Communication from the Commission to the Council - Report on the operation of the system of searches resulting from Article 39 of the Community Trade Mark Regulation
Date: 2002-12-27
Institutions: European Commission
Subjects: EU trade mark, European Union Intellectual Property Office, operation of the Institutions, registered trade mark, trade-mark law

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 27.12.2002
COM(2002) 754 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL

Report on the operation of the system of searches resulting from Article 39 of
the Community Trade Mark Regulation

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL

Report on the operation of the system of searches resulting from Article 39 of
the Community Trade Mark Regulation

On 20th December  1993  the  Council  adopted  Regulation  (EC)  N°  40/94  on  the  Community
trade mark1 (the "CTMR"). This Regulation establishes a unitary system for the protection of
trademarks on the basis of a single procedure before the Office for the Harmonisation in the
Internal Market ("the Office").

According to Article 8 CTMR, a sign shall not be registered as a Community trade mark if it
conflicts, inter alia, with a prior national trade mark right. At the time of the discussion which
led to the adoption of the Regulation two options for dealing with prior rights were discussed,
namely an ex officio system of refusal of applications and a system based solely on the action
of the parties themselves.

The system finally adopted in Article 39 CTMR provides for an hybrid system, where search
reports  are  provided  but  under  which  possible  conflicts  between  rights  are  decided  prior  to
registration but on the basis of action by the parties rather than ex officio action. This system
is  intended  to  provide  valuable  assistance  to  small  and  medium-sized  firms  for  whom  the
monitoring  of  conflicting  rights  may  involve  prohibitive  costs.  The  function  of  the  search
reports is to inform the applicant about prior rights which may conflict with the sign for which
he has applied, so that he may take appropriate action even before publication.

To assess whether the system established in Article 39 CTMR really meets the objectives for
which it was created, Article 39(7) CTMR establishes that: "five years after the opening of the
Office for the filing of applications, the Commission shall submit to the Council a report on
the operation of  the  system  of  searching  resulting  from  this  Article,  including  the  payments
made  to  Member  States,  and,  if  necessary,  appropriate  proposals  for  amending  the
Regulation  with  a  view  to  adapting  the  system  of  searching  on  the  basis  of  the  experience
gained and bearing in mind developments in searching techniques."

The Commission must study three questions which stem from this provision:

(1)

(2)

(3)

How does the system work? (…report on the operation of the system…)

What  are  the  costs  and  benefits  of  the  search  system?  (…including  the  payments
made to Member States…)

Is it necessary to propose changes to the system? (…and, if necessary, appropriate
proposals  for  amending  the  Regulation  with  a  view  to  adapting  the  system  of
searching on the basis of the experience gained and bearing in mind developments in
searching techniques.)

1

Council  Regulation  (EC)  No  40/94  of  20  December  1993  on  the  Community  trademark.  OJ  L  11,
14.1.1994, p. 1

2

                                                
In order to have a clear appreciation of the functioning of the search system the Commission
launched  a  public  consultation,  inviting  Member  States  and  stakeholders  to  express  their
concerns  and  to  evaluate  the  system  on  the  basis  of  their  experience2.  As  a  result  of  this
exercise the Commission received a total of 27 responses, from interested parties (including
multinationals  and  professional  organisations3)  and  from  all  the  Member  States  (with  the
exception of Germany, Greece and Italy).

According to the Member State responses to the Commission’s questionnaire, it would appear
that  the  majority  (9  Member  States)  is  of  the  view  that  the  system  of  searches  should  be
maintained  and, 
the  responses  received  from
improved.  As  regards 
multinationals  and  professional  organisations,  only  25%  of  them  share  the  view  that  search
reports  should  be  maintained,  while  the  remaining  75%  would  prefer  to  make  the  system
optional or to abolish it entirely.

if  necessary, 

This  report  seeks  to  give  an  objective  analysis  of  the  operation  of  the  search  system  in  the
light of the comments made by the Member States and interested parties.

1.

FUNCTIONING OF THE SYSTEM

According to Article 39 CTMR, searches on prior rights are only conducted once the Office
has examined the application4 and confirmed that the applicant is entitled to be the proprietor
of a Community trade mark.

At this stage, the Office transmits a copy of the application to the central industrial property
offices of those Member States which participate to the system (all the Member States except
France,  Germany  and  Italy).  These  national  offices  have  3  months  to  produce  and
communicate to the Office a report which  contains  those  earlier trade  marks  or trade  marks
applications which are considered relevant for the purposes of the application of Article 8 of
the Regulation (relative grounds for refusal).

The Office then transmits to the applicant the "Community search report" which it produces
together  with  those  national  search  reports  which  have  been  received  within  the  3  month
limit.

Upon publication of the Community trade mark application, which may not take place until
one month after the Office transmits the search reports to the applicant, the Office informs the
proprietors of any earlier CTM or CTM application cited in the Community search report of
the publication of the Community trade mark application.

According to a joint statement by the Council and the Commission which was entered in the
minutes  of  the  Council  meeting  at  which  the  Trade  Mark  Regulation  was  adopted,  the
national  offices  are  free  to  inform  the  proprietors  of  any  earlier  national  trade  marks  or
national trade marks applications cited in the national search report of the publication of the
Community trade mark application. To date, no national office has informed the Commission
that it makes use of this possibility.

2

3

4

Questionnaire attached (Annex 1)
ECTA, Marques, Efpia,  ITMA,  Unice,  AIM,  INTA,  FICPI,  Procter  &  Gamble,  Air  Liquide,  Danone,
Gevers & Partners, Alstom, L'Oreal, Nestlé, Unilever.
Article 36 CTMR

3

                                                
In summary, for each CTM application the Office prepares a Community search report during
the  registration  procedure.  This  report  lists  earlier  identical  or  similar  CTMs  and  CTM
applications  for  identical  and  similar  goods  and  services,  and  is  transmitted  to  the  CTM
applicant  together  with  the  national  search  reports  which  10  national  offices  have  prepared
(France, Germany and Italy do not participate in the system).

These search reports may result in the applicant withdrawing the application, if he finds there
are clearly conflicting marks which will prevent him from obtaining a CTM registration and
from using the mark in all Member States. Alternatively, he may amend the application, for
instance by restricting the specification of goods and services in order to avoid a conflict of
goods.  Finally,  he  may  take  the  matter  up  with  the  owner  of  the  prior  conflicting  marks  in
order to seek an agreed solution.

It  is  not  possible  to  know  with  certainty  the  number  of  applications  which  are  totally  or
partially withdrawn as a consequence of the information provided by the search report, given
that applicants do not inform the Office of their reasons for withdrawal. However, only 4% of
applications  are  withdrawn  before  publication.  The  number  of  applications  withdrawn
because of the search report is therefore rather low. In this respect, it should be noted that the
initial fears that it might prove difficult to obtain a CTM registration because of earlier rights
in Member States could be said to be somewhat exaggerated, in view of the limited number of
oppositions (20%).

Finally,  it  should  also  be  noted  that  the  Office  does  not  undertake  searches  on  individual
request. Such services are provided by private enterprises. In this respect, the Office has about
25 licensees who receive data on the CTM and some of these appear on a list offering private
search services5. The information provided by the Office is not intended for the general public
since it does not include searching software. This service is instead targeted at national offices
and  companies  interested  in  writing  the  necessary  computer  programs  to  exploit  the
information. The cost of a licence is € 5 000 6.

5

6

http://oami.eu.int/en/marque/faq/faq06.htm. There is a list of undertakings that provide for this service
available  on  request  from  the  Information  Section  of  the  Office.  This  list  contains  details  of  the
following private search services: Bureau Gevers (BE), COMPU-MARK (BE), Elzaburu (ES), Grupo
10  Empresarial  (ES),  SIMADEC  S.L.  (ES),  Studio  Manni  (IT),  IQS  AvantIQ  S.A.  (LUX),  Search
Systems Ltd (UK) , The United Kingdom Patent Office (UK);
Further information on the "CTM-Download" service can be found in:
http://oami.eu.int/en/database/download.htm

4

                                                
2.

LEVEL OF THE FEE

The  level  of  the  search  fee  is  fixed  by  the  Budget  Committee  of  the  Office  by  a  decision
adopted  by  a  three-quarters  majority  of  the  representatives  of  the  Member  States.  This  fee,
which is be the same for each office participating in the system, is paid to each national office
for  each  search  report  it  provides.7The  fee  was  fixed  at  €25  by  decision  of  the  Budget
Committee of 7 July 1995.8

However, in 1998 the Budget Committee decided to tailor the fee to the number of classes of
goods  and  services  covered  by  the  trade  mark  application.  It  was  therefore  decided  that,  in
addition  to  the  €25  fee,  each  national  office  would  receive  €5  for  each  class  of  goods  and
services  exceeding  three  in  the  Community  trade  mark  application.9  According  to  this  new
system, the average cost per report per country amounts to about €27, which makes a total of
about €270 per application.

This fee does not cover the expense incurred by the Office in handling the search system. This
expense is not only the cost of the Community search report but also the administrative cost
of  handling  about half a million10 search  reports  per  year.  Since  the  Office  does  not  charge
applicants any extra fee for the Community search report, the regular application fee covers
the overall cost of the search system11.

To assess whether the fee is adequate, it is necessary to verify first whether national offices
consider that they are paid appropriately for the service they provide and, secondly, whether
applicants consider that they obtain good value for their money.

According  to  the  answers  received  by  the  Commission  to  the  questionnaire  on  the  search
system, the national offices are of the view that the present amount paid is reasonable. One of
them  considered,  though,  that  the  fee  should  be  reviewed  in  view  of  the  efforts  and  cost
required by the national offices. Another Member State suggested that an increase in the fee
might allow for improvements in the quality of the search reports.

7

8

9

10

11

Article 39 (4) CTMR
Article 1  of  Decision  No  CB-95-11  of  the  Budget  Committee  of  the  Office  for  Harmonization  in  the
Internal  Market  (Trade  Marks  and  Designs)  of  7  July  1995  concerning  the  amounts  to  be  paid  for
national offices' search reports (http://oami.eu.int/en/admin/cb-95-11/decision.htm)
Article  1  of  Decision  No  CB-98-4  of  the  Budget  Committee  of  the  Office  for  Harmonization  in  the
Internal  Market  (Trade  Marks  and  Designs)  of  9  March  1998  modifying  the  amounts  to  be  paid  for
national offices' search reports ( http://oami.eu.int/en/admin/cb-98-4/decision.htm)
About  45,000  applications  per  year  multiplied  by  11  search  reports  per  application  gives  a  figure  of
495,000 search reports.
According to the fifth recital of Commission Regulation (EC) No 2869/95 of 13 December 1995 on the
fees payable to the Office  for Harmonization in the Internal Market (Trade Marks and Designs):  “the
basic  fee  for  the  application  for  a  Community  trade  mark  shall  include  the  amount  which  the  Office
must pay to each central industrial property office of the Member States for each search report provided
by such offices in accordance with Article 39 (4) of the Regulation”

5

                                                
As regards the answers received from interested parties, they recognise that a fee of about €27
per country (270€ in total) is not unreasonable.  However the lack of coherence in the search
criteria  between  the  different  searches  and,  at  times,  the  incomplete  and  poor  quality  of
certain searches do not represent a good value for money. As a result, most applicants will in
fact have already done their own searching before filing a trademark. Therefore, for the large
majority of applicants, the search system only increases cost and work without providing any
added  value.  On  the  other  hand,  those  applicants  who  do  not  have  the  means  to  rely  on
"private  search  services"  are  obliged  to  invest  further  resources  to  convert  the  "raw"
information  provided  by  the  search  reports  into  usable  information  as  to  the  existence  of
conflicting  prior  rights.  This  screening  exercise  imposes  an  extra  cost  on  these  applicants.
Finally, some other applicants prefer simply to disregard the contents of the search reports to
avoid the above mentioned difficulties and costs.

All  this  goes  to  show  that,  while  the  fees  are  not  in  principle  considered  unreasonable,
applicants usually ignore the search reports or are obliged to incur further expenses in order to
obtain  any  useful  information  out  of  them.  Consequently,  given  the  limited  value  of  these
reports, the payment of the fee is considered an extra cost for applicants who obtain very little
in return.

3.

ENLARGEMENT

Added to that, it is impossible to ignore the impact that enlargement of the European Union
will have on the search system and on its cost. The number of national searches will increase
significantly,  depending  on  how  many  new  Member  States  exercise  their  right  to  operate  a
search  in  their  own  register.  It  is  premature  and  difficult  to  determine  which  new  Member
States will make search reports. However, at the present time the following countries (which
carry  out  searches  for  earlier  trade  marks  in  their  national  systems  as  their  national  offices
examine relative grounds for refusal) may be interested in performing searches under Article
39(2)  CTMR:  Bulgaria,  Estonia,  Hungary,  Malta  and  Poland.  Others,  such  as  the  Czech
Republic  or  Slovakia,  already  provide  search  services  and  are  likely  to  opt  for  the  search
report option under the Regulation. At the end  of  the day, it  is quite  possible that all of the
new Member States will decide to take part of the search system.

If the current mandatory system of searches is extended to 12 more Member States, the cost
of the search report per application would increase to up to €594, more than double the cost
today. This would impose a further burden on CTM applicants that would in particular impair
the competitiveness of SMEs. This result would in fact be contrary to the objective for which
the  system  of  searches  was  established,  namely  to  provide  valuable  assistance  to  small  and
medium-sized  firms  for  whom  the  monitoring  of  conflicting  rights  may  involve  prohibitive
costs.

6

4.

OTHER CONCERNS

As  stated  above,  the  main  purpose  of  this  report  is  to  ascertain  whether  it  is  necessary  to
propose changes to the system and, if so, which changes are needed. Naturally any proposal
for  change  should  aim  to  answer  adequately  the  problems  detected  in  the  current  system.
Section  2  above  already  mentions  some  of  the  apparent  faults  related,  in  particular,  to  the
level  of  the  fee.  However  on  the  basis  of  the  comments  made  by  stakeholders,  the
Commission has detected other deficiencies of the search system which need to be mentioned.
These can be summarised as follows:

– 

– 

– 

– 

– 

Inappropriate  timing:  As  mentioned  above,  searches  are  conducted  after  the  CTM
application has been already filed and the application fee (€975) paid. Therefore, in
most  cases  the  applicant,  instead  of  withdrawing  the  application  in  view  of  any
potentially  conflicting  rights  which  appear  in  the  report,  will  prefer  to  wait  for  an
opposition to be lodged before taking such a decision.

Misallocation of time, money and resources: The cost of management of the search
system  in  terms  of  money  and  resources  is  not  compensated  by  the  limited
advantages which it provides to applicants. In this light, it should be noted that since
last year the Office has put in motion an in-depth restructuring to ensure that human
resources are employed on a cost-effective basis.

Lack of uniformity of the search reports: This criticism relates not only to the level of
the information on earlier rights which search reports provide but, in particular, to the
heterogeneous  nature  of  the  search  criteria  themselves.  In  spite  of  attempts  by  the
Office  to  secure  the  harmonisation  of  the  search  reports  from  both  a  formal  and  a
substantive point of view, national offices have maintained their format and criteria,
although there have been some improvements since the system began in 1996.

This  problem  has  been  further  confirmed  by  Communication  No  5/00  of  the
President of the Office of 3 August 2000 concerning an overview of the national and
Community  search  reports,  which  the  OHIM  prepared  in  consultation  with  the
national  offices  and  the  Benelux  Trade  Mark  Office.  This  communication  provides
plenty  of  evidence  of  the  different  criteria  applied  by  the  national  offices  and  the
Office  itself  when  dealing  with  search  reports.  This  lack  of  harmonisation  is
detrimental  to  the  usefulness  of  the  system  and  makes  it  difficult  for  applicants  to
assess accurately the existence and/or number of prior conflicting rights.

Results are not complete, since no searches are conducted against the trademarks of
major Member States like Germany, France and Italy.

Particularly bad quality of searches for trade marks containing device elements: Most
automatic searching systems do not have methods for effectively searching figurative
or  device  elements.  The  use  of  the  Vienna  Classification  for  this  purpose  does  not
fully solve this question for two reasons: first, because Member States do not always
apply the classification in an harmonised way, and secondly, because searches made
using  the  classification  include  too  many  results.  Moreover,  to  ensure  a  minimum
quality for this kind of search national offices are obliged to select the trade marks to
be cited in the search report by means of manual intervention. This approach is not
only expensive but also a subjective exercise which may produce unreliable results.

7

– 

Unnecessary delays in the registration procedure: Due to the procedure established in
Article 39 CTMR, there is a delay of about six months between the date on which the
application is filed to the Office and the date on which the application is published.
Should the search system be abolished, this delay could be reduced by about a month
and a half, to the benefit of users.

CONCLUSION

In view of the above, the Commission has reached the conclusion that the system of searches
established by Article 39 CTMR is a costly one, which extends unnecessarily the procedure
for the registration of Community trade marks, imposes an administrative burden on national
offices,  the  Office  and  the  applicants  and,  despite  this,  does  not  provide  applicants  with  a
cost-effective and valuable tool to help them to monitor effectively the possible existence of
prior conflicting rights.

Moreover,  in  view  of  the  future  enlargement  of  the  European  Union,  this  system  would,  if
maintained, only become even more costly and complex.

In view of the above, the Commission considers to include a proposal to delete Article 39 of
the  CTM  Regulation.  This  will  be  done  in  the  framework  of  a  broader  revision  exercise  to
update the Community Trade Mark Regulation to be proposed by the Commission.

8