The Requirement of Genuine Use

The Requirement of Genuine UsePresentation

by Mihály Ficsor

Vice-President

Hungarian Patent Office

Regional Conference on the Coexistence of the Community and National Trade Mark Systems in Europe

Budapest, 3 November 2009

Introduction

Recital (2) of the CTMR:

‖It is desirable to promote throughout the Community a harmonious development of economic activities and a continuous balanced expansion by completing an internal market which functions properly and offers conditions which are similar to those obtaining in a national market. In order to create a market of this kind […] not only must barriers to free movement of goods be removed and arrangements be instituted which ensure that competition is not distorted, but, in addition, legal conditions must be created which enable undertakings to adapt their activities to the scale of the Community […].‖

Introduction

The Community trade mark system fails to achieve these objectives, which is due to

- the interpretation of the genuine use requirement (in particular, its territorial scope), and

- the policy pursued by the OHIM in terms of fee levels, quality andtimeliness, and co-operation with national offices.

Co-existence and balance

Tilting the balance in favour of

CTMs:

- abolition of mandatory national search reports,

- enlargement-related transitional arrangements and their interpretation by the OHIM,

- fee reductions in 2005 and 2009.


The original idea behind the CTMR:

- a balanced relationship

- between the co-existing Community and national trade mark systems

- with no hierarchy

- but with a lot of interaction.

Applicants should be guided by their business needs when choosing Community-wide protection for their trade marks.



―The Community law relating to trade marks … does not replace the laws of the Member States on trade marks. It would not in fact appear to be justified to require undertakings to apply for registration of their trade marks as Community trade marks. National trade marks continue to be necessary for those undertakings which do not want protection of their trade marks at Community level.‖


Cheaper CTMs that can be obtained more and more easily – at the expense of national applicants and trade mark owners:

— more CTMs more difficult to obtain national protection;

— defending national TMs against a flood of CTM applications;

— national protection: no longer a sensible option?

— protection in a single MS: only through the CTM system?

Genuine use

Article 15 CTMR:

―If, within a period of five years following registration, the proprietor has not put the Community trade mark to genuine use in the Community in connection with the goods or services in respect of which it is registered, or if such use has been suspended during an uninterrupted period of five years, the Community trade mark shall be subject to the sanctions provided for in this Regulation, unless there are proper reasons for nonuse.‖

Genuine useSanctions for non-use:

- an opposition is to be rejected if it is based on a CTM in respect of which genuine use is not proved [Article 42(2) CTMR]

- the same applies to applications for a declaration of invalidity and to counterclaims for a declaration of invalidity in infringement proceedings [Articles 57(2) and 100(5) CTMR]

- failure to comply with the genuine use requirement is a ground for revoking a CTM either on an application to the OHIM or on the basis of a counterclaim in infringementproceedings [Article 51(1)(a) CTMR]

Genuine use

Articles 10-12 of the First Trade Mark Directive

- lay down a similar genuine use requirement, and

- provide for similar sanctions for non-use.

Genuine use

Recital (9) of the Directive:

―In order to reduce the total number of trade marks registered and protected in the Community and, consequently, the number of conflicts which arise between them, it is essential to require that registered trade marks must actually be used or, if not used, be subject to revocation.‖

Genuine use


―There is no justification for protecting Community trade marks or, as against them, any trade mark which has been registered before them, except where the trade marks are actually used.‖

Genuine use

OHIM’s Manual Concerning Opposition (Part 6, Proof of Use, 3.1. and 3.4.):

- ―[t]rade marks must be used in the territory where they are protected (European Community for CTMs, the territory of the Member States in [the]case of national marks)‖;

- ―[t]he mark has to be used in therelevant market, that is thegeographical area where it isregistered‖.

Genuine use

VITAFRUT (paragraph 70):

―there is genuine use of a trade mark where the mark is used in accordance with its essential function, which is to guarantee the identity of the origin of the goods or services for which it is registered, in order to create or preserve an outlet for those goods or services‖.

Genuine use

Ansul (paragraphs 37-38):

‖The protection the mark confers and theconsequences of registering it in terms of enforceability vis-à-vis third parties cannot continue to operate if the mark loses its commercial raison d'être, which is to create or preserve an outlet for the goods or services that bear the sign of which it is composed, as distinct from the goods or services of other undertakings. […] [W]hen assessing whether there has been genuine use of the trade mark, regard must be had to all the facts and circumstances relevant to establishing 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.‖

Genuine use

Watering down the genuine use requirement –elements of the ECJ’s jurisprudence:

- ―it is not possible to determine a priori, and in the abstract, what quantitative threshold should be chosen in order to determine whether use is genuine or not. A de minimis rule, which would not allow […] all the circumstances of the dispute [to be appraised] […], cannot therefore be laid down. […] Thus, when it serves a real commercial purpose, […], even minimal use of the trade mark can be sufficient to establish genuine use‖;

- ―the fact that […] the proof of use of the earlier trademark was established only for the sale of productsintended for a single customer does not a prioripreclude the use being genuine, even though it followsfrom that situation that the mark was not present in asubstantial part of the territory of Spain, in which it isprotected‖;

Genuine use

Watering down the genuine use requirement –elements of the ECJ’s jurisprudence:

- ―the territorial scope of the use is only one of several factors to be taken into account in the determination of whether it is genuine or not‖;

- ―a trade mark is put to genuine use where a nonprofit-making association uses the trade mark, in itsrelations with the public, in announcements offorthcoming events, on business papers and onadvertising material and where the association’smembers wear badges featuring that trade mark whencollecting and distributing donations‖.

(La Mer Technology, paragraphs 24-25 and 27;VITAFRUT, paragraphs 72 and 76; Radetzky-Orden/Feldmarschall Radetzky, paragraph 24)

Genuine use

Joint Statement by the Council and the Commission:

―The Council and the Commission consider that use which is genuine within the meaning of Article 15 in one country constitutes genuine use in the Community.‖

Genuine use


―In order to open up unrestrictedeconomic activity in the whole ofthe internal market for the benefitof undertakings, trade marksshould be created which aregoverned by a uniform Communitylaw directly applicable in allMember States.‖

Genuine use

Article 112(1)(a)(ii) CTMR: conversion of a Community trade mark into a national trade mark application

―shall not take place […] where the rightsof the proprietor of the Community trademark have been revoked on the groundsof non-use, unless in the Member Statefor which conversion is requested theCommunity trade mark has been put touse which would be considered to begenuine use under the laws of that

Member State;

Genuine use

Manual Concerning Opposition (Part 6, Proof of Use, 3.1-3.2.):

- ―[g]enuine use within the meaning of Article 15 CTMR may be found […] when the criteria of that article have been complied with in only one part of the Community, such as in a single Member State or in a part thereof‖;

-―even use in a quite limited area of the relevant territory might prove to be sufficient‖.

Genuine use

Manual Concerning Opposition (Part 6, Proof of Use, 3.1-3.2.):

- ―in territorial terms, the appropriate approach is not that of political boundaries but of market(s)‖,

- ―it may be that European quantity standards could be different than the respective national criteria in some cases‖.

Genuine use

The CFI in HIWATT (paragraph 37):

- ―[not] only does genuine use of a trade mark exclude artificial use for the purpose of maintaining the mark on the register; genuine use means that the mark must be present in a substantial part of the territory where it is protected, inter alia exercising its essential function, which is to identify the commercial origin of the goods or services, thus enabling the consumer who acquired them to repeat the experience, if it proves to be positive, or to avoid it, if it proves to be negative, on the occasion of a subsequent purchase‖.

Genuine use

The ECJ in VITAFRUT (paragraph 76):

―the territorial scope of the use is […] one of several factors to be taken into account in the determination of whether it is genuine or not‖.

Genuine use

The ECJ in Pago: the territory of a single Member State

―may be considered to constitute a substantial part of the territory of the Community‖.

Rethinking genuine use

Genuine use (?) of a CTM in the Community:

minimal use by selling the goods to a single customer by a non-profit organisation in a quite limited area forming only a part of a single Member State.


The result of a genuine non-use requirement:

- the economic goals of the CTMR are not achieved;

- discrepancy between rights and obligations.


Points of departure:

- ―genuine use means that the mark must be present in a substantial part of the territory where it is protected‖ (HIWATT)

- ―the appropriate approach is not that of political boundaries but of market(s)‖ (OHIM Manual).


Council Conclusions of May 2007: the Commission is to

―start work on acomprehensive study on the overall functioning of the Community trade mark system to be completed as a matter of priority‖.

Thank you for your attention!

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The Requirement of Genuine Use