Does the recent Benelux decision on “Genuine Use” devalue CTM rights?

A recent decision (OMEL - 15 January 2010) by the Benelux Office of Intellectual Property (BOIP) may unsettle those relying on Community Trade Mark (CTM) Registrations which are only “genuinely used” in a single EU member state.

After 5 years of registration a CTM becomes vulnerable to revocation, or ineffective in oppositions, to the extent that there is no “genuine use in the Community in connection with the goods and services in respect of which it is registered”. The recent BOIP decision, relating to proof of use of an Opponent’s CTM that had been registered for over 5 years, held that “genuine use” in only one EU member state was insufficient to constitute “genuine use in the Community”. This decision, should it ever come to be accepted as good EU law, would seriously damage the rights of CTM owners who are only active locally, and would force them to think twice about using an old CTM registration in infringement proceedings or in opposing/invalidating later national or Community Trade Mark applications/registrations.

Some commentators are confident that this decision will be eventually approved by the ECJ, and thereby effectively become EU law. However, there are reasons for the ECJ to overrule this interpretation of “genuine use in the Community”, including:

• Political – Albeit not part of the main CTM Regulation, the “Joint Statement” preamble of the CTM Regulation, which represents the political intention of the CTMR, clearly emphasizes the importance of a CTM’s unitary character, “regardless of frontiers”. Thus, if frontiers don’t matter, why should genuine use be based on frontiers? Moreover, OHIM could expect lost revenues if CTMs were viewed as unreliable – albeit a cynical consideration, this should not be overlooked.

• Economic – Again the “Joint Statement” reiterates the EU’s goal of a “single market” enabling “undertakings to adapt their activities to the scale of the Community…regardless of frontiers”. In other words, it is economically crucial to provide a viable platform for businesses to expand into the “single market”, unimpeded and well protected. Thus restricting CTM rights will harm this objective.

• Legal – If “genuine use” means use in more than one member state, where is the line drawn? It could prove difficult to provide an objective and practicable test which could give legal certainty to both CTM owners and third parties. Moreover, if this BOIP decision was approved by the ECJ, it would create a number of legal absurdities, particularly in view of the recent PAGO ECJ decision. For example, a CTM owner trading in Austria alone could build up a strong enough reputation to enjoy the extra "reputation" rights under Art 8(5) CTMR and Art 9(1)(c) CTMR. For at least the first 5 years of the CTM registration these rights could be asserted EU wide – giving very generous protection. Then, as soon as the CTM becomes revocable after 5 years (because the mark was only used in Austria), not only do these generous rights cease, if revocation action is taken, the whole CTM could fall, leaving the CTM owner recovering limited rights in Austria through a CTM conversion. To go from having such generous protection to nothing at all seems totally inconsistent with the aims of the CTM system. Therefore, we would expect the ECJ, if asked, to rule that “genuine use in the Community” could be demonstrated in just one member state.

We will have to wait and see how the ECJ chooses to develop this area of CTM law.