COMMISSION STAFF WORKING PAPER EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying document to the Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending COUNCIL REGULATION (EC) No 207/2009 of 26 February 2009 on the Community trade mark and the Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL to approximate the laws of the Member States relating to trade marks (recast)
Date: 2013-03-27
Institutions: European Commission
Subjects: EU trade mark, European Union Intellectual Property Office, approximation of laws, brand name, registered trade mark, trade-mark law

EUROPEAN 
COMMISSION 

Brussels, 27.3.2013  
SWD(2013) 96 final 

COMMISSION STAFF WORKING PAPER 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying document to the 

Proposal for a  
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending COUNCIL REGULATION (EC) No 207/2009 of 26 February 2009 
on the Community trade mark 

and the 

Proposal for a  
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

to approximate the laws of the Member States relating to trade marks (recast) 

{COM(2013) 161 final} 
{COM(2013) 162 final} 
{SWD(2013) 95 final} 

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COMMISSION STAFF WORKING PAPER 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying document to the 

Proposal for a  
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending COUNCIL REGULATION (EC) No 207/2009 of 26 February 2009 
on the Community trade mark 

and the 

Proposal for a  
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

to approximate the laws of the Member States relating to trade marks (recast) 

1. 

CONTEXT 

In  Europe,  a  trade  mark  can  be  registered  at  national  level  at  the  industrial  property  (IP) 
offices of Member States, or at EU level as a Community trade mark ('CTM') at the Office for 
Harmonization in the Internal Market (Trade Marks and Designs) in Alicante ('OHIM').  

Since the 90s, when the trade mark acquis was created, neither the TM Directive nor the CTM 
Regulation have been subject to any major modification. The business environment, however, 
has changed significantly over the past two decades.  

2. 

PROBLEM DEFINITION 

The  two  main  problems  identified  relate  first  to  the  divergent  provisions  of  the  existing 
regulatory  framework  and,  second,  to  the  low  level  of  cooperation  between  trade  mark 
offices. 

First, the Directive does not cover procedural aspects at all, the level of harmonisation as to 
substantive law (including optional provisions) is insufficient, and there is only a vague legal 
basis for cooperation between the OHIM and national IP offices in the CTM Regulation. 

Second,  in  order  to  achieve  and  ensure  complementarity  and  interoperability  between  the 
CTM  and  national  systems,  OHIM  and  national  IP  offices  need  to  cooperate  closely. 
However,  besides  missing  a  clear  legal  basis,  there  are  two  other  drivers  hindering 
cooperation. These drivers are the insufficient technical facilities (IT equipment) of national 
offices,  and  the  fact  that  they  do  not  possess  the  necessary  financial  resources  to  develop, 
launch and run, in the long term, common tools, e.g. joint trade mark databases with online 
search facilities.  

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The  above  problems  have  a  series  of  significant  adverse  consequences  for  industry.  These 
deficiencies  not  only  limit  accessibility  to  the  systems  of  trade  mark  protection,  involve  a 
great deal of legal uncertainty, and put the complementary relationship between the CTM and 
national  systems  at  risk,  but  also  distort  the  level  playing  field  for  companies,  with  further 
negative consequences on the competitiveness of the EU.  

Without appropriate changes, the current sub-optimal conditions for European businesses and 
the under-developed complementarity between the trade mark systems are likely to worsen. 

There  have  been  some  promising  attempts  to  find  practical  solutions  for  facilitating 
cooperation between OHIM and national IP offices, notably within the context of the OHIM 
Cooperation  Fund.  However,  this  experience  has  revealed  the  clear  shortcomings  of  the 
current  framework  for  cooperation,  and  demonstrated  the  limits  of  cooperation  based  on 
voluntary arrangements.  

Therefore,  despite  existing  cooperation  initiatives,  sustainable  benefits  are  not  secured,  and 
the  benefits  of  the  existing  cooperation  initiatives  will  represent  a  cost  if  the  situation 
continues as it is.  

As  a  result,  the  further  IP  offices  fall  behind  in  terms  of  efficiency,  the  less  attractive  they 
become  vis-à-vis  the  CTM  system,  with  the  risk  that  trade  mark  owners  cease  to  use  them 
altogether,  opting  for  a  CTM  instead.  In  the  long  run,  this  may  threaten  the  viability  of 
national systems, contrary to the goal of preserving national trade marks alongside CTMs in a 
system of harmonious and complementary coexistence. 

3. 

SUBSIDIARITY  

Article 118(1) TFEU allows the establishment of measures for the creation of unitary IP rights 
to provide protection throughout the EU, including the setting up of centralised Union-wide 
authorisation,  coordination  and  supervision  arrangements.  The  adoption  of  measures  for  the 
approximation  of  the  provisions  laid  down  by  law,  regulation,  or  administrative  action  in 
Member States, which have as their object the establishment and functioning of the internal 
market, is provided for by Article 114 TFEU. 

The CTM is a self-standing EU intellectual property title. Only the EU legislator is entitled to 
make necessary modifications to the Regulation in order to improve and streamline the CTM 
system. The  same applies for necessary amendments of corresponding provisions which are 
already part of the TM Directive. 

Moreover,  as  the  identified  problems  do  not  allow  a  level  playing  field  for  EU  companies 
(with  further  negative  consequences  on  their  competitiveness),  it  is  advisable  to  adopt 
measures that can improve the functioning of the Internal Market. Such measures, aiming at 
extending the current level of approximation through the TM Directive, can only be taken at 
EU level, particularly given the need to ensure coherence with the CTM system.  

Finally, as OHIM is a regulatory agency of the EU, a solution for the unfavourable framework 
conditions impeding effective cooperation with national offices can also only be found at EU 
level. 

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4. 

OBJECTIVES 

The general objective of the review is to modernise the trade mark system in Europe, thereby 
enhancing  EU  companies'  competitiveness  through  improving  accessibility  of  TM  systems 
(decreased  costs;  increased  speed  and  predictability),  providing  legal  certainty  for  all 
businesses  in  the  EU,  and  ensuring  coexistence  and  complementarity  between  EU  and 
national systems. 

The  specific  objectives  are  to  increase  convergence  of  the  TM  Directive  with  the  CTM 
Regulation, and to increase the level of cooperation between OHIM and national IP offices. 

Finally,  the  operational  objectives  are  to  achieve  greater  approximation  of  trade  mark 
procedures and substantive issues, provide an adequate regulatory incentive for cooperation, 
build technical cooperation capacity at national TM offices, and to secure long term financing 
for cooperation activities. 

5. 

ANALYSIS AND COMPARISON OF POLICY OPTIONS AND THEIR IMPACTS 

The  policy  options  were  considered  for  each  of  the  operational  objectives  and  measured 
against the criteria of effectiveness (achievement of objectives) and efficiency (time needed, 
overall cost and proportionality).  

5.1. 

Approximation of trade mark laws and procedures 

Option 1 (base line): There would be no further harmonisation, despite the apparent need for 
further alignment of the heterogeneous legal framework.  

Option  2  (partial  approximation):  The  approximation  of  national  laws  and  their  coherence 
with  the  CTM  system  would  be  expanded  to  encompass  (i)  the  alignment  of  the  principal 
procedural  rules  with  the  CTM  Regulation,  (ii)  the  alignment  of  further  substantive  law 
aspects addressed in the CTM Regulation, and (iii) the reduction of optional provisions in the 
TM Directive, in line with the  CTM Regulation.  It is considered that this limited alignment 
exercise would be feasible for Member States and could be done within a reasonable period of 
time.  Since  the  achievement  of  the  identified  objectives  would  be  highly  uncertain,  if  the 
approximation was carried out on a voluntary basis (sub-option 2a), it appears appropriate to 
pursue the harmonisation by a legally binding instrument (sub-option 2b). 

Option 3 (full approximation): The approximation would be based on option 2 but includes 
all remaining aspects of substantive trade mark law and procedures. The approximation would 
be  either  voluntary  (3a)  or  mandatory  (3b).  However,  the  analysis  of  existing  problems  has 
not demonstrated an apparent need for a full scale approximation of all trade mark provisions. 
Moreover, Member States do not seem to be ready for such an extensive move. As a result, 
option  3  would  be  disproportionate  to  the  actual  needs  and  its  political  feasibility  highly 
uncertain. 

Option 4 (single rule book): National trade mark laws would be entirely replaced by a single 
rule  book  setting  uniform  rules  across  the  EU.  As  a  result,  all  national  offices  would  apply 
identical  provisions.  However,  even  more  than  option  3,  this  option  would  be  clearly 
disproportionate and is to be discarded upfront. 

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Objective 1 – approximation of trade mark laws1 

Effectiveness  

Efficiency 

Overall  

Greater approximation of TM 
laws and procedures 

Time 
needed 

Overall 
cost 

Proportio 
nality 

0 

? 

++ 

? 

++ 

++ 

0 

0 

-- 

+ 

-- 

-- 

-- 

- 

- 

-- 

-- 

-- 

0 

+ 

+ 

- 

-- 

-- 

0 

- 

++ 

- 

+/- 

+/- 

1. Baseline 

2. Partial approximation  

2a. Voluntary  

2b. Mandatory  

3. Full approximation  

3a. Voluntary  

3b. Mandatory 

4. Single rulebook 

The selected option 2b is expected to have an overwhelmingly positive effect on all users of 
the trade mark system, especially SMEs. In the long term, it would contribute to improving 
the  efficiency  and  effectiveness  of  procedures  at  national  IP  offices  and  eventually  lead  to 
significant cost savings. Finally, it would be clearly beneficial to OHIM, considering the idea 
of  taking  the  CTM  system  as  a  benchmark,  and  the  Office's  task  of  supporting  and 
coordinating efforts in converging practices and tools with national offices. Moreover, one of 
the priority harmonisation measures, the introduction of the "one-class-per-fee" system, will 
be accompanied by an appropriate adjustement of CTM application, renewal and class fees, 
which will additionally benefit users.  

5.2.  Missing clear legal basis for cooperation 

Option 1 (base line): No specific legal basis for cooperation would be provided. 

Option  2:  A  clear  legal  basis  would  be  established  allowing  OHIM  and  national  offices  to 
cooperate  (optional  cooperation)  with  the  aim  of  harmonising  practices  and  developing 
common  tools  and  databases.  Given  its  non-binding  nature,  it  cannot  be  expected  that  all 
offices would take part. 

Option  3:  National  offices  and  OHIM  would  be  obliged  to  cooperate  (obligatory 
cooperation).  The  cooperation  objectives  would  be  clearly  specified  in  order  to  allow 
monitoring of their achievement. As a result, participation of all offices would be ensured and 
it  would  become  easier  for  them  to  justify,  to  their  budgetary  authorities,  the  allocation  of 

1 

Score system: positive effect: from slightly positive (+) to strongly positive (++); negative effect: from 
slightly negative (-) to strongly negative (--); uncertain result: (?); no impact: 0. 

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resources  for  common  projects  with  other  IP  offices,  and  easier  for  OHIM  to  internally 
validate its expenditure on cooperation activities. 

Objective 2 - providing adequate legal basis for cooperation 

Effectiveness  

Efficiency 

Overall  

Greater incentive for 
cooperation 

Time 
needed 

Overall 
cost 

Proportio 
nality 

1. Baseline 

2. Legal basis for optional cooperation 

3. Legal basis for obligatory cooperation 

0 

? 

++ 

0 

+ 

+ 

0 

+ 

+ 

0 

? 

+ 

0 

? 

+ 

The selected option 3 would ensure full participation in the process of converging practices 
and developing common tools, and would thus meet the expectations of users. For national 
offices,  the  selected  option  would  lead  to  significant  gains  in  efficiency  and  cost  in  the 
medium to long term. National offices would be able to build on the experience gained in the 
context  of  the  OHIM  Cooperation  Fund,  and  further  develop  the  existing  framework  which 
would  facilitate  a  smooth  transition.  OHIM  clearly  demonstrated  its  capacity  to  deal 
effectively and within a short timeframe with such large scale cooperation projects and will 
also be able to draw benefits from the common projects.  

5.3. 

Cooperation capacity building regarding technical facilities 

Option 1: Would leave it for each IP office to procure and develop the required facilities.  

Option  2:  Would  make  it  possible  that  the  required  facilities  and  tools  are  accessible  to  IP 
Offices within a framework of voluntary cooperation.  

Option  3:  Would  ensure  that  the  required  facilities  are  accessible  through  an  obligatory 
cooperation framework. Only this option would guarantee that all offices benefit and commit 
to the development of common tools and databases.  

Objective 3 - Technical capacity building at national IP offices 

Effectiveness  

Efficiency 

Overall  

Greater security for obtaining 
facilities 

Time 
needed 

Overall 
cost 

Proportio 
nality 

1. Baseline 

2. Optional access to tools 

3. Mandatory access to tools 

EN 

0 

? 

++ 

5 

0 

? 

+ 

0 

+ 

+ 

0 

+ 

+ 

0 

? 

+ 

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Under  the  retained  option  3,  users  can  be  expected  to  face  convergent  and  technologically 
updated  IT  solutions.  This  will  result  in  increased  accessibility,  enhanced  efficiency  and 
reduced costs. IP Offices can benefit from enhanced cooperation thanks to improved access 
to IT development. The selected option would also benefit OHIM.  

5.4. 

Cooperation capacity building regarding funding  

5.4.1.  Financing in general 

Option 1: Each IP office and OHIM would bear the entire cost of their cooperation activities. 
This would prevent Member States from taking part in cooperation schemes, and, therefore, 
this option would fail to achieve the identified objective. 

Option 2: Cooperation activities would be financed from the EU budget. However, it would 
be highly unlikely that a substantial contribution from the EU budget could be made available 
considering the current budgetary restrictions. 

Option 3: Financing would be from the OHIM budget, using part of OHIM's annual revenue. 
An  appropriate  funding  mechanism  would  be  identified,  including  control  mechanisms  to 
guarantee that funds are only used for specific earmarked purposes, and subject to compliance 
criteria.  OHIM  has  accumulated  a  substantial  surplus  which  is  already  partly  used  for 
Cooperation Fund projects. Moreover, OHIM's annual budgetary results constantly exceed the 
operational  expenditure  of  the  Office.  Hence,  the  new  cooperation  activities  could  either  be 
financed from annual income and/or from the existing surplus, thus ensuring the availability 
of sufficient finances. The cost of cooperation activities between OHIM and national offices 
would  amount  to  € 17  –  20  million  a  year   which  corresponds  to  about  10%  of  OHIM 
operational income. The budgetary forecasts show that option 3 would not cause an imbalance 
in the OHIM budget. 

Objective 4 –– Secure long term financing 

Options 

Assessment criteria 

Securing long term financing 

Effectiveness  
(achievement of 
objectives) 

Efficiency 

Overall 
assess- 
ment 

Greater security of financing 

Time needed 

Overall cost 

1. Financing from MS 

2. Financing from EU budget 

3. Financing from OHIM budget 

0 

? 

++ 

0 

? 

++ 

0 

0 

0 

0 

- 

++ 

5.4.2.  Financing from the OHIM budget – funding mechanism 

The  report  analyses  two  possible  funding  models:  funding  via  lump  sums  on  the  basis  of 
agreed distribution criteria (3.1a) and project-driven funding based on grants (3.2a). Based on 
that  assessment,  the  report  finds  the  latter  option  to  be  fitter  to  achieve  the  identified 
objectives. 

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Use of OHIM budget – funding mechanism 

Options  related  to  the  financing  from 
OHIM budget  

Funding mechanism 

Effectiveness 
(objective: 
securing long 
term funding)

Efficiency 

Overall 
assessment 

Accuracy of 
funding  

Complexity and 
transparency 

1a. Lump sums based on distribution key 

2a. Project driven funding based on grants 

+/- 

++ 

- 

++ 

- 

+ 

- 

++ 

5.4.3.  Financing from OHIM budget – source of funding 

Upon  analysis  of  options,  notably  funding  from  OHIM  operational  budget  (3.1b),  from  a 
specific OHIM income (3.2b) and by further using the accumulated financial reserve (3.3b), , 
it appears most appropriate to finance cooperation actictives from OHIM annual income as a 
whole. 

Use of OHIM budget – source of funding 

Options  related  to  the  financing  from 
OHIM budget  

Source of funding 

Effectiveness 
(objective: 
securing long 
term funding)

Efficiency 

Overall 
assessment 

Accuracy of 
funding  

Relevance 
(source vs. 
purpose)  

Risk for 
OHIM 
budget 

1b. Funding from operational budget 

2b. Funding from specific income (renewal 
fees) 

3b.  Use  of  surplus  (increase  in  allocation 
to the Cooperation Fund) 

++ 

++ 

-- 

5.4.4. 

Impacts of the selected option 

+ 

- 

+ 

0 

- 

0 

+/- 

0 

0 

+ 

0 

- 

Users  would  clearly  benefit  from  results  of  the  new  cooperation  scheme.  Moreover,  there 
would be no impact on them due to the use of OHIM budget to fund common projects with 
national IP offices. The fact that sufficient funds would be provided to finance the cooperation 
activities  would  allow  national  IP  offices  to  participate  in  and  commit  to  common 
cooperation  projects  on  a  long-term  basis.  The  financing  of  the  cooperation  activities  by 
OHIM  would  have  a  significant  impact  on  its  budget.  It  can  be  concluded  that  the  OHIM 
budget  would  be  able  to  take  the  additional  expenditure  related  to  funding  of  cooperation 
projects with national offices from its annual operational results, while taking into account the 
impact  of  the  adjustment  of  OHIM  fees  due  to  the  introduction  of  the"one-class-per-fee 
system". Accordingly, the selected option would not cause an imbalance in the OHIM budget.  

6. 

MONITORING AND EVALUATION 

Three years after the expiry of the transposition deadline, Member States could submit to the 
Commission a report on the implementation of the new provisions of the Directive. Based on 
these  inputs,  the  Commission  could  draw  up  a  report,  including  an  assessment  of  the 
effectiveness of the measures taken. Furthermore, the cooperation activities financed from the 
OHIM budget would be checked and monitored in accordance with financial rules applicable 

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to the Office, notably  as regards grant procedures. The progress in terms of convergence of 
practices and tools could be measured annually, on the basis of OHIM summary reports. Five 
years after the entry into force of the amendments to the CTM Regulation (and, if applicable, 
also  the  TM  Directive),  the  Commission  could  review  the  new  legal  framework  for 
cooperation, with particular attention to the funding mechanism for cooperation. The review 
should be based on annual summary reports prepared by OHIM.  

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