La gestión de los datos

I. Principle of Undistorted Competition

1.23 Since the beginning of the European Community the system of undistorted competition belongs to the goals among the list of objectives in the EC Treaty that have to be pursued. The protection of trade marks is an intrinsic part in the system of undistorted competition. Pointing to this relationship the ECJ has derived from the primary law of the EC Treaty the need to grant and to recognize trade mark protection. In 1990, the ECJ has stated in HAG II (Case C-10/89) for the first time that the system of undistorted competition requires that companies are able to create and maintain relations with their customers by virtue of the quality of their goods. Distinctive signs, and notably trade marks, are necessary to allow customers to identify goods and services and thus create a link between the goods

and services and the undertaking responsible for their marketing and their quality.

In order to fulfil this purpose trade marks must guarantee the identity of origin of goods bearing them. For that reason, trade mark protection is needed.

1.24 Hence, European trade mark law, composed of the Community trade mark system and the partially harmonised national trade mark systems, is anchored in the fundamental principle of undistorted competition. European trade mark protection is regarded as an element of undistorted competition. It is this concept that has become a guiding factor for the interpretation of the provisions in the TMD and the CTMR by the case law of the ECJ. When the grounds for refusal under Article 3 TMD and Article 7 CTMR are interpreted, the principle of undistorted competition finds expression in the public interest underlying each of them in various forms (for details, see discussion under para 1.40). In general, the application of this principle increases the threshold for access to trade mark protection.

1.25 As a feature for determining the content of trade mark protection and the scope of trade mark rights the concept of undistorted competition is reflected by the requirement that trade marks have to guarantee the origin of the goods bearing the mark. Trade mark protection must ensure that all goods bearing them have been produced and were released on the market under the control of a single undertaking. This origin-indicating function of trade marks has become the basis for the interpretation of the notion of “trade mark use” or “use of a sign for goods”

within the meaning of Article 5 (1) TMD and Article 9 (1) CTMR. The justification of the protection of trade marks against likelihood of confusion is directly related to the preservation of fair and suppression of distorted competition. Also the protection of trade marks with a reputation beyond likelihood of confusion, namely against taking unfair advantage of their distinctive character and reputation is justified because, and insofar as, it contributes to the creation and preservation of a system of undistorted competition.

1.26 As far as the limitation of rights is concerned the principle of undistorted competition calls for an assessment focussing on a balance between the interests of trade mark protection and free movement of goods and services within the internal market, and the interest of other market actors to use a sign for legitimate purposes in accordance with honest practices. In particular, this is reflected in the permissibility of use to indicate the product’s purpose, and the use of descriptive terms that are identical with, or similar to, protected trade marks or their components, where the legitimate interests of trade mark proprietors are not adversely affected.

1.27 The concept of undistorted competition as a guiding principle for interpretation of European trade mark law is not a one-way approach towards a protection scheme being faced with limiting effects only. Undistorted competition requires a basically strong and firm protection of trade marks that takes into account both the interests of the trade mark holders and the interests of competition. Under the roof of the principle of undistorted competition European trade mark protection has, based upon the case law of the ECJ, developed into a direction that emphasises the links between trade marks and their impact on competition.

1.28 The evaluation of the European trade mark law and the proposals submitted in this report proceed from this basic idea of trade mark law being a component of undistorted competition.

II. Trade marks and free competition

1.29 As a matter of principle, trade mark law and free competition are not in conflict with each other. On the contrary, rather than restraining competition, trade marks are indispensable elements for competition to function properly. By providing information about the commercial source of goods or services and thus enabling consumers to repeat purchases that were satisfactory, trade marks provide an incentive for entrepreneurs to invest in quality, and to increase the variety of commodities offered. Furthermore, by contrast to other IP rights such as patents, the objective of trade mark law is not to confer an exclusive market position for certain goods or technologies. Competition thus remains free; those entering the market only have to use another sign so as to indicate the different commercial origin.

1.30 Without doubting the basic validity of those tenets, certain observations must be added. Most importantly, economic reality will only function as indicated above if the acquisition of trade marks remains competition-neutral, in the sense that appropriation of the sign as such does not confer on its holder a competitive advantage from which others are excluded. That condition is largely met where (fantasy) word marks and other traditional forms of trade marks are concerned.

Such signs are regularly in infinite supply, so that no barrier to entry for others will ensue. Contrary to that, signs consisting of colours per se, or descriptive designations, are only available in limited stock, which means that the exclusive effect of trade mark protection on the availability of the sign for others entails (more or less aggravating) obstacles for competition, to which the law must respond. Particular issues further arise with regard to shape of product marks where, contrary to the general rule, protection of the mark actually does lead to an exclusive right in the appearance of a specific product (see also Chapter 2 B para 2.17 et seq.).

1.31 Furthermore, the paradigm of trade marks functioning as tools conveying information about commercial origin, which underpins the fundamentally competition-friendly disposition of trade mark law, needs some adjustment. In addition to indicating origin, marks may acquire intrinsic value as business assets;

extended protection of reputation marks beyond likelihood of confusion is a response to that development. The economic rationale is found in the fact that reputation enjoyed by a mark is regularly the fruit of intense investments, for which further incentives are provided by the additional protection granted. For competition, however, the phenomenon is not without risks. Due to their psychological dimensions – the capacity to symbolize status and life style – the market power of reputation marks can be very high, possibly resulting in undesirable effects such as high (psychological) entry barriers and reduced market transparency. Those risks as well may have to be considered for the balancing of interests to be undertaken on the premise of undistorted competition.

III. Accessibility of trade mark protection

1.32 Easy accessibility is of essential importance for the proper functioning of trade marks as an element of undistorted competition. Apart from potential issues resulting from the form of signs which were addressed above, the level of accessibility is largely determined by the overall volume of prior rights posing obstacles for protection of new signs. The topic is in the focus of discussions about the congestion, or “cluttering”, of registers. One position advanced in the debates holds that by attracting too many registrations, the CTM system tends to obstruct registration of marks under the national regimes. That argument is frequently linked with the issue of genuine use of CTMs, as the barring of access to new signs under national law is considered as particularly aggravating where it results from a CTM which is not used and has no factual effect on the domestic market.

Apart from that, cluttering is also perceived as an internal problem for the CTM system, as the access to new CTMs is likewise impacted by the rising number of existing CTM applications and registrations. The problem – if it exists – is even exacerbated by the fact that applicants for CTMs are confronted with an aggregated number of prior rights existing on the Community level as well as under national law.

1.33 It is true that the difficulties for newcomers to find a sign which is not blocked by a prior mark – and which can easily be pronounced and remembered, and gives rise to positive associations without being descriptive – are bound to increase in proportion with the size of registers. On the other hand, this is not an issue of absolute figures. At present (30 June 2010), 650.000 trade marks are registered at OHIM, whereas the German Patent and Trade Mark office counts ca. 800.000 registrations of national marks in force at the end of 2009, and more than 1.5 mio trade marks are registered at the USPTO. However, this does not allow drawing conclusions regarding the level of accessibility under each system; for a full picture, other relevant systemic features must be included in the consideration.

This is particularly obvious for the US system, where – inter alia because of the requirement to prove actual use or file a declaration of intent to use – the space occupied by each mark in the register is typically narrower than under European law and regularly reflects a fairly accurate picture of the mark’s “life-size” on the market.

1.34 In contrast to American law, it is a fundamental trait of European trade mark law that trade marks can be registered without actual use, and are only liable to revocation if no genuine use is made after the lapse of 5 years following registration. If not challenged, unused marks will typically remain in the register until the end of the registration period, and they may be renewed without difficulty.

The system therefore inevitably involves a certain amount of “cluttering” in the sense that unused trade marks are found in the registers and will show up in searches, even when they cannot be validly enforced. Further features arguably contributing to the accumulation of “deadwood” at OHIM (and at national offices following the same model) concern the basic fee covering three classes, which may invite overbroad registrations, or the use of class headings as designations covering all goods or services under that heading.

1.35 Those features should, however, not be regarded in isolation, but must be appraised as an element forming part of a system which is more strongly geared

towards fast and cost-efficient procedures than its American counterpart. This implies that private actors must be alert and defend their interests in a pro-active manner instead of relying on the “watchdog-function” of the registry. Changes in that regard are only called for if the obstacles to access resulting from unused or unnecessary registrations are substantial in their dimensions, and if the solutions envisaged are feasible and appropriate under a cost-benefits perspective.

1.36 Regarding substantiality – i.e. the question whether and to what extent “cluttering”

results in serious detriments for applicants – the views presented by offices and stakeholders diverge widely. Whereas OHIM and major business associations emphasize that no such problems exist, other stakeholder organisations, in particular those representing agents and attorneys, declare that the cluttering problem is virulent and growing. A tableau of split opinions also transpires from the Allensbach survey: Out of 74 percent of agents expressing a view on the issue, the majority (41 percent vs. 33 percent) is of the opinion that what may be described as cluttering poses a problem at OHIM, whereas that view is only shared by 21 percent of proprietors (vs. 29 percent endorsing the opposite opinion).

1.37 While it is difficult to find reliable data sustaining one or the other position, the evidence available from the CTM register appears to point in the direction that the access to CTMs is not severely hampered by the number of earlier marks. As is regularly emphasized by OHIM, the opposition rate has remained stable throughout the years or is even slightly declining, showing that the growing number of trade marks has not led to a rising portion of conflicts. Interestingly, statistics also show that very crowded classes such as 09, 35, 42 and 41 attract a relatively low opposition rate (between 14 percent and 15 percent). However, the evidence is not entirely conclusive. Apart from the absence of conflicts, an explanation for the low opposition rate could lie in the fact that more efforts are undertaken in those classes to clear the rights before filing an application, thus adding to the pre-filing costs incurred by the companies. Concrete data are not available on that point. However, according to reports by FICPI about an internal survey conducted among its members, clients are usually advised to submit for clearance at least 3 if not more “candidate marks”, as the statistical probability for clearing one particular sign has become “increasingly minimal” due to the high and rising number of prior registrations. This stands in certain contrast to the results of a survey undertaken among companies participating in the European Business Test Panel (EBTP), which was established by the Commission in order to receive direct information and feedback from European business by way of regular consultations on various topics. According to the consultation on trade marks

conducted in that framework in 2008

(http://ec.europa.eu/yourvoice/ebtp/consultations/2008_en.htm) a clear majority of participants (54 percent of 391 answers received) never had difficulties in finding a proper name or sign for a trade mark. Of those who did experience such difficulties (84 participants), however, 45 (53,6 percent) answered that the name was already registered as a trade mark by others (with additional 13,1 percent answering that the sign was taken by a prior design, trade name or patent).

1.38 Some investigations on the issue have also been conducted by INNO-tec.

According to rough estimations based on internet searches, about 6 – 10 percent

of CTMs remain unused after 5 years of registration. Furthermore, an attempt is made to find indirect evidence for the volume of strategic applications which are not meant to be used, and remain to be unused in case of successful registration.

As a background, the hypothesis is promulgated that the “dummy” strategy described above with regard to searches might be practised also for applications, meaning that companies file several applications simultaneously in order to increase the probability that at least one of them will “survive”. Without going into the details which are set out in the report by INNO-tec (Annex I), it is remarkable that simultaneous applications have significantly increased in recent years and appear to be augmenting. Submitting that the above hypothesis is valid, the finding might indicate that a strategy initially devised by applicants in order to minimize the risk of finding access to protection barred by a growing number of prior rights might itself become a source of obstruction. This would be critical inter alia because it tends to disadvantage SMEs which cannot easily afford to adopt the same strategy, at least in the longer run. However, all those findings are preliminary and must be appraised with great caution. It is strongly recommended that further studies are carried out which help to shed light on the issue.

1.39 For the purposes of this Study it must be stated that the evidence gathered is imperfect and does not allow drawing definite conclusions. There is no sustainable documentation showing that access to trade marks is substantially impaired by congestion of registers. On the other hand, it would equally be unwise to contend that the features of the present system which tend to invite a certain amount of cluttering are not giving rise to any problems at all, and will not do so in the future.

The lack of hard and fast evidence in that regard may have various reasons, such as the “hidden” nature of additional costs incurred in the pre-filing stage, or the hard-to-grasp impact of strategic conduct. The Study therefore adopts as a general premise that amendments aiming at reducing the number of unused or partially unused marks may contribute to improvement of the system, where such measures appear as sensible and balanced in view of the ensuing costs and benefits. The issue is addressed at several instances in the further course of this Study.

E. Impact of different interests involved in trade mark law