Board of Appeal refuses to review opposition based on absolute grounds

The Board of Appeal has ruled in an opposition filed by Promat GmbH against the registration by Paroc Oy Ab of a device trademark in Classes 6, 17, 19 and 37 of the Nice Classification (Decision No 1418-o, October 16 2013).

On August 1 2012 Promat filed an opposition against Paroc’s International Registration No 1079053, which is depicted below:

The opposition was based on absolute grounds of refusal, namely lack of distinctive character, common use of the sign and bad faith.

The opponent claimed that such a simple pattern of black-and-white diagonal stripes did not function as a trademark, and pointed out that OHIM had previously refused to register a trademark consisting of red-and-white stripes (International Registration No 866976) based on Article 7(1)(b) of the Community Trademark Regulation (207/2009).

The opponent also referred to the common use of the pattern in the construction business and presented several examples of such use.  

With regard to the bad-faith claim, the opponent argued that it had used a pattern of red-and-white stripes on its products since the 1970s and that Paroc had requested it to cease using this pattern in 2010. The companies both provide heat insulation materials in the building sector, and operate partly in the same markets. Therefore, Promat argued that seeking to register a commonly used sign and monopolise it should be considered as bad faith.

Paroc did not respond to the opposition. According to the current trademark law and the procedural rules of the Board of Appeal, a lack of response is not, in itself, sufficient to sustain an opposition; a review of the opposition and the issuance of a decision on the merits are required. In practice, the Board of Appeal has almost always interpreted a lack of response on the applicant’s part as agreement with the opposition; however, this was one of the rare cases in which the outcome was different.

According to the Estonian trademark law, the opponent must establish that it has a legal interest in filing the opposition. This applies also to oppositions based on absolute grounds of refusal, a concept that is not applied in many countries.

The Board of Appeal thus considered whether Promat had a legal interest in filing the opposition and found that the following circumstances had not been established:

• that the companies were competitors;
• that Promat uses the stripe pattern in its business activities - there was no evidence of such use in Estonia; and
• that a cease and desist letter had been sent by Paroc to Promat in 2010 - the letter had not been presented as evidence, the mark at issue had not been filed at the relevant time, and the rights on which the claim was based were not known.

In its final arguments, Promat argued that it had concluded a distribution agreement with a Latvian company, which included Estonia in the distribution territory. However, the Board of Appeal found that there was no evidence that any product had actually been sold in Estonia and that such evidence had been filed too late.

The decision shows that the Board of Appeal interprets the ‘legal interest’ requirement under Estonian trademark law in a very restrictive manner. Arguably, the decision is not in line with the rationale behind the examination on absolute grounds - especially when compared to other trademark systems which provide an opportunity for observations.

The decision has not yet come into force, as Promat may bring the dispute before a general civil court for further review in the context of continuation proceedings.

Almar Sehver, AAA Legal Services, Tallinn