Board of Appeal held to have gone too far in refusing suspension based on groundless suspicions

In Royalton Overseas Ltd v Office for Harmonisation in the Internal Market (OHIM) (Case T-556/12), the General Court has considered and annulled a decision by the First Board of Appeal of OHIM to refuse to grant a suspension. This decision is important as it is the first time that a decision of the Board of Appeal on such a procedural matter has been held to exceed the board’s broad discretion.

The decision involved an opposition to a Community trademark (CTM) based on an earlier Romanian registration. The opposition was upheld for some of the goods and services. The CTM applicant, Royalton Overseas Ltd, appealed the decision to the First Board of Appeal OHIM and, in its statement of grounds, requested that the appeal be suspended while a cancellation action against the Romanian registration was pending. 

The Board of Appeal refused to suspend the appeal as:

• no copy of the original cancellation action had been presented (which later proved to be incorrect as the correct document had in fact been filed);
• the English translation provided did not prove that the Romanian registration was the subject of the cancellation action at that time; and
• the cancellation action was filed after the appeal had been filed and the statement of grounds submitted. 

The board also stated that it had serious doubts about the true intentions of Royalton in requesting suspension, as it had filed previous cancellation actions against the Romanian registration which had been concluded. 

The Board of Appeal issued a decision confirming the findings the Opposition Division, which Royalton appealed to the General Court.

The General Court held that the Board of Appeal had been incorrect to state that no copy of the original cancellation action had been presented, and OHIM had admitted that this document had in fact been filed with the statement of grounds of the appeal. The Board of Appeal had therefore failed in its duty of diligence under Article 76(1) of the Community Trademark Regulation (207/2009) to examine carefully and impartially all the relevant factual and legal aspects of the matter. 

However, the court went on to consider whether the suspension should have been granted even if the cancellation action had been properly considered. It was acknowledged that the Board of Appeal has a broad discretion on requests for suspension, but its decision on suspension can still be judicially reviewed if there has been a manifest error of assessment or misuse of powers.

The court held that, even if the Board of Appeal had accepted that a cancellation action was pending, this did not make a refusal to suspend a manifest error of assessment. The general EU principles governing procedural fairness require a weighing of the competing interests between the CTM applicant and other parties. A failure in this regard can constitute a manifest error of assessment. 

Cancellation proceedings and oppositions are distinct and autonomous proceedings. One can file cancellation proceedings even if the mark is currently the basis of an opposition and it is not evidence of bad faith to do so.  However, the opposition proceedings do not necessarily have to be suspended if a cancellation action is filed against the opponent’s mark. The decision on whether to suspend requires a weighing of the interests involved.

The earlier cancellation actions filed by Royalton failed on procedural grounds and therefore there was no basis for the Board of Appeal’s suspicion that Royalton was trying to delay the outcome of the opposition by filing the new cancellation action and seeking suspension of the opposition. Royalton had little to gain in doing so as the applicant could simply file a new application at a later date if the cancellation action was ultimately successful.  The Board of Appeal’s refusal of the suspension on the basis of these doubts was therefore abstract and unsupported by any objective evidence. In its presumptions regarding the intentions of Royalton, the Board of Appeal had failed to take into account all aspects of Royalton’s situation, had not looked at the whole picture and had not properly weighed the various interests involved. Therefore, the decision to refuse the suspension was in error.

As question of suspension must be decided before the assessment of likelihood of confusion, the court annulled the decision and did not proceed to analyse the decision on the merits.

This decision underlines the broad discretion of the Boards of Appeal of OHIM, which are not bound by the same standard practices on extensions or suspensions as the Opposition or Cancellation Divisions of OHIM. The approach of the boards to such matters can be very difficult to predict and the practices and procedures of the Boards of Appeal are largely undocumented. Indeed, different boards often take different approaches to the same procedural issue. In this case, the board went too far in casting aspersions on the intentions of the party requesting suspension, and the decision is a useful examination of the principle of manifest errors in assessment due to a failure to weigh the various interests involved.

Niamh Hall, FRKelly, Dublin and Belfast