Monday, 25 April 2016

The supposed benefits of the EU - part 2

Some time ago I posted on the effect that EU membership has had on intellectual property, my specialist field.  That post focussed on effect the EU's interventions had had on costs and timescales.  I promised a second post, looking at the detail.  Here it is...

First, let's rewind the clock and look at the original British system of registering trade marks, as set out in the Trade Marks Act 1938 and as in the early days of the Trade Marks Act 1994.  When you filed an application to register a new trade mark, the Registry looks through its records of earlier pending and registered marks.  If it finds any that are similar, it cites them against you as an objection.  Your application cannot proceed while that objection is there.  You must then either convince the Registry that there is no actual conflict in practice, or approach the earlier proprietor to seek their consent, or apply to revoke the earlier registration, or some combination of these.  Only when the Registry was happy that your proposed trade mark registration did not conflict with anyone else's would your application proceed.

Incidentally, a request for consent was always accompanied by an offer to pay the associated professional fees in advising the earlier proprietor (even if they subsequently refused consent). 

After the application was accepted by the Registry, it was published to let third parties "oppose" the application if they thought it whouldn't have been allowed.  As the Registry had already examined the application, this opposition process was only needed where the Registry had made a mistake or where the opponent had been using their mark but had never bothered to register it.

This system worked well from 1875 until 1996 (although I can only personally vouch for it after 1991…).  It is still the approach that is current in the US, Japanese, Chinese, Canadian, Brazilian, Australian, New Zealand, Indian and other Trade Marks Registries.  In other words, it is the accepted system among the non-EU developed economies of the world.

1996 brought us the EU Trade Marks Registry, which was originally going to work to the French/Italian model of allowing anyone to register anything and leaving it to the Courts to sort everything out afterwards.  We and the Germans resisted this and insisted on an opposition process and an examination for earlier marks; we succeeded in getting an opposition process but the examination as to earlier marks was limited to merely doing a search, telling the applicant what they had found, and telling the owners of the earlier marks that their mark had been cited.  The theory was that when shown an earlier registration of a similar mark, the later applicant would realise that proceeding with the application was pointless and would withdraw it.  In practice, most applicationts carry on anyway.  Faced with a steady stream of EU registrations that were effective in the UK and had not been examined for prior rights, the UK Registry eventually gave up examining and has now adopted the same process as the EU office. 

The EU IPO is currently trying to drop even this step of the process as (in its view) it just gets in the way of registering things quickly.

For the owner of the earlier mark, receiving one of these 'notice letters' is a warning that someone may be trying to adopt the same trade mark as they already own.  They need to look up the details of the later application, come to a view as to whether that is a problem, and (if so) contact the application to persuade them to withdraw.  If they do not withdraw, then an opposition will be needed.  The result has been an approximately tenfold increase in the rate at which applications are opposed, and (for some owners) a need to send a steady stream of opposition threats. Previously, this work was done for them, funded by the application fees charged to new applicants.

This was a deliberate decision at the political level to shift the burden of keeping the register 'clean' off the IP offices and new applicants, and onto the proprietors of the earlier marks.  The intention was that faster and cheaper application processes via a single EU Registry would outweigh the additional cost of forever having to defend the registration.  I would characterise the results against that criterion as “mixed” at best, and the level of understanding of IP application processes among the politicians who made this decision as “non-existent”.

This decision by the EU has had two effects, both of which were entirely predictable.  First, the owners of registered marks have to keep on defending them, incurring costs in the process.  They see the EU IPO taking hefty application fees off new applicants and running large surpluses, and frankly they (and I) do not understand why the EU IPO cannot therefore examine new applications properly instead of just passing the problem on to others.  Second, happy clients who have just been granted a registration ask whether that means they are the owners of the trade mark, free to use it in the EU?  I have to tell them that no, they are not - there could easily be a prior national right which both invalidates their EU registration and also means they cannot use the mark in that state.

The EU's involvement in the trade mark registration process has therefore been to devalue a registration and to place a new burden on trade mark owners, while raking in the cash (see my previous post).  They could have helped businesses, for example by creating a central registry holding searchable details of all the marks in all the EU countries, allowing us to clear new trade marks easily, cheaply and quickly; that would have been a genuinely valuable resource (but would not have been as profitable for the EU).  But instead, they just created another level of complexity for the system. 

And I haven't even got onto the real minutiae of class fee structures and specification drafting - two more areas where the EU's influence has again made life more difficult for businesses.

Suffice to say that I shall be disagreeing with the assumption by my professional institutes that we should vote to stay in.

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