South Africa: Is Your Community Trade Mark Vulnerable To Cancellation For Non-Use?

Last Updated: 14 April 2013
Article by Donvay Wegierski

Is your Community Trade Mark vulnerable to cancellation for non-use?

As a consequence of the territorial nature of intellectual property (IP) rights, a trade mark registered in South Africa is not automatically available for use or registration in foreign countries. It is therefore essential to fi rst ascertain by searching the relevant registers as to whether the proposed trade mark is available in the relevant market and that the use thereof will not infringe an existing local trade mark.

Hence it is important for concerned parties such as exporters to obtain protection of their trade marks in the jurisdiction into which they intend exporting their products. In some instances it is possible to fi le a single application to register a trade mark covering a number of countries, one such system being the Community Trade Mark (CTM) which enables applicants to fi le a single trade mark application with the CTM offi ce.

Such an application, once registered, affords trade mark protection in the following twenty seven member countries of the European Union: Austria, Belgium, Bulgaria, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Romania, Spain, Sweden and the United Kingdom, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia

A CTM is benefi cial in that it is unitary in nature and co-exists with national marks, affording a CTM proprietor the same rights as trade mark owners of national marks in the territory concerned.

Following the 19 December 2012 ruling of the Court of Justice of the European Union ("CJEU") in Leno Merken BV vs Hagelkruis Beheer BV C 149/11 ("LENO judgment"), CTM owners are however advised to pay close attention to their existing CTMs possibly reinforcing their CTM with national registrations in core countries.

The Leno Judgement which is in line with Advocate General ("AG") Sharpston's opinion of 5 July 2012, held that territorial borders should be disregarded in determining whether a CTM has been put to "genuine use".

On the premise that the essential function of a trade mark is to guarantee the identity of the origin of the goods or services for which it is registered, the Leno Judgment regards territorial reach as only one factor of a number of factors to be taken into account when determining "genuine use", instead requiring an overall assessment on a case-by-case basis.

USE VERSUS NON-USE

As mentioned, trade marks are both territory and class specific with the result that a trade mark registration affords the proprietor or licensee the exclusive right to use a trade mark in respect of the goods and/or services for which it is registered.

It is therefore also necessary to avoid exploitation of a mark. For this reason trade mark laws in most territories make provision for interested third parties to seek removal - or partial removal in respect of specified goods or services- of a trade mark registration if the mark is not used.

The non-use term depends on the territory concerned with most territories, including South Africa and the European Union (covered by a CTM) being five years while in some territories, for example China and Australia, the non-use term is only three years. The relevant non-use period usually commences from the date of registration.

Article 15 of the CTM regulation 207/2009 ("CTM regulation") provides as follows:

  • 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 non-use. The following shall also constitute use within the meaning of the first subparagraph:
    • use of the Community Trade Mark in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered;
    • affixing of the Community Trade Mark to goods or to the packaging thereof in the Community solely for export purposes.
  • Use of the Community Trade Mark with the consent of the proprietor shall be deemed to constitute use by the proprietor."

Recital 9 in the Preamble to this Directive states that it is essential for a CTM to be used and if not that the CTM registration should be subject to removal from the register for non-use in order to reduce the total number of CTM registrations and the number of conflicts that arise between them.

Until the Leno Judgment the evidence of use of a CTM in a single member country of the EU would sufficiently have demonstrated "genuine use" under Article 15.

THE LENO JUDGMENT

In July 2009 Hagelkruis Beheer BV ("Hagelkruis") filed a trade mark application at the Benelux trade mark office for a national trade mark for OMEL in respect of three service classes which Leno Merken ("Leno"), the proprietor of a CTM registration for ONEL subsequently opposed in the Benelux trade mark office.

As the CTM registration ONEL was registered on 3 October 2003 the five year nonuse period commenced 3 October 2008. Hagelkruis responded to the opposition by requiring Leno to provide evidence of use of its CTM registration. This is practice in oppositions in this jurisdiction and shifts the onus back to the opposing party. Leno in turn provided proof of use of its ONEL mark limited to the Netherlands.

In January 2010 the Benelux trade mark office rejected the opposition on the grounds that Leno had not shown that it had put its CTM registration ONEL trade mark to genuine use. The parties at this stage agreed that the marks and respective goods and services to which they were applied were similar and as such were likely to give rise to confusion.

The issue disputed and referred to the CJEU was the interpretation of "genuine use" in terms of Article 15 of the CTM regulation and whether use in one EU member state, in this instance the Netherlands, is sufficient. The CJEU ruled that territorial scope alone cannot be used in the assessment instead requiring an overall view on a case-by-case basis.

The AG's opinion provides some guidance as to how "genuine use" might be assessed requiring further consideration of:

  • Characteristics of the market and nature of the goods or services concerned such as supply and demand, language barriers, consumer preferences, transport and investment costs and whether use of a mark is particularly concentrated is necessary;
  • Territorial extent and scale of use, frequency and regularity of use indicating that where a trade mark is used in an area where the market is particularly concentrated this may play a more significant role than use of the same mark in a part of the market where there are little or no sources of supply and demand.

To further illustrate, referring to the Leno Judgement, the AG's opinion says that the court cannot decide solely on use of ONEL in the Netherlands instead that the court should consider all instances of use in the internal market giving weight to each instance of use taking into account characteristics of the market and market share. Thus if the court finds that the internal market and relevant market for ONEL is the Netherlands only , use of the mark in the Netherlands should be given particular weight.

So too the national court should further consider forms of use that may not be relevant in assessing genuine use of a Netherlands national mark, for example marketing the CTM in such a manner that it is commercially meaningful to potential customers outside the Netherlands.

Furthermore the AG records that the national court should recognise that these relevant facts could change of overtime and indeed during the five year period from date of registration.

To conclude the AG's interpretation of "genuine use" in terms of Article 15 of the CTM regulation is that use of a CTM in single member state may not necessarily suffice however that it is possible that when all relevant facts are considered, use of a CTM in a single territory of the EU will constitute genuine use in the Community.

CTM CONVERSION

In instances where a CTM has been refused for registration or is to be removed due to non-use it is possible to convert the CTM into national registrations albeit only in the member states where the CTM has been put to genuine use under the relevant national laws.

The advantages of converting a CTM into national marks is that the filing date, priority and seniority dates (if relevant) of the CTM are maintained in respect of the national mark. A conversion fee is payable to the Office of Harmonisation ("OHIM" or CTM office) and if the conversion is approved it is directed to the national office who may also require a fee for the national application.

RECOMMENDATIONS AND CONCLUSION

Due to the wide protection afforded to a proprietor of a CTM the system is by its nature attractive to trade mark owners worldwide hence increasing the likelihood of an interested third party challenging the validity of a registered CTM.

Proprietors of CTM's that have been registered for five years or longer and where "genuine use" may be difficult to show might therefore preempt an invalidity action and consider either filing a fresh CTM or filing national applications in the commercially relevant territories.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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