Reform of the trademark system and its practical consequences: part II

As announced on February 12th, 2020, in our 15th newsletter, focused on the changes to the substantive conditions of trademark protection, we continue the detailed presentation of the recent reform of the French trademark legal system.

This second part describes certain procedural changes in trademark law, resulting from the implementation, on April 1st, 2020, of trademark revocation and invalidity actions before the INPI.

CHANGES IN PROCEDURES

FILING FEE PER DESIGNATED CLASS

The trademark filing fee system is deeply impacted by the reform: an additional fee now has to be paid for each new class of goods or services designated beyond 1st class, whereas under the old system it was only payable beyond the third. This measure is accompanied by a substantial reassessment of the level of fees (€190 per class, instead of €210 for three classes).

>> The purpose of this change is to discourage the filing of trademarks that are too broad in scope with respect to the field in which they are actually intended to be used, in order to “free” the registers of partially unexploited trademark registrations. 

>> This measure will also allow, by narrowing the scope of the filings, to reduce the owners’ exposure to partial revocation of their trademark, at a time when this sanction promises to be greatly facilitated by the creation of an administrative action for revocation before the INPI, and when the examination of the proof of use also becomes stricter in opposition proceedings (see below).

OPPOSITION: BROADENING THE SCOPE OF THE PROCEDURE AND THE POWERS OF THE INPI

For nearly 30 years, the opposition proceeding has been permitting  to act before the INPI to request, at the filing stage, the refusal of a trademark application infringing prior rights. This procedure is undergoing a notable evolution, which brings it closer to its European cousin before the EUIPO.

The grounds for opposition are multiplied : a well-known trademark, a company name or business name, a domain name, a trade name, the name of a legal person under public law, and a case of unauthorized filing by the agent or representative of the trademark owner may now be invoked in support of opposition. In addition, one opposition may now be based on several rights, which will increase the chance of success.

The procedure itself is modified: the opponent has now the possibility to file, within two-months period from the publication of the application for registration, a “formal” opposition, justifying only the scope of his opposition, indications relating to his invoked prior rights and the payment of the fee. He may subsequently complete it within a period of one month by submitting his statement of grounds, the justification of his prior rights and a copy of the contested application. The intermediate stage of the issuance of a draft decision by the INPI has been abolished, as does the six-month period allowed for a decision. The latter is replaced by an “instruction phase” of approximately six months, during which the parties operate the exchange of observations and documents, followed by a period of three months, allocated to the Administration to rule. In case of opening of discussions between the parties in order to reach for an agreement, the latter may submit a joint request for suspension for a period of four months, renewable twice.

The proof of use system, is made stricter, in line with that in force before the EUIPO: at the request of the applicant, the opponent whose invoked trademark has been registered since more than five years now has to prove genuine use of their trademark for each of the goods and services invoked in support of the opposition, and no longer for a single good or service in the opposed class. For the purposes of examining the opposition, the earlier mark will be deemed to be registered only for those goods and services for which such use has been proved, or for which proper reasons for non-use have been established. Finally, the INPI is vested with a real discretionary power, whereas until now it could only refuse proof of use in case of proven irrelevance.  

The amount of the opposition fee has also been reassessed (from €325 to €400 for an opposition, plus €150 for each additional right invoked), effective since December 11th, 2019,  the new opposition procedure having itself begun to apply to registration applications filed from that date, which were published in the Official Bulletin of January 3rd, 2020.

>> This partial alignment of the French opposition procedure with that in force before the EUIPO should not make us lose sight of certain major differences: on the one hand, the opposition is certainly open to multiple rights, but subject to the payment of a fee for each right invoked. On the other hand, the filing of the opposition remains subject to a time limit of two months (instead of three months at EUIPO), at the end of which the opponent must already have decided on the rights he wishes to invoke against the contested application for registration. These two parameters will henceforth force the opponent to precisely define its action strategy at an early stage, by having measured the possible consequences on its own rights, in particular the risk that it will run, as of April 1st, 2020, of the applicant replying by attacking its earlier trademarks for revocation or invalidity.
It is, moreover, likely that the INPI, unlike the EUIPO, will rule on all the rights invoked in support of the opposition since each one will have been subject to the payment of a separate fee.

RENEWAL TERMS

Renewal of a trademark can now be requested during a period of one year prior to the day of expiry of its registration (instead of six months prior to the last day of the month in which its registration expires previously). However, the new law no longer provides for the possibility of early renewal of a trademark in association with a new application in an amended form. This mechanism allowed the owner to update the protection of his trademark (following a change in the sign and/or the classes of goods and services) in a new application associated with the early renewal of an older trademark.

This mechanism allowed an alignment of the renewal dates of two associated trademarks to simplify their renewal procedures as well as the payment of a single renewal fee instead of the two normally provided for.  
Henceforth, the filing of the modified form of a trademark will constitute an autonomous title of the first one, with its own expiry date.

Renewal fees are also being increased to €290 for renewal in one class, plus €40 for each additional class, compared to €250 for three classes before the decree came into force.

Another significant change : the renewal declaration can now be filed by “any authorized person”, whereas it was previously restricted to the owner of the trademark, registered as such in the National Trademark Register on the day of the renewal request.

>> This last change will provide better legal certainty for trademark owners and will put an end to frequent litigation before the INPI related to trademark transfers. Indeed, it often happened that the renewal was requested by the assignee while he had not yet registered the assignment contract on the national trademark register, which led to the inadmissibility of his renewal request and the irremediable loss of his rights. From now on, this situation should no longer arise. The texts do not, however, specify the scope of the INPI’s control (if any) on the status of the applicant’s “authorized person” and, where applicable, what proof will be required in this regard. It is therefore always strongly recommended to diligently complete the steps for the registration of a change of ownership of a trademark and in particular the registration of an assignment in the Trademark Register so that the assignee can freely dispose of his rights, in particular for the purposes of opposability against third parties. 

As for the increase in the renewal fee, it may lead to considerable renewal costs, applied in particular to old filings covering many classes. Combined with the strengthening of the requirements for the use of the trademark, this increase will necessarily lead to the question of whether it is advisable to reduce the scope of the trademark to strictly necessary classes at the time of its renewal.

INSCRIPTION OF AGENT

The decree introduces the possibility, in Article R.714-6, of requesting the registration in the National Trademark Register of an agent.

>> It is recommended to proceed with this formality as soon as possible. Indeed, as of the entry into force of the trademark revocation and invalidity procedure on April 1st, 2020, the INPI will notify any revocation and invalidity actions to the representative of the challenged trademark registered in the register. In the absence of a registered representative, the notification will be made to the owner (who may have changed address without informing the INPI) or to the last representative known by the INPI (with the risks that this implies, insofar as the status of “representative” was not formalized in the registers until now : it may therefore not have been taken into account by the Office despite the request addressed to it by the representatives at the time of taking over trademark portfolios).

IMPRESCRIPTIBILITY OF NULLITY ACTION

Last, but not least, measure of the reform: the ordinance raises an important subject of controversy in caselaw, by enacting a principle of non-prescriptibility of trademark invalidity actions (as for other IP rights). The solution adopted also resolves the doctrinal debates heard during the preparatory work, since imprescriptibility is general, without distinction according to the grounds of invalidity. Therefore, invalidity will henceforth be likely to affect trademarks that are sometimes several decades old.

However, with regard to relative grounds, extinction of rights continues to apply in the event of acquiescence by the holder of the earlier trademark for a period of five years.

TIME LIMIT FOR ACTION FOR INFRINGEMENT

An action for infringement remains subject to a limitation period of 5 years. However, the law now sets its starting point “from the day on which the holder of a right knew or should have known the last fact enabling him to exercise it“, whereas under the previous regime, this starting point was set at “the day on which the holder of a right knew or should have known the facts enabling him to exercise it“, according to common law. This change is likely to considerably lengthen the period not subject to limitation, since in the case of continuous infringement, the period only starts to run from the last sale and can thus be pursued as well as compensated for infringements dating back more than ten years.

Two final components of the “Loi Pacte” will enter into force very soon:

• on the one hand, a major overhaul of the examination proceeding of patent applications by the INPI, with notably the introduction of the examination of inventive activity and the creation of an opposition procedure, whose latest implementing texts were published on 8th, March 2020;
• on the other hand, the creation, also before the INPI, of trademark revocation and invalidity actions, which will be possible as of April 1st, 2020, as an alternative to the jurisdiction of civil courts.

We will present them to you in detail shortly.

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