European Union trademark or National trademark?
Updated: Aug 5, 2020
When the Community trademark was adopted in 1996, things were simple!
Indeed, this trademark made it possible to obtain a monopoly of exploitation via a single procedure for all the territories constituting the European Union, for a modest sum. The procedure was simple and the vast majority of applications were accepted.
Use was required, only in one part of the Union, and sometimes even in only one country, in order to validate the EU trademark and avoid cancellation for non-use.
As a result, many operators have used this formality in a "mechanical" way to protect their trademarks within the EU and, at the same time, have often abandoned their national trademarks at renewal time, sometimes with serious consequences.
That was before! Over the last few years we have seen that the EU trademark was not necessarily the solution to be prioritized in order to obtain optimum protection for this area.
However, many applicants remain in this earlier trend of registering their EU trademark when they are only interested by certain countries in this area, mainly on the grounds that this trademark is inexpensive.
We believe that this automatism should be questioned and that the choice to adopt and/or keep a EU trademark must now be accompanied by a real analysis upstream and downstream.
We will review the various aspects that deserve to be analyzed to date, in order to manage this right, as well as possible, and to avoid certain pitfalls and very unpleasant consequences.
Is the EU trademark the best cost/protection ratio?
Yes and no. In terms of costs, to target the 27 EU countries, this is the most economical solution at the time of filing. Provided that a certain number of precautions have been taken beforehand:
Be sure that the filed sign is sufficiently distinctive before EUIPO. Indeed, the office is increasingly strict in the context of the adoption of EU trademarks and rejects many trademarks. In case of rejection, appeal procedures exist but generate costs and delay the decision to grant or reject the title. Furthermore, and in case of a confirmed rejection, the application fees are not refunded.
For trademarks claiming distinctiveness acquired through use, it is essential to prove this use, and this, in each of the EU countries… is a real obstacle course!
Secure the project by conducting a prior rights search in all EU countries. It is important to know that any holder of a prior right (trademark, domain name, sign used in business life) can oppose the filing through administrative channels and, in the absence of negotiation, obtain the cancellation of the entire trademark. Then, the only option to retain the right will be to convert the EU trademark into national trademarks in countries where no obstacles have been encountered, but against payment of a conversion fee in each of the countries. These countries will then examine the distinctive character of the trademark, publish it and thus considerably lengthen the procedure, the costs in each of the territories concerned and the ability to obtain in court bans on the sale of confusing goods or services.
Finally, it is useful to note that any interested third party may file observations before EU challenging the distinctiveness of the trademark. The Office will then have to reopen the registration procedure even if it has not raised any objections during its examination! In case of rejection, the fees are lost.
Can the EU trademark serve as the basis for an international application?
According to the texts, an EU trademark can serve as a basis for an international trademark... On the other hand, and in application of the principle of dependency, these trademarks are linked for 5 years. So if, during this period, the EU trademark is rejected or reacted to by a third party, the international trademark will be cancelled, and the costs generated will be lost.
In other words, while the EU trademark helps to limit costs when filing, it increases the risk of reaction by a factor of 27 (i.e. the number of member countries).
Does the use of a trademark in a country still allow a cancellation action for non-use to be dismissed?
Use is nowadays the key notion, and since the “Paquet Marques” European Directive and recently the “Pacte” Law, the rules on use have been considerably tightened. The trend is to be able to sanction trademark owners, particularly in the EU, who do not exploit their sign under the conditions set by the texts and case law. It is necessary to free the registers encumbered by non-exploited trademarks.
Administrative actions are open to any interested third party (no interest to act is no longer required), they are quicker and cheaper than judicial actions and there is a considerable inflation of such actions.
However, it turns out that this trend also results in the cancellation of exploited trademarks... It turns out that no less than 50% of the EU trademarks which are the subject of cancellation actions for non-use, and which are cancelled, are in fact exploited.
The EUIPO has indeed laid down a number of rules on proof of use and it is now relatively complex to be able to prove a use that will be considered valid in order to ensure that the EU trademark does not lapse.
In other words, it is one thing to use one's trademark, it is quite another to prove it.
Indeed, it is first necessary to prove a use during the last five years preceding the application for cancellation, within a substantial part of the EU (this notion being variable depending on the goods and services covered by the trademark. A volume of business X will be considered sufficient for a given field of activity and insufficient for another), of the sign as filed (beware of variations over time) and for the strict activities referred to in the filing (no proof for similar activities). The proofs must be provided within a relatively short period of time.
As a result, several questions arise before adopting an EU trademark:
What are my major countries of interest, the ones I need to secure?
Is the sign I want to protect sufficiently distinctive to be registered?
Is the sign free of any risk of reaction within the 27 EU countries?
Am I really interested in a monopoly in the 27 EU countries and, if so, what will be the nature of my operation and in what time?
Do I have a plan B to protect my brand more effectively?
A number of questions also arise in connection with the ownership of such a trademark:
Is the registered sign used in accordance with the requirements of EUIPO (form of use, volume, activity, territory)?
Is my use sufficient in the event of a third party's reaction to allow me to validate my trademark?
If the answer to these questions is no, then I am at risk on my brand which is therefore vulnerable, so what bypass option do I have?
These are all questions that need to be answered in order to secure a trademark portfolio within the EU, to be deprived of its rights exposing owners to risks of cancellation and, therefore, to financial consequences. Moreover, owning a “vulnerable” trademark without taking the necessary measures to secure it will necessarily have an impact on its financial value.
In conclusion, owning or planning to register an EU trademark should no longer be a “reflex” decision, but should be accompanied by a process of reflection that will enable one to secure one's rights within the EU area by taking appropriate decisions.