The New Trade Mark Regulations: What Brand Owners Need to Know

15-02-2019

Authors: Olivia Mullooly and Colm Maguire

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If you own or use registered trade marks in Ireland, then the new European Union (Trade Mark) Regulations 2018 (the “Regulations”) may affect you. The Regulations, which amend the Trade Marks Act 1996, came into force on 14 January 2019 and bring about some noteworthy and mostly positive changes for brand owners.

You can (in theory) apply to register more types of trade marks

Previously, an Irish trade mark could only be registered if it was “capable of being represented graphically”. This meant that it was extremely difficult, if not impossible, to apply to register “non-traditional” trade marks such as sounds or multimedia marks. The Regulations remove the requirement for graphical representation – you can now apply to register “words… or designs, letters, numerals, colours, the shape of goods or of the packaging of goods, or sounds”. This gives brand owners the opportunity to register more aspects of their brands, like colours, shapes or sounds. However, the trade mark applied for must be “sufficiently clear and precise” which can be a difficult threshold to meet in practice.

You can stop infringing acts earlier in the supply chain

If a trade mark owner can demonstrate to a court that there is a risk that their trade mark is being used for ancillary or preparatory infringing acts, such as being affixed on packaging, labels or tags for counterfeit or infringing goods, then the trade mark owner can rely on the Regulations to seek to prevent such activities. For example, they can seek an order to prevent the placing on the market or importing or exporting of such infringing items.

Trade mark owners have improved rights to stop counterfeit goods transiting through Ireland

Previously, in order for Irish customs authorities to seize counterfeit goods that were passing through Ireland, the trade mark owner had to prove that the counterfeit goods were intended to be put on the market in the EU. This meant that it was difficult to successfully secure the seizure of such goods if they were transiting through Ireland to a country outside of the EU, for example counterfeit handbags being exported from Turkey through Ireland and onwards to Canada.

Under the Regulations, trade mark owners are entitled to prevent goods (and their packaging) that infringe their trade marks from being imported into Ireland from outside the EU. It is then up to the importer to prove that the trade mark owner is not entitled to prohibit the placing of the goods on the market in the country of final destination. Taking the above example, this means that if the trade mark owner requests that the authorities seize the infringing handbags in Ireland, the importer would have to prove that the trade mark owner is not entitled to stop the bags being sold in Canada. While these new provisions are intended to make it easier for trade mark owners to stop and seize counterfeit goods passing through Ireland, they are still left in a weak position if they do not have sufficient rights in the country of final destination.

The Regulations sit alongside existing laws that give Revenue the power to seize and destroy small consignments of counterfeit goods sent by post.

The statutory rights afforded to licensees are narrowed

Before the Regulations were commenced, a non-exclusive licensee of a trade mark could, subject to the terms of the licence, bring infringement proceedings against a third party if the licensor refused to take proceedings within two months of being called upon to do so. Under the Regulations, a non-exclusive licensee can only bring infringement proceedings with the consent of the licensor – there is nothing the non-exclusive licensee can do if the licensor fails to take action when called upon by the licensee, or where the licensor does not consent to the licensee taking an action. Therefore, matters relating to infringement of the licensed mark should be dealt with in the licence.

The rights of exclusive licensees are also narrowed under the Regulations. Previously, exclusive licensees could, subject to the terms of the licence, bring infringement proceedings in their own name – they did not have to notify the owner. The Regulations have changed this position: exclusive licensees must now give the owner “formal notice” before issuing proceedings; the exclusive licensee can then only bring the proceedings if the owner does not bring the proceedings “within an appropriate period.”

However, the Regulations are not all bad news for licensees – they now have an express right to intervene in infringement proceedings brought by a trade mark owner to obtain compensation for damage suffered by the licensee due to the infringement.

The grounds on which to oppose a trade mark application are limited

In an unusual move, the Regulations now limit the grounds on which a third party can oppose an application for registration to “relative grounds” only. This means that a third party can now only oppose an application if it has prior trade mark rights (e.g. by arguing that the mark applied for is confusingly similar to its prior registration) and not based on the characteristics of the trade mark being applied for, otherwise known as “absolute grounds”. Examples of absolute grounds include that the trade mark being applied for is descriptive, generic or consists exclusively of signs that designate the kind, quality or geographical origin of the goods or services.

The Irish Patents Office can still object to an application on absolute grounds. However, if a third party wants to raise absolute grounds against an application, it must wait until the mark has been registered and then seek to invalidate the registration on absolute grounds.

Trade marks automatically transfer with a business

An aspect of the Regulations that will be of interest to trade mark and transactional lawyers alike is the new presumption that a “transfer of a whole business shall include the transfer of the trade mark, except where there is agreement to the contrary, or circumstances clearly dictate otherwise.” Therefore, in an asset sale of the whole of a business, both buyer and seller should consider the impact of this provision on their commercial objectives, as a seller may want to retain the trade marks attaching to the business, or a buyer may want to exclude the trade marks from the assets being acquired. Accordingly, the transaction documents for the sale of the whole of a business should clearly address this new presumption.

Infringing acts are expanded

The “own name” defence is no longer available to corporate entities; the Regulations limit it to natural persons, meaning that only individuals can use their own name without infringing an identical or confusingly similar name that is a registered trade mark (e.g. Smyths or McDonald’s). Another related change is that using a trade mark as part of a trade or company name can now constitute an act of infringement. Finally, the Regulations explicitly provide that the use of a trade mark in comparative advertising in a manner that is contrary to the Misleading and Comparative Marketing Regulations 2007 (e.g. denigrating or taking unfair advantage of a trade mark) constitutes an act of infringement.

Comment

The Regulations should be welcomed by brand owners for enabling the registration of non-traditional marks (where they are clear and precise), introducing additional anti-counterfeit measures and expanding the range of infringing acts. However, both exclusive and non-exclusive licensees, and any person who seeks to oppose the registration of a trade mark, will find their rights diminished by the Regulations.

The authors thank Ciara Cosgrave, Trainee, for her contribution to this article.

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