border enforcement agencies cannot currently stop counterfeit goods passing through the EU on their way to other destinations.

Brands have pinpointed fakes passing through the EU on their way to other destinations as a major problem, with border enforcement agencies unable to act following the Philips/Nokia ruling in 2011. As a result of that Court of Justice for the EU ruling, agencies can check counterfeit goods transiting through the EU but can only stop them if there is a risk of these goods entering the single market.

The reform package will also adapt the EU trademark classification system to comply with the 2012 IP Translator case and with the Nice system. “It will also provide a fair temporary exception for trademark owners to declare the goods and services they wanted to cover when registering their trademarks under different classification rules existing at that time,” explained INTA in its announcement.

INTA did take issue with several omissions, including bad faith as a relative ground for refusal as well as the immediate implementation of opposition and cancellation administrative procedures at the national level in all member states, as opposed to the seven-year transition period that the provisional reform package mandates.

The association explained: “Forcing parties to go to through seven more years of expensive and time-consuming court proceedings to oppose or cancel a trademark goes against the goal for efficient and timely administrative procedures.”
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