EU Trademark Law Reform Series: Implications for Nontraditional Marks

Article by Taras Kulbaba, Senior Associate from PETOŠEVIĆ Ukraine, first appeared in the INTA Bulletin and was reprinted with permission from the International Trademark Association (INTA).

In this latest installment to the EU Trademark Law Reform Series, INTA’s Nontraditional Marks Committee updates members on the implications of the recent changes to the EU Trade Mark Regulation and Trade Marks Directive for shape, color, sound and other types of nontraditional marks.

The texts of the EU Trade Mark Regulation (EUTMR) and the Trade Marks Directive (TMD), which were published in the Official Journal of the EU in December 2015, have triggered numerous comments among trademark professionals. The proposed changes to fees, provisions regarding counterfeit goods in transit and the removal of the graphical representation requirement from the definition of a trademark, among other changes, seem to have attracted the attention of many practitioners.

At the same time, the approved changes to Article 7(1)(e) of the Regulation and, respectively, Article 4(1)(e) of the Directive (full texts here) seem to have generated less discussion. These Articles, together with the graphical representation issue, are of direct relevance for companies and organizations wishing to register nontraditional marks (NTMs) such as shapes, colors, sounds and others. In fact, the amended Articles might become a serious obstacle to registration of applications and a ground for invalidation of registrations for other types of marks.

Graphical Representation Requirement Removed

The new legislation has removed the requirement for graphical representation when registering a trademark. Article 4, EUTMR and Article 3, TMD now define signs of which a trademark may consist as follows:

A trademark may consist of any signs, in particular words, including personal names, or designs, letters, numerals, colors, the shape of goods or of the packaging of goods, or sounds, provided that such signs are capable of:

• Distinguishing the goods or services of one undertaking from those of other undertakings; and
• Being represented on the register in a manner which enables the competent authorities and the public to determine the clear and precise subject matter of the protection afforded to its proprietor.”

This can be considered a positive change from the perspective of NTM holders because it opens up possibilities for representation of such marks on the register and, therefore, registration of NTMs that could not previously be registered.

However, the new legislation requires that the representation needs to be “clear, precise, self-contained, easily accessible, intelligible, durable and objective” (Recital 13, TMD and Recital 9, EUTMR). This could give rise to uncertainty and litigation about whether such conditions are met. Trademark searches and examination by the offices will likely take longer and be more complicated. However, in a webinar hosted by INTA, representatives from the European Commission and a national IP office have argued that this new definition of the representation is meant to be flexible (so as to allow registration of other types of marks) and “future-proof” (to allow for new types of filings that may be possible in the future due to technological advancements).

As the number of applications for NTMs is likely to increase upon implementation of the new legislation, those interested in protection of NTMs should follow the practice of the European Union Intellectual Property Office (the new name of OHIM) and national offices on this subject and, in particular, accepted forms of representation for various NTMs. INTA believes that it will be necessary to ensure that all offices are equipped to manage different kinds of nontraditional filings and provide for search mechanisms (for instance, accepting MP3 files for the purpose of registering sound marks, as indicated by a speaker in the above-mentioned webinar).

At the same time, applicants should not be lured by new opportunities opened by the removal of the graphical representation requirement. They should rather keep in mind the essential function of the trademark when considering new applications.

Grounds for refusal in the existing Article 7(1)(e)

Article 7(1)(e) of the existing Community Trade Mark Regulation (CTMR) reads as follows:

7. Absolute grounds for refusal
1. The following shall not be registered: …
(e) signs which consist exclusively of:
(i) the shape which results from the nature of the goods themselves;
(ii) the shape of goods which is necessary to obtain a technical result;
(iii) the shape which gives substantial value to the goods.

The rationale of the grounds for refusal in Article 7(1)(e) or the corresponding Article 3(1)(e) of the existing TMD, as interpreted in the case law of the Court of Justice of the European Union (CJEU), was to “prevent trade mark protection from granting its proprietor a monopoly on technical solutions or functional characteristics of a product which a user is likely to seek in the products of competitors. Article 3(1)(e) TMD is thus intended to prevent the protection conferred by the trade mark right from being extended, beyond signs which serve to distinguish a product or service from those offered by competitors, so as to form an obstacle preventing competitors from freely offering for sale products incorporating such technical solutions or functional characteristics in competition with the proprietor of the trade mark.” (Case C-299/99 Philips v Remington [2002] ECR I-5475)

In addition to the general purpose of Article 7(1)(e), the initial rationale behind the third indent of the provision was to prevent registration as trademarks of shapes that could be protected by other IP rights, in particular industrial designs. However, the Max Planck Institute (MPI), which carried out a study on the EU trademark system published in March 2011, concluded that the reasoning behind Article 7(1)(e) as provided by the CJEU could hardly apply to the third indent of the provision and recommended to either delete Article 7(1)(e)(iii) from the text of the Regulation (and the corresponding provision from the Directive) or to amend the provision by allowing registration of signs consisting exclusively of the shape which gives substantial value to the goods when such signs have acquired distinctiveness through use.

It was considered that Article 7(1)(e)(iii) might represent a serious obstacle to registration of ambitious designs that are significantly different from the existing forms in a particular area. This was confirmed just a few months later, with the EU General Court (EGC) decision dated October 6, 2011, in Bang & Olufsen A/S v. OHIM (Case T-508/08 Bang & Olufsen v OHIM [2011] ECR II-6975). The EGC upheld the decision to refuse the registration of a loudspeaker’s shape as a trademark based on the provision at hand.

Revised Article 7(1)(e) and New Absolute Grounds for Refusal or Invalidity

It was decided by the lawmaker to extend the permanent exclusion clauses in Article 7(1)(e) from the signs consisting exclusively of the shape of the goods to other types of signs. This was done by adding the words “or another characteristic” in each of the indents in Article 7(1)(e), EUTMR to read as follows:

7. Absolute grounds for refusal
1. The following shall not be registered: …
(e) signs which consist exclusively of:
(i) the shape, or another characteristic, which results from the nature of the goods themselves;
(ii) the shape, or another characteristic, of goods which is necessary to obtain a technical result;
(iii) the shape, or another characteristic, which gives substantial value to the goods.

Adding the words “or another characteristic” to all three sub-points of Article 7(1)(e) has been considered by the EU lawmakers as a step to counterbalance the removal of the graphical representation requirement from the definition of a trademark in Article 4. According to one speaker at the above-mentioned webinar, because the removal of the graphical representation requirement allowed the expansion of types of marks that could be registrable, the grounds to refuse them should follow suit.

However, the potential negative effect of the amendment to Article 7(1)(e)(iii) may by far outweigh the removal of the graphical representation requirement.

Consequences of the Revised Article 7(1)(e)

Careful analysis of the amended provision shows that this amendment to Article 7(1)(e) may, in fact, become a serious threat to the registration of nontraditional marks, as well as other types of marks.

According to the Oxford Online Dictionary, “characteristic” is defined as “a feature or quality belonging typically to a person, place, or thing and serving to identify it.” In addition to shape, characteristics of a sign may include color, taste, smell, touch, sound, etc.

Although it could be debated whether some of these characteristics of a sign could give substantial value to goods, there is no doubt colors could indeed serve this purpose. For example, in the United States, in order for a color sign to be registered as a trademark, it should either be considered not functional or, if functional, a secondary meaning should be demonstrated. In Deere & Co. v. Farmhand, Inc. (Deere & Co. v. Farmhand, Inc., 560 F. Supp. 85, 217 USPQ 252 (S.D. Iowa 1982)) the U.S. District Court ruled that the color green was aesthetically functional for tractors and, therefore, no protection should be granted to a color trademark unless a secondary meaning is proven.

While in the EU the graphical representation requirement was considered an obstacle to the registration of such nontraditional trademarks as smell, taste and touch marks, the amendment to Article 7(1)(e)(iii) of the EUTMR could, in addition to the aforementioned types of marks, become a serious threat to the registration of a color per se or color combination trademarks.

The amended Article 7(1)(e)(iii) puts some types of nontraditional marks, which, under the circumstances, could be considered as giving substantial value to the goods, under threat of being rejected or invalidated without the possibility of overcoming this objection on the basis of acquired distinctiveness.

Trademark owners and practitioners will have to monitor how the CJEU interprets the meaning of “another characteristic,” as well as “substantial value,” in the context of the amended wording of the Regulation and Directive.

In the meantime, it is advisable that the applicants for NTMs either ensure that substantial value of their goods is provided by characteristics other than signs applied for registration, or that such signs are combined with other elements, i.e., signs which do not consist exclusively of the shape or other characteristics which give substantial value to the goods.

The new rules of the Regulation will start to be implemented on March 23, 2016, except for the removal of the graphical requirement, which should enter into force only on October 1, 2017. OHIM should have produced by March 2016 guidelines on the reform and hopefully clarified how Article 7(1)(e) should be applied.

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