Having fun with the UK over substitution rights in EU trade mark oppositions
To the great surprise of both EUIPO and most players in the intellectual property legal community, the General Court (GC) in a judgment of 16 March 2022 in the case Nowhere against EUIPO considers that the UK substitution rights remain valid in EUIPO oppositions decided after the end of the transition period, i.e. after 31 December 2020. The Court specifically considers that the Board of Appeal of the ‘EUIPO was not empowered to reject the opposition on the mere basis that the UK rights were no longer valid in the EU when the Commission’s decision was issued.
The Court’s judgment squarely contradicts EUIPO’s Executive Director’s Communication No 2/20 of 10 September 2020 that EUIPO will treat all UK rights as “prior rights” for the purposes of inter partes procedure. The judgment will have important implications far beyond the UK angle, as the Court makes it clear that in opposition proceedings the only relevant date for the existence of an earlier right is the date of filing of the junior brand. This means that any subsequent modification of the earlier mark which does not retroactively affect its validity at that time (such as for example actions for revocation, as well as the limitation or renunciation of the earlier mark) will be completely irrelevant to the outcome. of the opposition procedure. This marks a significant change in EUIPO practice and we expect EUIPO to appeal the decision to the Court of Justice.
On June 30, 2015, the applicant filed the EUTM below in classes 3, 9, 14, 18, 25 and 35:
On March 8, 2016, Nowhere, Co. Ltd. opposed the application, in particular on the basis of a claim of passing off alleging its prior use of the following marks in the United Kingdom:
In 2018, the Board of Appeal rejected the opposition for lack of justification. The opponent appealed to the General Court, but before the Court heard the case on July 17, 2019, the board reversed its 2018 decision, saying it may contain a substantial procedural defect. Accordingly, the proceedings before the Supreme Court were terminated and the case was referred back to the Board of Appeal.
More than a year and a half later, on February 10, 2021, the Second Board of Appeal adopted a new decision which we now report. The board came to the same conclusion and held that the earlier rights were unfounded. Importantly, the Commission added that this issue has also become moot because, in the meantime, the Brexit transition period has ended and the UK rights invoked by the opponent were no longer valid prior rights in the EU. .
Court Decision – Case T-281/21
Without an expanded panel of five judges, the GC has taken a major decision that can have many and very significant impacts on the European trademark system and on the procedural strategies of trademark holders.
The General Court considers that, in the context of opposition proceedings, the existence of a relative ground for refusal must be assessed at the time of filing of the EUTM application. The fact that the earlier mark may lose the status of a registered mark in a Member State at a time after the filing of the opposing EUTM application, including for example due to a withdrawal of this Member State from the European Union, is in principle irrelevant to the outcome of the opposition.
This means that the EUIPO could have wrongly refused oppositions based on UK rights against EUTMs applied for before 1 January 2021. This also means that pending oppositions in which UK rights have been invoked in relation to these EUTM applications should be reconsidered and the rights of the UK can be restored as valid grounds on which opposition decisions can be based.
This marks a significant departure from existing EUIPO practice and EUIPO Executive Director Communication No 2/20 of 10 September 2020, which consistently rejects UK rights in oppositions to EUIPO after January 1, 2021.
While the GC in Nowhere refers specifically to the fact that the request in this case was filed both before the entry into force of the Withdrawal Agreement and before the expiry of the transition period, it is not clear whether this has had any influence on the decision itself. However, the statements of the GC are clear and seem to apply to all cases where the EUTM application was filed before the end of the transition period, i.e. before January 1, 2021. There may be to argue that EUTM applications filed after February 1, 2020 and up to and including December 31, 2020 (when the UK had already left the EU but the UK was in a transition period ) cannot be validly opposed by earlier UK rights, but this does not change the very general statement of the CG that the relevant date for the assessment of the existence of an earlier right in opposition proceedings (and the same applies to invalidity proceedings) is only the filing date of the contested EUTM application. Such a general statement has far-reaching implications for EUIPO procedure and for the outcome of invalidity and opposition cases that go well beyond oppositions based on UK law.
It is true that the GC already indicates that this may be the correct legal position in three previous decisions in 2020 and 2021, but in all these cases the question remained unanswered because it was not relevant to the outcome of these specific cases and the Court left a final decision on the subject open (see judgments of January 30, 2020, Grupo Textile Brownie vs. EUIPO – The association of guides (LEPRECHAUN), T‑598/18, item 19; from September 23, 2020, Bauer Radio vs. EUIPO – Weinstein (MUSIKISS), T‑421/18, item 34; and from December 1, 2021, Inditex versus EUIPO – Ffauf Italy (ZARA), T‑467/20paragraph 58).
Similarly, the legal question was considered irrelevant in the judgment of the Court of October 6, 2021, Indo European Foods v EUIPO – Chakari (Abresham Super Basmati Selaa Grade One Best Rice in the World), T‑342/20. In that case, the question arose in a different context, namely whether the withdrawal of the United Kingdom from the EU had an impact on the proceedings pending before the General Court. In this case, the Board of Appeal’s decision on an opposition based on earlier UK rights was taken before the end of the transition period. The question then was whether the General Court should terminate the proceedings because at the time the case was brought before the General Court, UK law was no longer ‘previous law’ in a Member State. However, the answer in this case was more direct since the case law of the General Court confirms that the General Court should review the legality of the decision of the Board of Appeal only at the time when the decision was taken. Events occurring after the decision of the Board of Appeal has been issued are in principle irrelevant and therefore irrelevant. Indo-European foods the GC confirmed that the fact that UK rights ceased to have effect in the EU after the Council issued its decision was irrelevant. EUIPO appealed against this judgment to the Court of Justice and the case is pending admission under C-801/21.
Finally, it should be mentioned that directly contrary to the position taken here, in 2019, the General Court in the case T-162/18, Beko v. EUIPOpoint 41 considered that the earlier mark on which the opposition is based must be valid not only at the time of publication of the application for registration of the mark applied for, but also at the time when EUIPO issues a decision on the opposition (similar for nullity actions the GC in its judgment of June 02, 2021 in the case T-169/19 (Representation of a polo player), item 30). Furthermore, this position is better aligned with previous EU case law, which has indicated that earlier rights invoked in opposition or invalidity proceedings must continue to produce their effects in the EU at the date on which a decision is taken by the EUIPO, failing which there is no longer any interest in acting (case C-268/12 Zydusdots 32-33; case T-7/15, LEOPARD real racing, dots 21-22; Case T-191/04 – Subwayparagraph 33).
It now remains to be seen whether the EUIPO will appeal and if so how the CJEU will rule on the matter. It only remains to hope that the CJEU will find the appeal in this case admissible, particularly in view of the divergent case law of the GC as set out above.
If the judgment of the GC in Nowhere is confirmed that the impact would be far-reaching, for example:
- The EUIPO should decide on all inter partes opposition and invalidity proceedings relating to EUTMs filed before 1 January 2021 where a UK rights action has been brought. This could lead to the absurd situation where an EUTM can be refused by the EUIPO on the basis of these prior UK rights, but can then be converted into national marks in the current 27 EU Member States.
- The EUIPO should examine reputational evidence relating to the UK for earlier EUTMs invoked against EUTMs filed before 1 January 2021.
- Any subsequent modification of the earlier mark due to revocation actions (with effect only ex nun), the limitations of the trademark or even its disclaimer would now be completely irrelevant to the outcome of inter partes procedure before the EUIPO. It means that:
- EUIPO should review its practice in granting stays in opposition and invalidity cases where earlier rights are at risk of being invalidated where the effective date of invalidation is later than the filing date of the trademark attacked.
- EUIPO should rule on all opposition and invalidity actions where the earlier mark has ceased to exist before a decision on the actions is taken and with effect after the filing date of the contested mark. Nullity applicants would no longer have to demonstrate a legitimate interest to obtain such a decision.
- EUIPO should reconsider the view, set out in its Guidelines, that the reputation of an earlier mark in opposition and invalidity proceedings must subsist until a decision by EUIPO is issued .
This would have a significant impact on brand advocacy strategies adopted over the years.