The Legal 500

The UK system for trade mark registration has always been seen as strong and reliable. However, the perceived value of a UK trade mark registration may not be as high after October 2007.

At present, the UK Trade Marks Registry (the Registry) cites prior conflicting marks as a bar to registration. This is one of the biggest differences between an application for a trade mark in the UK and a Community Trade Mark (CTM), but it is to disappear following a recent consultation process by the Registry. The new regime, which is expected to come into force in October 2007, will make it easier for companies to register trade marks but will place a greater burden on trade mark owners to protect their marks once they have been registered.

Current system

Trade mark applications in the UK are currently examined on both ‘absolute' and ‘relative' grounds under the UK Trade Marks Act 1994 (the Act). Examination on absolute grounds ensures that the mark is inherently capable of registration for the goods and/or services for which registration is sought.

Examination on relative grounds involves a comparison of the application mark with trade marks that are protected in the UK, which include UK national marks, CTMs and international registrations that have designated the UK or the European Union for protection.

If the Registry finds an earlier mark that it considers conflicts with the trade mark being applied for, it will ‘cite' the earlier mark as a reason to provisionally refuse the application. Unless the applicant can then persuade the Registry that it has misjudged the situation and there is no real conflict, or can otherwise overcome the Registry's objections (for example, by gaining the consent of the owner of the earlier mark), the registration will be refused.

By contrast, applications for a CTM are examined solely on absolute grounds and will only be refused on relative grounds if the proprietor of an earlier mark successfully opposes the application. Clearly, this places an onus on trade mark owners to discover applications for conflicting marks themselves and then oppose those applications.

reasons for change

The CTM has proven to be very popular, but has also resulted in anomalies with the current UK system. A key issue is that a UK national application can be refused on the basis of a CTM which was not itself subject to a relative grounds examination. The rapid growth in the number of CTMs has led to a situation where the chances of a new applicant obtaining a UK national registration have decreased due to the large number of earlier protected CTMs. According to the Registry, 50% of present citations against UK national applications are CTMs and, if no changes are made to the present UK system, this is forecast to rise to 66% within five years and 75% within ten years.

Because of the different methods of examination, it can be easier to gain protection throughout the whole of the EU than it is in the UK alone. The possibility of bypassing an examination on relative grounds at the UK national office by filing a CTM is used to circumvent objections that have been, or are likely to be, raised by the Registry.

A further issue arises in the case of the non-use of a CTM. A CTM that has not been in use for a period of five years can be vulnerable to revocation on the basis of non-use and the proprietor of such a mark cannot use this mark to oppose an application. However, the Registrar's examiners have no knowledge of whether a mark is in use or not, and may identify an earlier conflicting CTM that is over five years old and is not in use, but base an official objection on it. Should this happen, the Registrar would be raising an objection that the owner of the earlier CTM could not have raised himself. This has not been a significant issue to date, as a relatively small number of CTMs have passed the five-year milestone, but it may become an increasing problem over time. An applicant wishing to revoke such a CTM must launch their own proceedings at the Office of Harmonisation for the Internal Market (OHIM). This can be slow and costly, and is unlikely to be commercially viable for small and medium-sized companies (SMEs) just wishing to obtain UK protection for their brands.

New system

In February 2006 the Registry published a consultation paper which proposed five options for the future system. The consultation period ended in May 2006 and a response document was published. The next steps will be to undertake further consultation in relation to the chosen option, and to introduce the legislative and administrative changes to bring the new system into force in October 2007.

The new system will still see a search of the Register conducted by the Registry to identify any potentially conflicting earlier marks. However, these conflicting earlier marks will not be cited as a bar to registration. Instead, the current applicant and the owner of the earlier mark will be notified of the result, and the onus will be on the applicant and the owner of the earlier mark to decide how to respond.

The applicant will need to make a commercial decision about whether or not to proceed in the face of potentially conflicting earlier marks (although there seems to be no incentive to take any action unless and until the owner of an earlier mark takes some positive step). The owners of any earlier marks will need to decide whether to oppose the application. By informing both sides of potentially conflicting marks, it is hoped that issues are identified and disputes are settled as early as possible.

Implications for applicants

Under the new system it should be easier for applicants to register trade marks, particularly when considering the increasing difficulties that they would face under the status quo. It is therefore likely that the number of national trade mark applications will increase. There are expected to be considerable savings for applicants, especially SMEs, where the applications are opposed at an early stage, before significant commercial investment is expended in the mark.

A potential concern is that the changes to the system may make a UK trade mark ‘weaker'. At present, respondents to the Registry consultation felt that a ‘stronger' registration could be obtained through the current UK system, where there has been an official examination on relative grounds and there is a high presumption of validity. A CTM registration is often considered ‘weaker' than a UK registration as there is no official examination on relative grounds and it is more likely that a CTM registration can be declared invalid (if a trade mark owner did not file an opposition, but later decides to take action). The new system could therefore mean that UK registrations are considered ‘weaker'. As a result, applicants may be less likely to apply for a UK registration and may decide to simply pursue a CTM registration instead.

Implications for trade mark owners

The onus for protecting existing marks will move from the Registry to the trade mark owner. The Registry will act more as an information service, and will no longer be protecting the rights of trade mark owners to the same extent. Trade mark owners will need to decide whether to oppose an application or not, and will face increased burdens in protecting and enforcing their marks.

There will be an increased cost in opposing applications that would previously have definitely been barred by relative grounds examination. For more borderline cases, trade mark owners will need to take a commercial decision on how to respond. It is expected that the identification of potentially conflicting applications will not usually lead to an opposition, except where there is real conflict. The nature of the response is likely to vary according to the size of the company, however.

SMEs will be at a disadvantage under the new system as the Registry will no longer be looking after their rights and they will have limited capability to enforce their rights themselves. Such companies will need to become more aware of their rights and develop capabilities to protect them. However, they will face financial and practical constraints which mean that they are forced to prioritise the potential conflicts against which they take action and only oppose those applications where there is a high likelihood of success.

Larger companies should be in a better position as they are already geared up to filing oppositions and are more likely to have the necessary resources to act against potentially conflicting marks. Such companies may choose to adopt a more proactive approach.

Given the fact that owners of earlier marks will be required to enforce the marks themselves, it appears likely that more national oppositions will be filed. However, the burden may not be as high as in other jurisdictions due to changes to the opposition procedure introduced in 2004, in particular the ‘preliminary indication' and ‘proof of use' regimes, which have helped to streamline opposition procedures and save costs.

Advice to companies

Trade mark owners and applicants should keep themselves informed as to the Registry's plans in the period approaching the implementation of the new system and should consider the implications of the detailed proposals when they are published. Companies should also bear in mind that there is likely to be a period of uncertainty concerning the interpretation of new legislation and new case law, and this should therefore be reviewed on an ongoing basis.

Trade mark owners should consider the approach to adopt to protect their marks, and how aggressive they will be in doing this. This is likely to be a commercial decision, driven by the likelihood of winning and the cost-benefit analysis of opposing or not opposing. Companies will need to ensure that they have the necessary capabilities and resources in place for the implementation of the new regime.

Trade mark applicants planning to apply for registration within the next year should consider whether there is the option to apply under either the new system or the old system, and which would be more advantageous. Applicants should also consider whether it is more appropriate to register a national trade mark or a CTM. SMEs may not currently be familiar with the CTM system, and should ensure that they understand the nature of CTM rights, how the CTM system works, and the potential advantages and disadvantages of the different types of registration.

Conclusions

There is little doubt that the abandonment of examination on relative grounds represents a revolution in the system of trade marks in the UK and will result in a greater alignment with the CTM application process.

The new system is due to come into force in October 2007. It will be much easier for companies to register trade marks and it is likely that the number of national applications will increase. The number of oppositions in response is expected to increase, but it is hoped that the new system will help to ensure that any potential disputes are settled as early as possible. The Registry will be acting more as an information service than as a protector of the rights of trade mark owners, and there will be an increasing burden on the owners themselves to protect their rights. This is likely to place SME trade mark owners at a disadvantage, as they will have more limited capabilities to protect their rights.

By Mark Holah, partner and Claire Brinn, solicitor, Trade Marks and Brand Protection Group at Field Fisher Waterhouse LLP