ORDER OF THE GENERAL COURT (Second Chamber)
9 December 2022 (*)
(Community designs – Community designs representing medical instruments – No application for renewal – Cancellation of the designs on expiry of the registration – Application for restitutio in integrum – Article 67 of Regulation (EC) No 6/2002 – Duty to take due care – Action manifestly lacking any foundation in law)
In Case T‑311/22,
AMO Development LLC, established in Santa Ana, California (United States), represented by J. Day, Solicitor, and T. de Haan, lawyer,
applicant,
v
European Union Intellectual Property Office (EUIPO), represented by T. Klee and E. Markakis, acting as Agents,
defendant,
THE GENERAL COURT (Second Chamber),
composed of A. Marcoulli, President, J. Schwarcz (Rapporteur) and V. Tomljenović, Judges,
Registrar: E. Coulon,
having regard to the written part of the procedure,
makes the following
Order
1        By its action pursuant to Article 263 TFEU, the applicant, AMO Development LLC, seeks annulment of the decision of the Third Board of Appeal of the European Union Intellectual Property Office (EUIPO) of 15 March 2022 (Case R 1433/2021-3) (‘the contested decision’).
Background to the dispute
2        On 3 June 2015, the Community designs Nos 2712885-0001 and 2712885-0002 were registered in the name of Optimedica Corporation (‘the holder of the Community designs’).
3        On 6 November 2019, EUIPO informed the holder of the Community designs that the designs would expire on 3 June 2020 and that the request for their renewal, together with the corresponding fees, should be received by EUIPO on 30 June 2020 at the latest, a late renewal being possible, for an additional fee, within a further six-month period.
4        On 12 January 2021, EUIPO notified the holder of the Community designs of the loss of its rights, with effect from 3 June 2020, over the registrations, in accordance with Article 22(5) and Article 40(1) of Commission Regulation (EC) No 2245/2002 of 21 October 2002 implementing Council Regulation (EC) No 6/2002 on Community designs (OJ 2002 L 341, p. 28), since neither the applications for renewal nor the fees had been received before the expiry of the time limit.
5        On 8 March 2021, Carpmaels & Ransford LLP (‘the applicant’s representative’) informed EUIPO of the merger between the holder of the Community designs and the applicant, with effective date as from 30 December 2019. That change was registered by EUIPO on 19 March 2021. As EUIPO considered that it had carried out that registration in error, it cancelled the registration on 8 June 2021, given that the time limit for the renewal of the registrations and the payment of the corresponding fees had expired.
6        On 11 March 2021, the applicant’s representative lodged an application for restitutio in integrum with EUIPO under Article 67 of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs (OJ 2002 L 3, p. 1), and requested that the position of the holder of the Community designs be reinstated with regard to the time limit for applying for renewal. The fee for restitutio in integrum, the renewal fee and the additional fee were paid at the same time.
7        The application for restitutio in integrum was based on two declarations, together with annexes, which state that, following an error in the registration number of the two Community designs, which was flagged by the IT system and corrected on 8 September 2020, and despite several checks throughout the procedure, the payments specialist (‘the specialist’) of the applicant’s provider of renewal services, CPA Global Performance (‘CPA’), did not re-send the amended letter requesting payment of the renewal fees. That oversight resulted in a delay in the payment of the fees.
8        On 1 May 2021, EUIPO informed the holder of the Community designs that the two Community designs in question would be cancelled as from 3 June 2020.
9        By decision of 5 July 2021, EUIPO rejected the application for restitutio in integrum as unfounded and decided to reimburse the renewal fees and the surcharge fees. It considered that the error that caused non-observance of the time limit should have been detected by implementing a monitoring system pursuant to the duty to take all due care and, consequently, the failure to comply with the time limit was due to the fact that a manual task had not been supervised.
10      On 12 August 2021, the holder of the Community designs filed a notice of appeal seeking annulment of that decision.
11      By the contested decision, the Third Board of Appeal of EUIPO dismissed that appeal on the ground that one of the conditions laid down in Article 67(1) of Regulation No 6/2002 had not been satisfied, as CPA had not acted with ‘all due care [required by the circumstances]’. First, the Board of Appeal considered that the series of errors caused could not be regarded as exceptional and unforeseeable circumstances. The failure to correctly process manual tasks in the system was a foreseeable human error which would have made it necessary to ascertain whether the payment instruction letter had indeed been sent and to monitor the course of the procedure. Such error requires the putting in place of a proven system of internal control and monitoring of time limits that generally excludes the involuntary failure to observe those time limits, particularly within a world-renowned company specialising in renewal payments. Second, the Board of Appeal stated that any obstacle arising from the COVID-19 pandemic had to be demonstrated individually. There must be a causal reason, on which the relevant party can rely, which prevented that party specifically and individually from taking the requisite action in time. Third and lastly, the Board of Appeal observed that EUIPO is not bound by its previous decisions, as each case has to be dealt with separately with regard to its particularities.
Forms of order sought
12      The applicant claims that the Court should:
–        annul the contested decision;
–        order EUIPO to pay the costs.
13      EUIPO contends that the Court should:
–        dismiss the action;
–        order the applicant to pay the costs.
Law
14      Under Article 126 of the Rules of Procedure of the General Court, where an action is manifestly inadmissible or manifestly lacking any foundation in law, the Court may, on a proposal from the Judge-Rapporteur, at any time decide to give a decision by reasoned order without taking further steps in the proceedings.
15      In the present case, the Court, considering that it has sufficient information from the documents in the file, has decided, pursuant to that article, to give a decision without taking further steps in the proceedings, notwithstanding that one of the parties has requested a hearing (order of 6 October 2015, GEA Group v OHIM (engineering for a better world), T‑545/14, EU:T:2015:789, paragraph 13).
16      As a preliminary point, it should be borne in mind that, under Article 67(1) of Regulation No 6/2002, the applicant for or holder of a registered Community design or any other party to proceedings before EUIPO who, in spite of all due care required by the circumstances having been taken, was unable to observe a time limit vis-à-vis EUIPO is to, upon application, have his or her rights re-established if the non-observance in question has the direct consequence, by virtue of the provisions of that regulation, of causing the loss of any rights or means of redress.
17      It is apparent from that provision that restitutio in integrum is subject to two conditions, the first being that the party has exercised all due care required by the circumstances, and the second that the non-observance of the time limit by that party has the direct consequence of causing the loss of any right or means of redress (see judgment of 31 January 2019, Thun v EUIPO (Poisson), T‑604/17, not published, EU:T:2019:42, paragraph 11 and the case-law cited).
18      It is also apparent from Article 67(1) of Regulation No 6/2002 that the duty to take due care falls in the first instance on the applicant for or holder of a Community design or any other party to proceedings before EUIPO. However, if those persons are represented, the representative is subject to the requirement to take due care just as much as those persons. Since the representative acts in the name of and on behalf of the applicant for or holder of a Community design or of any other party to proceedings before EUIPO, his or her acts must be considered as being those of those persons (see, to that effect, judgment of 31 January 2019, Poisson, T‑604/17, not published, EU:T:2019:42, paragraphs 18 and 19 and the case-law cited).
19      It should also be borne in mind that, according to the case-law, the expression ‘all due care required by the circumstances’ in Article 67(1) of Regulation No 6/2002 requires a system of internal control and monitoring of time limits to be put in place which generally excludes involuntary failure to observe time limits. It follows that restitutio in integrum may be granted only in the case of exceptional events, which cannot therefore be predicted from experience (see judgment of 31 January 2019, Poisson, T‑604/17, not published, EU:T:2019:42, paragraph 31 and the case-law cited).
20      Furthermore, observance of time limits is a matter of public policy and restitutio in integrum is liable to undermine legal certainty. Consequently, the conditions for the application of restitutio in integrum must be interpreted strictly (see, to that effect, judgment of 31 January 2019, Poisson, T‑604/17, not published, EU:T:2019:42, paragraph 33).
21      In support of its action, the applicant raises a single plea divided into three complaints, alleging infringement of Article 67(1) of Regulation No 6/2002, more specifically of the assessment of the criterion of ‘all due care required by the circumstances’.
22      EUIPO contends that the single plea raised by the applicant should be rejected. It contends that the Board of Appeal was fully entitled to find that the application should be rejected as unfounded on the ground that the criterion of ‘all due care required’ had not been fulfilled, as no conclusive evidence had been given of an internal control and monitoring system.
23      It is necessary to assess, in the light of the preliminary considerations set out in paragraphs 16 to 20 above, whether the Board of Appeal was entitled to find that the conditions set out in Article 67(1) of Regulation No 6/2002 were not satisfied in the present case.
The first complaint, concerning the combination of several unforeseeable and exceptional events
24      By its first complaint, the applicant submits that EUIPO did not assess the full factual context which, considered as a whole, would meet the definition of ‘all due care required’ prescribed by Article 67 of Regulation No 6/2002 due to a unique combination of events, that is, a human error committed within an establishment, the professionalism of which is recognised worldwide, and coinciding with the effects of the COVID-19 pandemic.
25      Also according to the applicant, that combination of events is unforeseeable and exceptional, as the facts are complex and unique. Thus, EUIPO is required to assess complex factual scenarios where multiple factors are at play, particularly external factors, all the more so where, on the balance of probabilities, a single human error in isolation cannot be proved to have contributed entirely to the failure to pay the renewal fee for a right conferred by a registered Community design. The degree of due care must be determined in the light of all the relevant circumstances. However, EUIPO failed to take into consideration all the specific circumstances of the case.
26      The Board of Appeal pointed out several factors which led to the non-renewal of the designs in question, basing its decision, in essence, on CPA’s breach of its duty to take due care. According to the Board of Appeal, the absence of an effective system to detect human errors which, like the inability to carry out manual tasks correctly, are foreseeable events, has the effect of making it impossible to rule out that a series of errors may occur.
27      Although the applicant admits that a clerical error was made by the specialist, whose payment instructions were made invisible to the downstream supervisor checks, it maintains that a complex series of events, even if foreseeable to a certain extent, could lead to an unforeseeable final result, such as the unintended failure to observe a payment time limit. However, the applicant claims to have showed that a system providing for sufficient checks actually exists and that that system had not previously malfunctioned.
28      According to the applicant, CPA’s verification system provides for cross- and downstream checks. Accordingly, from the point when a specialist has generated letters instructing payment, the verification system provides for two quality controllers to verify the payment instructions given by the specialist.
29      The applicant states that, in the present case, the error was committed by the specialist who, despite having generated the instruction letters, did not give the agents the instruction to pay the renewal fees – given that the letters of instruction did not reach their intended recipients – but rather produced an internal receipt in CPA’s management tool, informing the quality controller that the instruction letters had been sent. Consequently, the additional checks by CPA could not be carried out. The error committed by that specialist is claimed to be due to the consequences of working-from-home measures as a result of the COVID-19 pandemic, the specialist’s absence from the company’s offices and the fact that the specialist’s friends and colleagues could not provide support.
30      Also according to the applicant, given that there has been a deadline monitoring system in place for a considerable length of time and that efforts have been made and due care exercised at every level of the management system, that simple and isolated error was unforeseeable.
31      The Court must, therefore, examine, in the first place, whether the Board of Appeal correctly established that the applicant breached its duty to take due care because of a human error which the applicant acknowledges as having committed.
32      It must be noted that the Court has previously held that human errors in inputting data cannot be regarded as exceptional or unforeseeable events which cannot be predicted from experience, even in cases where staff have been adequately trained and adequately instructed and supervised (judgment of 21 April 2021, Lee v EUIPO (Table knives, forks and spoons), T‑382/20, not published, EU:T:2021:210, paragraph 28). The Board of Appeal therefore correctly found that CPA had not, in that respect, complied with its duty to take due care, as human errors in the management of renewals cannot be regarded as exceptional or unforeseeable events: the inability to correctly process manual tasks in the system is a foreseeable event.
33      In the second place, the Court must examine the fact that the system for the internal control and monitoring of time limits set up by CPA failed to detect the error.
34      In that regard, it should be borne in mind that, in connection with the renewal of marks entrusted to a specialised company using a computerised renewal reminder system, the due care required by the circumstances in particular demanded that that system was capable of detecting and correcting any foreseeable error in the functioning of the computerised system (see, to that effect, judgments of 13 May 2009, Aurelia Finance v OHIM (AURELIA), T‑136/08, EU:T:2009:155, paragraph 27, and of 19 September 2012, Video Research USA v OHIM (VR), T‑267/11, EU:T:2012:446, paragraph 26).
35      However, contrary to the applicant’s claim and in keeping with the case-law in paragraph 32 above, it is clear that, first, the fact that the instruction letters did not reach their intended recipients even though they were generated by a CPA specialist and, second, the fact that the CPA specialist produced an internal receipt in CPA’s management tool, are foreseeable errors that must therefore be able to be detected by a control system. CPA’s system for the internal control and monitoring of time limits, based on cross- and downstream checks by managers checking the quality of the specialist’s work, is inefficient in situations such as that of the present case, where an internal receipt is incorrectly generated without that system being able to ascertain whether the instruction letters were in fact received. Moreover, as observed by the Board of Appeal in paragraph 25 of the contested decision, no follow-up action was taken in order to monitor the course of the procedure set in motion. Follow-up action, such as requests for updates of the payment process or to receive a receipt for the payment, or ex post verification that the renewal has in fact been entered in the register, could have made it possible to detect the error in question.
36      It is, therefore, appropriate to endorse the Board of Appeal’s finding that the applicant has not shown that CPA had set up and implemented a proven system for the internal control and monitoring of time limits that generally excludes the involuntary non-observance of those time limits.
37      That finding cannot be called into question by the applicant’s argument that EUIPO should have taken further account of the universal disturbance in working patterns caused by the COVID-19 pandemic, which was at its height when the error was committed. Indeed, that argument is not supported by any evidence which would make it possible for the Court to assess in specific terms to what extent the COVID-19 pandemic could have actually interfered with the work carried out by CPA and the specialist, or how working from home could have prevented them in fact from carrying out the necessary checks and detecting the error committed, or setting up additional control systems.
38      Similarly, that finding cannot be called into question by the applicant’s preliminary observation that Article 67 of Regulation No 6/2002 should be assessed in the light of the judgment of 22 June 2016, Nissan Jidosha v EUIPO (C‑207/15 P, EU:C:2016:465), and, more specifically, the Opinion of Advocate General Campos Sánchez-Bordona in Nissan Jidosha v OHIM (C‑207/15 P, EU:C:2016:190), which the applicant claims enable a more flexible approach to the application of that article.
39      It should be noted that that case concerned the interpretation of Article 47(3) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78, p. 1) in connection with a partial application for renewal of a registered mark made in two stages: the first, in respect of certain classes, within the six‑month time limit, and the second, in respect of another class, within the additional six-month grace period. As the first application for renewal of the mark in respect of certain classes was considered to constitute a surrender of the renewal of the registration of the mark in respect of the other class, the Board of Appeal did not, for reasons of legal certainty, allow the applicant to reverse its decision not to renew the mark in question in respect of the other class within the six-month grace period. According to the approach endorsed by the Advocate General in Nissan Jidosha v OHIM (C‑207/15 P, EU:C:2016:190), it is argued that given that the legislature wished to ensure the uninterrupted protection of a registered mark, the rejection of an application for restitutio in integrum made within the prescribed time limit, as in the present case, would in actual fact run counter to the objectives of the legislation, not merely the holder’s interests. The Advocate General also stressed, it is alleged that, in order to safeguard legal certainty in the event of a delay, owing to the need to correct irregularities or for other reasons which prevent swift registration, renewal should be suspended until such time as the problem identified is dealt with.
40      In that connection, the Court finds that the judgment of 22 June 2016, Nissan Jidosha v EUIPO (C‑207/15 P, EU:C:2016:465), and the Opinion of Advocate General Campos Sánchez-Bordona in Nissan Jidosha v OHIM (C‑207/15 P, EU:C:2016:190) are not relevant in this instance. That case concerned, more specifically, whether subsequent applications for renewal of a mark could be lodged during the period provided for in the provision at issue. The Court of Justice decided that subsequent applications for renewal could be admitted, provided that they are lodged before the additional six-month grace period expires, as this does not run counter to the principle of legal certainty. The non-observance of time limits, the additional six-month grace period in particular, for lodging applications for renewal was not at issue.
41      By contrast, in the present case, the applicant has applied for restitutio in integrum in particular because the time limits for requesting renewal were not observed, and because after the two periods expire – the six-month period and the additional six-month grace period – the legislature allows a holder to lodge a subsequent request for restitutio in integrum in order for its rights to be re-established, by way of derogation from the principle that all time limits must be observed, but only where the holder has exercised all due care required by the circumstances.
42      It should be borne in mind in that connection that, as is clear from the case-law recalled in paragraph 20 above, the conditions for applying restitutio in integrum must be interpreted strictly.
43      For that reason, a more flexible approach to the provisions of Article 67 of Regulation No 6/2002 cannot be followed in the present case.
44      Accordingly, the Court holds that the Board of Appeal was able to find, on the ground that the criterion relating to ‘all due care required’ had not been met, that the first condition of Article 67(1) of Regulation No 6/2002 had not been fulfilled. The first complaint must, therefore, be rejected as manifestly unfounded.
The second complaint, based on the application of the ‘all due care required’ criterion to the holder of the rights
45      By its second complaint, the applicant submits that there are no guidelines relating to evidence that must be produced in support of an application for restitutio in integrum, so that a sworn declaration by a professional representative together with any form of evidence should have been sufficient for a finding that all due care required by the circumstances had been exercised. It claims that the standard of proof set by EUIPO was unfair and unrealistic, was detrimental to the objective of the holder being able to exploit the rights conferred by the Community designs without bureaucratic obstacles and penalised CPA on account of its historic success and global reputation.
46      Although it is clear from the case-law that a statement drawn up in the interests of its author has only limited evidential value and must be corroborated by additional evidence, this does not, however, allow the adjudicating bodies of EUIPO to conclude as a matter of principle that such a statement is, in itself, devoid of any credibility. The evidential value of such a statement, taken in isolation or in combination with other evidence, depends, inter alia, on the circumstances of the case (see judgment of 16 December 2020, Forbo Financial Services v EUIPO – Windmöller (Canoleum), T‑3/20, EU:T:2020:606, paragraph 52 and the case-law cited).
47      In the present case, it must be found that the Board of Appeal duly took account of the declarations in the annex to the application for restitutio in integrum. In its statement of reasons, it refers, in paragraphs 26 and 27 of the contested decision, to certain sections of the declarations and concludes that, despite the evidence adduced by the applicant, that evidence did not prove the existence of an efficient system for detecting human, foreseeable errors, and that CPA had not, consequently, exercised all due care. The Board of Appeal did not, therefore, consider that those declarations were not credible or were inadequate, but that the existence of a proven detection system had not been established.
48      Nor did the Board of Appeal regard CPA’s size and reputation ‘in a negative and punitive way’, but considered that, owing to its vast experience, a certain degree of due care could reasonably be expected of it and that an error such as that committed in the present case should, as a result, have been noticed and avoided.
49      The present complaint must, therefore, be rejected as manifestly lacking any foundation in law.
The third complaint, relating to whether EUIPO’s objective of preserving legal certainty complies with the objectives of Regulation No 6/2002
50      By its third complaint, the applicant claims that EUIPO’s objective of preserving legal certainty in connection with the time limits applicable to renewal fees does not comply with the objectives of Regulation No 6/2002 of protecting and promoting innovation, the freedom to develop new products and the safeguarding of the market life of products, and runs counter to the fundamental principles of the Treaty, that is, the principles of subsidiarity and proportionality.
51      The arguments relating to the principles of subsidiarity and proportionality are in no way supported by evidence and must be rejected.
52      That said, a requirement that there be an effective system for the internal control and monitoring of time limits is not contrary to the principle of proportionality. Failure to comply with an obligation such as the observance of the time limits prescribed by EUIPO, which is fundamental to the proper functioning of the procedure for examining applications for registration of a Community design, may be penalised by forfeiture of a right, and that is not inconsistent with the principle of proportionality (see, to that effect, judgment of 20 January 2021, Crevier v EUIPO (Air freshener), T‑276/20, not published, EU:T:2021:26, paragraph 39).
53      As regards the principle of legal certainty (see paragraphs 39 to 42 above), the conditions governing an application for restitutio in integrum
in respect of a registration after it has been cancelled must be interpreted strictly, given that, in particular, that application is liable to undermine legal certainty, while observance of time limits is a matter of public policy. Those conditions do not, therefore, run counter to the objective pursued by Regulation No 6/2002 of ensuring effective protection of registered Community designs within the European Union (see, to that effect, judgment of 16 February 2012, Celaya Emparanza y Galdos International, C‑488/10, EU:C:2012:88, paragraph 44).
54      The third complaint must, therefore, be rejected as manifestly unfounded.
55      Consequently, it is apparent from all the foregoing that, as the Board of Appeal was fully entitled to consider that an order for restitutio in integrum should not be made because the conditions set out in Article 67(1) of Regulation No 6/2002 were not met in the present case, the applicant’s single plea must be rejected as manifestly lacking any foundation in law and, therefore, the action in its entirety must be dismissed.
Costs
56      Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by EUIPO.
On those grounds,
THE GENERAL COURT (Second Chamber)
hereby orders:
1.      The action is dismissed as manifestly lacking any foundation in law.
2.      AMO Development LLC shall pay the costs.
Luxembourg, 9 December 2022.
E. Coulon
A. Marcoulli
Registrar
President
*      Language of the case: English.