Source: EURLEX
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# 52013SC0095

**COMMISSION STAFF WORKING PAPER 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) /\* SWD/2013/095 final \*/**

  

TABLE OF CONTENTS

1........... Introduction.................................................................................................................... 5

2........... Procedural Issues and
Consultation of Interested Parties.................................................. 9

2.1........ Procedural issues............................................................................................................ 9

2.2........ External expertise and
consultation of interested parties.................................................. 10

3........... Policy context, Problem
definition and Subsidiarity......................................................... 12

3.1........ Background and context............................................................................................... 12

3.1.1..... Nature and size of the market
concerned....................................................................... 12

3.1.2..... Development in numbers of trade
mark applications....................................................... 12

3.1.3..... Impact of the reduction of CTM
fees on demand........................................................... 13

3.1.4..... Users of the CTM system............................................................................................. 13

3.1.5..... Overview of legislative framework................................................................................. 14

3.1.6..... Systemic coexistence, extent of
the links and interaction between the systems................. 15

3.1.6.1.. Systemic coexistence.................................................................................................... 15

3.1.6.2.. The extent of the links and
interaction between the systems............................................ 16

3.2........ Problem definition......................................................................................................... 18

3.2.1..... Problem relating to divergent
provisions of the existing regulatory framework.................. 18

3.2.1.1.. Non-harmonisation of trade mark
procedures................................................................ 19

3.2.1.2.. Insufficient level of harmonisation
as regards substantive law.......................................... 23

3.2.1.3.. Missing clear legal basis for
cooperation........................................................................ 26

3.2.2..... Problem relating to the low level
of cooperation between trade mark offices................... 27

3.2.2.1.. Insufficient technical facilities
of national offices.............................................................. 27

3.2.2.2.. Lack of sustainable financing in
medium to long term...................................................... 28

3.2.3..... Adverse effects............................................................................................................. 29

3.2.4..... Baseline scenario.......................................................................................................... 34

3.3........ The EU's right to act..................................................................................................... 39

4........... Objectives.................................................................................................................... 40

4.1........ General, specific and operational
objectives................................................................... 40

5........... Identification of Policy Options...................................................................................... 41

5.1........ Divergent provisions of the
existing regulatory framework.............................................. 41

5.1.1..... Approximation of trade mark laws
and procedures........................................................ 41

5.1.2..... Missing clear legal basis for
cooperation........................................................................ 43

5.2........ Cooperation capacity building....................................................................................... 43

5.2.1..... Technical facilities......................................................................................................... 44

5.2.2..... Funding in general......................................................................................................... 44

6........... Comparison of options and
analysis of Impacts.............................................................. 45

6.1........ Divergent provisions of the
regulatory framework: comparison of options....................... 45

6.1.1..... Approximation of trade mark laws
and procedures – comparison of options.................. 45

6.1.2..... Missing clear legal basis for
cooperation – comparison of options.................................. 46

6.2........ Divergent provisions of the
regulatory framework: impact of the selected option on stakeholders          48

6.2.1..... Impacts as regards the
approximation of trade mark laws and procedures...................... 48

6.2.1.1.. Trade mark users (including SMEs)............................................................................... 48

6.2.1.2.. National IP offices........................................................................................................ 49

6.2.1.3.. OHIM.......................................................................................................................... 51

6.2.2..... Impacts concerning the legal base
for cooperation between IP offices............................ 53

6.2.2.1.. Trade mark users.......................................................................................................... 53

6.2.2.2.. National IP Offices....................................................................................................... 53

6.2.2.3.. OHIM.......................................................................................................................... 53

6.3........ Cooperation capacity: comparison
of options................................................................ 54

6.3.1..... Technical facilities – comparison
of options.................................................................... 54

6.3.2..... Funding........................................................................................................................ 54

6.3.2.1.. Financing in general – comparison
of options................................................................. 54

6.3.2.2.. Financing from the OHIM budget –
comparison of sub-options..................................... 56

6.4........ Cooperation capacity: impact of
the selected option on stakeholders and mitigating measures   60

6.4.1..... Technical facilities/tools................................................................................................. 60

6.4.1.1.. Trade mark users.......................................................................................................... 61

6.4.1.2.. National offices............................................................................................................. 61

6.4.1.3.. OHIM.......................................................................................................................... 61

6.4.2..... Financing of cooperation............................................................................................... 62

6.4.2.1.. Trade mark users.......................................................................................................... 62

6.4.2.2.. National IP offices........................................................................................................ 63

6.4.2.3.. OHIM.......................................................................................................................... 63

6.5........ Interaction between selected
options............................................................................. 64

6.6........ Further possible impacts of the
selected options............................................................. 66

6.6.1..... Consumers................................................................................................................... 66

6.6.2..... EU budget.................................................................................................................... 66

6.6.3..... Social impact................................................................................................................ 66

6.6.4..... Environmental impact.................................................................................................... 66

6.6.5..... International.................................................................................................................. 66

7........... Choice of the legal instrument........................................................................................ 67

7.1........ Approximation of trade mark laws
and procedures........................................................ 67

7.2........ Cooperation capacity building....................................................................................... 68

8........... Monitoring and Evaluation............................................................................................. 68

8.1........ Approximation of trade mark laws
and procedures........................................................ 68

8.2........ Cooperation capacity building....................................................................................... 68

9........... Annexes....................................................................................................................... 69

9.1........ Annex 1: Glossary........................................................................................................ 69

9.1.1..... European Observatory on
Counterfeiting and Piracy...................................................... 69

9.1.2..... Technical terms relating to trade
marks.......................................................................... 70

9.2........ Annex 2: Proposals to be covered
by the revision of the regulatory framework............... 72

9.2.1..... Approximation of trade mark laws
and procedures (addressed in the problem definition) 72

9.2.1.1.. Principal procedural rules of the
CTMR to become also part of the TM Directive........... 72

9.2.1.2.. Further substantive rules of the
CTM Regulation to become part of the TM Directive..... 73

9.2.1.3.. Reduction of optional provisions in
the TM Directive..................................................... 73

9.2.2..... Cooperation capacity building
(addressed in the problem definition)............................... 73

9.2.3..... Amending or removing outdated
provisions (not addressed in the problem definition)...... 73

9.2.4..... Clarifying legislation and
removing ambiguities (not addressed in the problem definition).. 74

9.2.5..... Implementation of case law (not
addressed in the problem definition)............................. 74

9.3........ Annex 3: Online services and
degree of automation at national offices............................. 74

9.3.1..... Availability of online services......................................................................................... 74

9.3.2..... Degree of automation at national
offices......................................................................... 75

9.4........ Annex 4: Overview of trade mark
application and registration fees................................. 75

9.5........ Annex 5: Procedural issues –
opinions of the Impact Assessment Board......................... 76

9.6........ Annex 6: Cost of cooperation
activities.......................................................................... 78

9.7........ Annex 7: Summary of the main
statements made by user associations............................. 81

9.7.1..... General position regarding the
coexistence of the trade mark systems in Europe............. 81

9.7.2..... National trade mark systems......................................................................................... 81

9.7.3..... National offices and cooperation
with OHIM................................................................ 82

9.7.4..... Community trade mark system...................................................................................... 82

9.8........ Annex 8: Findings of a Social
Cost Benefit Analysis....................................................... 83

9.8.1..... Packet 1 projects......................................................................................................... 84

9.8.2..... Packet 2 projects......................................................................................................... 84

9.8.3..... Assumptions underlying benefit
calculations................................................................... 86

9.8.4..... Comments on broader social impacts............................................................................ 87

COMMISSION STAFF WORKING PAPER

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.
Introduction

1.1.      Importance of trade marks and
available systems of trade mark protection

Trade marks are indicators of business
origin, distinguishing products and services of one company from those of
another. They enable consumers to recognize a product as one which they have
liked, or disliked, in the past and thereby allow them to make an informed
choice when making the purchase or asking for a service. Trade marks are also
essential marketing tools for modern business: They are the principal
instrument used by businesses for advertising their products, and offer a
guarantee that all the goods originating from the same producer have a certain
quality. In a world of increasing consumer sophistication, branding, supported
by trade marks, can assist businesses of all sizes in their quest for
innovation and entry into new markets.

Trade marks are territorial rights. They
guarantee a protection to their owners only in the territory of the country or
countries concerned. In Europe, several systems for trade mark protection
exist.

(a)
National trade marks are registered by the
intellectual property (IP) offices of Member States on the basis of a
harmonised system. Currently, there are 24 national offices, and one regional
office – the Benelux Office for IP (BOIP)[1] . National trade marks generally serve users seeking registration in
one, or a limited number of, countries, as well as users that want to obtain
much broader protection in geographical terms but are not able[2] or willing to opt for a
Community trade mark.

(b)
Community Trade Marks (CTM), available since
1996, grant their proprietors a unitary IP right with an equal effect
throughout the entire EU. They are registered by a specialised EU agency, the
Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM)
which was established in 1994 in Alicante, Spain. The CTM does not replace national
trade mark systems, but provides an additional legal framework ("a 26th
regime") for obtaining trade mark protection in the territory of all 27 Member
States.

(c)
Finally, international trade mark registrations
are administered by the World Intellectual Property Organisation (WIPO), and
secure protection in several countries, through the system of the Madrid Agreement
and the Protocol to that Agreement. These trade marks can be obtained in a
single procedure; however, once registered they do not become a single IP right,
as the CTM, but split into a bundle of national and/or Community trade marks,
depending on the choice of the applicant. International applications have
limited added value within the EU and are more advantageous for users seeking
trade mark protection in countries outside Europe and/or worldwide.

The national, Community, and international trade
mark systems not only coexist passively but are closely interrelated with each
other[3].

1.2.      Political context

The trade mark system in Europe has
undergone a significant development over the last 20 years. This process
started with the harmonisation of national trade mark laws in 1989 and was
followed by the creation of the CTM in 1994. Since then, it has not been
subject to any major modifications[4].

The business environment, however, has
changed significantly over the past two decades, notably with the expansion of the
internet and other electronic business tools. The numbers of trade mark
applications have been growing, both at national and Community levels[5], as are the numbers of trade
mark users. Stakeholders increasingly demand faster,
higher quality, more streamlined trade mark registration systems, which are
more consistent, user friendly, publicly accessible and technologically
up-to-date.

In 2007, when addressing the issue of the
financial perspectives of OHIM, the Council[6]
recognised that it was over a decade since the introduction of the CTM
Regulation and the establishment of OHIM, and under the principles of better
regulation, emphasised the need for an overall assessment of the functioning of
the CTM system. It invited the Commission to start work on a comprehensive
study on the overall functioning of the CTM system.

The Commission committed itself, in its
2008 "Small Business Act"[7],
to make the CTM system more accessible to SMEs. Furthermore, the 2008
Communication on an Industrial Property Rights Strategy for Europe[8] stressed the Commission's
commitment to effective and efficient trade mark protection and to a high
quality trade mark system. It concluded that it was time for an overall
evaluation which could form the basis for future review of the trade mark
system in Europe, and the further improvement of cooperation between OHIM and
national IP offices. As regards the international dimension, the Communication
announced that the Commission would prepare the ground for the accession of the
EU to the Singapore Treaty on the Law of Trademarks and encouraged Member
States to ratify that treaty. In 2010, in the Communication on Europe 2020
strategy[9]
under the Flagship Initiative: “Innovation Union”, the Commission committed to
modernise the trade marks framework in order to improve the framework
conditions enabling business to innovate. Finally, in its new IPR strategy for
Europe[10],
the Commission announced a review of the trade mark system in Europe, with a
view to modernising the system both at EU and national levels, by making it
more effective, efficient and consistent as a whole.

On the basis of interim results of a related
Commission study (see section 2.2 below), the Competiveness Council adopted on 25
May 2010 conclusions on the future revision of the Trade Mark system in the EU[11]. The Council called on the
Commission to present proposals for the revision of, respectively, the CTM
Regulation, and the Directive approximating the laws of Member States relating
to trade marks, and flagged up those issues which it would like to see
addressed therein.

1.3.      Scope of the impact assessment

The present impact assessment looks into the
business needs of trade mark users in Europe and evaluates them against the current
conditions resulting from the EU trade mark legislation. It deals with the CTM
Regulation[12]
and the Trade Mark Directive (TM Directive) and assesses the impact of their
possible modification, as well as of other soft law measures. The analyses
focus on major problems and shortcomings identified in the current system during
a comprehensive fact finding and consultation process ("evaluation
process", for details see chapter 2.2).

Accordingly, the scope of this report was
shaped on the basis of these evaluation results which primarily revealed considerable
incoherence between the trade mark systems in the EU, and the inefficient
procedures, inappropriate practices and missing and/or outdated tools and
instruments. Such shortcommings all negatively affect the access to trade mark
protection, especially its speed and cost, as well as the legal certainty of
trade mark users in general. All these findings demonstrated an urgent need for
modernisation and streamlining of the European trade mark system, both at EU
and national levels.

The report does not focus on the issue of
OHIM financing as its primary content. In accordance with the commitment made in
an earlier impact assessment[13],
accompanying the 2009 Commission proposal for reduction of OHIM fees[14], the evaluation process
encompassed an assessment of OHIM's fees and fee structure[15]. This assessment concluded that the current balance between the fees appears appropriate[16]. The study contractor noted in
this context that the overall level of fees must be sufficient to cover the
expenses of the present and any future tasks of the Office, and any payments
made by the Office to the national offices. The level of fees should further
suffice to establish and maintain an adequate reserve fund. In addition, it
found that there is no objection in principle to fixing the fees at a level
which takes into account additional considerations, such as facilitating a
choice between CTMs and national trade marks, or the actual and potential value
of the IP right granted by the Office. As long as the overall fee level is
sufficient to cover the Office's operations, the legislature was considered to
have substantial discretion to fix the level of each individual fee. The
interests to be taken into account in this context include those of CTM
applicants and proprietors, the interests of earlier rights owners, and also
the interests of the EU as a whole and of its Member States in maintaining an
adequate balance between their trade mark systems and the CTM system. A CTM
renewal fee, substantially higher than the application fee, was regarded as
entirely justified in view of the value of an existing and continuing
registration valid in the whole EU, and the fact that it may contribute to
preventing CTMs being renewed which are not used at all or are of only marginal
value to their owners. Therefore, this report does not address OHIM fees as an
issue per se, but does so in relation to identified problems or considered
policy options (see chapter 6.2.1.3).

Where suitable, this report draws links to
a recent impact assessment[17] which
accompanied the 2011 proposal for a Regulation entrusting the OHIM with the
European Observatory on Counterfeiting and Piracy[18]. It should be clarified,
however, that whereas the Observatory Regulation aims at extending the current
mandate of the Office by entrusting it with new competences in relation to IPR
enforcement, the present impact assessment report looks into the core business
of OHIM and national IP offices in the field of trade marks, notably their
registration and administration. Accordingly, since the subject matter of these
two initiatives is substantially different and not directly related, the number
of potential common issues is limited.

Finally, the present impact assessment does
not expressly scrutinize all possible amendments, in particular not those aimed
at minor adaptations of existing provisions with little, or no, practical
impact, nor those which would "clean" both pieces of legislation from
obvious historical leftovers[19].
Nevertheless, an overview of the proposals for amending existing legislation is
provided in Annex 2 (section 9.2).

2.
Procedural Issues and Consultation of Interested
Parties
2.1.
Procedural issues

The preparation of this impact assessment
was monitored by an Inter-Services Steering Group, composed of Directorates
General Internal Market and Services (MARKT), Enterprise and Industry (ENTR),
Joint Research Centre (JRC), Budget (BUDG), Secretariat-General and Legal
Service. The Steering Group met on three occasions, on 30 June 2011, 20 July
2011 and 12 September 2011. The minutes of the last Steering Group's meeting were
sent to the Impact Assessment Board (IAB).

A draft of this impact assessment was
submitted to the IAB on 21 September 2011 and discussed at the Board's meeting
on 19 October 2011. The IAB issued an opinion on 21 October 2011 finding that
the draft report should be significantly improved in several important aspects.
The report has been substantially revised, improved and extended in order to completely
comply with the opinion of the IAB[20].

The revised draft of this impact assessment
was submitted to the IAB on 10 Januar 2012. The IAB issued a second opinion on
that revised draft on 3 February 2012, confirming that the report had been
improved to a significant extent along the lines of the IAB's first opinion. The
report has been further revised and improved in order to address the remaining
points raised by the IAB.

After the second opinion of the IAB, the
report was subject to further discussions with the DG BUDG as regards its parts
dealing with financial matters and OHIM budget. Following the recommendations
of the DG BUDG, some new elements were added to the final impact assessment, leading
in part to changes in the originally preferred options (for details, see Annex 5,
section 9.5).

The initiative to which this impact
assessment relates to has been introduced into the Commission's agenda planning
as 2011/MARKT/003.

2.2.
External expertise and consultation of
interested parties

The drafting of this impact assessment was
preceded by an extensive evaluation and consultation process in which DG MARKT
sought expertise of external specialists as well as views of interested
parties.

The evaluation process started in 2008 with
a "consultation on trade marks" carried out via the European Business
Test Panel (EBTP)[21].
It aimed at gathering views of companies, including small and medium sized
enterprises (SMEs)[22],
about issues such as the added value of trade marks for companies, the
awareness of the potential users, the costs of a trade mark, the relationship
between the national and the CTM systems, the efficiency of the systems and the
protection of trade marks.

The main component of the evaluation
process was a comprehensive study[23]
commissioned by the Commission from the Max Planck Institute for Intellectual
Property and Competition Law in Munich, Germany, and carried out between
November 2009 and February 2011. The study was based on a non-exhaustive set of
evaluation questions[24]
grouped around two main tasks: assessment of links between the CTM and national
systems, and assessment of the functioning of the CTM system. The aim of the
study was to identify potential areas for improvement, streamlining and future
development of the trade mark system as a whole, both at Community and at national
level. The study also established the potential for enlarging the scope of
cooperation between OHIM and national IP offices.

In addition to the expert analyses by the
Max Planck Institute, which were complemented by an economic analysis of
certain aspects of the CTM system by the institute INNO-tec[25], the study comprised a number
of consultations with various stakeholders. First of all, a large online survey[26] among users of the CTM system
was performed by the Institut für Demoskopie Allensbach, Germany (Allensbach
survey). The survey was based on a random sample of 1,599 users, and data was collected
between February and March 2010. Secondly, user associations were invited to
express their views on all evaluation questions, and to make further observations
and suggestions. In total, 19 organisations representing trade mark users at
national, European and international level sent their contributions[27], making use of both listed evaluation
questions and free submissions. Indeed, a number of issues that had not been
part of the initial tender were eventually considered by the Commission's
services on the basis of users' comments. Moreover, a hearing with 15 major
user organisations was organised by the Max Planck Institute in Munich on 8 and
9 June 2010. The purpose of this meeting was to give user organisations the
opportunity to express their main ideas on the study and to discuss with them
topics raised in the call for tender[28].
Finally, the Max Planck Institute consulted all national IP offices[29] and OHIM, most of them by
means of personal visits, the rest on the basis of a written questionnaire. The
results of all these consultations, surveys and hearings[30] were taken into consideration
in the final report of the Max Planck Institute and by DG MARKT when drafting
the present impact assessment.

The conclusions of the study endorsed the
need for greater coherence between the CTM and national systems and for further
approximation of Member States' trade mark laws both within and beyond the
current scope of the TM Directive. While many aspects of the present CTM system
were confirmed as functioning well, the study made a large number of proposals
for improvement and identified areas for strengthening cooperation between OHIM
and national IP offices.

As a follow up to the study, DG MARKT held
a number of bilateral meetings with user associations. Moreover, it organised a
hearing with their representatives to seek their views on selected proposals of
the study as well as to test some options identified as part of the impact
assessment. The hearing took place on 26 May 2011 in Brussels and was attended
by 18 user associations. Its results shaped and confirmed the preliminary
analysis of the Commission.

Finally, it should be mentioned that the TM
Directive was subject to transposition checks by the Commission following the
expiry of the transposition deadlines. DG MARKT
commissioned in 1997 a study on the conformity of the trade mark laws in the 15
old Member States with the Directive. The conformity of the laws of the 12 new
Member States was assessed internally. Those studies did not reveal any
significant problems in transposing the Directive. This result corresponds to
the fact that there were no infringement procedures to be opened against Member
States. Against this background, it is not surprising that the question of
proper implementation of the Directive by Member States did not play any role
in the above later evaluation process.

3.
Policy context, Problem definition and Subsidiarity
3.1.
Background and context
3.1.1.
Nature and size of the market
concerned

Europe's economy relies on powerful brands,
requiring strong and effective trade mark protection. In the EU, the value of the
top ten brands per country[31]
amounts to almost 10% in relation to their GDP (PPP)[32]. The percentage is even higher
in smaller countries with valuable brands where the figure can amount to over
30%[33].
As such, the economic value of trade marks serves as an indicator for the economic
wealth of a country. The average value of the top ten brand values per Member
State equals € 35 billion but amounts to € 145 billion in Germany and € 138
billion in the United Kingdom. Annual communication and
advertising expenditure in Europe on brands of € 174 billion[34] benefits media as well as
sport, arts and entertainment.

In microeconomic terms, trade marks are
important and valuable business assets for companies across all sectors, and able
to significantly increase in value as businesses expand and grow. With regard
to international trade dimension, 48% of EU exports are
upmarket branded goods[35].

3.1.2.
Development in numbers of trade mark
applications

The demand for trade mark protection is
constantly high. In absolute terms, both CTM and national trade marks have
grown between 1996 and 2008 (the most recent year for which data for all 26
offices are available). While the total number of trade mark applications in
the 27 current EU Member States increased[36]
by about 8% from 471,000 in 1996 to 509,000 in 2008[37], the numbers of CTM
applications have more than doubled during a similar period from about 43,000
in 1996 to over 107,000 in 2012[38].

An overall global decrease in activity was
witnessed from 2007 to 2009, reflecting prevailing economic conditions. In
2008, a total of 3.3 million trade mark applications were filed world-wide, representing
a 0.9% decline compared to 2007. China was an exception, with 2009 showing a
21% increase in filings and more than a 50% increase in registrations compared
with the previous year. However, indications are that with the economic
recovery trade mark filings have started to grow again.

3.1.3.
Impact of the reduction of CTM fees on demand

At the time of the Impact Assessment for
the last CTM fee reduction in 2009, there was no evidence available for the
previous 2005 fee reduction having led to an increase in volume of CTM
applications. Therefore, the Commission proceeded from the assumption that the
number of CTM applications would remain unchanged. According to the findings of
INNO-tec, the fee reduction instituted in 2005 had a strong positive effect on
demand for the CTM. The second fee reduction in 2009 was too close to the end
of the available data series to be evaluated as to its effects by the institute.
However, against the 2005 experience it cannot be excluded that the substantial
fee reduction in 2009 also may have had an impact on the demand of CTMs besides
possible other impacting factors (e.g. the start of economic recovery,
increasing internationalisation of businesses or further efficiency
improvements at OHIM)[39].
This is confirmed by the difference between the 90,000 CTM applications per
year forecasted in the Impact Assessment for the last fee reduction and the
current over 105,000 applications per year[40].

3.1.4.
Users of the CTM system[41]

The 350,000 companies from 170 countries
that have registered CTMs range from large multinationals to SMEs. From the
beginning, the majority of the CTM applications originated from EU Member
States. In recent years, these countries accounted for around 70% of total
applications. Among the Member States, Germany, United Kingdom, Italy, Spain
and France are the top filers. Among non-EU countries, the United States,
Switzerland, Japan, Canada and Australia are the main
users of the Community system.

The full integration of the 12 Member
States that joined the EU between 2004 and 2007 is still a work in progress,
including the use by companies from those countries of the European IP rights
provided by OHIM. Thus, the 12 new Member States account for about 12% of the
total GDP of the EU at Purchasing Power Parities (2009, Eurostat data) but they
represented only 5% of CTM applications in 2010.

Looking at CTM owners by company size, it
is clear from the chart below that the vast majority of new CTM owners are
SMEs. The chart shows the composition of new CTM owners in each year, distinguishing
between large-scale enterprises (LSE) and SMEs. In the early years of OHIM’s
operation, a significant share of new owners were LSEs, more than 35% in 1996.
In contrast, in recent years, the SMEs' share has been well over 95%. This
indicates that there was an initial rush of big companies, already operating on
a pan-European scale, to protect themselves to the maximum extent possible. By
now, all the big multinationals already have their CTMs. Most of the recent growth
comes from SMEs, once again reflecting the critical role such companies play in
the development of Europe’s economy and their growing internationalisation at a
much earlier stage in their evolution.

Figure 1: New CTM owners by company size

Source: OHIM data and classes of Allensbach Institute

3.1.5.
Overview of legislative framework

The EU legislative framework is based on
two main components, the Trade Mark Directive approximating the laws of Member
States related to trade marks, and the Community Trade Mark Regulation.

The aim of the Trade Mark Directive[42] was to ensure that national trade
marks registered with the Member States' IP offices were subject to the same substantive
conditions of registrability[43]
and enjoyed the same protection under the laws of all the Member States. It did
not undertake a full-scale approximation of laws but harmonised only those
(substantive) provisions of national law that most directly affected the
functioning of the internal market, leaving expressly unharmonised the
procedural rules concerning the registration, revocation and invalidity of
trade marks[44].

Alongside and
linked to national systems, the CTM Regulation[45]
established a free-standing trade mark system which provides a single procedure
for registering a unitary Community right having equal effect throughout the
EU, instead of a separate procedure in each Member State leading to a bundle of
national trade mark rights conferring protection only in their respective
territories. The provisions of the CTM Regulation were further specified in
three implementing Regulations[46], adopted as comitology
measures in accordance with Council Decision 1999/468/EC.

3.1.6.
Systemic coexistence, extent of the links and
interaction between the systems
3.1.6.1.
Systemic coexistence

The coexistence
principle is expressed in the 6th Recital of the Preamble to the CTM
Regulation and is one of the cornerstones of the European trade mark system.
According to that principle, CTM law does not replace the law of the Member
States on trade marks, but solely provides an additional legal framework for
obtaining effective and efficient trade mark protection throughout the entire
Union, with the result that the Community and national systems exist alongside
each other.

However,
coexistence does not mean that these systems merely exist in parallel, but
rather that they should complement each other harmoniously, that is, in a way
that allows each system to attain its specific purpose. This complementary relationship between the Community and national
trade mark systems mainly manifests itself on two levels:

First, there is
a significant degree of overlap between the two systems in terms of territorial
coverage. Territorially, European trade mark systems are to a certain extent interchangeable
in the sense that users may seek trade mark protection for the whole or part of
the EU, by opting either for a CTM or for one or more national trade marks. In
fact, the clear intention of the
Community legislator has been that businesses should not be required to apply
for registration of their trade marks as Community trade marks if they do not
want protection of their trade marks at Community level (see 6th
Recital at the end).

Therefore, companies should be free to choose between registering of their trade marks at national or Community level (or
international level) and be able to combine those trade mark filings where
appropriate, according to their specific business needs and strategic interests.
In practice, it is not unusual for a growing
undertaking, seeking to expand its business beyond a national or regional market,
to escalate its trade mark protection by adding a CTM to its existing
portfolio of national registration(s). Finally, it also
happens frequently that a company aiming at a large market may have to opt for
registering its trade mark several-fold at national level instead of having a
single CTM. This is due to the unitary character[47] of a CTM, which does not allow
the trade mark to be registered at all if there is an obstacle in any of the
Member States (e.g. existence of an older identical or similar national trade
mark[48],
descriptiveness of a verbal trade mark in one of the EU languages[49]). In such a case, the number
of parallel national trade marks depends on the company's business needs in
geographical terms and may range from 1 to 25 (excluding of course the
territory or territories where a ground of refusal exists).

Second, the
systems are legally and organically linked and interact with each other in a
variety of ways[50].
First of all, trade mark owners in the EU can use their national trade marks in
opposition, cancellation or Court proceedings to prohibit the registration or
use of a later identical or similar CTM and vice versa. Moreover, CTM
owners may also choose to abandon their national registration and claim for the
CTM the seniority[51]
of the national trade mark which has been left to lapse, while keeping the same
level of protection in the Member State in which the latter was registered.
Equally, companies who choose, or are forced to, abandon their CTM, can
transform their CTM into one or more national registrations, through the
mechanism of conversion[52].

It should be
stressed in this context that the above multi-filing practices of companies are
natural in the trade mark field and form part of companies' business and/or
branding strategies, which may differ on a case-by-case basis in accordance
with the economic purpose of each trade mark filed. The multi-level trade mark
system in Europe has been shaped against this reality. However, the choice of
whether a company should opt for a CTM or a national mark should be driven by
its business needs only and not by convenience considerations or other
extraneous factors. The problems described below in the problem definition are
not caused by the multi-filing itself, but are often due to legal and other distortions
which result in a sub-optimal operation of the EU trade mark framework for
businesses.

3.1.6.2.
The extent of the links and interaction between
the systems

There is ample
evidence that users make extensive use of the above options and regularly exploit
the links between the various systems, both when determining their trade mark
strategies and when facing the need to protect or enforce their existing
rights.

According to
the Allensbach survey[53],
21% of SMEs and 30% of LSEs owning trade marks at OHIM, answered that their
prevailing practice is to apply for both national and CTM protection, whereas
around 20% of them (22% of SMEs and 17% of LSEs) answered that they had no
prevailing practice or that it was impossible to say whether they use mostly the
CTM or national systems. According to the INNO-tec report[54], 19% of Community trade mark
applications filed at the OHIM by German applicants between 1997 and 2006, i.e.
15,440 trade marks, had also been filed as national trade marks in Germany.

Figure 2: Filing practice of SMEs and LSEs (among CTM users)

Source: Allensbach report

This practice
is further attested by the fact that 93.216 CTM applications (roughly 10% of
the total until May 2011) have been filed with a priority claim from a national
filing[55].
Furthermore, a comparative search carried out by OHIM in the TM View database
has shown that out of a sample of 666.527 CTM applications (verbal marks only),
174.795 (that is 26,3% of the sample) had also been filed as national marks[56].

The extensive interaction
between the systems is also clear from a number of indicators: A query on the
number of national rights used in opposition proceedings against CTM has
revealed that at least 32% of the earlier rights used in opposition proceedings
before the OHIM are national marks[57].

As regards
seniorities and conversions, figures show that, from the inception of the CTM
system, 256.056 seniority claims were filed with the OHIM until May 2011[58] and 3.171 conversion requests
were made until the end of 2010[59].

While the above
figures demonstrate the extent of a simultaneous use of CTMs and national trade
marks, similar statistics about multiple registrations at national level are
not available. However, contacts with stakeholders have confirmed that, as
explained in the previous section "systemic coexistence" (3.1.6.1),
it is a common practice for companies to seek trade mark protection in several
Member States, notably when a CTM protection cannot be obtained due to existing absolute or relative grounds for refusal in a part
of the EU.

The foregoing shows that, depending on its
branding strategy, an undertaking wishing to market its products in the EU may
opt for a CTM or one or more national marks, either alternatively or
cumulatively, and that, in either case, it may be confronted with procedures
pertaining to another system, even if its initial choice was to acquire a trade
mark using a different regime. For instance, CTM filers must search national
registries to ensure that there are no prior rights opposable to their
application, whereas national filers must check the CTM register for the same
reason.

Hence, in order to be able to make an
informed choice and to be in a position to effectively protect their rights,
companies need to have a sound overview of the rules and procedures applicable
not only on Community level, but also in each and every Member State
separately.

3.2.
Problem definition

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

3.2.1.
Problem relating to divergent provisions of the
existing regulatory framework

The consulation and evaluation exercise has
revealed that the business environment in the trade mark field remains very heterogenous
in spite of the partial harmonisation of national laws dating back to early
1990s. The level of harmonisation imposed by the TM Directive was quite low,
focusing on a restricted number of substantive rules that were then considered
to most immediately affect the functioning of the internal market[60], whereas an important number
of areas, in particular relating to formal requirements and procedures, was
left unharmonised. Moreover, the CTM Regulation was enacted several years after
the Directive, which means that at the time the Directive came into being there
was no 'common benchmark' against which the efficiency of national proceedings
could be measured. By now, however, the procedures followed by OHIM have been in
place for more than 15 years and are generally regarded as meeting business needs
and expectations, in terms of timeliness, user-friendliness and quality.

As a result, the current landscape of EU
trade mark law is still characterised by a wide divergence between national
rules and procedures, both among themselves and in relation to the rules and
procedures applied by the OHIM, while no attempt has ever been made to apply
‘best practice’ with regard to procedures.

As reported by user organisations[61] during the consultation
process the existing divergencies between national systems are regarded as
significant. These divergences are due to three main causes related to the
regulatory framework:

·
the fact that the TM Directive does not cover
procedural aspects;

·
the insufficient level of harmonisation as
regards substantive law including optional provisions in the TM Directive; and

·
the vague legal basis for cooperation.

There is a broad agreement among users of
the trade mark systems in Europe that the present level of approximation
between national trade mark laws, as well as with the CTM system, has not been
sufficient. User organisations unanimously stated that further harmonisation of
national trade mark laws, with regard to both substantive law and procedural
issues, is needed.

At a political level also, the Council[62] appreciated the incoherence
between the CTM and national regimes and called on the Commission to include in
its proposals measures to make the TM Directive more consistent with the CTM
Regulation and thus to further contribute to reducing areas of divergence
within the trade mark system in Europe as a whole.

3.2.1.1.
Non-harmonisation of trade mark procedures

Due to the fact that procedural aspects
where left completely unharmonised, the existing gaps affect a variety of
procedural areas, including the conditions for granting a filing date[63], the designation and
classification of the goods and services for which protection is sought[64], the range of goods and
services (number of classes) covered by a trade mark application[65], the extent of ex officio
examination of grounds for refusal[66],
the possibility of submitting observations by third parties[67], the existence or not of
administrative procedures for opposing an infringing application or cancelling[68] a mark, the defenses of
absence of genuine use available to trade mark owners in the context of such
proceedings, the duration/renewal of the registration[69] and the option to divide a
trade mark application or registration[70].

The following three important examples
illustrate some practical problems caused by the incomplete harmonisation of
rules and practices.

(a) Designation of goods and services
and classification issues

Trade mark protection is always granted in
relation to a specific set of goods and/or services. The goods and services for
which protection is sought determine to a large extent the scope of protection
afforded to the trade mark owner, and also affect other aspects of trade mark
protection such as the claiming of priority and seniority, insofar that in
those cases a double identity of signs and goods and services is required.

Article 28 of the CTM Regulation, in
combination with Rule 2 of the CTM Implementing Regulation[71], imposes on the Office the
obligation to apply the Nice Agreement[72]
to the classification of goods and services, despite the fact that the European
Union is not a party to that Agreement.

On the other hand, the TM Directive does
not create the same obligation for Member States. Although all countries of the
EU are parties to the Nice Agreement, with the exception of Cyprus and Malta,
who apply the same system on a voluntary basis, there are no common rules in
the Directive as to how that agreement should be applied in practice. What is
more, Article 2 of the Nice Agreement expressly allows the contracting parties
to give to the classification the effect that suits best the requirements of
their legal system, by providing that the classification is not binding when
determining the scope of protection afforded to the registration.

As a result of a lack of legal provisions
in that regard, OHIM and national offices follow different rules and criteria
for the classification of goods and services. This has led to the adoption of
diverging classification practices across European IP offices to the detriment
of consistence, clarity and legal certainty. In particular, different Member
States regard various terms in the Nice Classification as not suitable, whereas
others, including the OHIM, accept them all. Moreover, while OHIM and some
national offices have been applying the Nice Classification by assuming that
its class headings are exhaustive and encompass all the goods or services
falling into a given class of goods or services ("cover-all"
approach), the majority of the IP Offices consider these headings as merely
exemplary, concrete terms covering only goods or services clearly encompassed
by their specific meaning ("it-means-what-it-says" approach).

Box 1:
Classification – real life examples and practical consequences

– An applicant requesting protection at OHIM for the heading of Class 15 ("musical instruments") is also deemed to have protection for "stands and cases adapted for music instruments" whereas these additional goods will not be protected in a Member State following a different practice, unless it is specifically enumerated in the specification. – A CTM application for the heading of Class 25 ("clothing, footwear and headgear") is deemed to also cover "belts", which would only be protected in a different system if the applicant takes the precaution to also indicate "belts"’ or at least "clothing accessories" when applying for protection. Practical consequences for the industry: – The same term is interpreted differently in different jurisdictions within the EU, which leads to undesirable fluctuations in the trade mark's scope of protection in different territories and makes it impossible to secure uniform trade mark protection throughout Europe. To avoid this, companies have to express the specification of their trade marks in different terms depending on the teritory of registration. – In the case of conflict between trade marks having been registered under different regimes, this does not only create a great deal of legal uncertainty about the meaning of the registration and, by extension, about its scope of protection, but also leads to unreasonable distortions when trying to enforce the same trade mark in different territories, or when claiming priority, seniority or conversion. The consequence for IP offices: – The acute legal controversy surrounding this area has the effect of rendering cooperation between OHIM and national offices in classification matters and/or the development of common tools and IT platforms near impossible. For instance, it is very difficult to create common classification databases if the acceptability of a given term is subject to different rules in different teritories. To remove the existing stalemate, the Appointed Person by the Lord Chancellor (United Kingdom) referred a preliminary ruling to the Court of Justice, aimed at clarifying the correct application of the Nice Classification to trade mark filings[73]. In its judgment of 19 June 2012 the Court of Justice indeed found that the TM Directive must be interpreted as meaning that it requires the goods and services for which the protection of the trade mark is sought to be identified by the applicant with sufficient clarity and precision to enable the competent authorities and economic operators, on that basis alone, to determine the extent of the protection conferred by the trade mark. Furthermore, it must be interpreted as meaning that it does not preclude the use of the general indications of the class headings of the Nice Classification, provided that such identification is sufficiently clear and precise. Finally, that an applicant for a national trade mark who uses all the general indications of a particular class heading of the Nice Classification must specify whether its application for registration is intended to cover all the goods or services included in the list of that class or only some of those goods or services. If the application concerns only some of those goods or services, the applicant is required to specify which of the goods or services in that class are intended to be covered.

(b) Number of classes of goods or
services covered by a single trade mark application

There are different rules in place in the
Union as regards class fees[74].
Thirteen national offices operate with a fee structure where the
application/registration fee only covers one class of goods or services, so
that an additional (class) fee has to be paid for any extra class. By contrast,
the other 12 national offices follow the CTM system where the basic application
fee for a CTM automatically includes three classes of goods or services regardless
of whether that number of classes is applied for by the applicant or not. In
the latter case the applicant is only charged an additional (class) fee for any
further class of goods or services beyond the third.

As found in the MPI study[75], easy accessibility of trade
mark protection is of key significance for the proper functioning of trade
marks as an element of undistorted competition. The degree of accessibility is
determined not only by the overall volume of prior rights, posing obstacles to
protection of new signs, but, also, by the 'space' occupied by each mark in the
register (which depends on the specific range of goods and services in respect
of which the trade mark is registered).

The MPI study generally concluded that
there is no sustainable documentation showing that access to trade marks is
substantially impaired by congestion of registers[76]. However, it pointed to
several features of the CTM system which tend to invite a certain amount of
'cluttering' and may, therefore, give rise to problems. One problem being that
the basic application fee, covering three classes, encourages applicants to
apply for a broader scope of protection than actually needed[77]. This is clearly corroborated
by the experience of the Spanish IP office, where the move to a
'one-class-per-fee system' (basic application fee only covering one class of
goods of services) has led to a significant drop in the average number of
classes covered by new trade mark applications[78].

A basic application fee, including three
classes, not only attracts unnecessarily broad specifications of goods and
services for trade mark coverage, but also increases the likelihood of
subsequent applicants finding access to trade mark protection barred by prior
rights. This creates a problem between the CTM system and the national systems
which operate with an application fee covering a single class only, as the CTM
system can potentially obstruct national filings. Moreover, such an approach
also poses an internal issue for the CTM system, as CTM applicants are
confronted with an aggregated number of prior rights existing both at the Union
level and under national law.

The MPI study favoured having all IP
Offices in the Union operating with an application fee covering one class only,
as this would ensure a balanced and harmonious trade mark system, and reduce
the potential for cluttering the trade mark registers. The special hearing
organised by DG MARKT on 26 May 2011, and subsequent written comments on the
MPI study obtained thereafter, have revealed that this position is supported by
the majority of user associations[79],
provided that such a fee structure change would not involve an increase in fees
(i.e. applicants would not have to pay more than they do now for a trade mark
covering two or three classes).

(c) Ex-officio examination of relative
grounds for refusal

Although the right to file an opposition to
the registration of a later trade mark is in principle reserved for the holders
of earlier rights, several national offices conduct, in addition, an ex-officio
examination of relative grounds for refusal[80]
concerning conflicts with earlier rights[81],
by raising the relevant objection even if the rightholder chooses not to do so.

Box 2: Ex-officio examination of relative grounds – practical
consequences

The ex-officio examination of relative grounds is generally perceived as creating several unnecessary hurdles to the registration of trade marks: – To the extent that such an objection may be overcome if the owner of the right gives its consent to the filing, it creates a complex and time consuming traffic in "letters of consent", whereby applicants need to contact the owner and request a clearence (which is not always granted for free), even if the owner would not have opposed the application of its own motion. Thus, companies are obliged to undergo unnecessary expenses and delays, not to mention that they often fall victims of extortion. – In some cases the owners of the earlier rights might have gone out of business or may have transferred the mark to a third company who does not yet appear on the register. In such cases, applicants will not be in a position to locate the owner in order to obtain a letter of consent and might not be able to get their registration, even though, in practical terms, there is no real conflict. Moreover, the earlier right on which the objection is based may not be used by its owner, which means that the office raises an objection on the basis of a right that could not have validly been relied on by its proprietor to prevent the registration or use of a later mark. Hence, the system gives rise to artificial disputes and distorts competition by erecting unjustified barriers to enter a market. – This approach gives rise to legal uncertainty, since offices applying the ex-officio system only raise objections on the basis of earlier registered rights, that have been filed for identical or similar goods and services. Accordingly, they cannot offer a guarantee that if an application successfully passes the ex-officio control, it will not subsequently be opposed on the basis of a mark which has acquired reputation in the marketplace and or on the basis of an earlier unregistered well-known mark. This, however, leads to an unacceptable duplication of procedures which are both time consuming and inefficient.

(d) Absence of uniform rules and procedures
in opposition and cancellation:

The availability and nature of opposition
and cancellation procedures at EU and national levels show major discrepancies.
Proceedings may be administrative (at IP office) or judicial (at Courts) and may
vary significantly in terms of length and complexity. Moreover, national rules
not always offer the same range of defenses to trade mark applicants.

Box 3: Opposition and cancellation – examples and practical
consequences

– In some Member States, trade mark applicants and owners cannot challenge the validity or opposability of the earlier rights relied upon against their trade mark in the same proceedings, with the result that they often need to lodge separate legal remedies to that effect, often in a different forum, with all the delay and expense that this may entail. – In a number of Member States it is only possible to contest the validity of a prior trade mark in court proceedings, which delays things even further and usually requires the appointment of a qualified lawyer to prosecute the case. Practical consequences for industry: – The above systems are exceedingly long, cumbersome and expensive. – In comparison, the administrative opposition and cancellation procedures, as applicable at OHIM and other national offices, are much simpler since the validity of earlier rights can be raised as a defense in the same proceedings and without need for professional representation. In practice, this means that a CTM applicant may successfully defend itself against an opposition and obtain its trade mark years faster and with considerably less expense than a national applicant.

3.2.1.2.
          Insufficient
level of harmonisation as regards substantive law

(a)     Non-harmonised issues

Further to the procedural aspects, a number
of substantive law issues remain unharmonised, namely the protection of
geographical indications, the rules applicable to trade marks as objects of
property, and the provisions relating to collective trade marks[82].

Firstly, contrary to the CTM Regulation[83], the grounds for refusal
contained in the TM Directive do not address conflicts with protected
geographical indications (GIs). In consequence, there can be no guarantee that
the levels of protection afforded to GIs by other instruments of EU law[84] are indeed applied in a
uniform and exhaustive manner in trade mark examination throughout the EU, for
instance, when applying absolute grounds for refusal.

Likewise, the current provisions of the CTM
Regulation fall short from offering the same degree of protection as other
instruments of EU law. Specifically, the prohibitions included in Article 7(1)(j)
and (k) of the CTM Regulation apply only to trade marks filed for ‘the same
type of product’, contrary to Articles 13 and 14 of Regulation 510/2006 and
Article 45 (2) of Regulation 479/2008, which afford protection also in the case
of ‘the same class of product’, a ‘comparable product’ or even
against any other kind of product ‘insofar as using the name exploits the
reputation of the protected name’. Similarly, Article 7(1)(k) of the CTM Regulation
can be invoked only against marks which ‘contain’ or ‘consist of’
a GI, but not against applications reproducing the protected indication in
translated form or merely ‘evoking’ the same, contrary to Articles 13
and 14 of Regulation 510/2006.

This, however, stands at apparent odds both
with Article 164 of the CTM Regulation, which provides that the protection
afforded to GIs under Regulation 510/2006 ‘shall not be affected’ by its
provisions, and with the established case-law of the Court of Justice, which
requires that existing rules of Union law protecting GIs are given full effect
in proceedings relating to the registration of trade marks[85].

Second, apart from some basic rules
concerning licensing[86],
and unlike the CTM Regulation[87],
the TM Directive does not comprise provisions regarding other aspects of trade
marks as objects of property, such as transfers[88] or rights in rem. In
consequence, vital aspects of the commercial exploitation of trade marks are
regulated poorly or differently accross the EU.

Indicatively, the TM Directive does not contain
rules dealing with matters such as (a) the transfer of trade mark rights
separately from the owner’s business[89],
(b) the inclusion of the company’s trade marks in the transfer of the entire undertaking,
(c) the requirement, present in the CTMR, that trade mark assignment must be
made in writing, and (d) the possibility for trade marks to form the object of
rights in rem or to be levied in execution. In addition, the conditions for a
licensee to bring infringement actions are different in the CTM Regulation and
the TM Directive, in that the latter does not allow licensees to intervene in
infringement actions brought by the proprietor, so as to be able to claim their
own damages.

Box 4: Transfers
and Licensing – example

Company A is a producer of food-stuffs based in Member
State X. It produces five different products, marketed under five distinct brand
names. Two of these trade marks are protected as CTMs while the remaining three
as national marks in all Member States.

Due to the lack of harmonisation of the legal norms
relating to transfers and licensing, the following risks may occur:

(i) In order to enhance its growth, Company A decides
to merge with and into Company B. Althought all its CTMs are automatically
transferred to the new company, its national marks will only be included in the
assigment if the national law so stipulates, or if express provision is made in
the merger agreement.

(ii) Company A markets its products across the EU
through locally based licensees-distributors, one in each Member State. Company
C launches a range of competitive products in a number of Member States,
imitating the marks of Company A. The conditions under which A’s licensees can
take preventive action against Company C differ, depending on whether the
infringed right is a CTM or a national mark, with the risk that some of the
actions brought by A’s licensees may be rejected as inadmssible.

Third, while the CTM Regulation encompasses
a set of specific provisions regarding the collective marks but not
certification marks, the TM Directive refers to such rights but leaves this
type of trade mark protection unharmonised in most of its aspects[90].

Collective marks (whether or not with
elements of guarantee or certicication) designate goods which share specific
common characteristics (like provenance from a specific locality), or which
satisfy particular manufacturing or quality standards. Indications of this kind
are protectable as trade marks in a number of Member States and have proven
particularly successful in protecting the economic value inherent in such
commercial instruments.

To the extent, however, that collective and
certification marks are recognised as particular types of trade mark rights
only in some Member States and their protection can differ substantially from
one legal system to another, industry cannot be offered with a uniform level of
protection for such indications throughout the EU.

For instance, OHIM objects
to applications for collective marks which, in reality, are either guarantee or
certification marks[91],
despite the fact that the same signs would have been registered as trade marks e.g.
in the Benelux, on the assumption that “certification marks in the sense that
one individual entity unilaterally sets standards with which the goods shall
comply if they carry the mark, cannot constitute Community collective marks in
the sense of the CTMR”[92].

Moreover, the possibility of invoking a
national certification mark in opposition proceedings against a later CTM
application is significantly complicated on a technical level by the total absence
of provisions specifically regulating this type of mark in the CTM Regulation
itself.

These substantive issues were omitted during
the first harmonisation round of the laws of the Member States. However, both the
Study[93]
and user associations (which were explicitely asked for their opinion in the
above mentioned special hearing organised by DG MARKT on 26 May 2011) have expressed
the view that the relevant provisions related to these issues are important and
should therefore be approximated as well, in order to achieve a harmonious
system of trade mark protection in Europe.

(b)     Optional provisions in the TMD

Moreover, problems arise from the fact that
the current Directive, contains several provisions which are only optional for Member States. In practice, this has also led to deviations from the
CTM system and from the general need to align as much as possible the CTM
Regulation with the TM Directive in all crucial areas of substantive trade mark
protection.

These voluntary provisions concern rules
directly affecting the system of absolute[94]
and relative[95]
grounds for refusal, like the possibility to refuse registration to signs applied
for in bad faith and the possibility to provide for protection of marks with
reputation against dissimilar goods and/or services[96].

Box 5: Gaps in protection due to the optional character of rules

Company A is the holder of national trade mark N in Member
State X, which has aquired a substantial reputation in that territory. Company
B applies to register the similar sign N1 for dissimilar goods, both as a CTM
and as a national mark in Member State X, in an attempt to take unfair
advantage of the reputation of mark N. Company B also applies to register the
sign N1 in Member States Y and Z, to which Company A was planning to expand its
business, in apparent bad faith.

The current lack of harmonisation of the relevant
legal norms within the EU leads to the following unsatisfactory results:

Firstly, although Company A can validly oppose the
filing of the mark N1 as a CTM under Article 8 (5) of the CTM Regulation (which
extends to national marks with a reputation), it cannot prevent the
registration of the sign N1 as a trade mark in Member State X (that is, in its
home territory), unless the legislation of that State voluntarily protects
reputed marks.

Secondly, although Company A can cancel the registration
of the sign N1 as a CTM and also in State Y, on the ground that it was filed in
bad faith, it cannot validly challenge the registration of the same sign in
Member State Z, if the latter has chosen not to transpose the relevant
provisions of the TM Directive.

As part of the MPI study, the contractor
was asked to gather evidence and analyse whether there is a need for
harmonising these optional elements. During the consultation phase, Member
States did not much comment on this issue[97];
only France was explicit in this regard while being supportive of further,
mandatory harmonisation regarding specific optional disposals. On the other
hand, user organizations identified the optional provisions in the TM Directive
as an important reason for persisting divergences between the national systems[98] and suggested that the
currently optional provisions of the TMD should be made mandatory[99]. Also the MPI in its
conclusions[100]
preferred to remove a number of these optional provisions.

3.2.1.3.
Missing clear legal basis for cooperation

This driver has clear links with the second
identified problem, the low level of cooperation (see below). It is presented
here because of its regulatory nature. The CTM Regulation does not contain a clear
legal base for cooperation. Such a gap has been observed in cooperation
programmes with national offices since 2005, and most recently, with the
Coooperation Fund. In fact, the current legal base for cooperation activities
is very vague in the CTM Regulation[101]
and non-existent in the Directive. This causes difficulties for national IP
offices to participate in any cooperation projects and also to justify use of
financial and/or human resources. In the case of OHIM, the inappropriate legal
base has led to some problems when validating its expenditure on cooperation in
budgetary terms.

3.2.2.
Problem relating to the low
level of cooperation between trade mark offices

The second main problem to be addressed
within this impact assesment report is the low level of cooperation between the
trade mark offices in Europe. As explained previously in the context part,
there are many links between the CTM and national regimes with direct
consequences for both trade mark users and IP offices, which require a certain
level of complementarity between the two systems. To achieve and ensure this
complementarity, OHIM and national IP offices should cooperate closely. At
present, however, both the missing legal base for cooperation, as already mentioned
in the context of the first problem, and other unfavourable circumstances,
which are to be specified in the following, under 3.2.2.1 and 3.2.2.2, seriously
hinder specific and targeted cooperation. Additionally, the existing level of legislative
approximation also has an influence on the extent IP offices cooperate with
each other. In fact, it is clear that the more divergences exist in the regulatory
framework, the less IP offices feel encouraged and able to cooperate with each other.
This means that all problem drivers analysed in this impact assessment report
are largely interconnected with each other.

3.2.2.1.
Insufficient technical facilities of national
offices

The first main driver (besides a lack of clear
legal basis) being responsible for the low level of cooperation between trade
mark offices are the insufficient technical facilities, particularly IT
equipment, at some national offices. The lack of technical facilities prevents successful
implementation of the envisaged cooperation projects.

In this context one must refer to the
available data on the state of IT developmement at trade mark offices in
Europe, bearing in mind that the availability of electronic services at OHIM
and national offices, as well as the level of automation of their internal
processes, significantly influence their effectiveness and efficiency both
internally and vis-à-vis their users. The available data were obtained in 2009
in the context of launching the Cooperation Fund. OHIM carried out, with the assistance
of the consultancy Gartner, an extensive evaluation of the current state of art
in IT at national offices. The evaluation assesssed the degree of process automation
(back office) as well as the availability of online services that are provided
to users (front office).

The assessment revealed that the level of
IT equipment is still low. The figure 3 demonstrates the availability of
e-services at individual national offices (first chart) and their degree of
automation (second chart and figure 4). These overviews show that only five
offices provide more than 50% of their services online and that a majority of
offices are still far from being automated, whereas none
of the considered standard processes (TM examination, opposition, cancelation,
similarity search etc.) is fully automated at more than seven national offices.

Figure 3: Availability of online
services[102]
& degree of automation[103]
at national offices

Source: OHIM data (2009), based on self-assessment of
national offices

Figure 4: Degree of automation

Source: OHIM data (2009), based on self-assessment of
national offices

3.2.2.2.
Lack of sustainable financing in medium to long
term

The second major driver is that most
national offices do not possess the necessary financial resources required to
develop, launch and run, in the long term, common tools (for example, joint
trade mark databases with online search facilities). This is often the
consequence of the vast majority of offices not having statutory financial
autonomy enabling them to deploy resources without direct intervention from
other governmental authorities. Due to such dependency, priorities cannot be
fixed by the offices’ management without considering domestic conditions or
limitations set by ministerial authorities, which may influence the work plans
of the national offices. As a result, offices may be led to concentrate
resources on inmediate domestic interests, as opposed to spending resources to
fulfil cross-border business needs resulting from the functioning of the
Internal Market.

For reasons of subsidiarity, the lack of
financial autonomy of national IP offices is not tackled by this impact
assessment, as it is for Member States to determine their institutional
structures[104].

However, it should be stressed that it is
the lack of sustainable financing in medium to long term which represents the
main problem in this context. Already today, the experience with the
Cooperation Fund and other common projects has demonstrated the difficulty of
some national offices to take part in these activities. This situation may
worsen in the future due to economic turmoil, with the result that national
offices will not be able to join all of these cooperation initiatives, because
of lacking resources, and, in the worst case, abandon already running projects.

3.2.3.
Adverse effects

Given the legal and other links between the
CTM and national systems (see the context part "systemic coexistence"
above), all trade mark applicants in Europe have to be familiar with both
national and CTM legal systems to cope, for example, with possible opposition
procedures.

Moreover, as explained in the context part
above, many enterprises, including SMEs, make use of several systems in parallel,
i.e. they opt for both the CTM and national protection, and/or register a
number of national trade marks, as part of their company's branding strategy.

Finally, users of a single national system
may also be negatively affected by the current situation. Indeed, the
differences between the existing regimes, for example, the availability of
certain procedures and tools, legal certainty as well as speed of registration,
lead to an unlevel playing field which is to the detriment of all users of the
European trade mark system, regardless of the geographical scope of trade mark
protection they seek to obtain.

As a result of the above described current
situation (see chapters 3.2.1.1 – 3.2.2.2), a company, planning its branding
strategy, already faces a multitude of unevenly regulated regimes, which
present applicants with different degrees of accessibility, difficulty,
predictability[105]
and speed in obtaining trade mark protection.

Similarly, when facing the need to enforce
its rights or defend itself against alleged infringement, a company is faced
with an overcomplicated regulatory framework which may give rise to legal
uncertainty and increases dependency on external consulting. Moreover, since it
is outdated in some areas[106],
the trade mark system in Europe does not provide, from the users' perspective,
effective and efficient solutions which respond adequately to their
expectations. However, even in case where trade mark offices already render
advanced e-services, their tools and other practices often differ from each
other[107].
In addition, trade mark offices neither work with coordinated (examination)
guidelines, nor the same quality and performance standards. This influences
their decision making practice, results in inconsistencies and negatively
affects coherence, integrity and reliability of the European trade mark system
as a whole.

Therefore, it is clear that the negative
effects resulting from the divergent regulatory framework are further aggravated
by the lacking convergence of practices, tools and decision making at trade
mark offices in Europe.

Overall, the missing common tools and other
reasons for incoherence in administrative practices are summarised in the below
figure 5.

Figure 5:
Missing common tools and other problems

Problem || Examples

Missing common tools || Common seniority database

Online search facilities for trade marks of all IP offices in the EU

Common classification database

Tool on similarity of goods and services

Discrepancies in tools and practices || Non-harmonised quality/performance standards

Non-harmonised forecasting methodology

Inconsistencies in decision making || Discrepancies in examination guidelines

Few common trainings

Source: consultations with stakeholders and OHIM
Cooperation Fund

Box 6 shows that the number and scope of
practical implications due to the heterogenity and divergences in trade mark
tools and practices (including decision making) may be significant for a trade
mark applicant/owner.

Box 6: Examples of divergences in trade mark tools and practices

When seeking trade mark protection for two identical trade marks at two IP offices the applicant will probably have to deal with different application forms (not always available in other languages than the language of that country), provide different information and data, face various classification practices (including use of two different lists of goods and services), experience a different speed of procedures and thus an overall length of the registration process as well as uneven quality of office's decision (which directly impact the risk of future invalidation of such a trade mark), and face many other differences.

Furthermore, the below case study (box 7)
demonstrates how costly, lengthy and burdensome in terms of administrative
procedures launching a new trade mark for a company may be, in particular for a
SME, notably because of missing trade mark databases and common searching
tools. The significant extra cost related to clearance of prior rights, under
current circumstances inevitable because of lacking alternative solutions[108], appears unjustified in
today's digital society.

Box 7: Case study – lack of search facilities

An Italian starter company F wants to sell its products EU-wide and has decided to protect its goods with two Community trade marks. Before applying for the CTMs the company would like to check whether identical or similar trade marks already exist at both Community and national level to avoid later oppositions against its application ("clearance"). The company has to check the 26 registers one by one. At OHIM and several national IP offices, trade mark registers are available online. In other offices, registers have not been (fully) digitalized yet, and are therefore less accessible for searches. This task is further complicated by the fact that some trade mark registers are available only in the respective national language. Given the complexity of such a task, the company F would not be capable of performing it on its own and needs to engage one or, more often, many external consultants which implies substantial additional cost. To avoid cost and delay (the company is pressed to launch the product on the market to get a head start over competitors) the company decides to take the risk of applying for a CTM without clearing for prior rights. It pays 1800 EUR for the filing of two CTM applications. Unfortunately for the company, trade marks similar to the applications already exist in two Member States and their owners raise an opposition against the company’s applications. The company engages a TM attorney (cost) to evaluate the situation and decides to abandon one of its CTM applications (in spite of the fact that it cannot recuperate the paid fee of 900 EUR) and to defend the other one. Even though a professional representation is not obligatory in opposition proceedings, the company does not feel able to deal with the procedure on its own and hires a law firm (further extra money). At present, the opposition procedure is still pending. The trade mark in question has not been registered yet and company F has not put its goods on the market.

Thus, the low level of harmonisation of
trade mark laws and procedures as well as the limited convergence of practices
and tools at IP offices due to the low level of cooperation have a series of
significant adverse consequences for industry: higher costs and delays; legal
uncertainty; risk of unsustainable relationship between the CTM and national
systems; limited accessibility of the trade mark systems.

First, there is a direct increase in
costs, because industry is obliged to: (a) increase inhouse expertise so as
to be in a position to internalise the knowledge necessary for effectively
dealing with the various aspects of the system in all Member States, (b) seek
expensive professional advice, often in the form of an international network of
external consultants, especially when the issues involved require local legal expertise,
and (c) develop and maintain overcomplicated data management tools in order to
manage its trade mark portfolio efficiently, in particular since it has to deal
with divergent rules as regards registration and renewal fees, term of
protection, calculation of renewals, transfers, licensing, professional
representation etc.

Second, the low level of harmonisation also
raises costs indirectly, because legal uncertainty often encourages
companies to resort to unnecessary multi-filing practices in case one kind of
trademark protection proves to be easier to obtain or more efficient than another. Indeed, the research conducted by the institute INNO-tec
has confirmed such practice by revealing that it is often cheaper for companies
to apply for several trade marks, hoping that one will be registered, than to
undertake an exhaustive search for all possible conflicts between marks on the
OHIM and on national trade mark registers within the EU. As a result, firms
often apply for more than one CTM at a time when they seek to ensure that they
will have at least one trade mark in the register for a new product or service[109]. In addition the complexity
and lack of transparency of the system leads to considerable delays in
developing an appropriate trade mark strategy and, thus, slows down the
marketing of new products and services and hampers the competitiveness of the
company to a significant extent.

Third, the lacking harmonisation of trade
mark procedures[110]
as well as the limited use of IT tools contribute to appearance of delays in
registration and other proceedings. The consultations with national offices
revealed that the average time for registration varies considerably: trade mark
protection can be obtained within the limits of 3 to 6 months in the
"fastest" offices whereas it may take up to several years in others[111]. Similar results were
obtained for average times of opposition and cancellation procedures[112]. As for users, they
repeatedly emphasised[113]
the importance of processing times for the protection of their IP rights. For
example, a trade mark registration within a year or a year and a half which is
currently the average across the EU may be perceived as being excessively long
from the perspective of a company's marketing strategy where delays of several
weeks or months significantly matter. Accordingly, not only the currently
"slowest" but all IP offices should aim at decreasing the speed of
their processes.

Fourth, legal uncertainty increases
the exposure to legal risks, especially if a company, due to reduced budget or
time pressure[114],
decides not to forego an exhaustive EU wide priority search (which, due to the
current lack of transparency and search facilities, can prove quite costly)
before securing trade mark rights. Moreover, and more importantly, the
diversity of prior rights opposable to a later trade mark in different
territories may lead to strategic errors and could result in: (a) loss of trade
mark rights (and of the expense that was incurred in order to secure them in
the first place); (b) civil or even criminal liability and, by extension, high
litigation costs and attorney fees; (c) the eventual need to redeploy the
company’s marketing schemes and suffer additional costs, in case a given
product has to be withdrawn from a specific territory or has to be re-branded
in order to avoid legal conflict with existing rights of third parties.

Fifth, the different standards applicable
in different jurisdictions lead to an increased danger of forum shopping,
since companies are often tempted to use one system instead of another, not on
the basis of their marketing needs, but rather on the basis of convenience
criteria like the ease or speed with which trade mark registration can be
obtained in a particular territory[115]. For
example, it may be known among trade mark users that the examination practice
is more rigorous in one Member State than in another, and that, consequently,
the trade mark protection can be obtained more easily (or at all) at the latter
IP office. The same is valid for the diverging classification practice of trade
mark offices[116],
which ,not only involves a great deal of legal uncertainty but may also encourage
such forum shopping[117].
Moreover, the average time for registration and/or availability of an
administrative opposition and cancellation proceedings, including their quality
and speed, may play a role when deciding on the use of one trade mark system or
another. Since all the above considerations significantly matter for a branding
strategy, they may be eventually more important from the applicant's
perspective than the territorial coverage originally intended. As a possible consequence
thereof, the situations of some national offices might become unsustainable as
they may not be able to keep pace with the development elsewhere in Europe. This
would go against the intention of the EU legislator whereby national trade mark
systems shall not be replaced by the CTM regime. Consequently, the fundamental principle
of coexistence (including harmonious complementarity and free choice) between
CTM and national trade mark system, which is so much supported by trade mark
users, could be put at risk.

The above mentioned deficiencies not only limit
the accessibility of the systems of trade mark protection, involve a great deal
of legal uncertainty to cope with, and put the complementary
relationship between the CTM and national trade mark systems at risk, but obviously
also distort the level playing field for companies, with further negative
consequences on the competitiveness of EU companies and the competiveness of
the EU as a whole.

It should also be noted that the above
effects are more accute for SMEs and individual applicants, who are less capable
of hiring expensive teams of international professional consultants to cater
for their filing needs. This leads to discrimination and artificial barriers,
since small companies find it increasingly difficult to compete with big
multinationals. Characteristically, the INNO-tec report has come to the
conclusions (a) that, overall, larger firms are more likely to convert a trade
mark application into a registered trade mark and (b) that, already by 2003,
large firms were less likely to face oppositions to CTM applications than
smaller firms[118].

3.2.4.
Baseline scenario

Without appropriate changes the current sub-optimal
conditions for European businesses and the under-developed complementarity
between the various trade mark systems are not likely to improve. On the
contrary, the existing divergences and inconsistencies at IP offices in terms
of practices and tools are likely to increase to the detriment of trade mark
users.

It is true that there have been some
promising attemps to find practical solutions for facilitating cooperation
between OHIM and national trade mark offices.

Since 2005, a scheme for bilateral
cooperation agreements between OHIM and national offices has been in place.
These arrangements are aimed at financing specific information and advice services,
relating to the CTM, provided by national offices, and may cover costs related
to fairs, exhibitions and publications as well as organisation of seminars and
workshops. In 2005, when the scheme started, 13 national offices participated;
in 2011, all 25 offices were involved in some of the eligible actitivities.

The bilateral agreements have represented
the first structured effort to enhance cooperation between OHIM and national
offices. However, their bilateral nature and the kind of activities included in
the agreements mean that their contribution to enhanced convergence is limited.
Therefore, many multilateral[119]
cooperation projects have been launched in 2010/2011 as part of the € 50
million OHIM Cooperation Fund. The creation of the Fund
was agreed by OHIM governing bodies and the management of the Office, in
September 2008, together with other measures, aimed at better balancing OHIM’s
budget[120].
The funds which stem from a budgetary surplus of OHIM are available for common
actions between OHIM and national offices and should be used for the projects
closely related to harmonization and the protection, promotion and/or
enforcement of trade marks and designs[121].
In legal terms, the Cooperation Fund is a line in OHIM operational budget;
accordingly, any related expenditure is governed by the Financial Regulation of
the Office[122].
In addition, an advisory body (Management Board) has been established in order
to assist the President of the Office, who is the authorising officer, on
matters relating to the Cooperation Fund. The OHIM governing bodies (i.e. the
Administrative Board and the Budget Committee[123]) are regularly informed, both
by the Office and by the Management Board, about the selection of projects and
their implementation. Finally, users are associated with the operation of the
Fund.

The Cooperation Fund initiatives include,
for example, the project TMView, aimed at providing online search facilities
connecting trade mark databases of national IP offices and of OHIM[124], and the Euroclass project,
used for establishment of a common classification database. The Cooperation
Fund is also aimed at developing common software tools and at contributing to
achieving full automation and e-business administration at all European IP
offices (for the state of play in this area see chapter 3.2.2.1 above). The
trade mark users very much welcome the initiatives under the Cooperation Fund
and emphasise the importance of their quick and full implementation[125].

At the same time, this recent experience reveals
the clear shortcomings of the current legal, technical and financial framework
for cooperation, as described above, and also confirms the shortcomings of
cooperation achieved on a voluntary basis. It has to be stressed in this
context that any common project can bring the desired results only if all IP
offices participate. As an example, the common databases for searching purposes
can be mentioned. Given the unitary character of a CTM (see explanation in box 7)
such databases are useful only if they enable a trade mark applicant to check
upfront all relevant registers with all possibly conflicting rights. Even
though the preparation of the Cooperation Fund work programme followed a bottom-up
approach, seeking views of all stakeholders, and having the support of both
national offices and users, eventually only three out of 18 projects have been
joined by all IP offices. As for the other multilateral projects[126], the participation rates vary
between 10 and 20 offices per project with a significantly lower implementation
rate. Moreover, the involvement in a particular initiative depends at present
on the choice of the office in question. Therefore, it cannot be guaranteed
that those offices that would most benefit from a particular project will
indeed participate.

It follows from all the above that despite
existing cooperation initiatives, sustainable benefits are not secured. The
current baseline thus has a double cost: the cost of possibly wasting the money and effort already invested in these projects and the loss of possible
benefits if existing cooperation initiatives remain optional, uncoordinated and
unsustained.

It should be added that with regard to bilateral
cooperation agreements between OHIM and national offices, it has taken 6 years
to involve all EU offices in a bilateral mechanism representing a total
investment of € 7 million. Because of the reasons explained above (see
under 3.2.2.2), this mechanism is not sustainable per se, and therefore,
results cannot be expected to stay. Such investment will definitively be lost without
more stringent cooperation obligations.

As far as the Cooperation Fund is concerned,
OHIM has conducted a “cost-benefit” analysis (CBA) of the investment
represented by the various activities included. Details are to be found in
Annex 8, which contains an explanation of how estimates for potential benefits
generated by the Cooperation Fund projects have been derived and the underlying
assumptions. In assessing benefits, the method applied was the “social cost-benefit
analysis” which offers a methodoloy for “monetising” benefits which are not
purely financial (such as improved service by a governmental institution).

Given the fact that these benefits will not
materialise in the absence of further EU action, they are presented within the
impact analysis of the relevant policy solution(s) (see sections 6.4.1.1. and
6.4.1.2.).

Some benefits of this programme are being
generated already. For example, TMView: since its entry into service until
March 2011, it has been used to search for 471,683 trade marks, meaning, in a
12-month period, some 257,282 trade marks.

The cost of searching this number of trade
marks through a commercial provider[127]
would have been more than € 500,000. This is part of the benefit derived
from TMview: a reduction of approximately € 2 per trade mark searched. In
other words, TMview could already serve to save businesses, in one year, € 0,5
million when searching for 0,25 million trade marks. It should be noted that
this is a very conservative estimate since it ignores the fact that usage of TMView
is increasing as more and more countries are added to the tool (all 25 EU IP
offices are projected to be in the tool by the end of 2012), thus making the
tool more useful and increasing the savings business can realise by using it.

The first-cut CBA indicated, that over a
period of 10 years (starting from the first investment), the investment in the
Cooperation Fund projects could yield some € 73 million in benefits for
both users and IP offices. These benefits were monetised based on benefits that
are most valuable for end users, such as reduced processing times or greater
predictability in the service received. The CBA assessed the value that users
would attribute to the improvements deriving from the projects in monetary
terms, using a "willingness to pay approach".

The analysis identifies the following as
the major benefits: improvement in efficiency (avoidance of errors in offices);
enhanced IP protection for end users (easy to define a strategy and track
portfolio); saving in legal fees; full range of business improvements possible
via standardized procedures, improved transparency and predictability; easy
access to information and improved consistency across the members of the
network. Each project of the Fund has been analysed in how it contributes to
yielding these expected benefits (for example, the Future software project of
the Fund could yield some € 45 million in realised benefits to users and
IP offices on a Net Present Value basis).

However, these benefits will actually
represent a cost if the limited and voluntary cooperation capacity baseline continues
as it is. In other terms, these benefits will represent “lost opportunities” and,
therefore, concrete costs of the existing baseline, because the sustainability
of the investment of cooperation requires that the national IP offices have the
long term capacity to secure resources in order to properly run, maintain,
repair and keep up to date the systems and solutions developed by the Cooperation
Fund (e.g. IT tools). If not, the expected benefits will not materialise.

This is why the cost of the current “low
cooperation” baseline is captured in the potential loss of benefits that the
initial investment is expected to yield.

It should also be noted that the risk of
upsetting the overall balance of the system is acute, in the sense that even if
only a limited number of national IP offices fail to finance the continued operation
of their part, the common tools will underperform as a whole. For instance,
even if a small number of national IP offices fail to update their part of TMView,
all the benefits stemming from a free, rapid and reliable EU-wide search or trade
mark clearance will immediately disappear, since the timeliness and reliability
of the search remains dependent on the slowest and less reliable office. In
other words, the failure of only some offices may effectively cancel the
cumulative benefits from the investment of all other offices put together.

In addition, it is clear that the further national
IP offices (due to their non-involvement in cooperation projects with OHIM) fall
behind in terms of automation, timeliness, reliability, predictability and
user-friendliness, the less attractive they become compared to 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 dysfunctional
national systems, contrary to the goal of preserving national trade marks
alongside CTMs in a system of harmonious and complementary coexistence which
ensures the principle of free choice.

Finally, the current status of
harmonisation already achieved at the international level is not sufficient (i.e.
EU action remains necessary). The main international treaties administered by
WIPO destined at simplifying and harmonizing the administrative procedures in
respect of national applications (in particular Trademark Law Treaty (TLT),
Singapore Treaty on the Law of Trademarks, Madrid Agreement and Protocol, see
also section 5.1.1 below and footnote 134), either fall short from dealing with
procedural issues in a comprehensive manner, or have not been ratified by all
the Member States (for instance, whereas TLT, which mainly seeks to harmonise
formal requirements has been ratified by 18 Member States, the Singapore Treaty,
which is aimed at enlarging and advancing this harmonisation further, has only
been ratified by 13 Member States).

Furthermore, while “harmonization”
initiatives have been launched under the aegis of WIPO, none of them have
resulted in the type and depth of results that the OHIM-led initiatives will
yield (e.g. no global trade mark search tool currrently exists that combines
trade mark information from major trading partners in the world, users having
to make recourse to commercial services for covering such needs).

However, by developing tools like TMview,
the European Union paves the way for more global convergence: a number of third
countries (US, Japan, Korea, Russia, etc.) are exploring how to use TMview
functions and render their trade mark data accessible through such a tool. This
would render the tool even more attractive, thus generating further benefits to
right holders: the more countries make their data accessible free of charge,
the greater the savings realised by businesses in search costs and associated
effort.

For the sake of completeness, the present
baseline scenario takes into account the positive synergies that may be expected
by the takeover of the European Observatory on Infringements of Intellectual
Property Rights by OHIM. In fact, the Observatory's impact assessment
identified some similar problems in relation to IPR enforcement, for example,
insufficient coordination and exchange between responsible authorities in the
Member States on best practices as well as insufficient use of technologies to
prevent counterfeiting[128].
Accordingly, the Observatory Regulation[129]
entrusts the Office with some tasks and activities in this regard, aimed, for
example, at providing mechanisms which help to improve the online exchange,
between Member States’ authorities working in the field of intellectual
property rights, of information relating to the enforcement of such rights, and
fostering cooperation with and between those authorities (see Article 2(1)(g)).

It can be expected that there will be some
positive interference between OHIM tasks carried out under the Observatory
Regulation and the cooperation activities considered in the present report, for
example, use of the established networks with national IP offices and/or of
developed patterns for cooperation projects. Such an interference, however,
should not be overestimated given the different subject matter of both
initiatives (IPR enforcement versus core business, comprising the registration
and administration of Community Trade Marks and Community Designs).

Figure 6: Problem tree

3.3.
The EU's right to act

In the context of the establishment and
functioning of the internal market, Article 118(1) TFEU empowers the European
Parliament and the Council to establish measures for the creation of European
intellectual property rights to provide uniform protection of intellectual
property rights throughout the EU, including the setting up of centralised
Union-wide authorisation, coordination and supervision arrangements.

Furthermore, Article 114(1) TFEU empowers
the European Parliament and the Council to adopt 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.

The CTM is a self-standing EU intellectual
property title which has been created by an EU Regulation. In as much as the
analysis carried out as part of this impact assessment proved that the
modification of certain provisions of the Regulation is necessary in order to
improve and streamline the CTM system, only the EU legislator is entitled to
make the necessary amendments. The same goes for (simultaneously) necessary amendments
of corresponding provisions which form already part of the TM Directive.

Moreover, taking into account that the
identified problems related to the significant divergences of the regulatory
framework either do not allow, or notably distort, a level playing field for EU
companies with further negative consequences on their competitiveness and that of
the EU as a whole, it is advisable to adopt measures that can improve the
relevant conditions for 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, all the more so given the need to ensure coherence with
the CTM system.

It has to be considered in this context that
the CTM system is embedded in the European trade mark system which is built on
the principle of coexistence and complementarity between national and
Union-wide trade mark protection. While the CTM Regulation provides a complete
system where all issues of substantive and procedural law are provided for, the
current level of legislative approximation reflected in the TM Directive is only
limited to selected provisions of substantive law. In order to be able to
ensure effective and sustainable coexistence and complementarity between the
components involved, it is necessary to create an overall harmonious system of
trade mark protection in Europe with substantially similar substantive rules
and at least principal procedural provisions which are compatible.

Finally, it needs to be noted that OHIM is
a regulatory agency of the EU with legal, administrative and financial
autonomy, which was created by the Council to administer the CTM system (and
later also that of the Community design).

As identified above, there are certain unfavourable
framework conditions which impede effective cooperation between OHIM and
national IP offices even though such cooperation is essential to contribute to
ensuring complementarity and interoperability between the CTM and national
trade mark systems. It is clear again that a solution for this problem can only
be found at EU level, including acknowledging the supporting and coordinating
role OHIM has to play in this context.

The above needs for EU action were also
expressly recognised by the Competitiveness Council in its conclusions of May
2010 on the future revision of the trade mark system in the European Union[130].

4.
Objectives
4.1.
General, specific and operational objectives

General objective: To modernise the trade mark system in Europe, thereby enhancing EU
companies' competitiveness by

·
Improving accessibility of TM systems = decrease
costs; increase speed and predictability

·
Providing legal certainty for all businesses in
the EU

·
Ensuring coexistence and complementarity between
EU and national systems

Specific objectives:

·
Increase convergence of the TM Directive with
the CTM Regulation

·
Increase level of cooperation between OHIM and
national trade mark offices

Operational objectives:

·
Achieving greater approximation of trade mark
procedures and substantive issues

·
Providing adequate regulatory incentive for
cooperation

·
Technical cooperation capacity building at
national TM offices

·
Secure long term financing for cooperation
activities.

4.2.      Consistency with existing EU
policies and horizontal objectives

It follows from the above that, in addition
to the aim of taking the level of legislative harmonisation of the EU trade
mark system a decisive step forward in terms of consistency, efficiency and
legal certainty, the objective of the review is to set the conditions enabling
the creation of a true cooperation network between OHIM and all national
offices. This cooperation network will permit further improvements of the
Internal Market conditions by reinforcing interconnection and interoperability among
national trade mark systems (being by definition territorial in scope) and between
them and the CTM system, and, by facilitating access to the network for all users
(notably SMEs). It is clear in this context that a truly integrated market requires
a seamless connection between all its component parts. To support this, relevant
framework conditions need to be both created (legal base), equipped (tools) and
supported (funding).

As regards coherence with other EU
policies, it should be noted that the EU has taken such an approach for policy
intervention in areas such as, for example, infrastructure and because of the need
to close interoperability gaps. This is why the Trans-European Network (TEN)
was created. Cross-border physical interconnections were lagging behind in the
EU. Missing links between national infrastructure components caused dividing
lines to grow between centre and peripheries. These effects were the result of
authorities tending to prioritise projects of primary national relevance, while
leaving cross-border projects as secondary priorities. The EU intervention
behind the “TEN” policy provides the framework conditions to overcome such
effects, in terms of facilitation of investment through sharing best practices and
direct funding facilities.

It can be argued that the current low
cooperation, derived from the cooperation capacity problem of members of the EU
network, between coexisting trade mark systems, is causing systematic gaps
similar to those that the TEN tries to overcome. Therefore, creating the
framework conditions to overcome the results of limited cooperation capacity
are at the core of an intervention to overcome the costs of the current
baseline scenario.

In addition, the above objectives are clearly
in line with the 2008 "Small Business Act", the 2008 Communication on
an Industrial Property Rights Strategy for Europe (including the announcement concerning
the accession to the Singapore Treaty on the Law of Trademarks), the 2010
Commission Communication Europe 2020 and the 2011 IPR strategy[131]. Moreover, these objectives conform
to the Europe 2020 agenda, especially with the idea to promote smart and
inclusive growth. They aim at making full use of information and communication
technologies in trade mark offices. They try to ensure that once innovative
ideas are turned into new products, trade marks can help secure protection for
these. This is particularly relevant for SMEs, which make up 99% of all EU
businesses and in the past 5 years have created 80% of the new jobs. Therefore,
if this trend continues, these objectives should contribute indirectly to
fostering a high-employment economy delivering territorial and social cohesion.

5.
Identification of Policy Options

In the following, various options are
explored with a view to the achievement of the operational objectives
identified in section 4.1.

5.1.
Divergent provisions of the existing regulatory
framework
5.1.1.
Approximation of trade mark laws and procedures

When it comes to consideration of available
policy options the necessary level and focus of approximation of national laws
should be assessed. The options under consideration are the following:

(1)
No further approximation of trade mark laws and
procedures (baseline scenario).

(2)
Expansion of the approximation of national laws
and their coherence with the CTM system. This option ("partial
approximation", option 2) would encompass a selected number of
trade mark law aspects which were kept out of the "first"
harmonisation in 1989, namely[132]

–
Alignment of the principal procedural rules with
the relevant provisions of the CTM Regulation, including those where existing
divergences cause major problems from the users' perspective and which are deemed
indispensable[133]
for creating a harmonious, complementary system of trade mark protection and
administration in Europe, taking also into account relevant harmonisation already
achieved at least partly through international instruments[134] (in particular Trademark Law
Treaty, Singapore Treaty on the Law of Trademarks, Madrid Agreement and
Protocol). The areas where further approximation and coherence of trade mark
laws at national and Community level is urgently needed were identified during
the 2010/2011 consultation process and some examples[135] are described above in section
3.2.1.1 of the problem definition. Users[136]
identified the incoherence of these procedures as the most problematic and thus
in a need for alignment.

–
Alignment of further substantive law aspects in
accordance with the provisions of the CTM Regulation, which are not yet
addressed in the TM Directive, unless differences are justified by important
legal principles and traditions in Member States[137].

–
Reducing the number of optional provisions in
the TM Directive in alignment with the CTM Regulation and to the extent
appropriate by rendering them mandatory.

(3)
Full approximation of national trade mark laws
and procedures (option 3). This approach would be based on option 2,
encompassing its above components, but include all remaining aspects of substantive
trade mark law and procedures[138].

When it comes to options 2 and 3 it should
be furthermore assessed how such an approximation could be pursued. Even though
this question touches upon the choice of legal instrument (chapter 7), it is
considered that this issue is of crucial importance to addressing the effectiveness
and efficiency of both policy options and should be tackled here.

–
It could be envisaged that the approximation
would be carried out on a voluntary basis (sub-options 2a and 3a,
respectively). In such a case, there would be no further approximation in
formal terms, i.e. no changes to the harmonising TM Directive. National offices
would be encouraged, by non-legislative means, to align their trade mark laws
and procedures. To this end, the Commission would issue a Communication
(Recommendation) and/or Member States would agree to approximate their national
laws on a voluntary basis.

–
Alternatively, the approximation could be
mandatory, i.e. driven by an EU legislative measure which would oblige Member
States to align their trade marks laws (sub-options 2b[139] and 3b, respectively).

(4)
A single trade mark rulebook (option 4)
which would entirely replace Member States' trade mark laws by setting uniform
rules across the EU. As a result, all national IP offices would apply identical
provisions when it comes to their national trade marks. However, this option
would be clearly disproportionate in view of the demonstrated needs. It would
not take into account at all the historical development of laws in Member
States and would unduly deprive them from any kind of flexibility at national
level. Accordingly, this option will not be considered any further.

5.1.2.
Missing clear legal basis for cooperation

The options for consideration are the
following:

(1)
No specific legal base for cooperation between
IP offices in Europe (baseline scenario).

(2)
Establish a clear legal base allowing national
IP offices and OHIM to cooperate with each other (optional cooperation) with
the aim of harmonising practices and developing common tools and databases
(including identification and sharing of best practices etc.).

(3)
The same as in option 2, except that the legal
base would oblige national offices and OHIM to cooperate with each other
(obligatory cooperation).

5.2.
Cooperation capacity building

Apart from the question of the missing clear
legal basis, which due to its regulatory nature is already dealt with in the
context of existing divergences of the legal framework, the problem definition
chapter identified inappropriate framework conditions,
in terms of technical equipment and financial resources, as the main obstacles
for cooperation between OHIM and national offices. Accordingly, the below
consideration of available policy options focusses on how to strengthen the technical
capacity of IP offices to cooperate and how to secure long term financing of their
common activities.

5.2.1.
Technical facilities

The options with regard to missing facilities
and tools are the following:

(1)
Leave it for each IP office to procure and
develop the required facilities and tools. This option corresponds to the
“status quo”.

(2)
Make possible that the required facilities and
tools are accessible to IP offices within a framework of voluntary cooperation which
pursues the very aim of harmonising practices and developing common tools
(including common software tools and standards and practices required to
achieve convergence and interconnectivity between procedures and systems etc.).

(3)
Same as option 2, but ensure that the required
facilities are accessible through an obligatory cooperation framework. This
option overlaps with the respective 3rd options retained with regard
to the missing clear legal basis and the financing of cooperation activities.

5.2.2.
Funding in general

The options for financing cooperation
activities between OHIM and national offices are the following:

(1)
Under this first option, each national office
and OHIM would bear the entire cost of their cooperation activities.

(2)
Alternatively, the cooperation activities of
national IP offices and OHIM would be financed from the EU budget. An
appropriate legal base would be established according to Article 310(3) of the Treaty
on the Functioning of the European Union, on which basis a new budget line
would be created as part of the DG MARKT budget for the period of the relevant
multiannual financial framework.

(3)
Finally, the cooperation activities would be
financed from the budget of OHIM. A part of OHIM annual revenue would be
dedicated to financing common cooperation projects with national IP offices. Such
a financial mechanism would cover both the setting up and running cost on a
long term basis. In this context, it should be recalled that, in view of the
revision of the CTM Regulation, the Commission was invited by the Competitiveness
Council to establish a legal basis for distributing a certain amount of OHIM
income to national IP offices to be used for specific, trade mark related
purposes. Should this last option 3 be retained (see section 6.3.2.1), the present
IA report would also assess, when comparing the available options and analysing
the impact of the selected one, the means and source of funding within the OHIM
budget (see section 6.3.2.2).

6.
Comparison of options and analysis of Impacts

In this section, the following score system
is used for the analysis of impacts of the options:

·
Positive effect: from slightly positive (+) to
strongly positive (++)

·
Negative effect: from slightly negative (-) to
strongly negative (--)

·
Uncertain result (?)

·
No impact: 0

6.1.
Divergent provisions of the regulatory framework:
comparison of options
6.1.1.
Approximation of trade mark laws and procedures
– comparison of options

The current scope of harmonisation of trade
mark laws in Europe is significantly restricted as the Directive follows a
minimum harmonisation approach by limiting its scope to substantive law aspects,
including several optional provisions (baseline). However, the
persisting negative effects associated with this option have been clearly
described under the 'problem definition' section above.

The 2010/2011 consultation clearly revealed
the most relevant areas for further harmonisation. Accordingly, the
approximation exercise should focus on the most significant divergences in
trade mark laws and procedures causing problems to the users at both national
and EU levels, as described above in section 5.1.1 (option 2). Since
only a limited scope of changes would need to be done in Member States' laws
(usually in the form of mere adjustments of existing provisions and not by
creating new rules), it is expected that the alignment exercise could be done
within a reasonable period of time. Furthermore, to the extent necessary such
an approximation of Member States' laws could be pursued together with
identical modifications to the CTM regime which would ensure coherence between
the two systems. This was not possible at the time of the adoption of the TM
Directive as the CTM Regulation was still at a draft stage and was only adopted
5 years later. In the meantime, the CTM system has proved well its merits and
should therefore serve, as much as possible and appropriate, as a benchmark for
future alignment of national laws[140].

Under option 3, the scope of the
approximation exercise would not be limited to particular aspects of trade mark
laws but would encompass the whole range of provisions on substantive law, procedures
and practices. Accordingly, the trade mark systems in Europe would evolve from
partially coherent and aligned to fully harmonised regimes. However, the
analysis of existing problems (chapter 3.2.1) has not demonstrated an apparent
need for a full scale approximation of all trade mark provisions. As a result,
option 3 would be disproportionate to the actual needs. Moreover, such a
scenario would necessitate far reaching changes at Member States' level,
involving not only amendments to national trade mark laws but possibly also to
civil, administrative and other laws.

When it comes to the implementation of
options 2 and 3, one could consider that the desired approximation of trade
mark laws and procedures could be achieved without a legislative intervention
at the EU level. In this case, Member States would have to agree on a common approach/benchmark
and align, accordingly, their laws and procedures on a voluntary basis (sub-options
2a and 3a). However, the achievement of the operational objectives identified
in section 3 is highly unlikely. Firstly, such a process would be very lengthy
given the wide range of existing divergences between national laws. The
duration and outcome of such an exercise would fully depend on the commitment
of all Member States and their willingness to find common approaches. It is
questionable how strong the incentives for this would be, taking into
consideration that further harmonisation is called for by industry but not by
national administrations. Moreover, it would be very difficult to arrive at a
unanimous decision among the 27 Member States. Therefore, the process would
more likely result in lowest common denominator solutions than the most
appropriate ones. Moreover, it might be easier to find a common approach on the
less controversial issues whereas there would not be any guarantee that the
most serious problems would be properly addressed. Finally, the objective of
achieving coherence between national laws and the CTM system would remain out
of the reach of this exercise.

Accordingly, it appears more appropriate to
pursue harmonisation by means of an EU-driven action, i.e. a legally binding
instrument, to ensure the achievement of the identified objective as regards
substantive trade mark laws and procedures (sub-options 2b and 3b).

Figure 7: Objective 1 – approximation
of trade mark laws – comparison of options

Options || Assessment criteria

Approximation of laws and procedures || Effectiveness (achievement of objectives) || Efficiency || Overall assess ment

Greater approximation of TM laws and procedures || Time needed || Overall cost || Proportio nality

1. Baseline || 0 || 0 || 0 || 0 || 0

2. Partial approximation focused on main problems ("top priorities") || || || || ||

2a. Voluntary partial approximation || ? || -- || - || + || -

2b. Mandatory partial approximation || ++ || + || - || + || ++

3. Full approximation (option 2+) || || || || ||

3a. Voluntary full approximations || ? || -- || -- || - || -

3b. Mandatory full approximation || ++ || -- || -- || -- || +/-

4. Single rulebook || ++ || -- || -- || -- || +/-

6.1.2.
Missing clear legal basis for cooperation –
comparison of options

The analyses performed as part of the
problem definition have demonstrated that the primary obstacle to an effective
and efficient cooperation between OHIM and national offices is the absence of a
clear legal basis. The analysis has further clearly shown the shortcomings of
cooperation achieved on voluntary basis (options 1 and 2). As
long as there is no legal obligation for IP offices in the EU to cooperate, it
cannot be expected that all offices would participate in common cooperation
projects, as is absolutely required for convergence of their practices and
development of common tools[141].

Therefore, a proper legal framework must be
adopted in order to create favourable conditions for cooperation at national
and EU level, i.e. national offices and OHIM have to be obliged to cooperate
with each other (option 3). The objectives of such cooperation should be
clearly specified in order to enable monitoring of their achievement.

As a result, participation of all national
offices would be ensured and it would become easier for them to justify to
their budgetary authorities the allocation of financial and human resources for
common projects with other IP offices.

It should be addded in this context that
the Competitiveness Council called on the Commission to introduce, when
presenting a proposal for the revision of the CTM Regulation, a specific
provision defining the framework for cooperation between OHIM and the national
offices. In the same context, the Council also requested the Commission make
explicit that harmonization of practice and tools is an aim which all trade
mark offices in the EU should pursue and that efforts in this area should be
supported and facilitated by OHIM.

Figure 8: Objective 2 – providing
adequate legal basis for cooperation

Options || Assessment criteria

Providing legal basis for cooperation || Effectiveness (achievement of objectives) || Efficiency || Overall assess ment

Greater incentive for cooperation || Time needed || Overall cost || Proportio nality

1. Baseline || 0 || 0 || 0 || 0 || 0

2. Legal basis for optional cooperation || ? || + || + || ? || ?

3. Legal basis for obligatory cooperation || ++ || + || + || + || +

6.2.
Divergent provisions of the regulatory framework:
impact of the selected option on stakeholders
6.2.1.
Impacts as regards the approximation of trade
mark laws and procedures

The following sections analyse the impacts
of option 2b (mandatory partial approximation) on various stakeholders, namely
users of national and Community trade mark systems, national IP offices and
OHIM.

6.2.1.1.
Trade mark users (including SMEs)

The objectives identified on the basis of
the problem definition are driven by the business needs of trade mark users in
Europe. They aim at modernising the framework for trade mark protection at both
EU and national levels, improving the level playing field for companies,
especially SMEs, and thus enhancing their and Europe's competitiveness.
Accordingly, the options selected to best contribute to the achievement of
these objectives, in terms of enhancing harmonisation of trade mark laws and
procedures, are expected to have a overwhelmingly positive effect on all users
of the trade mark system. This can be anticipated, for example, on the basis of
the great support from user organisations who represent both large and small trade
mark owners, as well as their agents[142].

Moreover, there are indications that the
impact of the proposed changes will be even more significant and positive for
SMEs than for LSEs. As described in the chapter 3.2 (problem definition), given
the current low level of harmonisation, companies who seek trade mark
protection under several national laws depend to a large extent on external expertise.
In this context, it is generally perceived, on the basis of contacts with
stakeholders, that SMEs, that do not have in-house IP experts, often pay more
than double the amount in "advisers" fees compared to larger
companies which have experienced in-house employees.

The introduction of the one-class-per-fee
system will also be beneficial to trade mark users and SMEs in particular. The
new fee structure will be more adapted to their needs since they will not be
obliged to pay for additional classes of goods and services which they do not
need. Indeed, in line with the preferred option, the majority of user
organisations indicated during the consultation phase that unnecessary claims
to three classes should be discouraged by adjusting the fee so that each class,
in addition to the first, costs the applicant more[143]. Furthermore, users will also
benefit from the anti-cluttering effect of the new system which is presumed to
limit the space occupied by trade marks in the registers and thus to increase
the amount of potentially available signs.

As a result, the selected option anticipates
significant benefits for the user community and it is not expected that there
would be any obstacles preventing trade mark users from complying with the proposed
changes once they have been implemented.

6.2.1.2.
National IP offices

Option 2b would imply the obligation for
Member States to adapt, accordingly, their national legislations. Considering
the heterogenity in trade mark systems, it is impossible to draw a general
conclusion, for example, as to whether these adaptations would be more
burdensome for small national offices than for big ones or vice versa.
The below table, however, provides an overview indicating which offices would
need to change their current systems as regards the identified top priorities
in terms of harmonisation of procedures.

Figure 9: Current situation at national offices – top priorities for
harmonisation

|| Classification (class headings) || Availability of administrative procedures || Ex-officio examination of relative grounds || Fee system[144]

"covers all" || "means what it says" || Opposition || Cancellation || 1 class || 3 classes

Austria || || X || Yes || Yes || No || || X

Benelux || || X || Yes || No (court) || No || || X

Bulgaria || X || || Yes[145] || Yes || No[146] || || X

Cyprus || || X || Yes || Yes || Yes || X ||

Czech Republic || || X || Yes || Yes || Partly Yes[147] || || X

Germany || || X || Yes || Yes || No || || X

Denmark || || X || Yes || Yes || No || || X

Estonia || || X || Yes[148] || No (court) || Yes || X ||

Spain || || X || Yes || No (court) || No || X ||

Finland || X || || Yes || No (court) || Yes || || X

France || || X || Yes || No (court) || No || || X

UK || || X || Yes || Yes || No || X ||

Greece || X || || Yes || Yes || Yes || X ||

Hungary || X || || Yes || Yes || No || || X

Ireland || || X || Yes || Yes || Yes || X ||

Italy || X || || Yes || Yes[149] || No || X ||

Lithuania || X || || Yes || No (court) || No || X ||

Latvia || || X || Yes || No (court) || No || X ||

Malta || X || || No || No (court) || Yes || X ||

Poland || || X || Yes || Yes || Yes || || X

Portugal || || X || Yes || Yes || Yes || X ||

Romania || X || || Yes || No (court) || No || X ||

Sweden || || X || Yes || No (court) || Yes || X ||

Slovenia || || X || Yes || No (court) || No || || X

Slovakia || || X || Yes || Yes || Partly Yes[150] || || X

OHIM || X || || Yes || Yes || No || || X

Source: MPI study and OHIM data

In terms of cost, because of the heterogenity
of national trade mark systems, it is assumed that certain national offices would
bear variable additional costs linked to further harmonisation efforts in the short
to medium term. Such costs and/or cost savings for each and every national
trade mark system can only be calculated at national level in the light of the peculiarities
of each trade mark system. However, most changes in the EU legislation would
essentially bring more clarity, consistency and legal certainty without any
significant impact on resources and structures (see Annex 2, section 9.2). While
being in favour of reducing areas of divergence within the trade mark system as
a whole[151],
national offices expressed concerns about the speed and scope of harmonisation
of procedural rules[152].
These concerns were considered when assessing various options.

The few changes that might have a
significant impact on some national systems relate to the setting up of
administrative opposition or cancellation procedures in the Member States where
such administrative procedures do not already exist, to the limitation of
ex-officio examination to absolute grounds in the Member States also examining
relative grounds on that basis, and to the introduction of a one-class-per-fee
system (see for the three issues data provided in Figure 9).

However, the cost linked to the setting-up
and functioning of administrative opposition and cancellation procedures would
be more or less compensated by the (parallel) alleviated burden for national
Courts. As regards the proposed abolition of ex-officio examination of relative
grounds, it is reasonable to expect, from the experience of Spain and the UK[153], that there would not be a
huge rise in oppositions, hence, the savings, to the relevant IP offices, from
not dealing with prior rights ex-officio, would (clearly) outweigh the
costs in dealing with additional oppositions. Therefore, in the long term,
option 2b would contribute to improving the efficiency and effectiveness of
procedures at European IP offices and eventually lead to significant cost
savings. As such, it would also increase the competitiveness of national
offices and allow them to extend the scope of cooperation with OHIM and other
IP offices to the procedural areas concerned. Data supporting such costs and/or
cost savings are however not available.

Finally, the need to change the fee
structure, so that the application fee covers only one class of goods or
services in future[154],
leaves national authorities free to set the overall level of fees in such a
manner as to avoid financial loss. Moreover, the anti-cluttering effect of the
measure should diminish the number of unecessarily broad specifications of
goods and services covered by trade mark registrations, and thus reduce the
conflict potential between them. This would strenghten the coexistence of the
trade mark systems in the Union and ensure a more balanced and harmonious trade
mark system overall.

Further, linking the move to a
one-class-per-fee system at OHIM level with a reduction of the basic
application fee would not put coexistence at risk[155]. Lowerering the application
fee, covering one class proportionally (so as to be € 775)[156], but leaving the price of a
CTM application covering three classes of goods or services unchanged,
constitutes a necessary and fair adjustment to the reduced range of goods or
services covered by a CTM application.

It is true that this further fee cut would
bring the CTM application fee level closer to the application fee level of
national offices for domestic filings. However, taking into acount that the
average fee to be paid in the Union for a national application covering one
class only accounts for € 143[157],
a further reduced CTM application fee would still keep a clear and sufficient
distance from the comparable fee at national level[158]. The aforesaid also applies
if one considers the highest current national fees for one class applications
which exceed € 200[159].
Those national offices[160]
currently charging an application fee including three classes of goods and
services[161]
would be free to follow the example of the OHIM and of other national offices
and to adjust their fee levels accordingly (by reducing the basic application
fee covering one class) and ensure a more favourable ratio compared to the OHIM
basic application fee.

6.2.1.3.
OHIM

In general, the approximation of laws and
procedures under option 2b (i.e. using the CTM system as far as possible, and
appropriate, as a benchmark for the alignment of national laws through
corresponding amendments to the TM Directive (see above under 6.1.1)) would be clearly
beneficial to OHIM. Such further harmonisation would also facilitate OHIM's task
of supporting and coordinating efforts in converging practices and tools with
national offices. To the extent that the harmonised approach would not match
with current OHIM practice and, thus, have an impact on the Office, it is
expected that any potential changes would be manageable, provided that
sufficient time (e.g. coresponding to the transposition period for Member
States) is left for a smooth transition.

Furthermore, the introduction of the
"one-class-per-fee" system requires an adjustment of OHIM fees to take
into account the diminished scope of trade mark protection (one class instead
of three), and also to better address the potential risk of cluttering. The new
fee structure should follow some essential principles. First, it must be simple
and transparent. The model should be the same for both application and renewal
fees, i.e. the basic fees should contain one class, and a separate class fee
should be paid as of the second class. Second, the class fees should be set so
as to continue to dissuade against filing unnecessary classes. Third, the level
of application/renewal fees should be adapted for the new fees to cover one and
two classes. Fourth, the new fee structure should take due account of the
principle of coexistence and the need to keep a sufficient distance from
comparable national fees. Finally, the new system should be well balanced as
regards the ratio between the application and renewal fees. It is considered
that the renewal fee could be descreased to some extent to come closer to the
level of the application fee.

The example of possible fee levels[162], as shown in figure 10, would
fulfil all the above criteria.

Figure 10: Current
and potential OHIM fee structure

|| Current || New

Application fee || 900 (3 classes) || 775 (1 class)

Class fees || 2nd class || -- || 50

|| 3rd class || -- || 75

|| 4th and subsequent classes || 150 || 150

Total amounts || Application fee (1 class) || 900 || 775

|| Application fee (2 classes) || 900 || 825

|| Application fee (3 classes) || 900 || 900

Renewal fee || 1350 (3 classes) || 1000 (1 class)

Class fees || 2nd class || -- || 100

|| 3rd class || -- || 150

|| 4th and subsequent classes || 400 || 300

Total amounts || Renewal fee (1 class) || 1350 || 1000

|| Renewal fee (2 classes) || 1350 || 1100

|| Renewal fee (3 classes) || 1350 || 1250

The impact of the above fee structure on
OHIM budget is displayed in figure 11 (the effects of the fee model are
included as of 2013). The calculations illustrate that the adjustment of fees
would lead to negative budgetary results in 2013 – 2015 and OHIM budget would
be in balance again in 2016. Taking into account the financial reserve that the
Office has accumulated over the past years short-term negative budgetary
results would not be critical for OHIM operations, notably, as is the case
below, if they were of temporary nature and not leading to long-term,
structural deficits.

Figure 11: Impact on OHIM budget – adjustment of fees

|| 2012 (m €) || 2013 (m €) || 2014 (m €) || 2015 (m €) || 2016 (m €)

Budgetary revenue || 174,9 || 160,7 || 167,1 || 177,8 || 202,8

Budgetary expenditure || 202,0 || 216,5 || 223,0 || 198,7 || 186,5

Operating result || -27,1 || -55,8 || -55,9 || -20,9 || 16,3

To be excluded from above result: Ad hoc expenditure || 32,4 || 29,6 || 35,3 || 18,7 || 6,2

Operating result excluding ad hoc expenditure || 5,3 || -26,2 || -20,6 || -2,2 || 22,5

6.2.2.
Impacts concerning the legal base for
cooperation between IP offices
6.2.2.1.
Trade mark users

The objectives related to convergence of
practices and tools at IP offices evidently follow the expectations of trade
mark users in Europe. The users expressed their support for closer cooperation
between offices to enhance harmonisation of practices and development of common
tools throughout the consultation process[163].
Therefore, it may be assumed that the selected option 3, which aims at
establishing a clear and obligatory legal framework to facilitate cooperation between
all IP offices, would have a primarily positive effect on the European users'
community, as quantified below under 6.4.1.1 in relation to technical
facilities and tools. The additional benefits include making the basis and
objectives of cooperation between OHIM and national IP offices themselves more
transparent.

6.2.2.2.
National IP Offices

Establishing the above legal framework for
cooperation according to option 3 would result, in short to medium term, in an
increased workload for all IP offices in the EU. In the medium to long term,
this option would lead to significant gains in efficiency and cost (see example
of the Euroclass tool in 6.4.1.2). In spite of the need to deal with new
projects and the increased workload it is considered that national offices are already
prepared for such a development. Many cooperation activities aimed inter
alia at developing common tools have already been successfully launched, in
particular, in the context of the Cooperation Fund. Therefore, national offices
would be able to build on this experience and further develop and extend the
existing framework which would certainly contribute to a smooth transition. During
the consultation phase[164],
all national offices strongly supported the incentive for cooperation with
OHIM. They confirmed their involvement in certain forms of cooperation which
they consider important and worth maintaining, but in need of further
improvement.

6.2.2.3.
OHIM

Option 3 would lead to enlargement of the
current scope of common projects with national offices. This might imply an
increase in staffing and other needs due to the management of these projects
and thus re-deployement of existing workforce and/or some new recruitment at
OHIM. Based on the experience so far with cooperation activities, notably the
Cooperation Fund, the Office clearly demonstrated its capacity to deal
effectively, and within a short timeframe, with such large scale projects. Given
the largely positive budgetary situation of OHIM, no difficulties for the
Office would therefore be expected as regards the managing of new tasks under
option 3. At the same time, the Office may also benefit from the common tools,
by increasing its efficiency and decreasing cost (see 6.4.1.3).

6.3.
Cooperation capacity: comparison of options
6.3.1.
Technical facilities – comparison of options

Under option 1, it would be left for
national offices to procure and develop the necessary technical means. This
option corresponds to the status quo, where technical capabilities are the
result of resource constraints and policy decisions at national level, in view
of domestic priorities, which may not necessarily drive offices towards
increased automation.

Therefore, it is clear that the first option
does not meet the set objectives. To meet the objectives, there would have be some
conditions in the way offices are equipped. While option 2 would only offer
offices the possibility of enhancing their technical capabilities within a
framework of voluntary cooperation, option 3 would ensure that all offices
benefit and commit to the development of common tools and databases.

Interoperability requires, as a starting
point, common standards in areas such as development of new filing tools, use
of teleconference equipment, or sharing of search tools built using common data
indexing schemes for pooling data (e.g. TMview). The use of videoconferencing
facilities, for example, illustrates this. Options 1 and 2 would for example
not necessarily ensure a large degree of interoperable equipment between
offices, each being free to adopt this or that solution. This may render
travelling between European capitals more frequent. Option 3 would, however,
articulate a convergent solution in the use of equipment that can save monies
and reduce the climate impact of hundreds of business trips among the different
offices of the network.

Figure 12: Objective 3 - Technical
capacity building at national TM offices

Options || Assessment criteria

Providing regulatory incentive || Effectiveness (achievement of objectives) || Efficiency || Overall assess ment

Greater security for obtaining facilities || Time needed || Overall cost || Proportio nality

1. Baseline || 0 || 0 || 0 || 0 || 0

2. optional access to tools || ? || ? || + || + || ?

3. mandatory access to tools || ++ || + || + || + || +

6.3.2.
Funding
6.3.2.1.
Financing in general – comparison of options

Under option 1, the experience so
far with regard to bilateral and multilateral cooperation projects[165], as well as the Cooperation
Fund, has revealed that some national offices would not be able to invest any
funds in cooperation activities. At present, this difficulty is further
accentuated by the on-going financial crisis and is not expected to improve in
the near future. As a result, it would be impossible for some Member States to
take part in cooperation schemes and, accordingly, this option would not
provide an effective response to the identified objectives.

Alternatively, funding from the EU budget (option
2) would ensure the implementation of the cooperation objectives. At the
same time, however, there would be a number of obstacles which would render
this option very difficult if not unfeasible. In particular, it would be highly
unlikely that (i) a substantial contribution from the EU budget could be made
available, considering the current budgetary restrictions, and that (ii) any
new posts could be allocated to DG MARKT in order to manage the programme given
the zero growth policy. In the light of this, even if such a programme was created,
it is far from certain that the entire sum needed would be made available.

By contrast, common cooperation activities
of national offices and OHIM could be financed from the OHIM budget (option
3). Over the past years, the Office has accumulated a substantial surplus,
part of which is already used for cooperation projects with national offices
within the framework of the Cooperation Fund. Moreover, OHIM annual budgetary
results constantly exceed, by several million, the operational expenditure of
the Office (see Figure 13 below). Accordingly, the new cooperation activities
could either be financed from the annual income and/or from the existing
surplus, thus ensuring the availability of sufficient financial means. At the
same time, OHIM could build on its extensive experience in managing large
cooperation projects in the field of trade marks and designs, including
employment of highly qualified staff, as well as on the existing networks with
national offices. This would be a further added value of option 3, compared to
options 1 and 2.

Figure 13: OHIM
annual budgetary results (‘000 €)

Source: OHIM

It is estimated that the cost of
cooperation activities between OHIM and national offices would amount to
€ 17 – 20 million a year[166].
This is equivalent to about 10% of OHIM yearly income. The forecasts featuring
in figure 17 in section 6.4.2.3 ("Impact on OHIM budget – funding of
cooperation activities") show that option 3 would not cause an imbalance in OHIM budget.

In addition, one should keep in mind that the
cooperation activities constitute mutual services of 'Community' nature. They do
not only reflect the coexistence between the Community and the national trade
mark systems but contribute to ensuring their complementary relationship and
necessary interoperability, on which the European trade mark system as a whole depends.
As already pointed out, the development and maintenance of efficient and all-encompassing
common tools and databases, such as the online search facilities for trade
marks of all IP offices in the EU or the required common seniority database[167], entirely depend on the
active participation of all national IP offices. Without the contribution of
the latter, inter alia by providing and permanently updating the
relevant data sourced from their national registries, these common projects are
neither feasible nor sustainable.

Obviously, under this option, safeguard and
control mechanisms would have to be introduced in order to ensure that the
relevant OHIM funds are effectively used by the national offices for the
specific earmarked purposes and subject to compliance criteria. This could be
achieved, for example, by using grants to finance the common activities. This issue
is addressed more specifically in the following further analysis of this option
as regards the mechanism and source of funding within the OHIM budget.

Figure 14: Objective 4 –– Secure long term financing for cooperation
activities

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 || 0 || 0 || 0 || 0

2. Financing from EU budget || ? || ? || 0 || -

3. Financing from OHIM budget || ++ || ++ || 0 || ++

6.3.2.2.
Financing from the OHIM budget – comparison of sub-options

As the selected option 3 implies
the establishment of a financing mechanism using the budget of the Office, the
following chapter provides its further analysis, notably as regards the mechanism
and source of funding within the OHIM budget.

The analysis also takes due account of the conclusions
of the joint meeting of the OHIM Administrative Board and Budget Committee
(ABBC) in September 2008[168],
endorsed by the Competitiveness Council in May 2010[169], that OHIM should share part
of its renewal fees with national offices "for the purposes closely
related to the protection, promotion and/or enforcement/combat counterfeiting
of trade marks". The Council called on the Commission to include in the
revision of the CTM Regulation "the creation of a legal basis for
distributing an amount equivalent to 50 % of OHIM's renewal fees to the
National Offices in accordance with fair, equitable and relevant distribution
criteria, to be defined in a way which would guarantee, inter alia, a minimum
amount for each Member State, as well as the introduction of appropriate
mechanisms which have due regard to the financial arrangements applicable to
individual National Offices, to ensure that these funds will be available to
the National Offices and will be used for purposes closely related to the
protection, promotion and/or enforcement of trade marks, including combating
counterfeiting".

Funding mechanism

There are two possible funding models. On
the one hand, contributions can be allocated as lump sums on the basis of
agreed distribution criteria (sub-option 3.1a), on the other, the
funding mechanism can be project driven and based on grants (sub-option 3.2a).

Sub-option 3.1a would first require the creation of a distribution key. There are several alternatives regarding how to distribute the
available sum among national IP offices. Either to divide the overall amount
into equal shares of which each office would receive one or to differentiate
the individual share for each office according to a quantitative criterion,
such as the number of trade mark applications and/or registered trade marks,
size of the country, its GDP, votes in the Council etc. Moreover, these two
basic options could also be proportionally combined. The MPI study indeed
suggested to combine both approaches and to base the distribution key on two different
elements[170]. Should the option 3.1a be retained further consideration will be
given to possible allocation criteria.

Under this option, the amount available for
cooperation in a given year would then be distributed among national offices in
accordance with the agreed key. The concrete contributions would be paid in
exchange for offices' participation in cooperation activities but their amount
would not depend on the cost of these projects, i.e. there would not be a
direct link between the cost of the activity and the money paid. The model
would also imply the establishment of precise compliance criteria (e.g. key
performance indicators) and control mechanisms to check that funds are used for
the earmarked purposes. In case of failure, payments could be (partly or fully)
suspended or annulled.

Sub-option 3.2a would follow a grant procedure. After the decision on projects to
be run and financed during a given period, the terms for participation
(including financing, compliance criteria and control mechanisms) would be
defined in accordance with the Financial Regulation. The concrete contributions
to national offices would be determined along with these terms and be in
relation with the cost of the respective cooperation activity.

In relation to sub-option 3.2a, it was also
considered whether grants would be the most appropriate instruments or whether
the financial contributions could follow another procedure of the Financial
Regulation. The analysis showed that public procurements could also be
envisaged for some cooperation projects; however, given the objectives to be
achieved and the nature of these activities, financing via grants appears more
suitable overall. Such a conclusion is consistent with the EU approach on
financing of comparable common actions involving national authorities in the
area of European statistics[171].

Comparing both options, the first difference is the accuracy of the payment. A scheme
based on a distribution key (option 3.1a) would be more rigid and therefore less
suitable to appropriately cover the specific funding needs of each IP office. It
might imply some risk that national offices would not receive the required
funding, inasmuch as they could get less than needed or vice versa.

Furthermore, the procedures would be substantially
different. A model based on grants (option 3.2a) would follow a standard funding
procedure, ensuring simple processes, sound financial management of EU money as
well as a high degree of transparency. The grant procedure provides for
flexible arrangements to meet the funding needs. For example, for
simplification purposes grants awarded to the national offices may take the
form of lump sums, in particular to cover costs incurred by the national
offices while participating in cooperation projects related to existing
databases, search tools etc. In option 3.1a, the funding mechanism would need to
be created which would not only render the whole exercise very complicated but could
also cast doubt upon its processes and methods.

Figure 15: Use
of OHIM budget – funding mechanism - comparison of options

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 || ++ || ++ || + || ++

Source of funding within OHIM budget

There are three sub-options to be
considered as possible sources for funding: financing from OHIM operational
budget in general, funding from a specific OHIM income and further use of the
accumulated financial reserve.

Firstly, cooperation activities could be
financed from OHIM's general budget as any other operational expenditure of the
Office (sub-option 3.1b). In such a case, the
financial needs would be covered by OHIM annual income generated from fees and
other revenue, as forecasted when adopting the budget. The final expenditure
would depend on concrete cooperation projects in a given year.

Alternatively, funding could come from a
specific OHIM revenue stream, generated in the previous budgetary year, for
example, the CTM renewal fees, as mentioned in the 2010 Council Conclusions (sub-option
3.2b). Under such an option, the available funds would be known upfront and
the concrete cooperation activities for the coming year, in particular, as
regards development of new projects, could be shaped and decided accordingly.

Finally, it could be envisaged that the
cooperation projects would be financed from the accumulated OHIM surplus (sub-option
3.3b), e.g. by extending the Cooperation Fund, currently allocated with €
50 million. This option might be suitable – for the time being – for
cooperation initiatives aimed at development of new tools and/or the launch of
new projects, but would be inappropriate for long-term financing of running
costs. Moreover, in spite of the currently high volumes of OHIM's financial
reserve these funds are expected to be used for other purposes[172] and, in general, would not be able to serve as a never-ending source
of funding. As a result, the sub-option 3.3b would not meet the identified
objectives with a view to achievement of a proper, stable and long-lasting
cooperation capacity of national IP offices and OHIM and was excluded from
further analysis.

Comparing sub-options 3.1b and 3.2b means confronting two approaches that imply either an ex-ante or an
ex-post calculation. In option 3.1b, the upfront selection of cooperation
projects would determine the financial envelope in the year to come; in option
3.2b, the envelope would be known in advance (being a part of OHIM revenue
collected in the previous year) and the scope of common activities would be
shaped in accordance with the available money. As a result, option 3.2b could
imply a risk of inappropriate and/or excessive funding. It might lead to
situations where the scope of cooperation activities is not driven by
cooperation needs but the amount of money available. This could be an incentive
to artificially inflate the common activities, by adding further projects with no
or limited added value, only to justify the use of all available funds.

Another critical feature of sub-option 3.2b
lies in assigning a specific part of OHIM income to a specific spending. First,
OHIM budget is not based on an "assigned revenues" system in which
the income from concrete fees would be spent for particular expenditures.
Option 3.2.b would hence be in contradiction with this budgetary principle.
Second, there is no pertinent link between cooperation with national offices
and OHIM renewal fees (nor any other OHIM income) except for the fact that the
estimated cost of cooperation would broadly correspond to 50% of renewal fees'
income. The choice of a specific fee income appears therefore fully arbitrary
and not justified in the given context. Third, using an OHIM fee to fund
activities of national offices might be perceived as an (inadmissible) tax
levied on companies. Fourth, as repeatedly highlighted by user representatives,
if the renewal fees were tightly associated with a permanent expenditure it
would be very unlikely that these fees would decrease in future. Last but not
least, combined with the above option 3.1a (funding based on a distribution
key), the option 3.2b could be interpreted as an "automatic"
entitlement of national IP offices to receive a share of OHIM renewal fees
which has been seen very critically from the perspective of EU financial and
budgetary rules.

Finally, due consideration was given to the
impact of both options on the OHIM budget. In this regard, option 3.1b based on
budgetary forecasts appears slightly riskier than option 3.2b which would
operate with actual financial results, minimising thus the risk of putting at
stake OHIM budgetary equilibrium. Moreover, a large volume of cooperation
projects under option 3.1b could also have a major impact on OHIM budgetary
results. Both risks could be mitigated by setting a cap (a limit) for yearly
spending on cooperation. Taking into account the estimated cost of cooperation
activities (€ 17 – 20 million a year[173]), it might be appropriate to set this cap at 10% of OHIM annual income which (i) would match with
the financial needs for cooperation and (ii) would be bearable by the Office
while keeping its budget in balance (see figure 17 in section 6.4.2.3).

Figure 16: Use of OHIM budget – source of funding – comparison of
options

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 || ++ || + || 0 || +/- || +

2b. Funding from specific income (renewal fees) || ++ || - || - || 0 || 0

3b. Use of surplus (increase in allocation to the Cooperation Fund) || -- || + || 0 || 0 || -

Taking into account all above considerations,
it appears more appropriate to finance the cooperation activities from the OHIM
general budget and not to draw a link to a particular OHIM income and to its
actual revenue.

Combined effect of selected sub-options

Based on the above comparison, combined
sub-options 3.2a and 3.1b appear fittest to achieve the identified
objectives. Furthermore, it is believed that these options would be in line
with the May 2010 Conclusions of the Competitiveness Council. The approach
suggested by the Council was carefully analysed and accommodated, where
necessary for legal and budgetary reasons, while fully preserving the aim of
the future financial scheme. Also the allocation of funds remains consistent.
As mentioned above, it is estimated that the cost of cooperation activities
between OHIM and national offices would amount to € 17 – 20 million[174] a year which corresponds to
the "cap" to be set at 10% of OHIM annual income. At the same time,
this amount is also equivalent to 50% of income from trade mark renewal fees[175].

Finally, having discarded the financing
from a specific OHIM income (renewal fees), including the need to establish a
distribution key, the Commission services did not further consider suitable
(relevant, fair and equitable) distribution criteria.

6.4.
Cooperation capacity: impact of the selected
option on stakeholders and mitigating measures
6.4.1.
Technical facilities/tools

Convergence in the way offices use and have
access to technical facilities, from examination tools to conference equipment is
expected to produce a positive impact on stakeholders, in as much as technology
creates efficiencies in labour intensive processes such as those involved in IP
rights examination and registration.

6.4.1.1.
Trade mark users

Users can expect to face convergent,
technologically updated IT solutions, where the same user experience is enhanced
thanks to a certain degree of harmonised solutions, both at “front office” and
at “back office” level. Common tools can enhance cooperation in the way offices
serve the interests of users, such as for example, the way technology can
improve performance indicators from offices cooperating in developing and
installing common e-filing tools. Moreover, the fact that users when dealing
with IP offices at national and Community level are using common tools will
result in increased accessibility, enhanced efficiency and reduced costs. In
their contributions to the MPI study, user organisations were unanimous that
all offices should further improve and harmonise their use of technology,
especially as regards IT tools[176].

It is important to recall in this context
the very telling and positive outcome of the cost benefit analysis (CBA) OHIM
conducted in relation to the cooperation projects financed through the Cooperation
Fund (see specified in more detail in Annex 8 ). This CBA indicated, that over
a period of 10 years (starting from the first investment), the investment in
the CF projects could yield in excess of € 935 million in benefits for
both users and IP offices. These benefits were monetised based on benefits that
are most valuable for end users such as reduced processing times or greater
predictability in the service received.

6.4.1.2.
National offices

IP Offices can benefit from enhanced
cooperation thanks to improved access to IT development. Individually developed
systems do not generate the same economies of scale that cooperation in a large
development project brings. This view is broadly shared by national offices who
consider the modernisation of IT facilities and tools as one of the main areas
where cooperation should be further improved[177].
As already mentioned in the previous chapter in relation to users, the
potential benefits to national offices were impressively substantiated by the
relevant CBA, conducted by OHIM in connection with the Cooperation Fund, an
explanation of which is to be found in Annex 8.

The expected gains in efficiciency and cost
is demonstrated by the example of a common database for classification of goods
and services ("Euroclass")[178],
being developed under the Cooperation Fund framework. The tool contains a
comprehensive list of pre-validated terms for goods and services which are
guaranteed to be accepted when filing a trade mark application. Accordingly,
when the Euroclass tool is used, the IP office does not need to examine the
terms describing the goods and services for which trade mark protection is
sought. This significantly reduces the administrative examination and can
considerably speed up the registration procedure.

6.4.1.3.
OHIM

There can be no doubt that this option
would be benefitial also to OHIM. The possibility for OHIM to succesfully play
a supporting and coordinating role in achieving and ensuring a true complementarity
and interoperability between the CTM and national trade mark systems essentially
depends on the use of standard technological facilities shared by all national offices.

The example of the common classification
database, as mentioned under 6.4.1.2., will have an additional positive effect
on OHIM. Since the database aims to contain the same set of terms in all
official EU languages, it will be able to automatically translate the goods and
services for a given CTM application. For OHIM, obliged to publish CTM applications
in all EU languages (Art. 120 CTMR), this would mean major savings in terms of
translation costs and time. Accordingly, a more frequent use of the
classification tool could be expected and/or promoted.
For example, the significant cost and efficiency gains could be taken into
account when adjusting OHIM fees. It could be envisaged, for instance, that
database use could be encouraged (and rewarded) by a discount to the
application fee (e.g. € 50[179];
for details see chapter 6.5).

6.4.2.
Financing of cooperation

The following sections analyse the impacts
of the selected option 3 (financing from OHIM budget) on various stakeholders,
namely users of national and CTM systems, national IP offices and OHIM.

6.4.2.1.
Trade mark users

As stated above under 6.2.2.1 in relation
to the necessary regulatory incentive for cooperation, the pursued objectives,
related to convergence of practices and tools at IP offices, clearly follow the
expectations of trade mark users in Europe. However, given the financial
implications of option 3, some consideration must be given to possible side
effects of this solution.

During the 2010/2011 consultation exercise,
the idea of distributing a part of OHIM income to national offices was
repeatedly tested with users' representatives[180]. Most user organizations
maintain that any transfer of funds should not be automatic but should be
substantiated by appropriate tasks which benefit the users. Examples of such
tasks coincide with lacunae in the current system identified as part of the
problem definition, for example, maintenance of seniority databases by the
national offices, developing e-tools and e-capabilities. These users'
expectations largely meet the goals of the selected options. As described
above, the contribution to national offices through OHIM financial contribution
would indeed enable the financing of specific cooperation projects and
initiatives.

The effect of additional expenditure from
the OHIM budget on the overall financial needs of the Office and on its fee
structure should also be assessed. The analysis carried out in section 6.4.2.3
clearly demonstrates that the Office would be able to take on these additional
budgetary obligations without any major difficulties. Accordingly, there is no
risk that OHIM income (i.e. fees paid by users of the system) would need to
increase in order to cover this spending.

6.4.2.2.
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.

In the context of this option, the impact
of the new funding mechanism for cooperation activities on the financing of
national offices also has to be assessed. Indeed, some representatives of users
have expressed their concerns that these funds would disappear within the
budget of the respective national office or in the general budget of that
Member State, in the case of financially non-autonomous offices, and never be
used for harmonisation projects[181].
However, these concerns might be mitigated by (i) the legal obligation of
national offices to take part in cooperation activities and (ii) clear
earmarking of these funds, both in the legislation and when it comes to their
implementation (following the grant procedures), including the establishment of
effective monitoring mechanisms.

6.4.2.3.
OHIM

The structured and long term financing of
the cooperation activities would have a significant impact on OHIM budget. Annex
6 (section 9.6) deals in detail with the particular aspects of such a financing
mechanism, notably the estimation of the cost of cooperation activities.

Based on these calculations, the impact on
the overall OHIM budget can be assessed. The below figure 17 shows the
estimates for OHIM operational revenue and expenditure. When evaluating the
capacity of OHIM to finance cooperation with national offices, the following
should be considered. First, the amount of 10% of OHIM annual income is reduced
from the respective annual budgetary result as of 2015 when the mechanism could
be first put in place, following the adoption of the amendment to the CTM
Regulation. Second, there will be a number of ad hoc costs,
related to the implementation of OHIM's strategic plan, e.g. construction of a
new building, and of the Cooperation Fund which can be covered from the
accumulated surplus[182].
Accordingly, these specific investments should not be included when considering
the impact of the new funding mechanism on OHIM operational budget and have
been excluded from the below figure. Third, as regards the Observatory, transferred
to the Office as of 2012, its running cost has been fully integrated in the
forecasted expenditure.

Figure 17: Impact on OHIM budget – funding of cooperation activities

|| 2012 (m €) || 2013 (m €) || 2014 (m €) || 2015 (m €) || 2016 (m €)

Budgetary revenue || 174,9 || 180,7 || 187,7 || 200,2 || 231,2

Budgetary expenditure || 202,0 || 216,5 || 223,0 || 198,7 || 186,5

Operating result || -27,1 || -35,8 || -35,3 || 1,5 || 44,7

To be excluded from above result: Ad hoc expenditure || 32,4 || 29,6 || 35,3 || 18,7 || 6,2

Operating result excluding ad hoc expenditure || 5,3 || -6,2 || 0,0 || 20,2 || 50,9

10% of annual income || || || || -20,0 || -23,1

Result after deduction of 10% income to finance cooperation || 5,3 || -6,2 || 0,0 || 0,2 || 27,8

It should be noted that the launch of the funding
scheme in 2015 coincides with the Cooperation Fund investment. This coincidence
is explained by the fact that the Cooperation Fund investment cycle is
estimated to conclude in 2015, when the last phases of the programme cycle are
exhausted, namely (i) the integration of tools developed in 2012 and 2013 in
the IP offices and (ii) the final development and integration of the last work
packages of the software programme. At the same time, Cooperation Fund projects
that have been implemented in the IP offices by 2014/2015 will already require
maintenance expenditure from that years onwards. It is crucial that the
contribution to the financing of the ongoing operations of the Cooperation Fund
projects is in place as soon as the investment phase of each project is
finished. Otherwise, there is an acute danger that the projects would wither
and die, thus depriving users and national offices of the very significant
benefits outlined in Annex 8.

It can be concluded that the OHIM budget
would be able to take the additional expenditure related to cooperation with
national offices from its annual operational results. Accordingly, option 3,
sub-options 3.2a and 3.1b, would not cause an imbalance in OHIM budget.

6.5.
Interaction between selected options

The selected options will complement and
reinforce each other. The further approximation of trade mark laws and
procedures will create even more favourable framework conditions for fruitful
cooperation between OHIM and national IP offices. This enhanced cooperation
between OHIM and national IP offices in the core business will also profit from
the cooperation framework to be set up in the context of the takeover of the
European Observatory on Counterfeiting and Piracy by OHIM (and vice versa).
Moreover, the new cooperation scheme will help to remove persisting divergences
between IP offices in Europe which could not, for practical reasons, be
achieved when harmonising national laws by means of a legal instrument.

Overall, the retained options will also enhance
the complementary relationship between the CTM and the national systems. As
confirmed by all stakeholders in a remarkably unanimous manner, the principle
of coexistence between Community and national trade mark rights is fundamental
and necessary for the efficient functioning of a trade mark regime that meets
the requirements of companies of different sizes, markets and geographical presence.
The use of both systems is continuous and high, as demonstrated by the filing
statistics at both national offices and OHIM[183],
as well as the number of trade marks in their registers[184]. While SMEs have become important
users of the CTM system[185]
they still regularly tend to prefer national systems[186]. Indeed, for SMEs and local
companies, national trade marks would generally better meet their business
needs. Moreover, while the CTM would be a natural choice for companies with
activities at the scale of the EU, for those of them who may not obtain a CTM
due to its unitary character[187]
national trade marks provide the indispensable alternative. The existence of 26 trade mark registers, covering different
geographical areas, increases the accessibility of and the opportunity for IP
protection. Also, the limitation of the geographical scope diminishes the
vulnerability of trade marks registered locally vis-à-vis subsequent applications
inasmuch as any trade mark has to be genuinely used (in the relevant territory)
to enjoy legal protection. Accordingly, the duality of
the trade mark system in Europe offers to users a number of choices. Users indeed exploit these opportunities[188], both when determining their
trade mark strategies and when aiming to protect or enforce their existing
rights.

The selected options will significantly improve
the shortcomings in the current situation where the CTM and national systems
coexist, being closely linked and interacting with each other, but without a
number of important common grounds[189].
The new measures will provide for a genuine European trade mark system, based
on a harmonious complementarity of different regimes. These measures will primarily
serve the Union interest[190]
and be beneficial for users of either trade mark regime. As a consequence, the
new setting will improve access to trade mark protection for all users, regardless
of their location, size or market. It will also contribute to increasing legal
security, limiting the risk of litigation, and improving the level playing
field for European business, thus enhancing the competitiveness and
attractiveness of the EU internal market.

Finally, some of the selected options will
have an impact on the OHIM budget, notably the adjustment of OHIM fees, the
discount for use of classification tool and the funding of cooperation
activities[191].
The combined effect of these options on the budgetary results of the Office is
shown in the below figure 18. The temporary deficits in 2013 – 2015 and
budgetary recovery in 2016, as described in relation to the adjustment of OHIM
fees, can be observed also in the combined model. As regards the discount of
€ 50 (see section 6.4.1.3) the calculation is based on the assumption that
50% of applicants would use the electronic classification tools. Under such a
scenario, the budgetary results appear slightly in deficit but still within the
limits of a balanced budget. In reality, however, more positive outcomes could
be anticipated, taking into consideration the cost savings at OHIM and
therefore some decrease in its expenditure. Overall, it can be concluded that
the budget of the Office would be able to bear the consequences of the selected
options while preserving its budgetary equilibrium.

Figure 18:
Combined impact on OHIM budget: adjustment of OHIM fees, including the discount
for use of common classification database, and funding of cooperation
activities

|| 2012 (m €) || 2013 (m €) || 2014 (m €) || 2015 (m €) || 2016 (m €)

Budgetary revenue || 174,9 || 158 || 164,3 || 174,9 || 199,8

Budgetary expenditure || 202,0 || 216,5 || 223,0 || 198,7 || 186,5

Operating result || -27,1 || -58,5 || -58,7 || -23,8 || 13,3

To be excluded from above result: Ad hoc expenditure || 32,4 || 29,6 || 35,3 || 18,7 || 6,2

Operating result excluding ad hoc expenditure || 5,3 || -28,9 || -23,4 || -5,1 || 19,5

10% of annual income || || || || -17,5 || -20,0

Result after deduction of 10% income to finance cooperation || 5,3 || -28,9 || -23,4 || -22,6 || -0,5

6.6.
Further possible impacts of the selected options

The following sections analyse the impacts
of the selected options on other stakeholders.

6.6.1.
Consumers

As mentioned above in the introduction (see
under 1.1), trade marks enable consumers to distinguish products from different
undertakings. In this context trade marks help them to recognize a product as
one which they have liked or disliked in the past and thereby allow them to
make an informed choice when purchaising goods or services. Being the principal
instrument used by undertakings for advertising their products, trade marks offer
a guarantee that all the goods originating from the same producer have a
certain quality. Therefore, trade marks allow consumers to lower their search
costs. Moreover, in as much as trade marks foster product differentiation, they
allow consumers to benefit from a wider variety of products. Against this
background, it may be concluded that the modernisation of the trade mark system
in Europe will also have an indirect positive impact on consumers.

6.6.2.
EU budget

OHIM is a regulatory EU agency. It is fully
financed from fees paid by its users and does not receive any subsidy from the
EU budget. OHIM enjoys a full financial independence, its budget is not part of
the EU budget and its budgetary authority is the Budget Committee. Against this
background, the selected options will have no impact on the EU budget.

6.6.3.
Social impact

Because of the new cooperation activities,
the selected options may have an impact on the staffing needs at national
offices, resulting in an increase of their employees dealing with these
cooperation matters. At the same time, the proposed measures aim at improving
the level of efficiency and effectiveness of trade mark procedures which, in
turn, should result in decreased staffing needs in these core business
departments. All in all, it can be expected that in the medium to long term the
employment rate at national offices would remain stable but there would be a
shift in allocation of human resources.

6.6.4.
Environmental impact

The selected options will not have any
direct environmental impact.

6.6.5.
International

All selected options aim exclusively at the
internal market and are therefore not meant to produce any direct effect beyond
the EU borders. However, any economic operator from outside the EU will benefit
from the proposed measures in the same way as Europeans. Accordingly, since the
business environment in the trade mark field is expected to become more
favourable for companies, the position and attractiveness of the EU as foreign
sales market and investment location would be increased.

The selected options do not imply changes to
the functioning of the procedural mechanism for the registration of
international marks provided under the Madrid system[192]. However, taking into account
the close interconnection existing between this system and the CTM and national
trade mark systems of EU Member States[193],
it is expected that the international trade mark system administered by WIPO
would indirectly also benefit from the modernisation of the European trade mark
system as a wole.

In addition, the approximation of trade
mark laws and procedures under option 2b would render the European trade mark
system as a whole (i.e. at EU and national levels) more consistent with the
existing international legal framework on trade marks, and so also facilitate the
ratification of, or the accession to, the relevant treaties in place, such as
in particular the Trade Mark Law Treaty and the Singapore Treaty on the Law of
Trademarks (see above under 1.2 on the 2008 IPR Communication which makes reference
to that international dimension).

7.
Choice of the legal instrument

This chapter considers what legal
instruments would be most appropriate for each of the selected options.

7.1.
Approximation of trade mark laws and procedures

The analysis carried out in chapter 6.1.1
clearly showed that the achievement of the identified objective cannot be
ensured by non-legislative means (options 2a and 3a). Moreover, the options 3b
and 4, that would imply a maximum harmonisation Directive and a Regulation,
respectively, have been discarded as disproportionate.

The selected option 2b aims at mandatory, (further)
approximation of some aspects of national trade mark laws; therefore, a
Directive would be the most suitable legal instrument for its implementation. Since
national trade mark laws have already been partially harmonised, this further
approximation should be done by means of a recast of the existing TM Directive[194].

Moreover, if the harmonisation of national
laws did not match with the current CTM system, the CTM Regulation would also need
to be amended accordingly, for the sake of consistency[195]. Finally, the OHIM fee regulation[196] should also be adapted to the
new fee structure.

7.2.
Cooperation capacity building

As established in the sections 6.1.2 and
6.3, there is a need to establish a clear legal, technical and financial
framework for mandatory cooperation between the OHIM and the national IP
offices in order to facilitate convergence of practices and tools.

The necessary legal basis would best be
achieved by explicit provisions in the CTM Regulation. Such a rule would also serve
as a basis for the funding from OHIM budget in terms of financial regulations. These
primary provisions to be introduced into the CTM Regulation should be further
complemented by corresponding amendments to the TM Directive.

8.
Monitoring and Evaluation

The methods and timetable for monitoring
and evaluation would depend on the objective to be achieved and the choice of
legal instrument.

8.1.
Approximation of trade mark laws and procedures

Three years after the expiry of the
transposition deadline, Member States should submit to the Commission a report
on the implementation of the Directive. On the basis of these inputs, the
Commission could draw up a report on the application of the new provisions of
the Directive, including an assessment of the effectiveness of the measures
taken. OHIM and national IP offices would provide the Commission with any
assistance it may need when drawing up such a report.

The Commission report could then be
transmitted to the European Parliament, the Council and the European Economic
and Social Committee. It may be accompanied, if necessary and in the light of
developments in the EU legal order, by proposals for amendments to this
Directive.

8.2.
Cooperation capacity building

If a decision is taken to establish at OHIM
a funding mechanism with a view to facilitating cooperation activities with
national IP offices, then the use of this money will need to be monitored and
evaluated in order to ensure that it has achieved its intended objectives, in
accordance to the financial rules applicable to the Office, notably as regards
grant procedures. In addition to the requirements stipulated by the Financial
Regulation, the OHIM Administrative Board and the Commission will be informed
and involved in the procedures, as appropriate, and a summary report will be
prepared by OHIM on an annual basis.

Furthermore, five years after the entry
into force of the amendments to the CTM Regulation, the Commission will review
the new legal framework for cooperation, with particular attention to the grants
based funding scheme. To this end, the Commission shall establish an evaluation
report and transmit it the European Parliament and to the Council.

This report would be composed of:

(1)
An assessment of the results that will be
published by the Office in its annual reports;

(2)
An assessment of the funding model as such;

(3)
Any audit reports carried out by OHIM on its
cooperation activities with national offices;

(4)
Any public surveys of trade mark users on their
perception of progress with regard to the convergence of practices and tools at
OHIM and national offices.

Figure 19: Indicators

Objectives || Indicators

Objective 1: Approximation of trade mark laws and procedures || – Number of remaining differences between national laws (transposition check) – Evolution in companies' direct cost for IP advice – Average time needed to register a trade mark (including average time needed for an opposition procedure) – possible benchmark: average time in 5 best performing offices

Objective 2: Increased cooperation capacity || – Number of running and new cooperation projects – Number of IP offices participating in cooperation projects – Number of IT tools used by all and/or several IP offices – Number of common training schemes

9.
Annexes
9.1.
Annex 1: Glossary
9.1.1.
European Observatory on Counterfeiting and
Piracy

The European Observatory on Counterfeiting
and Piracy was launched in 2009. Its main objectives are to collect and report
data on the economic and societal implications of counterfeiting and piracy and
to create a platform for representatives from national authorities and
stakeholders to exchange ideas and expertise on best practices. The initial
work of the Observatory has triggered positive responses from the European Parliament,
the Member States and private-sector stakeholders but also showed that there is
need to expand the current work.

However, under the original set-up, the
Observatory was unable to fulfil its full potential and to take on new tasks.
In May 2011, therefore, the Commission presented a proposal for a Regulation
transferring the Observatory to OHIM in order to provide it with a more
sustainable infrastructure and thus allow it to fulfil a broadened range of
tasks. The Observatory Regulation[197]
was adopted in April 2012 and came into effect on 5 June 2012.

In the future, the Observatory should focus
increasingly on operational tasks, such as organising training for enforcement
authorities (customs, police and judicial authorities etc.), setting up a
database of national and European case law and fostering cooperation with and
support for those third countries which are particularly vulnerable to
counterfeiting and piracy and are used by complex criminal networks as
manufacturing and distribution bases.

9.1.2.
Technical terms relating to trade marks

Absolute grounds for refusal: These grounds constitute the first type of grounds on which
registration of a trade mark may be refused. They are due to the lack of
inherent registrability of the mark and do not depend on the existence of prior
rights of third parties ("absolute"). These grounds are set out in Article
7 CTMR (Article 3 TMD) and are examined ex officio during the registration
procedure. The main absolute grounds are that the mark lacks any distinctive
character or that it is descriptive as to an essential characteristic of the
goods or services applied for.

Cancellation:
Trade mark rights can be revoked
(Article 51 CTMR/Article 12 TMD) or be declared invalid (Articles 52, 53 CTMR/Articles 3, 4 TMD).
‘Cancellation’ refers to both types of proceedings. A registered trade mark can
inter alia be revoked in the absence of genuine use. Furthermore, it may be
declared invalid on application to the Office where it has been registered
contrary to absolute (including acting in bad faith when filing the
application) or relative grounds for refusal. OHIM has
exclusive jurisdiction with regard to direct revocation or invalidity
applications. Courts in Member States of the European Union, however, may
revoke or declare a CTM invalid when the issue is put to them as a counterclaim
in an infringement action based on the CTM.

Clearance of prior rights: Prior to the registration and use of a trade mark in any
jurisdiction, it is vital that appropriate trade mark clearance is conducted to
ascertain whether the mark is available for such purposes. Its main objective
is to make sure that the proposed use of the mark does not infringe prior trade
mark rights of others.

Collective trade marks: This category of trade marks is to be differentiated from
individual trade marks, which are used by an individual company to distinguish
its own goods or services, from those of its competitors (see also 'types of
trade marks'). By contrast, a Community collective mark is a mark which is used
collectively by members of an association to indicate that they form part of
that group.

Conversion:
The mechanism of conversion (Art. 112 – 114 CTMR) allows CTM applicants (or
proprietors) to convert their CTM applications (or registrations) that cannot
be registered (or maintained) at EU level into a national trade mark
application while preserving the original filing date of the first application.
Conversion may be requested in two cases. Firstly, when the CTM application is
(fully or partly) refused or withdrawn, for example, because of the existence
of a similar prior national trade mark registered for identical goods and
services. In such a case, the applicant may convert its CTM application into a
national trade mark application in those Member States where there is no
conflict with an older trade mark. Secondly, conversion into a national trade
mark may be requested when a CTM registration ceases to have effect, for
example, when the rights of the proprietor have been revoked on the grounds of
non-use in the Community pursuant to Art. 51 CTMR. As the CTM may have
fulfilled the requirements of genuine use in a Member State, it does not have
to disappear from the market but may be converted into a national trade mark.

Genuine use:
A trade mark has to be put to genuine use within a period of five years
following registration. Otherwise the trade mark proprietor may not invoke his
rights against third parties (non-use defence).

Opposition: This
refers to the legal procedure that allows third parties to oppose the
registration of a trade mark application by submitting a notice claiming that
it conflicts with their earlier rights (see "relative grounds for
refusal"). Under the CTMR (Article 41), opposition may be lodged within
three months following the publication of the trade mark application. In the
absence of an opposition or in the event of refusal of an opposition, the trade
mark application proceeds to registration. Although holders of earlier rights
may also object to such registration thereafter within the framework of
invalidity proceedings (see "cancellation"), there is an interest in
preventing the inclusion of such later, conflicting trade mark in the CTM
register by means of the opposition procedure.

Registration:
The formal procedure through which a new trade mark is entered in the Register.
The registration of a trade mark has the effect of securing its proprietor the
exclusive right to use it for the goods and/or services that it covers and to
prevent third parties to use, without consent, the same or a similar mark for
identical or similar goods and/or services as those protected by his mark.

Relative grounds for refusal: These grounds constitute the second type of grounds on which
registration of a trade mark may be refused. They are based on a likely
conflict with certain earlier rights, especially trade marks, as set out in
Article 8 CTMR (Article 4 TMD). Contrary to the situation in some Member States
where relative grounds for refusal are examined ex officio in addition to
absolute grounds[198],
in the CTM system an earlier right can only cause a bar to the subsequent
registration of a trade mark if the owner of the earlier mark files a formal
“opposition” (see "opposition").

Seniority: The seniority system
can be described as the possibility of "merging" earlier, identical
trade marks registered in one or more Member States into CTMs. It enables the duplication of registrations to be avoided, but not the
loss of the earlier national registration date. CTM applicants
who are already owners of an earlier national trade mark may switch to the CTM
system by claiming the seniority for the same
trade mark and for the same goods or services. The effect of seniority
is that if and when an earlier trademark is surrendered or allowed to lapse
(for example, when the registration of an earlier national trade mark is not
renewed for a further period of 10 years), the rights provided by this prior
trade mark are maintained in the Member State of its national registration,
provided the CTM remains in force.

Seniority database: The Seniority database includes the data of any earlier trade mark
registered in a Member state or in the Benelux countries, or registered under
international arrangements having effect in a Member state for which seniority
has been claimed while filing a CTM. National Offices need to maintain the records
of those national filings to ensure full transparency of the legal situation
and since
the invalidity or revocation of an earlier mark may be
established after it has been allowed to lapse (Article 14 TMD).

Types of trade marks: The European
concept of a trade mark (both as to the TMD and CTMR) has an open nature. It
may consist of all signs that may be used to distinguish the goods and/or
services of one undertaking from those of other undertakings, such as verbal
marks (consisting of words, including personal names, letters and numerals), figurative
marks (consisting of designs, logos and labels), colour marks (being a
figurative mark in colour or comprising a colour per se in the abstract), or sound
marks (being an audible sign such as music or vocal sounds).

Unitary character: The essence of a CTM is that it is given uniform protection and
that it has effect throughout the entire territory of the EU. A CTM can only be
registered, surrendered, transferred, revoked, or invalidated for the entire
territory of the EU (Article 1(2) CTMR). This means
that if there are circumstances (related to absolute or relative grounds for
refusal) that prevent protection in just one Member State, no CTM can be obtained
or maintained for the other states either.

9.2.
Annex 2: Proposals to be covered by the revision
of the regulatory framework
9.2.1.
Approximation of trade mark laws and procedures
(addressed in the problem definition)
9.2.1.1.
Principal procedural rules of the CTMR to become
also part of the TM Directive

–
Regulate requirements for obtaining a filing
date;

–
Regulate main criteria for the classification of
goods and services including the use and interpretation of class headings[199];

–
Regulate that ex officio examination of a trade
mark application is limited to absolute grounds for refusal;

–
Regulate that it must be possible for third
parties to submit to the office prior to registration of a trade mark
application observations, explaining on which absolute grounds the trade mark
shall not be registered;

–
Regulate that it must be possible to oppose a
trade mark application in proceedings before the office (mandatory
administrative opposition procedure);

–
Regulate that it must be possible to request the
invalidation or revocation of a registered trade mark in proceedings before the
office (mandatory administrative cancellation procedure);

–
Regulate that it must be possible to raise the
defence of absence of genuine use both in opposition and cancellation proceedings;

–
Provide for rules on duration of protection and
renewal;

–
Regulate that it must be possible to divide a
trade mark application and registration.

9.2.1.2.
Further substantive rules of the CTM Regulation
to become part of the TM Directive

–
Clarify the provisions of the CTMR in relation
to Geographical Indications (see also 9.2.4 below) and insert corresponding
provisions in the TM Directive;

–
Complement the TM Directive by a body of rules
addressing trade marks as objects of property (transfer, licensing, rights in
rem, levy of execution and insolvency);

–
Provide for a set of specific provisions
concerning the registration of collective marks.

9.2.1.3.
Reduction of optional provisions in the TM
Directive

–
Render mandatory, with regard to cancellation
proceedings, the optional absolute ground for refusal of bad faith
applications;

–
Render mandatory the relative ground of refusal
applying in case of conflict with a trade mark with reputation;

–
Render mandatory the trade mark rights concerning
extended protection for trade marks having a reputation.

9.2.2.
Cooperation capacity building (addressed in the
problem definition)

–
Establish in the CTM Regulation a clear legal,
technical and financial framework for mandatory cooperation between the OHIM
and the national IP offices in order to facilitate convergence of practices and
tools.

–
Complement the above amendments to the CTM
Regulation by corresponding amendments to the TM Directive.

9.2.3.
Amending or removing outdated provisions (not
addressed in the problem definition)

–
Definition of a trade mark (Art. 4 CTMR, Art. 2
TMD): A registered (Community) trade mark may only consist of signs capable of
being represented graphically. The requirement of graphic representability is
only apt for conventional trade marks which are visually perceptible, such as
words or designs. For new types of trade marks, such as those which are
perceived by the sense of hearing (i.e. sound marks), representation by other
than graphical means (e.g. by sound recordings) allow for a more precise
identification of the mark. Therefore, it is appropriate to replace the
requirement of graphic representability both in the TM Directive and the CTM
Regulation by the more flexible criteria established by the CJEU in the Sieckmann
case (C-273/00).

–
Filing of CTM applications through national
offices (Art. 25 CTMR): The option to apply for a CTM through a national IP
office has been foreseen by the CTM Regulation as a temporary measure (see Art.
25(5)). The gradual decline of relevant national filings has reached a point
where applications received through national offices have become near extinct. Therefore,
the option of filing a CTM through national offices should be abolished.

–
National and community searches (Art. 38, 155
CTMR): The search regimes on prior CTMs and national trade marls do neither
provide a reliable trade mark clearance tool, nor a fully comprehensive watch
of the Register. Therefore, the relevant provisions in the CTMR should be
deleted.

–
Registration fee (Article 45 CTMR): The
registration fee was de facto abolished by the 2009 fee reduction when its
level was set at € 0. Since then, the simplified fee structure with an
application fee only has proved successful with both OHIM and its users.
Accordingly, the provision on a registration fee has become redundant.

9.2.4.
Clarifying legislation and removing ambiguities
(not addressed in the problem definition)

–
Geographical indications as absolute and
relative grounds for refusal: The scope of absolute and relative grounds related
to protected geographic indications contained in the CTM Regulation is partly
unclear and inconsistent with specific legislation protecting such indications.

–
Rights conferred by a trade mark (Art. 9 CTMR,
Art. 5 TMD), including for goods in transit: The provisions laying down the
rights conferred by a (Community) trade mark are not completely clear. For the
sake of legal clarity it is necessary, inter alia, to clarify the scope of
trade mark rights as regards goods in various situations throughout the EU
customs territory as well as to spell out that the rights conferred are without
prejudice to the rights of proprietors of earlier rights acquired before the
filing date or the priority date of the (Community) trade mark.

–
Limitation of the effects of a trade mark

–
Intervening rights of the proprietor of a later
trade mark (Art. 57(2), (3) CTMR, no provisions in the TMD)

9.2.5.
Implementation of case law (not addressed in the
problem definition)

–
Protection of trade marks with reputation
(Article 8(5) CTMR, Art. 4(3) TMD): The Court of
Justice clarified in its Judgments in Davidoff (C-292/00) and Adidas (C-408/01)
that the extended protection for trade marks with reputation apply also in case
where the goods or services under comparison are identical or similar. Both the
TM Directive and CTM Regulation need to be amended to reflect this.

9.3.
Annex 3: Online services and degree of
automation at national offices (figures 3 and 4)
9.3.1.
Availability of online services

The following e-services were considered in
the context of the evaluation referred to in section 3.2.2.1: e-Searching – availability and maturity of online search capabilities and
functionality for users, e.g. different search functionalities for trade mark
and designs, also simple and extended professional searches; e-Filing – electronic
process for the application of trade marks and designs registrations online; e-Opposition
– availability to file an opposition electronically and further electronic
process support for the user; e-Renewal – electronic process to renew online,
also included e.g. electronic reminders to users and online availability of
status of renewals and deadlines; e-Payment – possibility to pay registration
and renewal fees electronically; e-Enforcement – if the office has any
enforcement powers, this would mean that there is electronic support for
processes; otherwise electronic support for awareness campaigns of IP
enforcement etc.; e-Access – availability of all documentation online regarding
registered trade marks and designs. Electronic support for communication
between users and national offices or between national offices, e.g.
standardised email-communication; e-Administration – all electronic processes
inside the national office to support the trade mark and design handling; e-Authentication
– possibility to work with electronic signatures inside the national office or
as a user.

9.3.2.
Degree of automation at national offices

The assessed processes were: trade mark
examination - the process of examination (absolute grounds / relative grounds)
to determine if the trade mark application is valid and can be registered; trade
mark opposition - the process of opposition in which an user (or trade mark
holder) files an opposition against an announced registry of a trade mark; trade
mark cancellation - the process of cancellation of already approved trade
marks; trade mark similarity search - the process (or service) that determines
the degree of similarity of the trade mark application with the already
registered trade marks; trade mark renewal - the process of renewal of already
registered trade marks; design examination - the process of examination to determine
if the design application invalid and can be registered; design invalidation - since
there is no opposition process for designs, it is possible to do an
‘invalidation’ to declare the design invalid throughout the life-cycle of a
design; design renewal - the process of renewal of already registered designs; fee
management - the process of management of the user fees of the provided
services by national offices (e.g. registry, renewal, additional services like
similarity searches); appeals - the process of the handling of user or trade
mark holder appeals against a made decision by the national office; recordals -
the process of administration of the owner details for trade marks and designs.

9.4.
Annex 4: Overview of
trade mark application and registration fees

Figure 20: Trade mark application and registration fees[200] charged in the EU

Offices with one-class-per-fee system || Offices with application fee covering three classes

|| Application + registration fee covering 1 class || Fee for any additional class || Total amount of fees for 3 classes || || Application + registration fee covering 3 classes

Cyprus[201] || €26 || €26 || €78 || Austria[202] || €359

Estonia[203] || €185 || €45 || €275 || Benelux[204] || €240

Greece[205] || €110 || €20 || €150 || Bulgaria[206] || €278

Ireland[207] || €247 || €70 || €387 || Czech Republic[208] || €199

Italy[209] || €101 || €34 || €169 || Denmark[210] || €315

Latvia[211] || €180 || €29 || €237 || Finland[212] || €215

Lithuania[213] || €70 || €35 || €140 || France[214] || €200

Malta[215] || €116 || €116 || €348 || Germany[216] || €290

Portugal[217] || €120 || €30 || €180 || Hungary[218] || €264

Romania[219] || €150 || €50 || €250 || Poland[220] || €121

Spain[221] || €140 || €91 || €322 || Slovakia[222] || €166

Sweden[223] || €209 || €105 || €419 || Slovenia[224] || €250

UK[225] || €211 || €62 || €335 || ||

Average || €143 || €55 || €253 || Average || €241

|| OHIM || €900

9.5.
Annex 5: Procedural issues – opinions of the
Impact Assessment Board

A draft of this impact assessment was
submitted to the IAB on 21 September 2011 and discussed at the Board's meeting
on 19 October 2011. The IAB issued an opinion on 21 October 2011 finding that
the draft report should be significantly improved in several important aspects.
The report has been substantially revised, improved and extended in order to
completely comply with the opinion of the IAB.

The IAB indicated that
the report should better explain the scope of the report by particularly
explaining why the curent OHIM fee levels appeared to be appropriate overall.
In this respect, the relevant section was extensively amended and restructered
to make reference to the commitment made in the previous impact assessment on
the fee reduction, and to provide details on the assessment
of OHIM's fees and fee structure carried out within the framework of the Max
Planck Institute (MPI) Study[226]. Moreover, the relation to the Observatory's impact assessment is
clarified, and the measures aligning the TM Diective are now covered by the
scope of the present report.

The IAB also
recommended that all the problematic legal issues should be presented upfront,
distinguishing them clearly from the capacity-related issues and corraborating
them better, using evaluation and consultation results. To this effect, the
problem definition section, including the problem tree at the end, was
substantially restructured, modified and expanded by better defining, distinguishing
and substantiating the relevant problem drivers, the corresponding problems and
the adverse consequences they cause. The drivers relating to the divergences of
the regulatory framework (including the missing clear legal basis for
cooperation) are kept clearly apart from those concerning the cooperation
capacity of IP offices. With regard to the technical cooperation capacity of
offices, the revised draft now provides substantial evidence (reflected in the
new figures 3 and 4) demonstrating the limited availability of e-services at
national offices and their low degree of automation.

The IAB further recommended that the report
present a full baseline scenario that reflects the established practice of OHIM
to cooperate with national offices bilaterally, the improvements generated by
the Cooperation Fund, and the synergies created by the takeover of the above
Observatory by OHIM. The relevant baseline section was significantly amended to
this effect, and all the aspects recommended by the IAB are now addresed
therein.

The IAB also recommended that the
subsidiarity section should better demonstrate the need for further
harmonisation of the trade mark systems in Europe and alignment of the TM
Directive with the CTM Regulation. The relevant section was substantially
revised and extended to meet that request.

The IAB as well recommended that the report
present policy objectives and options that better correspond to the identified
problem drivers in order to establish a clear intervention logic. The relevant objectives
section was redrafted to more clearly indicate the scope and goals of the
proposed revision of the European trade mark system. Both the newly defined
operational objectives and the respective options offered now entirely
correspond to the identified problem drivers. As further recommended by the IAB
in this context, the specific measures included in each of the policy options
are now described in greater detail. Moreover, as regards the related
recommendation to consider additional options, the revised report now considers
the option of redistributing the remaining surplus by increasing the budget of
the Cooperation Fund. In compliance with a further recommendation, the revised
report now also makes clear (not least by reference to a new Annex 2) for each
element of the policy options, if a modification of the CTM Regulation and/or
the TM Directive is necessary. As further recommended by the IAB, the available
options on financing cooperation activities from the OHIM budget are now
presented as self-standing options and their analysis structured accordingly.

The IAB also recommended that the impacts
of the selected options be better analysed. To this effect, the relevant
sections of the revised report now fully justify the need to make the cooperation
between national IP offices and OHIM mandatory, and demonstrate better that the
preferred policy option would not cause an imbalance in the OHIM budget.
Moreover, particular focus was given on strenghtening the important
international impacts.

The revised draft of this impact assessment
was submitted to the IAB on 10 Januar 2012. The IAB issued a second opinion on
that revised draft on 3 February 2012, confirming that the report had been
improved to a significant extent along the lines of the IAB's first opinion.
The report has been further revised and improved in order to address the
remaining points raised by the IAB.

The IAB recommended that the problems
related to the problem drivers (i.e. non-harmonised substantive law issues and
optional provisions in the TM Directive) should be explained and corroborated
with evidence, as is done in the case of the missing procedural rules in the TM
Directive. To this effect, the relevant section explaining the insufficient
level of harmonisation as regards substantive law, including optional
provisions, was substantially extended so as to substantiate the individual
problems related to the protection of geograhical indications, the rules
applicable to trade marks as objects of property, the provisions concerning collective
trade marks, and optional provisions. The IAB further recommended making
clearer the provisions not addressed in the problem definition due to their
limited impact. In this respect, Annex 2 was improved in order to make it
clearer which proposed amendmends are addressed in this impact assessment and
which are not. Moreover, in response to the recommendation to better explain
the aspect of predictability of trade mark systems, a detailed definition of
predictability was added in a new footnote, the first time it is referred to in
the text.

With regard to the cost-benefit analysis
carried out by OHIM in relation to the Cooperation Fund projects, the IAB
further recommended that the report should explain in detail how the estimates
for potential benefits have been derived, and should list the underlying
assumptions. To this effect, a new Annex 8 was added to chapter 9. Moreover,
the IAB recommended to present those benefits within the impact analysis of the
relevant policy solutions. The text in the relevant sections was adjusted
accordingly. Furthermore, the baseline scenario was complemented by detailed
explanations of the benefits generated by the projects already launched under
the Cooperation Fund, as further advised by the IAB. Upon recommendation of the
IAB, the base line scenario was finally also revised to make reference to the
harmonisation already achieved at the international level.

The IAB further advised better
justification of the lack of alternative policy solutions. To this effect, it was
clarified in the text of the chapter identifying the options that the latter
resulted from the outcome of the evaluation of the overall functioning of the
European trade mark system. Moreover, upon recommendation of the IAB, the
correlation between the launch of the new funding mechanism for cooperation
activities and the apparent ongoing existence of the Cooperation Fund was
better explained.

Overall, the report has been revised in
order to provide greater transparency on the views of stakeholders, as recommended
by the IAB. Both appropriate cross references to the MPI Study and an extra
Annex 7 summarising the most relevant statements made by user associations were
added.

Finally, the impact assessment took into
account recommendations from DG BUDG regarding the parts dealing with financial
matters and OHIM’s budget. The options related to funding of cooperation under
the OHIM budget were reconsidered. The revised report took into account further
(legal and budgetary) elements which resulted in a change in the originally
preferred option (i.e. funding from the OHIM operational budget by means of
grants instead of a distribution mechanism based on renewal fees). Moreover, to
the problem definition part, non-harmonisation of trade mark procedures, new
paragraphs were added dealing with drawbacks linked to potential congestion of
registers. The analysis of available options was completed accordingly (new
element: harmonisation of number of classes of goods and services to be covered
by a single trade mark application, including the necessary adjustment of some
OHIM fees). The preferred option remained the same in this case.

9.6.
Annex 6: Cost of cooperation activities

When estimating the cost of future cooperation
activities between OHIM and national offices, aimed at convergence of practices
and development of common tools, the cost of several existing frameworks was
taken into consideration.

–
Bilateral cooperation agreements: These arrangements are aimed at financing specific information and
advice services related to the CTM. They may also cover costs related to fairs,
exhibitions and publications as well as organisation of seminars, workshops
etc. Finally, some national offices co-fund by these means their seniority
databases. Bilateral cooperation agreements between OHIM and national offices
first started in 2005 when 13 offices participated. The below table shows the
expenditure related to these activities in the past years as well as the number
of participating offices.

Figure 21:
Expenditure for bilateral cooperation agreements in 2009 – 2012

|| 2009 || 2010 || 2011 || 2012 (estimated cost)

OHIM contribution (80%) || OHIM contribution (80%) || OHIM contribution (80%) || Overall cost || OHIM contribution (80%)

Number of participating offices || 20 || 22 || 25 || 25 || 25

TOTAL || 1,818,721.43 || 2.371.147,58 || 2,113,590.48 || 3,052,238.45 || 2,441,790.76

Source: OHIM

–
Cooperation Fund:
As mentioned in previous parts of this report, the creation of the Cooperation
Fund was agreed in 2008, including its allocation of €50 million. The
implementation of first projects under this Fund, including financial
engagements, started in 2011 and it is expected that the final project will be
completed by 2015. The Cooperation Fund itself covers only the operational cost
of particular projects. The cost related to the management of the programme as
a whole and of each particular project are borne by OHIM from its operational
budget. The Office estimates that this additional management cost will amount
to approximately €5 million in total (€1 million a year). Moreover, the overall
cost of the agreed projects[227]
may exceed the original budget of € 50 million. The Office has committed
to allocate further money to to this programme, if needed.

–
Multilateral cooperation projects: In parallel to the above bilateral agreements, a number of
multilateral projects between OHIM and national IP offices have been launched
since 2006, namely TMView and Euroclass. As these initiatives have been taken
over by the Cooperation Fund the cost of their set up is not specifically
included when calculating the current expenditure on cooperation. In this
context, only their "running" cost is taken into account. The running
(or maintenance) cost is the expense which offices participating in a
particular cooperation project incur, once it has reached its cruising speed.
In principle, this cost is due to the need to maintain available data (e.g. via
website services) and to update them regularly. It may encompass expenditure
related to IT administration (staff managing the servers, supporting incidents
and solving problems), hardware acquisition (renting or depreciation of
hardware cost), maintanance support for hardware (maintenance of servers, 24x7
support, utilities such as space, power and cooling) as well as regular (daily)
communication of data from national offices to the central hub (database) at
OHIM. Based on the OHIM calculations, the running cost for a big project (such
as the TMView) amounts on average to € 132.000 a year. Accordingly, if all
25 national offices participate in such a project their running costs in total
will be € 3,3 million a year.

The overall cost linked to the ongoing
cooperation activities is summarised in the below table.

Figure 22: Overview of current cost of cooperation (rounded figures
in million €)

|| Overall cost (where applicable) || Cost per year

Bilateral agreements || || 3,0

Cooperation Fund – projects || 50,0+ || 10,0+

Cooperation Fund – management || || 1,0

Multilateral projects – running cost || || 2,0+ per project (e.g. 3,3 for TMView )

TOTAL || || 16,0++

Source: OHIM

With a view to the future cooperation
scheme, the following issues should be clarified:

First, the Cooperation Fund and existing
bilateral and multilateral cooperation projects will cease to exist with the
launch of the new funding mechanism for cooperation, based on grants. It is
foreseen that the current common actions will be covered from this income in
the future. In terms of cost, it is expected that the expenditure related to
the current bilateral agreements will remain at the same level (€ 3
million a year).

Second, it is planned that with the funds
already allocated to the Cooperation Fund the development of a number of
valuable projects will be finalised. In order to ensure that these common
databases and other tools really achieve the intended objective and remain
"alive" (see section 3.2.2.2) it is of utmost importance to ensure their
stable and long-term financing in order to cover the "running cost".
Accordingly, upon the completion of the Cooperation Fund there may be a significant
change in the funding needs. It is expected that the expenditure on development
will decrease (depending on the number of new common initiatives, see below) and
the running cost increase. For example, if only five projects, currently under
development, were up and running upon the closure of the Fund, their funding
needs by then could be estimated, based on current experience, at € 10
million a year.

Third, the implementation of the Cooperation
Fund has revealed that the current common projects are limited to a number of
selected initiatives. When preparing the work programme for the Cooperation
Fund, for example, proposals for 126 cooperation actions (including overlaps) were
submitted from user organisations and national IP offices. Eventually, the Fund
was deemed to be able, mainly for budgetary reasons, to encompass only 18
initiatives. This experience indicates that the finalisation of the Cooperation
Fund will not be an end point, but that there will be need for additional
common projects in the future. It is not expected, however, that these new
initiatives will be as great as the Cooperation Fund. When estimating the cost
of future cooperation activities, therefore, only one third of the related
current expenditure (setting up plus management cost) was taken into account
(€ 3 million a year). Last but not least, many national offices have not been
able so far to join several cooperation projects for the reasons of budgetary
and/or other restrictions. Therefore, it might be expected that as soon as an
appropriate legal, technical and financial framework is provided the
participation rate will significantly increase which in turn may further
increase the cost of setting up new projects.

Based on the above figures and other
considerations, it might be estimated that the overall amount needed to finance
cooperation activities between OHIM and national IP offices would slightly increase
compared to today's situation and be in terms of € 17 – 20 million per
year and possibly higher.

9.7.
Annex 7: Summary of the main statements made by
user associations
9.7.1.
General position regarding the coexistence of
the trade mark systems in Europe

User organizations agree that the
coexistence of CTMs and national trade mark rights is fundamental and necessary
for the efficient functioning of a trade mark system capable of meeting the
needs of businesses. Despite the generally positive view on the structure of
the two systems, a number of user organizations express concerns that the
relationship between these two systems is not well balanced. It is noted that
following the current legal regulation and practice, users have been encouraged
to seek exclusive rights in Community trade marks beyond their realistic scope
of interests, i.e. without the intention and possibility of using them in the
whole of the EU (ECTA, COAPI, FICPI). User organizations indicate several
issues which should be reviewed in order to facilitate a proper balance between
the systems. (Source: MPI study, Chapter 2, paragraphs 2.2 - 2.3).

9.7.2.
National trade mark systems

According to user organizations significant
divergences between the national systems still exist. These divergences are due
to the optional provisions in the TM Directive and the fact that the Directive does
not cover procedural aspects and rules on trade marks as property (e.g.
assignment, licensing). Furthermore, national offices tend to interpret legal
provisions differently. User organizations unanimously state that further
harmonization of national trade mark laws, with regard to both substantive law
and procedural issues, is needed. Regarding substantive law, user organizations
suggest that the currently optional provisions of the TMD should be made
mandatory (AIM, AIPPI Belgium, APRAM, ECTA, FICPI). According to MARQUES,
provisions governing the possibility to base an opposition or a request for
cancellation on a well-known national mark (Article 4 (4) (a) TMD) should be
made mandatory; ECTA indicates that Article 3 (2) (d), Article 3 (3) and
Article 4 (4) (a) TMD should in particular be made mandatory. According to
INTA, harmonization of provisions relating to trade marks as property should
also be considered, including such aspects as recordal in the trade mark
register of assignments and licenses, or the right of the licensee to take
legal action against trade mark infringements (source MPI study, paragraphs
2.4-2.5 and 2.8).

Regarding procedural issues, user
organizations suggest the harmonization of inter alia (a) whether relative
grounds are examined ex-officio or only upon opposition (e.g. AIM, AIPPI
Belgium, MARQUES propose the abolition of examination of earlier rights
ex-officio; ECTA also suggests that national offices should only examine
absolute grounds); (b) whether a system of pre-registration or
post-registration opposition should be adopted (most user organizations
generally express support for pre-registration oppositions (AIM, AIPPI Belgium,
APRAM, COAPI, FICPI, GRUR, ITMA, LESI); (c) the possibility to deal with
opposition, revocation and cancellation proceedings at the national offices
without having to refer to long and costly court procedures (APRAM, ECTA,
INTA); user organizations indicate the necessity of uniform guidelines
concerning registrability and proof of use requirement (MARQUES). ECTA proposes
to provide for request for proof of use in cancellation proceedings and
opposition proceedings (MPI study, paragraphs 2.9-2.10).

Besides legal aspects, user organizations
stress the necessity of better harmonisation of national offices’ practices,
processes and procedures as well as the interpretation of legal rules by the
courts. A number of particular measures have been suggested to facilitate the
harmonization of practices throughout the EU, including closer cooperation and
the development of common guidelines; creation of a single repository for all
CTM court decisions to be translated into the major languages of the EU;
establishment of common performance standards between the offices; education
and seminars, better communication and exchange of information, development of
common tools etc. Regarding E-business tools user organizations are unanimous
that all national offices should further improve and harmonize their use of
technology and their accessibility to users, thereby becoming more transparent
in their procedures. Such E-business tools should include unique online systems
providing options for e-filing, online access, e-renewal, e-payment and e-oppositions
as well as easily searchable databases. The possibility of a single EU databank
which contains all trade mark rights or “one-stop” online searching should also
be considered (ECTA, INTA) (MPI study, paragraphs 2.11-2.13).

9.7.3.
National offices and cooperation with OHIM

All user organizations agree that the main
role and mission of the national offices and OHIM should be the fast and
efficient delivery of a legal title to trade mark protection, and the
resolution of conflicts amongst trade marks, as well as related rights by
handling opposition proceedings, cancellation and invalidation requests, in a
timely and cost efficient manner. ECTA, AIM, MARQUES stress the importance of
financial autonomy of national offices as it provides a stimulus to seek improvement
of services rendered at the best cost / benefit ratio (e.g. by the use of new
common IT-tools (AIPPI Belgium, MARQUES). Most user organizations maintain that
any distribution of part of the OHIM renewal fees to national offices should
not be automatic but should be substantiated by appropriate tasks to the
benefit of the users (AIM, APRAM, ECTA, EFPIA, FICPI, ITMA, VFA (MPI study,
paragraphs 2.14 and 2.17).

9.7.4.
Community trade mark system

Regarding the issue of graphical
representation of trade marks, COAPI and ECTA state that the requirement should
be maintained. In that context it is suggested to think about how
non-traditional trade marks (e.g. olfactory marks, taste marks, etc.) could be
represented (e.g. GRUR, MARQUES). AIM, APRAM, GRUR, INTA propose that the
system should be opened to other possibilities or the establishment of new
conditions to represent new forms of trademarks (e.g. sound file as computer
file). FICPI is also in favour of a broader definition. INTA indicates that
currently there seem to be inconsistencies in the application of standards for
registration and requirements for graphic representation that vary between
national offices and OHIM (MPI study, paragraph 2.22).

Most user organizations (AIPPI Belgium,
COAPI, ECTA, EFPIA, FICPI, GRUR, INTA, ITMA, LESI, MARQUES) do not support the
OHIM’s practice of encouraging lists of goods and services corresponding to the
Nice class headings, indicating that it leads to unnecessarily broad
specifications of goods and services for which the applicant has no intention
to use the mark, or they claim at least that further conditions should apply so
as to ensure a precise and uniform use of the classification system (AIPPI
Belgium). On the other hand, AIM is of the opinion that the current practice
should not be changed as it meets business needs (MPI study, paragraph 2.28).

Most user organizations are in favour of
the current OHIM practice whereby no ex-officio examination of relative grounds
is being performed (AIM, AIPPI Belgium, ECTA, EFPIA, GRUR, LESI, MARQUES, VFA),
although different opinions also exist. The majority of user organizations are
also in favour of the current pre­registration opposition system, as opposed to
post-registration opposition (AIM, APRAM, COAPI, ECTA, FICPI, LESI, ITMA,).
INTA has expressed a general position that systems which only examine for
absolute grounds should maintain pre-registration opposition systems to ensure
that relative grounds can be considered prior to the registration of trade
marks (MPI study, paragraph 2.34).

9.8.
Annex 8: Findings of a Social Cost Benefit
Analysis

This is an excerpt from the Social CBA
analysis carried out by OHIM between July 2010 and June 2011 for the
Cooperation Fund projects. As any CBA analysis, it is intended to be an
estimate based on assumptions and parameters which may not always prove to be
accurate. The estimate can only be considered a first approach to identifying
possible social benefits of investments, without giving either a guarantee or a
commitment for specific benefits.

This CBA adopted the point of view of
society. This means that it considered not only tangible results, such as
cost-savings, but also indirect impacts on beneficiaries, such as satisfaction
and time-saving for businesses. It also assessed how cost and benefits would be
distributed among stakeholders: OHIM, national IP offices and businesses using
their services. The CBA was carried out for two groups of projects, both of
which were launched in 2011 (January and September). These projects are
currently in the implementation phase. Only two projects have been closed out
to date: IT architecture and seniority projects. The time span used for the
first group CBA was 15 years. This was then revised to 10 years for the second
group, which was considered to have a shorter payback period. In both cases the
yearly discount rate is 5%. The CBA used conservative estimates and
assumptions, e.g. on expected process improvements, increases in business
volume or number of national IP offices participating.

The CBA concluded that all projects would
produce a net benefit to society and would be therefore worth going ahead with.
It also suggested foreseeing "gates" within each project to refine
the analysis based on more updated information and fewer assumptions. These
gates would allow for a project to stop if it appears no longer feasible.

Each CBA started by considering the
benefits that would accrue to the businesses registering trademarks, to the IP
offices, and to OHIM. For example, in the case of e-filing, the project is
meant to achieve three major objectives:

– Improve the experience of businesses, with a reduction of
time spent, a more predictable and transparent outcome, fewer errors and lower
legal costs.

– Ensure efficiency savings for IP offices. The interests of IP
offices and businesses often coincide: for example, faster processing time are
an efficiency gain for IP offices and a benefit for businesses which use their
services.

– These efficiency gains in turn could translate into a reduction
of fees or improved services for businesses, as in the long term IP offices
are assumed to operate on a non-profit basis.

9.8.1.
Packet 1 projects

The table below provides an overview of the
results of both CBA broken down by project.

Figure 23: Final overall CBA table for all Packet 1 projects

|| Cost || Benefit OHIM per year || Benefit IP offices per year || Benefit businesses per year || Total benefit per year || Net Present Value over 10 years

Search Image || -1,118,000 || 194,435 || 1,944,355 || 3,889,908 || 6,028,698 || 23,642,448

Seniority || -722,000 || 58,324 || 1,173,539 || 887,925 || 2,119,788 || 6,970,156

Quality || -485,000 || 415,549 || 415,549 || 1,952,956 || 2,784,054 || 9,375,875

Designview || -2,257,000 || 265,000 || 500,000 || 1,370,000 || 2,135,000 || 6,123,727

Similarity || -823,000 || 162,000 || 545,541 || 1,327,205 || 1,872,746 || 5,353,448

CESTO || -1,522,000 || 295,000 || 1,745,000 || 2,848,357 || 4,545,945 || 15,583,640

Architecture and Standards || -874,000 || 50,000 || 150,000 || Not calculated || 200,000 || 620,000

E-learning || -1,130,000 || 36,000 || 105,853 || 243,696 || 385,549 || 5,751,173

TOTALS || -8,931,000 || 1,476,308 || 6,579,837 || 12,520,047 || 20,576,192 || 73,420,467

Source: OHIM

The figure above shows that this package of
options would produce net benefits far out-weighting the costs. In the first
case a cost of approximately € 9 million would yield a net benefit above € 73
million over 10 years. This means that each Euro of cost would yield over € 8
of net benefit. The ratio between cost and net benefit of most individual
projects over 10 years is in line with the 6% average and ranges between 1% and
9%.

Note: Two very conservative assumptions
have been made: one, that 10 offices implement each of the tools (we have
received expressions of intent to implement for far higher numbers); and, two,
that tools only deliver benefits for a ten-year period including the
development time. This excludes the long-term benefits of harmonisation. All
these figures are work in progress and will be updated on a regular basis.

The above table shows that most of the net
benefit accrues to businesses.

9.8.2.
Packet 2 projects

The table below shows the costs and
benefits for Packet 2 projects. The first column contains the costs of each
project, while the subsequent four columns show the average annual benefits for
OHIM, the participating IP offices, the businesses, and the total. Finally, the
last (highlighted) column shows the Net Present Value of the net benefits of
each project, discounted over 10 years using a discount rate of 5%.

Figure 24:
Final overall CBA table for all Packet 2 projects

|| Cost || Benefit OHIM per year || Benefit IP offices per year || Benefit businesses per year || Total benefit per year || Net Present Value over 10 years

Future Software Package: E-filing for Trademarks || -4,399,150 || 45,000 || 949,689 || 8,876,329 || 9,871,018 || 45,337,752

Database supporting Enforcement of IP Rights and Counterfeiting Intelligence Support Tool || -1,798,940 || 900,000 || 470,800 || 132,307,704 || 133,678,504 || 666,556,678

Harmonised User Satisfaction Survey || -645,754 || 120,000 || 2,675,062 || 0 || 2,795,062 || 15,793,074

Common Gateway for Applications || -790,691 || 675,000 || 15,650,800 || 238,750 || 16,564,550 || 96,376,700

Common Call Centre Tool || -1,388,508 || 990,000 || 3,942,070 || 3,637,500 || 8,569,570 || 27,229,170

TOTAL: || -9,023,043 || 2,730,000 || 23,688,421 || 145,060,283 || 171,478,704 || 851,293,374

Source: OHIM

Packet 2 would cost approximately € 9
million and produce a net benefit to society worth a staggering € 171
million yearly with a present value of € 851 million over 10 years. The
CBA revealed that the most efficient project would be a database supporting
enforcement of IP rights and counterfeiting intelligence support tool: it would
cost approximately € 1,8 million and produce alone almost 80% of the total
net benefits. This means that one Euro of cost on this project would produce € 371
of net benefit over 10 years. Other projects are comparatively less efficient,
but still definitely worth going ahead with, as on average one euro of cost
compares with approximately € 26 of net benefit.

In relation to the TMview and Euroclass
projects, launched before the kick-off of the Cooperation Fund, an ex-post
simplified CBA analysis has been conducted which provides the following
estimates:

Figure 25: Overview for TMView and Euroclass

|| Cost || Benefit IP offices per year || Benefit businesses per year || Total benefit per year || Net Present Value over 10 years

TMView || 2,330,798 || 1,909,600 || 1,672,925 || 3,582,525 || 5,108,184

Euroclass || 5,880,692 || 694,444 || 923,710 || 1,618,154 || 5,353,198

TOTAL: || 8,211,490 || 2,604,044 || 2,596,635 || 5,200,679 || 10,461,382

Source: OHIM

Note: The above simplified CBAs for TMview
and Euroclass is based on tools with 25 offices participating in. It is based
on the following assumptions:

TMview: end users benefit from reduced
commercial search service costs[228]
(since use of TMview is free of charge) and reduced national search reports fee
payments when filing CTMs, plus reduced labour costs related to the time needed
for conducting searches (TMview being a single search tool with results in
seconds); offices benefit from OHIM’s subsidy of their running costs derived
from servicing TMView

Euroclass: end users benefit from a
decrease of refusal decisions, thanks to the pre-filing use of Euroclass search
results, while offices benefit from reduction in time of examination due to use
of pre-accepted terms shown in Euroclass for classification purposes, thus
gaining efficiency.

9.8.3.
Assumptions underlying benefit calculations

The key assumptions used to calculate the
benefits for each project are outlined below. In general, the benefits to OHIM
and the IP Offices consist of efficiency gains due to the reduction in the
number of calls and e-mails and other streamlining of processes, and in most
cases a modest increase in the number of trademark applications filed as a
result of improved user experience or increased perceived value of a trademark
once stronger enforcement tools are deployed. For businesses, the main sources
of benefits are a reduction of harm from counterfeiting and piracy, as a result
of more efficient enforcement tools, a reduction in legal expenses to conduct
various proceedings before OHIM and the other IP offices, and a reduction in inter-partes
cases, such as oppositions resulting from more effective search and information
tools provided at the time or before filing of the application.

Figure 26: Main assumptions behind benefit calculations

|| OHIM || IP Offices || Business

Future Software Package: E-filing for Trademarks || – 10% reduction in number of calls, e-mails and complaints. || – Reduction of the number of examiners (1.3 FTE per office); – 1% increase in number of TM applications; – 15% reduction in number of calls, e-mails and complaints. || – 50% reduction in refusals on Absolute Grounds and formalities; – 10% reduction in the number of oppositions; – 5% reduction in the number of cancellations – Increase of 3 percentage points in the number of applications filed without using intermediary; – 5% reduction in the number of calls, e-mails and complaints filed with IP offices.

Database supporting Enforcement of IP Rights and Counterfeiting Intelligence Support Tool || – 1% increase in number of CTM filings. || – 1% increase in number of TM filings. || – 1% reduction of revenue lost due to piracy and counterfeiting; – 10% reduction in the number of legal actions.

Harmonised User Satisfaction Survey || – Savings in consultant costs to carry out survey. || – Avoided cost to develop and run own survey; – Savings in consultant costs to carry out survey; – 1% increase in number of TM filings due to higher customer satisfaction. || – No direct benefits.

Common Gateway for Applications || – 1% increase in the number of CTM filings; – 20% reduction in examiner training cost due to on-going best practice exchange and knowledge transfer. || – 1% increase in number of TM filings; – Avoided cost of “look and feel” adaptations of individual applications; – Avoided cost of “label translations” for individual applications; – 20% reduction in examiner training cost due to on-going best practice exchange and knowledge transfer. || – 10% reduction in the number of calls, e-mails and complaint filings.

Common Call Centre Tool || – 20% reduction in the number of calls, e-mails and complaints forwarded from other IP offices; – 1% increase in the number of CTM filings. || – Avoided costs of developing own call centre solution; – 1% increase in number of TM filings. || – Efficiency gains due to reduction in time spent (by intermediaries) on obtaining information from OHIM and other IP offices.

Common assumptions; || – Time horizon is 10 years; – Discount rate used to calculate NPV is 5%; – On average, 10 IP offices participate in each project.

Source: OHIM

9.8.4.
Comments on broader social impacts

–
As far as legal costs for enterprises are
concerned, taking into account that 99.8% of companies in EU27 are SMEs, and
that overall they don't have big market power, it can be assumed that a
significant part of their savings would be transferred to consumers via lower
prices. This conclusion, however, depends on the specific market conditions in
each sector.

–
Conversely, the legal profession is among the
"losers" of some of these projects, as legal costs savings would mean
the reduction in the use of this intermediary. Such intermediaries would need
to transition towards provision of higher value-added services to their clients
to make up for the lost revenue.

–
Employment effect: the CBA carried out by OHIM
calculated that some of the efficiency gains would materialise through a
potential re-deployment of staff, particularly information centre employees
dealing with customer inquiries and even examiners. This would allow offices to
focus their resources on improving service provided to business. In terms of
quality of work, the image boost for IP offices would translate into higher
commitment and motivation of employees.

[1]               Hereinafter, the 24 national IP offices and the
Benelux Office for IP are referred to jointly as "national IP
offices" and the national and regional trade marks as "national trade
marks".

[2]               Given the unitary character of a Community trade mark
(Article 1(2) CTMR), protection cannot be obtained if absolute grounds for
refusal exist in any part of the EU (for example, trade marks that would be
purely descriptive in one of the EU languages and/or would be contrary to
public policy in one Member State). Similarly, the existence of an earlier
national trade mark in a single Member State can prevent the registration of a
CTM for the whole territory of the EU.

[3]               In principle, companies should be able to freely
choose between registration at national, Community or international level,
depending on their business needs and the type of protection that they want to
secure for their trade mark rights. Ideally, their choice ought to be guided by
considerations regarding plans for future expansion, existence of prior rights
in some territories, investment in IP protection etc. In practice, however,
their free choice is often biased by uneven conditions at individual IP
offices. For more details about these issues see chapter 3.2, problem
definition.

[4]               The 1989 Trade Mark Directive was amended only once
in 1992 as regards its transposition deadline. The 1994 CTM Regulation was
amended in 2003 in relation to the EU accession to the system of international
trade mark registrations under the Protocol to the Madrid Agreement. In 2004,
the CTM Regulation was subject to some further amendments on substantive law
and procedures. Both the TM Directive and the CTM Regulation were codified in
2008 and 2009, respectively, but without any changes on substance.

[5]               For more details refer to section 3.1.2.

[6]               Council Conclusions of 21 and 22 May 2007, Council
document 9427/07.

[7]               COM(2008) 394 final.

[8]               COM(2008) 465 final.

[9]               COM(2010) 2020 final.

[10]             COM(2011) 287 final.

[11]             Council document 2010/C 140/07.

[12]             The impact assessment does not look into provisions of
the implementing measures to the CTM Regulation.

[13]             This 2009 impact assessment addressed the issue of OHIM
budgetary surplus and of its financial perspectives in general. As a first
step, the report identified the need to stabilise the OHIM budget in the medium
term and to avoid a further growing gap between its revenues and expenditure.
As a second step, it announced a later, more comprehensive revision of OHIM's
financial structure to be carried out in the context of a study on the overall
functionning of the Community and national trade mark systems. See at http://ec.europa.eu/governance/impact/ia\_carried\_out/docs/ia\_2009/sec\_2009\_0419\_en.pdf.

[14]             Proposal for a Commission Regulation on the amendment
of Commission Regulation (EC) No 2869/95 on the fees payable to the Office for
the Harmonisation in the Internal Market (Trade Marks and Designs), C(2009)
2322. This Regulation (EC) No 355/2009 was adopted on 31 March 2009.

[15]             This assessment, carried out by the Commission contractor,
the Max Planck Institute for Competition and IP law (MPI), included questions
on levels of various OHIM fees (notably application, renewal, opposition,
cancellation and appeal fees), the need for their further adjustment and/or
changing the fee structure overall. In the context of this study and also as
part of the overall evaluation exercise, led by Commission services, views of
all interested parties were sought, in particular, that of trade mark users,
national IP offices and OHIM.

[16]             See MPI Study, pages 190-191.

[17]             SEC(2011) 612, http://ec.europa.eu/internal\_market/iprenforcement/docs/observatory/sec\_2011\_0612\_
en.pdf.

[18]             See glossary in Annex 1 (section 9.1).

[19]             One example of such an outdated provision is the
definition of a trade mark which still contains the requirement of graphical
representation for a sign to be registered as a trade mark. This definition is
no longer suitable for new, non-conventional trade marks, for example sounds.

[20]             For details regarding both IAB opinions and subsequent
revisions of the impact assessment report see Annex 5 (section 9.5),

[21]             http://ec.europa.eu/yourvoice/ebtp/consultations/2008\_en.htm.

[22]             In terms of participation there were 391 replies and
the size of the companies that replied was very variable, from small and medium
enterprises to big companies (more than 500 employees).

[23]             See the final MPI study, including annexes, at
http://ec.europa.eu/internal\_market/indprop/tm/index\_en.htm

[24]             See the tender specification at:
http://ec.europa.eu/internal\_market/indprop/docs/tm/090722\_tender\_en.pdf

[25]             As part of the MPI study, an empirical assessment of
the development of the CTM system and its relationship with national trade mark
systems was carried out by the Institute INNO-tec at the
Ludwig-Maximilians-Universität, LMU Munich School of Management. The final
INNO-tec report, annex 1 to the MPI study, is available at
http://ec.europa.eu/internal\_market/indprop/docs/tm/20110308\_inno-tec-report\_en.pdf.

[26]             See the
final Allensbach report at http://ec.europa.eu/internal\_market/indprop/docs/
tm/20110308\_al-lensbach-report\_en.pdf.

[27]             For all received contributions refer to Annex 4 of the
study: Statements of user organisations, available at
http://ec.europa.eu/internal\_market/indprop/docs/tm/20110308\_statements-of-use\_en.pdf.

[28]             For a combined presentation of the opinions of user
associations per subject see MPI study p. 31-38. See also a summary of the
statements made by user associations, in particular in relation with
problematic legal and capacity related issues, in Annex 7.

[29]             A systematic presentation of the statements of national
IP offices per question is included in the MPI Study, ‘Chapter 1: Interviews
with, and information from, national trade mark offices’ p. 5 - 30.

[30]             When carrying out these consultations, the Commission
minimum consultation standards (Cf. "Towards a reinforced culture of
consultation and dialogue – General principles and minimum standards for
consultation of interested parties by the Commission", COM(2002) 704
final) were observed. In particular, the consultation documents were drafted in
a clear and concise manner and sufficient notices were given for both
participation in meetings and responses to questionnaires. Given the very
specific subject matter, there was not an open public consultation. However,
all relevant target groups were consulted by means of appropriate tools and the
consultation process was given a large publicity.

[31]             Source: European Brand Institute, www.eurobrand.cc.

[32]             For the used methodology, refer to methods of brand
valuation of the European Brand Institute at http://www.icon-net.com/medialib/file/EBI\_eurobrand%20Methoden\_ISO\_ON\_Okt%202010.pdf.

[33]             For example, this was the case of Finland in 2009; see
"eurobrand2009 country review" at http://www.eurobrand.cc/studien-rankings/eurobrand-2009/

[34]             Source: http://www.aim.be/economic\_aspects.htm

[35]             Same as in footnote 34.

[36]             Even more pronounced is the growth in applications
filed at national IP offices by national (resident) applicants, which rose from
269,000 in 1996 to 364,000 in 2008.

[37]             At the top of the ranking are the French IP Office (91,214
applications in 2011) and the German Patent and Trade Mark Office (69,117
applications in 2011). As regards the national registers, the German database
contained in 2011 774,000 registered trade marks and the French one 1,010,260.
Overall, the registers of Member States’ IP offices (without OHIM) contain
almost 9 million trade marks.

[38]             By the end of 2012, OHIM registered almost 900,000 CTMs
and, in October 2011, the one millionth CTM application was filed.

[39]             In the context of the INNO-tec economic study (footnote
25), the analysis also detected some evidence suggestive of competition between
OHIM and national offices. However, it could shed only a limited amount of
light on the extent of the effect that competition between the CTM and national
trade marks has on demand for the latter. This rather unclear picture is
confirmed by the relevant information which the MPI itself obtained from
national offices. In fact, national offices were clearly not unanimous when
asked whether the fee reduction for CTMs has had any impact on the number of
applications for national trade marks received by the office (for more details
see paragraph 1.21 on p. 9 of the MPI study and also considerations taken into
account in the IA for the last CTM fee reduction in 2009 (footnote 13), p. 16
under point 3.4.3 'Coexistence' and footnote 17 of this document under iii).

[40]             While in 2009 OHIM received 88,209 CTM applications,
and, thus, practically the volume as forecasted (90,000), the Office got 11%
more applications in 2010 (98,313) and witnessed a further increase in 2011
(105,857).

[41]             Source: report of Allensbach Institute (footnote 26);
OHIM data and calculations.

[42]             Originally First Council Directive No 89/104/EEC of 21
December 1988, now codified as Directive 2008/95/EC.

[43]             This means harmonisation of trade mark definition (i.e.
of signs of which a trade mark may consist), grounds for refusal of a trade
mark application and for invalidation of a registered trade mark, further
grounds for refusal or invalidity concerning conflicts with earlier rights etc.

[44]             See the 4th and 5th recitals to
the Preamble of the TM Directive.

[45]             Originally the Council Regulation (EC) No 40/94 of 20
December 1993 on the Community trade mark, now codified as Regulation 207/2009.

[46]             Commission Regulation (EC) No 2868/95 of 13 December
1995 implementing Council Regulation (EC) No 40/94 on the Community trade mark;
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) and Commission Regulation (EC) No 216/96 of 5 February 1996 laying
down the rules of procedure of the Boards of Appeal of the Office for Harmonization
in the Internal Market (Trade Marks and Designs).

[47]             See also footnote 2.

[48]             Example of a "relative" ground for refusal,
see Art. 8 CTMR, see also Glossary in Annex 1.

[49]             Example of an "absolute" ground for refusal,
see Art. 7 CTMR, see also Glossary in Annex 1.

[50]             MPI Study Part III, Chapter 1.A
"Coexistence", pages 45-47.

[51]             See
Glossary in Annex 1.

[52]             See Glossary in Annex 1.

[53]             Allensbach survey (footnote 26), pages 16-18.

[54]             See footnote 25. In the above text, reference is made
to page 22 of the INNO-tec report.

[55]             Source: OHIM data.

[56]             Source: OHIM data.

[57]             Source: OHIM data.

[58]             Source: OHIM data.

[59]             Source: OHIM data.

[60]             See the 4th Recital of the Preamble to the TM
Directive.

[61]             MPI study, p. 32.

[62]             See Conclusions on the future trade mark review, document
referred to in footnote 11, paragraph 14, last bullet point.

[63]             See for the CTM Articles 26 and 27 of the CTM
Regulation.

[64]             See explanation given in the following under point (a).

[65]             See explanation given in the following under point (b)

[66]             See explanation given in the following under point (c).

[67]             See for the CTM Article 40 allowing to submit
observations on the basis of absolute grounds for refusal

[68]             See for the CTM Articles 41 (opposition), 51
(revocation), 52 (absolute grounds for invalidity) and 53 (relative grounds for
invalidity) and furthermore the explanation given under point (d).

[69]             See for the CTM Articles 46 (duration) and 47 (renewal)
of the CTM Regulation.

[70]             See for the CTM Articles 44 (division of the
application) and 49 (division of the registration).

[71]             For reference see footnote 46.

[72]             International Classification of Goods and Services
under the Nice Agreement Concerning the International Classification of Goods
and Services for the Purposes of the Registration of Marks; available at
http://www.wipo.int/classifications/nice/en/classifications.html.

[73]             Case C-307/10, The Chartered Institute of Patent
Attorneys ("IP TRANSLATOR").

[74]             For details refer to figure 9 under 6.2.1.2.

[75]             MPI Study, p. 53, paragraph 1.32.

[76]             MPI Study, p. 55, paragraph 1.39. For details on the
views presented by stakeholders and on the related evidence gathered refer to
p. 54, paragraphs 1.36 to 1.38 of the Study.

[77]             See MPI Study, p. 169, paragraph 4.47.

[78]             According to the MPI Study, p. 12, paragraph 1.24, the
average number of classes covered by a trade mark application in Spain has gone
down to 1,5. By contrast, according to OHIM the current average number of
classes covered by a CTM application is 2,9, and thus twice the Spanish
average.

[79]             ECTA, GRUR, FICPI, UNION, ITMA, COAPI, CIPA, INTA,
Marques, EFPIA and Vfa..

[80]             See Glossary in Annex 1.

[81]             That practice was introduced in some EU jurisdictions
as a consumer protection measure to ensure that they are not confused when
making purchasing decisions. However, it is increasingly being abandoned, both
in the EU and internationally, on the assumption that the protection afforded
to prior right holders is principally aimed at protecting the interests of
competitors and that, at any rate, consumers are adequately protected through
the action taken by the owners of prior rights against later confusingly
similar trademarks. For that reason, it was not included in the system
introduced by the CTM Regulation. While in the EU the majority of Member States
(including all bigger countries except Poland) follow the CTM approach in the
meantime, there are still eleven Member States which adhere to the principle of
relative grounds examination ex-officio (for details refer to figure 9 under
6.2.1.2). The latter approach may be considered as reflecting a contradiction
between the nature of relative grounds, aimed at protecting private property or
rights, and the fact that an ex officio examination is carried out as if they
were absolute grounds, which are aimed at protecting the public interest.

[82]             See in this regard also Annex 2.

[83]             See Article 7(1)(j) and (k) for absolute grounds and
Article 8(4) for relative grounds for refusal.

[84]             Notably Council Regulation (EC) No 510/2006 of 20 March
2006 on the protection of geographical indications and designations of origin
for agricultural products and foodstuffs, Regulation (EC) No 110/2008 of the
European Parliament and of the Council of 15 January 2008 on the definition,
description, presentation, labelling and the protection of geographical
indications of spirit drinks and Council Regulation (EC) No 479/2008 of 29
April 2008 on the common organisation of the market in wine.

[85]             See the Judgment of the Court of Justice of 14 July
2011 in joined Cases C-4/10 and C-27/10 ‘Bureau national interprofessionel
du Cognac’

[86]             See Article 8 of the TM Directive which in particular
does not regulate whether licensees need the consent of the proprietor to
instigate infringement proceedings.

[87]             The CTM Regulation contains in Section 4 a
comprehensive body of rules dealing with CTMs as objects of property (see
Article 17 on transfer, Article 19 on rights in rem, Article 20 on levy of
execution, Article 21 on insolvency proceedings and Article 22 on licensing).

[88]             This essentially concerns the important question
whether a registered trade mark may be assigned separately from any transfer of
the undertaking as so provided in Article 17(1) of the CTM Regulation.

[89]             The need to allow for the separate transfer of trade
marks is also imposed by Article 21 of the WTO’s Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS).

[90]             Article 15 of the TMD only allows to provide for
additional grounds for refusal or cancellation, or to derogate from the
non-descriptiveness requirement laid down in Article 3(1)(c).

[91]             Manual concerning proceedings before the Office, Part
B, Examination, Section 10.2.

[92]             A recent example is CTMA N° 9 136 714, filed in the
name of the EU, represented by the European Commission.

[93]             See MPI study, p. 131, para. 2.314 (concerning
geographical indications), p. 222 (on the protection of collective marks), and
p. 225-227 (on the rules addressing trade marks as objects of property).

[94]             Article 3(2) TM Directive allows Member States to
include, in addition to the mandatory absolute grounds for refusal listed in Article
3(1), further grounds for refusal into their national law, such as under point
(d) concerning applications made in bad faith or trade marks resulting from
such applications.

[95]             Article 4(4) permits Member States to include, in
addition to the mandatory relative grounds for refusal listed in Article 4(1)
and (3), further grounds for refusal into their national law, such as under
point (a) relating to trade marks having a reputation in the Member State which
are applied or registered for dissimilar goods and services.

[96]             See Article 5(2) of the TM Directive.

[97]             MPI study, p. 30.

[98]             MPI study, p. 32, para. 2.4.

[99]             For details, see MPI study, e.g. p. 32, paragraphs 2.5
– 2.6, p. 49, paragraph 1.18 and p. 95, paragraph 2.148.

[100]            MPI study, Part V, Chapter 1.

[101]            Article 90 CTMR on 'administrative cooperation' reads:
"Unless otherwise provided in this Regulation or in national laws, the
Office and the courts or authorities of the Member States shall on request give
assistance to each other by communicating information or opening files for
inspection. Where the Office lays files open to inspection by courts, Public
Prosecutors' Offices or central industrial property offices, the inspection
shall not be subject to the restrictions laid down in Article 88."

[102]            The relevant e-services considered in this context are
specified in Annex 3, point 9.3.1.

[103]            The relevant assessed processes are specified in Annex
3, point 9.3.2.

[104]            See also MPI study, p. 257, para 23.

[105]            The term ‘predictability’ is used to denote the
ease with which trade mark applicants can successfully anticipate the result of
the registration procedure, by predicting whether or not their trade mark will
be granted. Predictability requires legal certainty (i.e. a set of clear and
unambiguous legal rules) and a uniform, consistent and coherent interpretation
of these norms by trade mark authorities. Predictability is greatly enhanced by
the existence of common practices and tools, such as common guidelines,
databases etc. and, in order to be sustainable in time, it requires the
continuous cooperation between trade mark authorities across the EU, as well as
their commitment to constantly strive for an ever increasing convergence of
their practices. This is all the more so in view of the fact that trade mark
examination often entails a high degree of subjectivity, which can only be
eradicated, or at least diminished, by a set of clear and detailed assessment
rules.

[106]            Notably as regards trade mark tools and electronic
services, e.g. databases, searching facilities etc., which are still not
available at (all) IP offices – at present and as illustrated previously in
figure 3, the development in this field is lagging behind the business
environment of the 21st century which relies to a large extent on information
technologies and where speed plays a key role.

[107]            Source OHIM, based on the evaluation carried out with
the consultancy Gartner, see under point 3.2.2.1.

[108]            In this regard, the CTM Regulation and its provisions on
searches appear outdated as they do not provide a satisfactory remedy to this
problem. According to Article 38(1) CTMR the Office draws up a Community search
report citing those earlier CTM which might be in conflict with the
application. The CTM applicant can also request, against payment of a fee, a
national search report from a Member State’s IP office. This service, however,
is offered currently only by 10 national offices. Furthermore, both search
reports are elaborated only after the filing of a CTM, i.e. after the
application fee was paid. The trade mark study confirmed that many users do not
consider these searches reliable and therefore useful; see MPI study, p. 182.

[109]            MPI study, p. 43, paragraph 4.13.

[110]            In particular, as regards availability of administrative
opposition and cancellation procedures – see examples given in box 3 above.

[111]            See MPI study, p. 13, paragraphs 1.30 – 1.31, including
a full overview of average registration times at individual offices While most
of national offices reported that the average registration time falls in the
limits of either 3 to 6 months (11 offices) or 7 to 18 months (12 offices), in
two offices the registration takes up to 2,5 and 4 to 5 years, respectively.

[112]            See MPI study, p. 20, paragraph 1.46, including a full
overview of average registration times at individual offices.

[113]            The consultation via the EBTP (see footnote 21) revealed
that more than 90% of the replying companies consider speed to be a very
important or fairly important aspect when assessing the work of an IP office.
This view was subsequently and widely manifested by trade mark users throughout
the whole evaluation process.

[114]            See above case study in box 7.

[115]            For further indications as regards the adverse effects
of low harmonization, see in Annex 4 to the MPI study (footnote 27) the
contribution of European Community Trademark Association (ECTA) of 14 January
2010, pages 2-5.

[116]            See explanations and examples provided above under
3.2.1.1, point a).

[117]            So expressly the General Advocate in his opinion of 29
November 2011 in Case C-307/10, paragraph 42.

[118]            See INNO-tec report, pages 27-32.

[119]            Two of these multilateral projects, namely the "TM
View" and "Euroclass", started already in 2006 but were later on
integrated into the Cooperation Fund.

[120]            According to the CTM Regulation, the budget of the
Office should be balanced. However, over a number of years, OHIM was
accumulating a significant surplus. The measures agreed in September 2008 were twofold.
As regards the use of the accumulated surplus, these were the establishment of
a reserve fund (currently kept at € 200 million) and the creation of the
above Cooperation Fund. With a view to balancing the annual budget, it was
agreed to reduce OHIM fees (applicable as of May 2009). Moreover, the idea of
distributing a proportionate part of OHIM renewal fees to national IP offices
was outlined in the context of the September 2008 agreement.

[121]            See at http://oami.europa.eu/ows/rw/pages/QPLUS/OHIMCooperationFund.en.do.

[122]            OHIM financial provisions are adopted, in accordance
with Art. 143 CTMR, by the OHIM Budget Committee and aligned as much as
possible with the financial regulations of the EU. See Regulation No CB-3-09 of
the OHIM Budget Committee of 17 July 2009 laying down the financial provisions
applicable to the Office ("Financial Regulation").

[123]            The Administrative Board and the Budget Committee
(ABBC), both composed of one representative of each Member State and one
representative of the Commission and their alternates. Each representative has
one vote except for the Commission which does not have the right to vote.

[124]            The TMView has been operational since 2010 and currently
provides full access to registers of OHIM, WIPO and of the offices of the
following countries: Bulgaria, Benelux, Czech Republic, Denmark, Estonia,
France, Italy, Lithuania, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden
and the United Kingdom.

[125]            As regards TMView, see the support expressed, for
example, by AIM, ECTA, ICC and Marques in Annex 4 to the MPI study, p. 10-11,
108+115, 169 and 226, respectively; as for seniority databases, see, for
example, contributions by ECTA, EFPIA and INTA, pages 108, 130 and 187,
respectively.

[126]            As regards the bilateral arrangements, where the
involvement of all 25 offices was recently achieved, it should be clarified
that these agreements are substantially different from the multilateral ones.
They are not shared among several offices and should rather be seen as
delegation of some services from OHIM to national offices. Therefore, the high
participation rate should not be overestimated and perceived as a new trend in
the area of cooperation, raising unfounded expectations as regards the other
common projects.

[127]            For purposes of this CBA, the rates for SAEGIS’ online
searching have been considered (Source:
http://trademarks.thomsonreuters.com/price-list, being the price 2,65 US
Dollars per search.).

[128]            See the document referred to in footnote 17; chapter
3.1.3, p. 8, and chapter 3.1.6, p. 9, respectively.

[129]            Regulation (EU) No 386/2012 of
the European Parliament and of the Council of 19 April 2012 on entrusting the
Office for Harmonization in the Internal Market (Trade Marks and Designs) with
tasks related to the enforcement of intellectual property rights, including the
assembling of public and private-sector representatives as a European
Observatory on Infringements of Intellectual Property Rights

[130]            See under 3.2.1 above, last paragraph, and, under 6.1.2
below, last paragraph.

[131]            For reference of all the mentioned communications see
section 1.2 'political context' above.

[132]            For details see list of proposals in Annex 2, point
9.2.1.

[133]            The harmonisation of the principal procedural rules is
also proposed by the MPI study (see p. 232, point 2.49), but an exception is
made in respect of ex-officio examination of relative grounds (see issue
described above under 3.2.1.1, point (c)). In that regard, the study admits
that goods reasons speak in favour of abandoning such examination all over but
that Member States should nevertheless be entitled to continue it. By contrast,
the presented option of partial approximation would include the alignment of
this issue, being considered indispensable for creating a harmonious and
complementary European trade mark system overall, so that ex officio
examination of a trade mark application is limited to absolute grounds both at
CTM and national levels. This would be in line with the current trend (e.g.
reflected in the corresponding amendment of the Spanish trade mark law in 2001,
the similar modification of the UK law in 2007 and the recent change of the
Bulgarian law), which is to abandon ex-officio examination of relative grounds
in order to create a level playing field between the CTM and national systems
and so also to ensure that businesses, that opt for the national registration
procedure are not treated worse than those that choose the CTM route.

[134]            This harmonisation at international level covers inter
alia the filing date requirements of a trade mark application, the possibility
to divide a trade mark application or registration, the classification of goods
and services, and the duration and renewal of registration. None of these
issues are currently addressed in the TM Directive (see listed in Annex 2 under
point 9.2.1.1).

[135]            These areas are classification, ex-officio examination
of relative grounds, opposition and cancellation.

[136]            These issues were in particular addressed in the
submissions of user organisations in the context of the MPI study and at the
Commission hearing on 26 May 2011.

[137]            As already mentioned under 3.2.1.2 this is also favoured
by the MPI study (see footnote 93).

[138]            For example the alignment of all deadlines, fee
structures, representation before the office, examination of formal
requirements, publication of the application, content of a notice of
opposition, examination of the opposition, multiple oppositions, registration
of the trade mark including certificate of registration, appeals etc.

[139]            For details on the proposed amendments see Annex 2,
point 9.2.

[140]            See MPI study and its Annex 4, as referred to in
footnote 27.

[141]            In other areas of EU legislation an obligation on Member
States to cooperate among themselves to ensure the efficient application of EU
policies is recurrent. For example, Council Regulation (EU) No 904/2010 of 7
October 2010 on administrative cooperation and combating fraud in the field of
value added tax (recast) or Council Regulation (EC) No 2006/2004 on Consumer
Protection Cooperation, which lays down the framework and general conditions
under which Member States are to cooperate. Such obligation is sometimes
followed by an obligation to cooperate using a specific instrument (e.g. IT
system). In this respect, the recent Commission proposal for a Regulation of
the European Parliament and of the Council on administrative cooperation
through the Internal Market Information System (‘the IMI Regulation’)
(COM(2011)522) require Member States to use a certain IT system in the
application of certain Union acts governing the free movement of goods, persons,
services and capital in the internal market which require Member States to
cooperate and exchange information with one another and with the Commission.

[142]            MPI study p. 32 and 232, para. 2.47 and 2.49; for
details: Annex 4 to the MPI study (as referred to in footnote 27). Examples of
representatives of large companies (International Trademark Association –
INTA), small brand owners (European Brands Association – AIM) and agents
(European Communities Trademark Association – ECTA)

[143]            MPI study, p. 38, para. 2.41

[144]            Number of classes covered by the
application/registration fee.

[145]            In alignment with the CTM system opposition procedures
were introduced by the recent amendments to the Bulgarian trade mark law that
entered into force on 10 March 2011. See information provided under http://www.country-index.com/articles/article\_103.pdf.

[146]            Together with the introduction of administrative
opposition procedures the ex-officio examination of relative grounds was
abolished. For source see footnote 145.

[147]            Ex-officio examination of relative grounds is only
available in relation to identical earlier trade marks which were applied or
registered for identical goods and services. Accordingly, ex-officio
examination would not cover similar trade marks and/or similar goods and services.

[148]            In Estonia, oppositions are not handled by the IP office
but by a specialised appeal body at the Ministry of Economic Affairs and
Communications, see MPI report, p. 20, paragraph 1.45, third bullet point

[149]            In Italy, however, the administrative cancellation
procedure is available on the basis of a court request after a judgment
concerning relative grounds.

[150]            See the reasoning given for Czech Republic, footnote 147
above.

[151]            Conclusions on the future trade mark review, document
referred to in footnote 11, paragraph 14, last bullet point. Also in
contributions of national offices to the MPI study (not publicly available).

[152]            MPI study, p. 232, para. 2.48 – 2.49.

[153]            The background for the legislative changes in Spain and
the UK concerning ex-officio examination of relative grounds including its
economic and commercial relevance is described in detail in a reference study
conducted by OHIM for the reviewers of the trade mark law of the People's
Republic of China. The document is available under http://www.ipr2.org/storage/OHIM\_Trademark\_Examination\_Systems\_in\_EU973.pdf.

[154]            Such a move was explicitly supported by a number of
national offices during the consultation phase, in particular for its
anti-cluttering effect; source: contributions of national offices to the MPI
study (publicly not available).

[155]            The level of OHIM fees is generally considered to be one
of the key elements for a balanced coexistence of systems, as stressed by a
number of national offices in their contributions to the MPI study (publicly not
available).

[156]            See in detail in figure 10 under next point 6.2.1.3.

[157]            For the calculation of this average amount the
application fee levels of all national offices operating with an application
fee covering one class of goods or services were considered.

[158]            Annex 4 (section 9.4) provides an exact overview of the
trade mark application and registration fees charged in the Union.

[159]            This is the case for the application fee in Sweden (€
209), the UK (€ 211) and Ireland (€ 247).

[160]            As also reflected in figure 9, this is the case for the
offices in Austria, Benelux, Bulgaria, Czech Republic Denmark, Finland, France,
Germany, Hungary, Poland, Slovakia and Slovenia.

[161]            The average amount of fees covering three classes is
obviously higher than the average amount of fee for a one class application and
consequently would come closer to a further reduced CTM application fee level.

[162]            These fee levels could be further combined with a
discount to the CTM application fee for applicants using a common
classification tool (see 6.4.1.3 and 6.5).

[163]            MPI study, p. 33, para. 2.11 – 2.13; Annex IV to MPI
study (as referred to in footnote 27)

[164]            MPI study p. 23, chapter II.

[165]            See Annex 6 (section 9.6).

[166]            Source: OHIM; for more details refer to Annex 6 (section
9.6).

[167]            For further examples see figure 5 in chapter 3.2.3
above.

[168]            Conclusions of the OHIM Administrative Board and Budget
Committee of 18 and 19 September 2008 as regards agenda item "How to
better balance OHIM's budget – the way forward", available at:
http://oami.europa.eu/ows/rw/resource/documents/OHIM/institutional/ABBC/summary\_joint-meeting-18-09-2008\_en.pdf.

[169]            See reference in footnote 11

[170]            The MPI believed that the key should be composed of a
"minimum amount" distributed on an equal share to all Member States
and a "proportionate amount", based on the numbers of national trade
mark applications in that respective country. The amounts dedicated for (i) and
(ii) would represent each 50% of the overall available sum.

[171]            See COM(2011) 928 final and
Regulation (EC) No 223/2009

[172]            See under 6.4.2.3. as regards projects under the OHIM
strategic plan.

[173]            Source: OHIM; for more details refer to Annex 6.

[174]            See Annex 6 (section 9.6)

[175]            It is expected that the income from OHIM renewal fees
should be close to € 40 million a year. Over years, the renewal rate
remains stable at 55%.

[176]            MPI study, p. 33, para. 2.13; Annex IV to the MPI (as
referred to in footnote 27).

[177]            For example, MPI study, p. 24.

[178]            In 2012, the Euroclass database was available to users
of OHIM and of 8 national offices who adopted the harmonised list of goods and
services (currently containing 90.000 terms). The remaining national offices
are expected to join by the end of 2013.

[179]            Combined with the new fee structure, following the
introduction of the one-class-per-fee system (see 6.2.1.3), the application fee
(covering one class) with the discount for using the classification tool would
be € 725, the fee covering two classes € 775 and three classes
€ 850.

[180]            See MPI study, p. 34, paragraph 2.17; Annex IV to the
MPI study: Statements of User Organizations – contributions from AIM, APRAM,
ECTA, EFPIA, FICPI, ITMA and VFA. The issue was also discussed at the
Commission's hearing with user organisations on 26 May 2011.

[181]            Accordingly, as part the study, the contractor analysed
the financial status in interviews with the national offices and discussed
possible accounting mechanisms: MPI study, p. 5, 29 – 30 and 263. Contributions
of national offices to the MPI study (publicly not available).

[182]            In budgetary terms, this
spending will be part of a single expenditure heading together with the
"regular" operational expenditure. As a result, the operating result (annual income/annual
expenditure) is expected to be negative for a couple of years – see line 4 in
figure 17. However, given the accumulated surplus (which appears in the budget
on the revenue side as "title 3: balance from previous financial
year") the total budget will remain balanced.

[183]            In 2011, yearly filings amounted to 550.000 altogether –
OHIM received over 105,000 CTM applications and Member States‘ offices about
435,000 national trade mark applications. See also section 3.1.2, footnotes 37 and
38.

[184]            There are 9,8 million of trade marks in registers of
European IP offices – almost 1 million of CTMs at OHIM and almost 9 million of
national trade marks at Member States‘ IP offices (2013). See also section
3.1.2, footnotes 37 and 38.

[185]            As regards new CTM owners, SME largely prevail; see
figure 1 in section 3.1.4.

[186]            E.g. MPI study, p. 234.

[187]            See footnote 2 and section 3.1.6.1.

[188]            21% of SMEs and 30% of LSE
owning trade marks at OHIM, confirm that their prevailing practice is to apply
for both national and CTM protection; see section 3.1.6.2, figure 2.

[189]            E.g. Non-existent regulatory framework for cooperation
between IP offices in Europe, missing Union wide databases.

[190]            The foreseen measures, both cooperation activities and
harmonisation efforts, will
primarily serve the Union interest and not that of the national offices or
OHIM. E.g. a common trade mark database does not provide a particular added
value for a single IP office, if seen in isolation. For its users, however, as economic
operators on the internal market, these databases will make a significant
difference, allowing them to properly evaluate the situation and to make
informed choices when determining trade mark strategies.

[191]            Sections 6.2.1.3, 6.4.1.3 and 6.4.2.3, respectively.

[192]            See referred to above under point 1.1 (c).

[193]            The major link is reflected in the fact that, on one
hand, an international trade mark registration is obtained by extending trade
mark protection to countries being party to the Madrid system on the basis of a
national basis application or registration (including a CTM) and, on the other,
that the protection of a foreign (i.e. non EU) trade mark application or
registration can be extended to cover the territory of one or more Member
States of the EU or the latter as a whole.

[194]            For details on the necessary amendments see Annex 2,
point 9.2.

[195]            This concerns the main criteria for the classification
of goods and services, see Annex 2, point 9.2.1.1, footnote 199.

[196]            See footnote 46.

[197]            For reference see footnote 129.

[198]            See chapter 3.2.1.1.(b).

[199]            As the relevant CTM provisions are incomplete, this will
require also amendments of the CTM Regulation.

[200]            Listed amounts of fees concern the cheapest filing
option by electronic means where available and are rounded to the nearest euro.

[201]            http://www.mcit.gov.cy/mcit/drcor/drcor.nsf/trade\_mark\_charges\_en/trade\_mark\_charges\_en

[202]            http://www.patentamt.at/Media/Infoblatt\_Gebuehren.pdf

[203]            http://www.epa.ee/client/default.asp?wa\_id=953&wa\_object\_id=1&wa\_id\_key

[204]            https://www.boip.int/wps/wcm/connect/6b3cf080474b73a8b9ddbf578c655cb7/BnlTariffs200701.pdf?
MOD=AJPERES&CACHEID=6b3cf080474b73a8b9ddbf578c655cb7

[205]            https://www.marques.org/class46/default.asp?D\_A=20121109

[206]            http://www.realandintellectualproperty.com/wp-content/uploads/2011/08/TARIFF.pdf

[207]            http://www.patentsoffice.ie/en/trademark\_schedule.aspx

[208]            http://www.upv.cz/en/ip-rights/trade-marks/fees.html

[209]            http://www.uibm.gov.it/index.php?option=com\_content&view=article&id=2005075%3Acome-richiedere-la-registrazione-di-un-marchio&lang=it

[210]            http://iprights.dkpto.org/trademark/prices-and-payment.aspx

[211]            http://www.lrpv.lv/index.php?lang=EN&id=28

[212]            http://www.prh.fi/en/tavaramerkit/hinnasto/hakemusmaksut.html

[213]            http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc\_l?p\_id=151225&p\_query=&p\_tr2=2

[214]            http://www.inpi.fr/fr/marques/deposer-une-marque/combien-coute-un-depot.html

[215]            https://secure2.gov.mt/ipo/Intellectual\_Property\_Office\_Malta/FAQ.aspx?ct=1

[216]            http://www.dpma.de/english/trade\_marks/fees/index.html

[217]            http://www.marcasepatentes.pt/files/collections/eng\_US/28/29/30/Table%20of%20Industrial%20
Property%20Fees%202012-2013.pdf

[218]            http://www.hipo.gov.hu/English/vedjegy/vedjegy\_dijtablazat\_en.pdf

[219]            http://www.osim.ro/index3\_files/trademarks/amountt.pdf

[220]            http://www.uprp.pl/oplaty-zgloszeniowe/Lead05,173,1755,4,index,pl,text/

[221]            http://www.oepm.es/export/sites/oepm/comun/documentos\_relacionados/Tasas/Tasas\_Signos
Distintivos\_1\_Julio\_2012.pdf

[222]            http://www.indprop.gov.sk/?administrative-fees-trademarks

[223]            http://www.prv.se/en/Trademarks/Fees-and-payment/

[224]            http://www.uil-sipo.si/sipo/addition/resources/fees/trademarks/

[225]            http://www.ipo.gov.uk/types/tm/t-formsfees.htm

[226]            See footnote 23.

[227]            In total, 18 cooperation projects have been identified
to be financed out of the Cooperation Fund. However, the overall cost of the
whole programme cannot be precisely forecasted at this stage since it would
depend to a large extent on the numbers of national offices participating in
each particular project. It should be noted in this context that national
office do not need to participate in all projects and are able to join also in
the course of the project's implementation.

[228]            For purposes of this CBA, the rates for SAEGIS’ online
searching have been considered (Source:
http://trademarks.thomsonreuters.com/price-list, being the price 2.65 US
Dollars per search.). The national search fee cost for CTM applicants is 120
euros per CTM application for which applicant requests a national search.

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