IP, IT & Life Sciences

New Principles for the Assessment of Genuine Use of Community Trademarks

The CJEU decision in the case Leno Merken1 leads to legal uncertainty concerning the territorial extent to which a Community Trademark must be used in order to avoid vulnerability due to lack of use.

There are too many marks on the register

Anyone who has been involved with the legal clearance of brands prior to their launch has certainly already experienced the effects of the rapid increase in the number of registered trademarks: A great amount of potentially conflicting earlier trademarks have to be assessed and a release without incurring a more than negligible risk or without attempting to obtain a coexistence agreement with owners of potentially conflicting earlier trademarks is rare.

Trademarks can be protected forever – as far as they have also actually been used

Trademarks are the only industrial property right that can enjoy protection forever, if the renewal fees that are due every 10 years are duly paid. To avoid “dead trademarks” from hindering the fair launch and use of new trademarks by companies, modern trademark law provides that trademarks that are not genuinely used (anymore) can be cancelled insofar as they are not actually used in the economic life. Such cancellations are not done automatically in Austria or in the Community Trademark system (as the offices do not request to trademark owners to regularly provide evidence of use), but anyone can file a respective claim for cancellation. However, to grant the owner a certain flexibility during the launch phase of its trademark, a grace period of five years after the registration exists, postponing the use requirement.

Statistics

According to the statistics of the Austrian Patent Office2, there were around 1 million registered trademarks with protection in Austria in 2012, among these more than 700,000 Community Trademarks. The massive amount of registered trademarks has in the recent years lent increasing practical importance to the cancellation of trademarks due to non-use.

Cancellation due to non-use

According to the jurisprudence of the CJEU, assessments of genuine must take into consideration whether the commercial exploitation of the mark is real, in particular whether such use is viewed as warranted in the economic sector concerned to maintain or create a share in the market for the goods or services protected by the mark.3

Territorial requirements for Community Trademarks

In this context, a special issue arises regarding the necessary territorial extent of use of Community Trademarks. Until now, it was assumed that genuine use in one Member State constitutes genuine use in the Community;4 in practice, this means that an owner of a Community Trademark who is active in Austria could successfully prove genuine use even if such use of the mark relates only to Austria. However, this approach leads to a situation in which the owner of a Community Trademark could prohibit the use of an identical or similar trademark for the registered (or similar) goods and services throughout the EU, even if the economic activity of the trademark owner is limited to one Member State. A Community Trademark used only in Malta could prohibit the use and registration of a similar trademark by an Austrian company in other parts of the EU, despite the fact that the trademarks would not actually collide due to a lack of territorial overlap on the market. This situation hinders trademark launches and was increasingly seen as questionable.

The new principles established by the CJEU

The long-awaited decision of the CJEU in the case Leno Merken brought about a new legal position: The CJEU held that the territorial borders of the Member States should be disregarded in the assessment. Assessing whether genuine use is given requires an individual assessment aiming at the entire Common Market of the EU and focusing on the relevant market for the relevant product. All the relevant facts and circumstances must be taken into account, including the characteristics of the market concerned, the nature of the goods or services protected by the trademark, and the territorial extent and the scale of the use, as well as its frequency and regularity.

Consequences

This stance leads to a considerable legal uncertainty, as as only future case-by-case decisions will establish the exact requirements for genuine use in the EU. However, there is no risk of losing the trademark entirely if the criteria of genuine use are fulfilled with respect to one or more EU Member States, but not with respect to the Common Market of the EU. Following a cancellation, the trademark owner could convert (keeping the priority) his mark into national trademarks of those Member States in which the trademark had indeed been genuinely used.5

Genuine use of a Community Trademark must now be proven in relation to the entire territory of the EU – genuine use of a Community Trademark in only a single Member State will no longer automatically be seen as sufficient.

1
CJEU December 19, 2012, C-149/11.
2
Annual Report of the Austrian Patent Office 2012, p 30, available on the website of the Austrian Patent Office at http://www.patentamt.at/Media/DruckversionA4.pdf.
3
CJEU March 11, 2003, C-40/01, Ansul, nr 38.
4
This opinion is supported especially by the joint statement No. 10 Re Art 15 Regulation (EC) No 40/94 by the Council on 20 December 1993 on the Community trade mark.
5
Art 112 CTMR.