Human and software errors during renewal process are not unforeseeable events

In Video Research USA Inc v Office for Harmonisation in the Internal Market (OHIM) (Case T-267/11, September 19 2012), the General Court has upheld a decision of the Second Board of Appeal of OHIM in which the latter had refused to order restitutio in integrum.

On August 26 1998 Video Research USA Inc filed an application for the registration of a Community trademark. On January 28 2008 Video Research's representative before OHIM - firm B - was informed by OHIM that the mark was going to expire on August 26 2008. OHIM also notified firm B that, upon payment of the additional fee for late payment, the deadline would be extended to March 2 2009. Video Research failed to renew its registration.

Video Research subsequently applied for restitutio in integrum, explaining why it had been unable to comply with the deadline. In particular, Video Research stated that it used a software named Inprotech, which had generated and sent renewal reminders to Video Research's US agent (the intermediary between firm B and Video Research). Those requests were sent three times on April 1, June 1 and July 1 2008 (ie, before the expiry of the deadline). Firm B received instructions to renew the mark on August 18. However, due to a human error, the person who received the instructions did not transfer them to the renewals clerk; in addition, the software did not generate the reminders that it was supposed to generate three, four and five months after the deadline for renewal.

The request for restitutio in integrum was refused by the Trademarks and Register Department of OHIM; the Second Board of Appeal of OHIM dismissed the appeal and the case came before the General Court.

Before the court, Video Research alleged infringement of Article 81 of the Community Trademark Regulation (207/2009), under which restitutio in integrum is subject to two conditions:

• the party must have acted with all due care required by the circumstances; and
• the consequence of the non-observance of the time limit by the party is the loss of any right or means of redress. 

The court first noted that the requirement to exercise due care lies with the trademark owner, even if the latter has delegated administrative tasks to a third party. In addition, according to the case law, the words "all due care required by the circumstances" in Article 81(1) require a system of internal control and monitoring that will prevent the involuntary non-observance of time limits.

In the present case, Video Research had chosen a US agent to manage the mark, which, in turn, had delegated the administrative tasks concerning renewal of the mark to firm B. The General Court thus examined whether the Board of Appeal had correctly established that firm B had failed to exercise due care in light of the reasons given by Video Research.

With regard to the first reason (human error), the court pointed out that it had already been held that human error made at the time of the technical management of renewals cannot be considered as exceptional or unforeseeable events (see Aurelia Finance (Case T-136/08)).

With regard to the second reason (the failure of the Inprotech software), the court noted that it had already been held in Aurelia that the malfunction of a computerised renewal reminder system is a foreseeable event and that a back-up system should exist. The failure to check the system also constituted a breach of the duty to exercise due care incumbent on firm B.

The third reason set forth by Video Research was that the board had erred in its assessment of the facts when it stated that firm B had not taken into consideration the content of a letter sent by OHIM giving it two deadlines to submit a request for renewal and pay the fees. The court requested some information about the functioning of firm B and found that the internal renewal procedure of the firm did not provide for any entry of data following receipt of OHIM’s reminder. As a consequence, the court decided that the board's reasoning on this point was correct.

The fourth reason set forth by Video Research was that it could not be foreseen that an experienced employee would make a mistake and that corruption of the computerised system would occur. According to Video Research, this amounted to an unforeseeable combination of events. The court held that the reason why it was possible for human error to have played a role in the non-renewal of the mark was because the failure of the Inprotech system occurred after the generation of three reminders, to which Video Research's US agent had reacted by giving the instruction to renew. That error had not occurred in the context of a control and verification mechanism of the computerised system. As a consequence, the court concluded that the board had correctly found that firm B had not taken "all due care required by the circumstances".

In addition, the court dismissed Video Research's argument that OHIM had unlawfully required a higher standard of due care from a professional agent than from a party in general. The court found that, since the board had established to the requisite legal standard firm B’s failure to comply with the due care required, that argument was ineffective.

Finally, Video Research criticised the statement in the board's decision that its US representative "should have reacted earlier"; it claimed that, by choosing a reputed and experienced law firm, and by communicating its request for renewal to firm B, it had displayed the diligence required. The court found that this criticism concerned the behaviour of firm B, rather than that of the US agent. In addition, it pointed out that, since the representatives of the trademark owner act on its behalf, the actions of firm B and the US agent must be regarded as being the owner’s actions. The court concluded that the question of whether Video Research or its US agent displayed a sufficient level of diligence was relevant only from the point of view of their contractual relations with firm B and in order to establish liability for any damage suffered by Video Research; however, this question was irrelevant in the present proceedings.

Therefore, the court held that the lack of due care of firm B had been established, and Video Research's action was dismissed.

Richard Milchior, Granrut Avocats, Paris