EUIPO and the balance of equality vs legality 14 Feb 2017

The 5th Board of Appeal’s decision (Case R 1488/2016-5) on the registrability of EUTM No. 14430276 “SMART-SEAL” in Classes 16, 17, 20 (essentially packaging goods) includes, a more detailed than usual, analysis of why EUIPO is not bound by its own previous decisions and perhaps merits commentary.

The mark was refused over Article 7(1) (b) and (c), both in conjunction with Article 7(2) EUTMR, for all goods covered by the application. In addressing the Examiner’s letter of provisional refusal and also in support of its appeal before the Board of Appeal, the applicant had argued that the earlier EUTM No. 5543616, ‘SMARTSEAL’ was registered by the EUIPO in Classes 16 and 17 and the combination of ‘smart’ and ‘seal’ has also been registered in the UK, US and Canada in Classes 16, 17 and 20.

This may be the most interesting factual element of this case. For those joining me in wondering whether the applicant would have a legitimate interest or demonstrate plain sense in relying on an earlier identical mark in the same classes (save Class 20) to succeed, one should know that the applicant had actually filed a cancellation action against the said mark over non- use (there could also be some discussion about the similarity of the goods involved).

The Board of Appeal endorsed the Examiner’s call on descriptiveness and lack of distinctiveness of the EUTM Application, but also addressed in detail the argument that other EUTM registrations, including SMARTSEAL No.  5543616 in Classes 16, 17, would mean that EUTM Application No. 14430276S MART-SEAL is not descriptive. The Board of Appeal did not restrict itself to the ‘classic’ reply that “decisions concerning the registration of a sign as a European Union trade mark which the Office or the Boards of Appeal are called on to take under the EUTMR are adopted in the exercise of circumscribed powers and are not a matter of discretion”.

Making its second reference to the need for EUIPO to strive for consistency, the Board cited para. 65 of T-554/12, § 65, (27/03/2014, T-554/12, Aava Mobile, EU:T:2014:158) to base the more technical finding that the Board of Appeal cannot be bound by decisions from first-instance departments, in particular when these have not been appealed.

Further, it ruled that “[i]t is a fact that the Office should endeavour to apply a consistent practice in examining trade marks in relation to absolute grounds for refusal. However, it is unfortunately inevitable that doubtful trade marks are sometimes registered.Notwithstanding this, the observance of the principle of equal treatment must be reconciled with observance of the principle of legality according to which no person may rely, in support of its claim, on unlawful acts committed in favour of another (27/02/2002, T-106/00, Streamserve, EU:T:2002:43, § 67)”.

The Board added another, generally sound, argument: That “market practices, languages and registration practices evolve over time and some of the marks cited may, therefore, have been accepted as they were considered to be registrable at the time of application, which however may not be the case nowadays”.

However, in this case, it does not look like English-speaking consumers of packaging goods understand SMART SEAL any different than they did 10 years ago, when EUTM No. 5543616 was filed.

The Board also invoked cancellation proceedings as a rectifying mechanism; again, in principle a sound argument: “Moreover, where marks are in fact registered contra legem, a mechanism is in place to deal with such cases, namely that of cancellation proceedings. In that connection, the Board notes that the mark ‘SMART-SEAL’ has been revoked by decision of the Cancellation Division of 26 July 2016 (C 11 301).”

But this would not be relevant, this blogger thinks, because revocation was actually the result of non-use, not descriptiveness or lack of distinctive character. So, the rectifying mechanism did not really work, in the way the Board of Appeal presented it.

To be clear, this blogger would find it hard to refute that SMARTSEAL is descriptive and non distinctive for packaging goods. Plus, from a practicioner’s standpoint this is a ‘go to’ example to water down clients’ aspirations to secure rights in marks, which are more or less descriptive. TM practicionersoften face the arguments of (well- or mis-) informed business executives on how “the same mark has been registered in Class X” or that “competitor Y uses an equally descriptive mark, so why not us?” In this type of situations, the EUIPO’s decision is an insurance policy.

But if we turn our heads away from simply being on the safe side with clients, this decision is not a good case for legal safety and foreseeability. When the EU’s IP Office says “don’t rely on our past practice” or, worse yet, “the Z mark, same as yours, that was registered when you filed has now been cancelled, though not irrevocably”, does it pass a business-friendly message? This blogger thinks not. Sure, TMs are not calculus; and that is one of the many reasons people like MARQUES members enjoy living in theTM universe. But, TMs serve business purposes and the Single Market’s IP Office is not just a custodian of TM registrations; it is a facilitator for economic growth and a(n integral for me) component of the European Union’s competitive assets in the global markets.

This blogger has no difficulty conceding that filing for a word mark in the likes of “SMART-SEAL” more or less invites an absolute grounds refusal. But, when the EUIPO registry and the Member States registries are gold mines of similar marks, it does not seem entirely fair to scold an applicant for thinking that the invitation is actually one promising registration. The EUIPO is not wrong in disassociating itself from past, potentially wrong practice; but it may need to put much more work in minimizing such problems in the future.

*This post was first published in the MARQUES Class46 blog under the title “EUIPO “smart-seals”(?) equality”.