Existence of negotiations not proper reason for not requesting proof of use

European Union
In Flaco-Geräte GmbH v Office for Harmonisation in the Internal Market (OHIM) (Case T-74/10, May 11 2011), the General Court has dismissed an appeal lodged by Flaco-Geräte GmbH against a decision of the Second Board of Appeal of OHIM finding that the request for proof of use of the mark on which the opposition was based was inadmissible.
 
Flaco-Geräte filed an application for the registration of FLACO as a Community trademark (CTM) for goods in Class 7 of the Nice Classification. Mr Jesús Delgado Sánchez filed an opposition based on the Spanish trademark FLACO (Registration 1691943), which also covered Class 7 goods and was registered in 1993.
 
The Opposition Division accepted the opposition and Flaco-Geräte appealed. In the statement setting the grounds of the appeal, Flaco-Geräte requested proof of use of the earlier mark - a request that had not been submitted in the first instance. The Community Trademark Regulation (40/94), now the Community Trademark Regulation (207/2009), permits an applicant to request proof of use of the earlier mark if it has been registered for at least five years prior to the date of publication of the opposed CTM application. In this regard, account must be taken of the fact that, under Rule 22(1) of the Community Trademark Implementation Regulation (2868/95) (implementing the Community Trademark Regulation), the request must be made within the term given to the applicant to submit its observations in reply to the opposition.

The Second Board of Appeal of OHIM dismissed the appeal, rejecting the request for proof of use of the earlier mark on the grounds that it had been submitted for the first time before the board.

Flaco-Geräte appealed to the General Court, alleging that it had not requested the opponent to furnish proof of genuine use of the earlier mark because it was already involved in a dispute with the opponent and that the dispute was in the process of being settled. It was only after realising that those settlement proceedings would not come to anything that the applicant decided, before the Board of Appeal, to present its request for proof of genuine use.

The General Court dismissed the appeal and, among other things, rejected the arguments put forward by Flaco-Geräte to explain why it had requested proof of use of the earlier mark outside of the relevant period. The main conclusions of the court were as follows:
  • There was no need to consider whether, and in what circumstances, the Opposition Division could take into account a request for proof of use of the earlier mark relied on in opposition, presented to it after the expiry of the period established by the Rule 22(1) of the Community Trademark Implementation Regulation, since it is apparent from the case law that, in any event, such a request may not be made for the first time before the Board of Appeal.
  • According to that case law, the request for proof of genuine use of the earlier mark adds to the proceedings before the Opposition Division the specific preliminary issue of genuine use of the earlier mark and, in that sense, changes the content of the opposition.
  • The Board of Appeal has jurisdiction only to rule on appeals against decisions of the Opposition Divisions, not to give a ruling itself at first instance on a new opposition.
  • The grounds relied on by Flaco-Geräte - based on the existence of ongoing dispute settlement proceedings - did not, as the Board of Appeal correctly found, affect that conclusion.
  • Even if, by that reasoning, Flaco-Geräte were to argue that, in spite of all due care required by the circumstances having been taken, it was unable to comply with the time-limit for submitting a request for proof of genuine use of the earlier mark before the Opposition Division, in such a situation, Flaco-Geräte should have applied before the Opposition Division for restitutio in integrum.
The conclusions drawn by the court appear to be reasonable. Pursuant to Articles 42(2) and (3) of the Community Trademark Regulation, only when the applicant has so requested will the proprietor of an earlier trademark who has given notice of opposition be called upon to furnish proof that, during the period of five years preceding the date of publication of the CTM application, the earlier mark has been put to genuine use. Rule 22(1) of the Community Trademark Implementation Regulation, in relation to Rule 20, sets out that a request for proof of use cannot be made outside of the term given to the applicant to reply to the opposition.

As the court correctly pointed out, the request for proof of use of the earlier mark, once it has been made, becomes a preliminary question that may be a determining factor in the decision issued in the first instance: when the opponent is unable to prove genuine use of the mark (or marks) on which the opposition is based, the opposition is automatically rejected by OHIM without addressing its merits. In addition, for the purposes of an opposition, the earlier mark is considered to be protected only for the goods and services in respect of which there has been genuine use.

For these reasons, requesting proof of use for the first time at the appeal stage is tantamount to expecting the Boards of Appeal to rule on a new opposition, since the issue of use could have a significant impact on the prevailing circumstances. In such a case, the function of the Boards of Appeal would not be limited solely to reviewing whether the decisions issued in the first instance conform to the law, and the boards would then play a function that should be limited to the Opposition Division alone.

Furthermore, the decision shows that the existence of negotiations between the parties does not appear to be a proper reason for not requesting proof of use of the earlier mark - Community regulations provide the parties with adequate procedures for requesting the suspension of opposition proceedings in order to conduct settlement negotiations, thus avoiding having to submit briefs or documents that may in any way disturb the ongoing negotiations. There is, for example, the possibility of requesting an extension of the cooling-off period to suspend the commencement of the adversarial stage of the proceedings. If that stage commences once the cooling-off period has expired, the parties may still jointly request the suspension of the opposition proceedings.

Fernando Ilardia, Elzaburu, Madrid

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