CFI clarifies Board of Appeal’s role in default cases

European Union
In Laytoncrest Ltd v Office for Harmonization in the Internal Market (OHIM) (Case T-171/06, March 17 2009), the Court of First Instance (CFI) has annulled a decision of the First Board of Appeal of OHIM in which the latter had found that the applicant had implicitly withdrawn its Community trademark (CTM) application under Article 44(1) of the Community Trademark Regulation (40/94) due to its “complete procedural inactivity”.
Laytoncrest Ltd filed an application for the registration of TRENTON as a CTM for goods in Classes 7, 9 and 11 of the Nice Classification. Erico International Corp, the proprietor of the CTM LENTON, lodged an opposition against the application based on Article 8(1) of the regulation. The opposition was directed against the goods in Class 7. Laytoncrest did not file any observations. The Opposition Division of OHIM rejected the opposition on the grounds that there was no likelihood of confusion between the marks, despite the partial identity of the goods. 
Erico appealed, claiming that Laytoncrest had implicitly withdrawn its application and, due to its procedural inactivity, did not exist. The First Board of Appeal sent these claims to Laytoncrest. When the latter failed to respond within the prescribed period, the registry of the board contacted Laytoncrest's representative by telephone to confirm that it would not be filing observations (a fact which was confirmed by telephone).
Subsequently, the board held that on account of Laytoncrest's complete procedural inactivity during the opposition and appeal stages, the latter had implicitly withdrawn its CTM application under Article 44(1) of the regulation. On that basis, the decision of the Opposition Division was declared null and void, and Laytoncrest was ordered to pay the costs of the proceedings.

Laytoncrest appealed to the CFI, arguing that it had no duty to file observations. OHIM sided with Laytoncrest in this regard, against the First Board of Appeal.

First, the CFI held that only the applicant may withdraw a CTM application. Article 44(1) of the regulation cannot be relied upon to infer the implicit withdrawal of a CTM application based solely on the fact that the applicant has taken no action during the opposition and appeal proceedings before OHIM. The CFI pointed out that the implicit withdrawal of the application applied to all the goods covered by the mark, even though the opposition was directed only against the goods in Class 7.
The CFI came to the conclusion that OHIM was bound to issue a decision under Rule 20(3) of Commission Regulation 2868/95, despite the inactivity of applicant. Likewise, the board was bound by Rule 50(1) of the regulation, which states that:

"[u]nless otherwise provided, the provisions relating to proceedings before the department which has made the decision against which the appeal is brought shall be applicable to appeal proceedings mutatis mutandis."

The CFI concluded that Laytoncrest's procedural inactivity during the opposition and appeal proceedings "could not be treated by the Board of Appeal as constituting a situation in which [Laytoncrest] had implicitly withdrawn its [CTM] application".
The decision offers welcome clarity - CTM applicants may ignore or downplay what they consider to be groundless oppositions during both the opposition and appeal stages.

Peter Gustav Olson, MAQS Law Firm, Copenhagen

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