Board of Appeal failed to carry out specific analysis of CTM’s descriptiveness

European Union
In mPAY24 GmbH v Office for Harmonisation in the Internal Market (OHIM) (Case T-275/10, November 22 2011), the General Court has annulled a decision of the First Board of Appeal of OHIM in which the latter had cancelled the Community trademark (CTM) registration for MPAY24.

In 2001 an Austrian company created the sign MPAY24 to designate its electronic payment services for third parties. The sign was registered as an Austrian trademark and subsequently as a CTM (Registration 2601656). The Austrian Patent Office, which is usually quite strict with regard to potentially non-distinctive signs, accepted the sign without problems. The OHIM examiner raised concerns and rejected the application in the first instance. However, on appeal the Second Board of Appeal considered that the trademark was sufficiently distinctive (Case R 0631/2003-2, April 21 2004). The trademark became so successful that the applicant changed its name to mPAY24 GmbH.
All successful trademarks are almost always imitated, and competitors started to use the sign MPAY for similar and related services. mPAY24 prevailed in various disputes: for example, the Court of Hamburg held in two separate infringement cases that the mark MPAY24 was sufficiently distinctive to be protected against use of the sign MPAY, and issued two preliminary injunctions (Landgericht Hamburg, File 315 o 536/05, August 4 2005; Landgericht Hamburg, File 315 o 191/08, April 17 2008). Similarly, rights in the MPAY24 mark were enforced in Poland against use of the sign MPAY by a Polish company (Warsaw District Court, XXII Division, File XXII GWzt 7/08, November 28 2008). However, the injunction was reversed on appeal on the grounds that the infringer owned an earlier Polish trademark, and the court assumed that the earlier mark was not used outside of Poland (Warsaw Appeal Court, File 1 Aca 182/09, August 25 2009).
Moreover, mPAY24 successfully opposed the registration of other trademarks consisting of, or containing, the word element 'MPAY' (MPAY EXPRESS (No 6327291) (Opposition Division, B 1 430 398, June 15 2010); MPAYXPRESS (No 6003602) (Opposition Division, B 1 518 227, June 28 2010); MPAY (No 3587896) (Opposition Division, B 860 504, December 21 2006). The first two decisions were not contested and became final. The third decision was appealed and the appeal was partially successful. However, the decision of the Board of Appeal was annulled by the General Court (Case T-557/08), so that case is again pending before the board.
On March 8 2007 Slovenian company Ultra doo Proizvodnja elektronskih naprav filed an application for a declaration of invalidity of the CTM MPAY24. The application was rejected by the Cancellation Division (Reference 2120C, June 10 2008). On appeal, the First Board of Appeal considered that the trademark MPAY24 was not registrable because it was descriptive (R 221/2007-1, September 30 2008). In particular, the board found that the letter 'M' could stand for 'multi' or 'mobile', the word 'pay' was a common verb in the English language and the element '24' could indicate that the services offered under the mark would be available 24 hours a day. Moreover, the board held that all the products and services covered by the mark could theoretically be used in connection with payment systems.

However, it failed to specify why the mark was descriptive in respect of "data processing apparatus, software, hardware" in Class 9, "printing matters, particularly magazines" in Class 16, "advertising and business management" in Class 35, "financial affairs" in Class 36 and "telecommunication" in Class 38 of the Nice Classification.

As soon as the trademark owner had filed an action with the General Court, the board realised its mistake and issued a corrigendum by inserting a new paragraph in the decision and re-numbering the other paragraphs in which it dealt with the alleged descriptiveness of the mark.

The General Court annulled the decision of the board on the sole basis that the corrigendum was inacceptable. Therefore, the board had failed to clearly explain for which products and services the trademark should be considered descriptive and, if so, why. Although, according to established case law, a general reasoning for a group or category of goods may be sufficient, the holdings of the board were so general that the court could not review them. The court pointed out that:

there must be a sufficiently direct and specific relationship between the sign and the goods and services in question to enable the public concerned immediately to perceive, without further thought, a description of the goods and services in question or one of their characteristics.” (Paragraph 37)

It remains to be seen how the board will handle these instructions in its next decision.

The multitude of proceedings involving the MPAY24 mark raises a further general issue which was not dealt with by the General Court. mPAY24 obtained registration of the MPAY24 mark following a clear decision of the Board of Appeal that the mark was sufficiently distinctive, and repeatedly enforced the trademark in various CTM courts. Years later, in a cancellation action based on exactly the same facts, the same circumstances and the same considerations, another chamber of the Board of Appeal held that the trademark was descriptive and thus invalid. In order to do so, the board did not specifically overrule the first decision holding that the trademark was sufficiently distinctive. Under the law, this may be justifiable; however, it could raise serious problems for trademark owners. Here, mPAY24 obtained registration of the mark on appeal, invested in building up the reputation of the mark, but was told several years later by another chamber of the Board of Appeal that the trademark was invalid and its investments were futile. It is hoped that the board, in its new decision, will respect the validity of a trademark that has been in use for a long period of time and has even been successfully enforced.

Hans Georg Zeiner, Zeiner & Zeiner, Vienna

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