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29 March 2024

Tomasz Gawliczek, PhD: Wider Judicial Scrutiny Of Intellectual Property Cases In The EU Is Required

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The discussion initiated in October 2018 as to whether you can make a priority claim when applying for a Community design based on a patent application filed 12 months earlier...
European Union Intellectual Property
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The discussion initiated in October 2018 as to whether you can make a priority claim when applying for a Community design based on a patent application filed 12 months earlier, has been finally concluded. The judgement of the Court of Justice of 27 February 2024 (ref. C382/21 P) can be regarded as a long-expected game changer. However, it raises not only the question whether this dispute had factual justification, but more importantly whether the EU system of judicial scrutiny over IP cases is functioning properly – writes Tomasz Gawliczek, PhD, JWP Patent & Trademark Attorneys.

More than five years ago, the German enterprise The KaiKai Company Jaeger Wichmann GbR filed applications for registration of several Community designs with the European Union Intellectual Property Office (EUIPO) to protect a design of sports and gymnastics equipment. Importantly, the same applicant had previously applied for a patent for the invention entitled "Sports device, use of a sports device and sports system" (PCT/EP2017/077469) and disclosed the same objects (visually in the form of figures) in the patent specification. Since at the time of filing of the design applications with EUIPO, twelve months had not elapsed from the date of filing of the international application with the European Patent Office, the company indicated that it wished to exercise the right of priority on that basis. As a result, a dispute followed that has aroused controversy among IP law practitioners over the past three years.

Convention priority

Claiming priority when filing applications regarding industrial property rights plays an important role. In this way, a legal fiction is created, which consists in assuming that a given object is protected from the date earlier than the date of its actual filing with the Industrial Property Office. In this case it is the date of the first correct application for protection to be granted for the same object which was filed earlier (e.g., in another country). For example, if an application for the registration of a design was first filed with the Patent Office of the Republic of Poland, it may be filed subsequently with another competent industrial property office, and in such a case, with convention priority claimed, the date of the subsequent filing will be fictitiously made equivalent with the one at which it was previously filed.

Why is claiming priority so important? The date of filing an application for an industrial property object with a competent office is the date when it must meet the conditions for protection. Thus, if, in such a case, the applicant claims convention priority and relies on the earlier application, this changes the point of reference in time, which is crucial for subsequent determination of whether an exclusive right should be granted. In addition, the priority date is also important for determining when the applicant gains relevant monopoly. In industrial property law, a general first-to-file rule applies, according to which an exclusive right should be obtained by the person who is the first to apply for protection for a given object.

When claiming priority on the basis of an earlier application, time limits are crucial. These are set out in Article 4 of the Paris Convention for the Protection of Industrial Property of 1883 and are 12 months for patents on inventions and utility models and 6 months for industrial designs and trade marks, respectively. Missing these deadlines leads to the loss of the right of priority for filing an application and, consequently, to the assumption that the priority in such a case results from the date of filing the application with a competent office.

The nature of the past (or never existing) problem

The essence of this dispute from the very beginning seemed to many of its observers somewhat incomprehensible. This is due to the wording of Article 41(1) of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs (OJ 2002 L 3, p. 1, hereinafter: CDR), which indicates that:

A person who has duly filed an application for a design right or for a utility model in or for any State party to the Paris Convention for the Protection of Industrial Property, or to the Agreement establishing the World Trade Organisation, or his successors in title, shall enjoy, for the purpose of filing an application for a registered Community design in respect of the same design or utility model, a right of priority of six months from the date of filing of the first application

When you read this provision carefully, it literally follows that the priority may be claimed only in the period of six months preceding the filling of a design application and it may result from the previous application filed for the same design or utility model. The KaiKai, on the other hand, pointed out that in the provisions of international patent law the term "patent" was understood more broadly and in such a case it also included utility models. Both categories of exclusive rights protected solutions of a technical nature. For this reason, since the EU Community Design Regulation was 'silent' on the priority claim based on an earlier patent application, EUIPO should, in the opinion of the German company, look to the general provision of Article 4 of the Paris Convention and recognize that claiming priority in this case was possible within a period of 12 months.

Although the applicant argued before EUIPO that the case at the appeal stage should be decided by the Grand Chamber due to some differences in official guidelines and judicial practice followed in the Member States, such a solution was not adopted. In two pages of the grounds for its decision of 13 June 2019, the Office took a position that the case did not raise a legal question of fundamental importance for judicial practice, as the wording of Article 41 of the CDR was unambiguous. It was thus confirmed that the priority right from a previous application (e.g., for a utility model) could be invoked in a Community design application, provided that a period of six months has not elapsed between the two filings.

Surprising twist on the case

At that stage, the case seemed so clear that The KaiKai's complaint to the General Court of the European Union in Luxembourg did not herald any changes in the approach to this legal issue.

All the more surprising was the judgement of the General Court of 14 April 2021, which annulled the EUIPO's earlier decision. Its substance states that 'since Regulation No 6/2002 makes no provision for the priority period resulting from an earlier international patent application, it is necessary to look to the underlying legislation, namely, the Paris Convention' (para. 64).

As a matter of fact, the EU General Court, when examining Article 41(1) of the CDR, found a lacuna consisting in that the provision ignored previous patent applications, which, after all, could also constitute the basis for claiming the right of priority to a design. Such reasoning led to the assumption that the time limit for claiming priority should be determined on the basis of the exclusive right invoked by the applicant. Therefore, if the design was previously disclosed in the patent application, in the opinion of the General Court, the applicant could rely on such an application for a period of further 12 months and thus claim priority to it.

Unsurprising final decision?

The EUIPO appealed against the judgement in The KaiKai's case and, by decision of the President of the Court of Justice, the European Commission was allowed to participate in the proceeding as an intervening party to support the EUIPO's claims.

The Office formulated only one objection to the contested decision, which, in essence, boiled down to demonstrating that a legislative gap in this case was impossible. The EU legislator's intention could be read literally from the wording of Article 41(1) of CDR. However, instead of applying it directly, the General Court had refrained from doing so and applied the provisions of the Paris Convention, which, although binding on the European Union, are devoid of direct effect.

As Umberto Eco has written: facts are what resists interpretations. Ultimately, the same conclusion was reached by the EU highest instance court and a few days ago it annulled the 2021 judgement of the General Court. The grounds for the decision in this case state that "it follows unequivocally from the clear wording of Article 41(1) that only two categories of earlier application – namely (i) an application for registration of a design and (ii) an application for registration of a utility model – can form the basis of a right of priority for a subsequent application for registration of a Community design, solely within a period of six months as of the date of filing of the earlier application concerned' (para. 76).

The Court of Justice confirmed that the EUIPO's position adopted from the very start solved the problem that the EU institutions were trying to address for more than five years. It was sufficient to use a linguistic interpretation of the provision of the EU regulation, which is directly applicable in such cases. Here, it would a truism to say that sometimes the simplest solutions are the most appropriate ones.

A two-instance model in the CJEU's judicial practice practically does not function

Why can the decision concerning The KaiKai be regarded as a precedent? Certainly, it is not due to the importance of the legal problem which has been resolved. On the contrary, many observers were surprised when following the case, wondering why the judgement of the General Court failed to literally interpret the provisions of the EU Regulation, while opting for a broader interpretation of intent, which is generally used in exceptional situations. Behind the scenes, the representatives of the Office, which seemed the most surprised by the outcome of the first-instance court proceedings, also expressed their astonishment.

To answer the questions, we need to focus on what happened five years ago. In 2019, the Statute of the Court of Justice of the European Union was amended to include the so-called filtering mechanism (Article 58a). As part of it, an appeal against a decision of the General Court in cases regarding, inter alia, EU intellectual property law is allowed to proceed, in whole or in part, where it raises an issue that is significant with respect to the unity, consistency or development of EU law. In practice, this is a so-called pre-trial which allows only part of the cases for which an appeal has been lodged to be heard.

The KaiKai case is precedential in the sense that, for the first time since the introduction of the filtering mechanism, the Court of Justice allowed an appeal against the General Court's judgement concerning the EUIPO's decision to be examined. Looking at the statistics in this regard, such a situation is definitely rare. In the years 2019-2020, a total of 65 appeals against the judgements of the General Court were lodged to the Court of Justice, none of which was ultimately accepted for hearing. In 2021, out of 49 appeals, only The Kaikai's case was allowed to proceed. For the record, it is also worth noting that in 2022 and 2023, a total of 5 cases were accepted for hearing by the Court of Justice (out of 123 appeals lodged at that time).

The introduction of the pre-trial stage in cases regarding, inter alia, EU intellectual property law was due to an increase in cases considered by European court instances. Considering the number of proceedings pending before the EUIPO's Boards of Appeal, it is clear that the exercise of judicial scrutiny over them constitutes an organisational challenge for the EU General Court. Especially since there are a total of 54 judges adjudicating in this instance, and these are not the only cases over which the General Court has jurisdiction. The restriction of court proceedings to de facto one instance was intended to ease the workload related to its court-of-appeal role for the Court of Justice, which consists of merely 27 judges. However, the question arises whether the procedural guarantees enjoyed by parties to proceedings have not been limited as a result of the change.

When looking at the resolution in The KaiKai's case, there is no doubt that the European two-instance judiciary system guarantees the highest quality of judicial practice. Such a systemic solution offers us the possibility of deeper reflection upon controversial or largely subjective issues, which are usually at the core of IP cases. A certain solution to the problem in question could be to increase the number of judges making up the Court of Justice, but this would require treaty changes, which is impossible in the absence of political consensus. For now, we can only hope that substantive consensus will be reached as to what cases actually need to be resolved by the highest instance court in the European Union.

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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