Parties to share costs where they jointly end proceedings, court rules

European Union

In Sunrider Corporation v Office for Harmonization in the Internal Market (OHIM), the European Court of First Instance (CFI) has rejected Sunrider Corporation's appeal against a decision of the OHIM Board of Appeal to share the costs of two separate opposition proceedings between Sunrider and the opposing parties, despite the fact that both oppositions were dropped.

In the first case, pet food and health product manufacturer Vitakraft-Werke Wührmann & Sohn opposed Sunrider's application to register VITATASTE as a Community trademark in Classes 5 and 29 of the Nice Classification on the basis of Vitakraft's earlier German trademarks VITAKRAFT and VITA for various products in Class 5. Without waiting for a decision of the Opposition Division, Sunrider removed some goods from its application. Vitakraft subsequently withdrew its opposition.

In the second case, Sunrider had applied to register METABALANCE 44 as a Community trademark also in Classes 5 and 29. Friesland Brands BV opposed the application on the basis of various registrations in EU member states for BALANCE and BALANS in Classes 5 and 29. Sunrider and Friesland came to an amicable settlement whereby Sunrider agreed to delete most of the goods in Class 29 from its application if Friesland withdrew its opposition. However, they did not agree on costs.

In both cases, the Opposition Division imposed costs on Sunrider pursuant to Article 81(3) of the Community Trademark Regulation, which states that the party who terminates the proceedings by withdrawing the application or the opposition shall bear the fees and the costs incurred by the other party. Sunrider appealed, requesting that (i) Vitakraft in the first case and Friesland in the second case bear the costs of the proceedings, and (ii) the OHIM reimburse the appeal fee in both cases pursuant to Rule 51 of the Community Trademark Implementation Regulation.

The Board of Appeal annulled the Opposition Division decisions and ordered each party to bear its own costs for both the opposition and the appeal proceedings, finding that the equity principle set out in Article 81(2) and (3) of the Community Trademark Regulation should apply. This is because the board found that all parties shared the responsibility of putting an end to the proceedings - Sunrider by amending its applications, and Vitakraft and Friesland by withdrawing their oppositions. In the appeal of the VITATASTE decision, the board rejected Sunrider's request for the reimbursement of its appeal fee. However, it ordered the OHIM to reimburse Sunrider its appeal fee in the METABALANCE Case on the grounds that the Opposition Division had not provided adequate reasons for rejecting the request, which - the board held - constituted a substantial procedural violation.

Sunrider appealed to the CFI, requesting that (i) Vitakraft and Friesland bear all the costs of the proceedings, and (ii) the OHIM reimburse the appeal fee in the VITATASTE Case. Sunrider contended, among other things, that the board's decision on costs was incorrect as it should have been based on Article 81(4) of the regulation, not Article 81(2) and (3).

The CFI upheld the board's decisions. It rejected Sunrider's claim that Article 81(3) was lex specialis of the general provision in Article 81(4), which provides that the award of costs is at the discretion of the competent authority "where a case does not proceed to judgment". The CFI concluded that the Board of Appeal had been right to split the costs between the parties in both cases as they had all made concessions. Accordingly, none of the parties could be considered to have lost and thus none of them should be expected to bear the full costs.

The CFI also dismissed Sunrider's claim that the costs decision was inequitable and violated the principle of proportionality on the grounds that the costs issue should have been decided (i) according to the most probable outcome of the opposition, and (ii) in view of the limited changes made to the application. The CFI made it clear that the competent authority has to follow the equity rule set out in Article 81(2). However, it has a broad discretion to award costs and should not take into consideration the chances of success of the opponent should it have further proceeded with the opposition against the remaining opposed goods and/or services.

Florian Schwab, Boehmert & Boehmert, Munich

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