Patent Office consults on proposed legislative changes

The UK Patent Office (soon to be renamed the UK Intellectual Property Office or UKIPO) has published a consultation paper entitled "Relative grounds for refusal - Proposed legislative changes" setting out proposed draft legislation for the abolition of the formal assessment of a trademark application on relative grounds. Essentially, the registrar will no longer refuse to register a new trademark application where there appears to be an earlier conflicting mark unless the owner of the earlier mark successfully opposes the new application. It is anticipated that the changes will bring the UK system more into line with the Community trademark system, while delivering a credible alternative.

Currently, the registrar of trademarks can refuse a UK trademark application on relative grounds, among other things. However, the increasing popularity of the Community trademark and the international trademark registration system has resulted in many UK applications facing significant numbers of blocking applications or registrations at the Community trademark or World Intellectual Property Organization level. Applications for Community trademarks are not blocked by earlier registrations unless the proprietors of the earlier marks choose to do so. As a result, a UK trademark application may find itself blocked by a number of earlier marks that not only appear to conflict with one another, but also by those held by proprietors who have no interest in exploiting their mark in the United Kingdom.

The Patent Office fears that, without change, the UK trademark system will become grid-locked in attempts to overcome conflicting marks to the point at which the decision on whether to file for a Community trademark or a UK application will be based on the ease of securing registration and not the relevance or the quality of protection obtained. In order to stave off this looming obsolescence, the Patent Office has decided to abolish the current practice of examination on relative grounds for a system more aligned with that at EU level (see End of relative grounds examination confirmed). The new consultation paper identifies the way forward and presents draft legislation (a draft order, as provided under Section 8 of the Trademarks Act 1994) required to implement the changes.

The order proposes to remove Section 37(2) of the act such that there will no longer be a formal obligation on the registrar to conduct a search for the purposes of examination. This will be replaced with a provision that a search may be carried out by the registrar for the purposes of notification of both the applicant and the proprietors of earlier marks that appear to conflict. Only proprietors of marks that are likely to present a good arguable case will receive notification.

The act currently allows "any person" to oppose the registration on relative grounds. Under the proposed legislation the right to oppose will be restricted to the proprietor of an earlier mark under Subsections 5(1), (2) or (3) or the proprietor of an earlier right under Section 5(4). The Patent Office believes that this will encourage economic efficacy since it will be proprietors of an earlier mark who are in the best position to judge the economic impact of the registration of a similar or identical mark. The decision on whether to oppose will thus be based on a market assessment. Further, it is anticipated that this provision will help prevent abuse of the system by parties filing oppositions for tactical purposes rather than as bona fide objections. It will, however, still be possible for any person to oppose an application on "other grounds".

None of these changes will apply to a pending application that has been accepted, but is awaiting publication, prior to the coming into force of the order. Applications that are pending, but have yet to be accepted, will be assessed under the new legislation.

The right to apply for a declaration of invalidity under Section 47 will be limited in accordance with Article 5 of the order to the proprietor of an earlier trademark (Section 47(2)(a)) or other right (Section 47(2)(b)). Any person may still apply for a declaration of invalidity on the grounds that a mark was registered in breach of Section 3 (absolute grounds for refusal).

Provision is made such that declarations of invalidity made prior to the coming into force of the new legislation shall not be subject to it.

To ensure that the proposed amendments to the 1994 act are regulated effectively in practice, the Trademark Rules 2000/136 are to be further amended as provided for by Section 78 of the act.

The change comprises the insertion of Rule 11A to clarify who will be notified as a result of the search carried out under the provisions of Section 37(1) of the act. The applicant will be notified of any earlier marks that appear to provide an objection on relative grounds under Subsections 5(1) and 5(2). If the applicant elects to proceed or fails to respond to the notification within two months, then the application will proceed to publication. The registrar will then notify the proprietor of the earlier marks identified in the search. It will be possible to extend the period between notification and publication if required.

Following notification, an applicant will be given an opportunity to restrict the specification of goods/services of its application before a search report is sent to the proprietor of an earlier mark. It may also make one written submission in response to marks which it believes should not have been included in the search report. It may not, however, appeal a decision to notify the proprietor of an earlier mark.
Proprietors not entitled to receive notification from the registrar include:

• proprietors who have informed the registrar in writing that they do not wish to receive notification; and
  
  
• proprietors of Community trademarks and international marks who have designated the European Union as a whole for protection, unless they have requested notification on the relevant form (for which the number and format have yet to be created) in relation to their mark and paid the associated fee.

These provisions prevent notification where not required/desired and do not result in the Patent Office subsidizing what would effectively be a watching service for proprietors of Community trademarks and international marks. This system reflects the Office for Harmonization in the Internal Market's system of notification to proprietors of Community trademarks but not proprietors of national marks.

Rule 13 will be modified to take into account that the right to oppose is no longer applicable to "any person".

The Patent Office hopes that the benefits generated by the new legislation will outweigh the costs involved. Whether this proves to be the case is likely to be dependent on the whether a UK trademark is viewed as a cost-effective and appealing alternative to a Community or international mark.

The Patent Office argues that the proposed changes will have little or no adverse effects on small and medium enterprises (SMEs). Clearly, without the automatic blocking by earlier marks the onus, and thus cost, will fall on the proprietor of an earlier mark to oppose an application. This will doubtless be an important consideration for an SME. The decision to proceed, based on the likelihood of a successful opposition, may therefore rely heavily on the judgement of the registry in its identification of earlier marks which it considers to be in conflict.

Those wishing to comment on this consultation have until March 12 2007 to do so.

Chris McLeod, Hammonds, London