Dynamic Point Review of European IPR 2015

By Huang Ruowei, Vice-General Manager, Huasun (Beijing) Intellectual Property Ltd.,[Comprehensive Reports]

It is notable that IP remains the most vulnerable section for many “going-out” enterprises when they participate in market competition. For instance, in early years the most common problem is that these enterprises counterfeited at will the products of other companies (especially well known enterprises), which caused grave consequence such as goods detainment and damages before governing organizations such as customs and courts. In recent years as Chinese enterprises constantly improved independently innovation capabilities and the awareness of IP protection, they paid increasingly high attention to IP application and protection in Europe. Some new issues, however, emerge. For instance, as these enterprises failed to conduct effective preliminary market/technology survey, they may encounter the impeding from a third party or governing authority so that they are rejected for granting or registration and cannot take effective actions to protect their rights via the IPR under their possession.

To this end, this article plans to describe and analyze some key issues in European IP industry in 2015 from the perspective focused by Chinese enterprises that will soon access to or have accessed to European market.

I. Key Points that Should be Focused by Applicants of European Patents (I). European patent influence is further expanded European patent applications submitted since March 1, 2015 may take effect in Morocco (MA) in North Africa. Thereby Morocco becomes the first country outside Europe that recognizes European patent can take effect on its territory. European patent applications submitted since November 1, 2015 may also take effect in Moldova (MD).

In addition, it is notable that London Agreement formally took effect in Norway in early 2015. This means that for the European patents which take effect in Norway on January 1, 2015 or later, if the European patents are granted by English documents or for the European patents, their applicants provide English version according to Article 65(1) of European Patent Convent (EPC), Norwegian version of the specification is no longer required (Norwegian version of the claim is still required). The simplified requirement for translation in the taking-effect procedure will help right holders of European patents to complete taking effect procedure in Norway with faster pace and lower price.

(II). Upcoming European Unitary Patent While existing European patent system is constantly expanding its influence, the preparation of eye-catching new European unitary patent system is continuously advanced. The following dynamics are particularly remarkable: 1. The launch of the scheme of unitary patent annual fee of “True Top 4” Under traditional European patent system, after a European patent is announced for being granted and enters countries to become effective, the right holder shall pay annual fee to the patent authorities of member states for which the patent is designated to take effect to maintain the effectiveness of the European patent on the part of the member states.

In contrast, under the new unitary patent system, the so called annual fee scheme of “True Top 4” means the level of European unitary patent annual fee will be equal to the sum of annual fees in the four countries (Germany, France, the U.K. and Netherlands) for which currently most European patents are designated to take effect. Moreover, new scheme will remarkably reduce some other relevant costs, mainly including translation fees and the fees to be paid to local agencies.

2. Italy accedes to unitary patent system In 2015, Italy, one of the important traditional countries in Europe, eventually selected to accede to the unitary patent legal framework. Before that, as no consensus could be reached with other 25 member states with respect to the translation language of European unitary patent, Italy and Spain had been refusing to accede to European unitary patent framework.

They even respectively lodged an action to the Court of Justice in 2013 to request the court to announce the resolution of the EU Council on the establishment of the European unitary patent mechanism was invalid.

However, Italy finally substantively changed its attitude toward European unitary patent . Italy formally announced to accede to unitary patent framework in May 2015 and soon signed the Agreement on a Unified Patent Court. The Agreement on a Unified Patent Court will not take effect until it is ratified by the parliaments of at least 13 signatories (necessarily including Germany, the U.K. and France). It is estimated that European unitary patent will be implemented in 2017 and the Unified Patent Court will also begin to formally operate.

II. The Threshold is Lowered, the Net of Justice is Tighten: EU Trademark Reform and Other Dynamics Reviews (I).Overview of EU Trademark Reform The tenet of the EU trademark reform is: to improve, simplify and modernize existing laws, with lower cost, more convenient proccedure, faster speed, more accurate foresee ability and more legal certainty, to provide enterprises with trademark registration mechanism featuring lower access threshold and more effective protection. The reform will be conducive to the right holders/ applicants of both EU trademarks and the domestic trademarks of the member states, and allow relevant enterprises especially small-medium sized enterprises (SME) to exposure to trademark protection.

The EU trademark reform scheme publicized on December 24, 2015 involves: 1, the amendment to the EU Trade Mark Directive, 2, Amendments to the EU Trade Mark Regulation. The former is to coordinate the domestic laws of EU member states, and the latter is closely related to applicants of EU trademarks. This time amendment to the EU Trade Mark Regulation mainly involves the following three aspects: 1. Fee change The focus of fee change this time is the change of charging standard and charging method of application fee and renewal fee.

According to the amendment, EU trademark application fee will apply more straightforward ladder rate called “one price for one class”.

Specifically, application fee of Euro 850 shall be paid if the applicant only applies for the protection of goods or services under one class; additional Euro 50 on the basis of the foresaid Euro 850 shall be paid if the applicant applies for the protection of goods or services under two classes; Euro 150 shall be paid for each class from the third class. It is believed that this scheme conforms to the tenet of this EU trademark reform of giving priority to SMEs and individual applicants.

Correspondingly, after this amendment, the renewal fee of EU trademarks will also apply more straightforward ladder rate, i.e., the renewal fee shall be Euro 850 if the applicant only applies for the protection of goods or services under one class; additional Euro 50 on the basis of the foresaid Euro 850 shall be paid if the applicant applies for the protection of goods or services under two classes; Euro 150 shall be paid for each class from the third class. These fees under the new scheme are also substantively lower than those under present renewal fee system. 2. Amendment to substantive rules This amendment t o the EU Trade Mark Regulation involves multiple aspects of amendments to substantive rules, mainly including: (1)The authority has the right to reopen ex officio examination of absolute grounds at any time prior to the registration of EU trademarks.

(2)Prohibitive rule (Paragraph (e), Item (1), Article 7) that is previously applicable to figurative trademarks is now extended to functionary marks such as sound and color.

(3)It is no longer a mandatory requirement that a trademark shall feature graphic representability. That is, if only their representations are clear, accurate, self-consistent and externalizable, marks to seek for the protection of EU trademark are allowed to be presented in any proper form through existing general technologies.

(4)Requesting for priority can only be conducted simultaneously with the filing of application, comparing to follow-up filing which is allowed presently.

3.Adjustment of names and organizations “Community trade mark” will formally exit historical stage, and “European Union trade mark” will substitute for it as the sole formal name. In addition, the name of EU trademark authority will formally changed from present Office for Harmonization in the Internal Market (OHIM) to European Union Intellectual Property Office (EUIPO), and then the names of affiliated departments and organizations will also be changed correspondingly.

Finally, the new EU Trade Mark Regulation will formally take effect 90 after the publicity of the amendment to it, namely on March 26, 2016.

However, some amendments will take effect later than the foresaid date.

(II). Convergent Practice and Tightening Net of Justice The newly launched EU trademark reform scheme is of course inspiring for Chinese applicants. However, there are still some “submerged rocks” (the “common practice method” as a doubleedged sword, for example) to which Chinese enterprises shall pay heed when accessing to European market.

The European Trade Mark and Design Network is the partnership project in the field of trademark and design that is mainly promoted by the OHIM. Over the past years, the partnership between the OHIM and domestic IP offices of member states was dramatically strengthened; both domestic IP offices of member states and the regional IP authority played an active role in the European Trade Mark and Design Network. One of the key objectives of the partnership project is to form a series of common practice methods among the IP offices participants. So far the common practice methods that have been formed under the partnership project include: (1)November, 2015: The common practice method concerning the distinctiveness judgment of device trademark containing descriptive/ non-distinctive character content; (2)October, 2014: The common practice method concerning trademark confusion possibility (influence of non-distinctive elements); (3)April, 2014: The common practice method concerning the protection scope of black-white trademarks.

The tenet of the launch of above common practice methods, namely, improving the t ransparency, certainty and foreseeability of matters concerned to examiners and practioners within the territory of EU, is no doubt positive. On the other hand, the common practice methods at the level of EU may also unavoidably lead to the confusion and conflict with existing practical operations of the countries concerned during the transitional period, and particularly bring Chinese applicants into dilemma as they are originally not familiar with the legal practice of European trademarks.

III. Building Comprehensive, Three-dimensional Enterprise IP Management System Enterprises are now engaged in European market competition in a wider and deeper way. As far as IP field is concerned, we are pleased to see that Chinese enterprises entering Europe are increasing in terms of application volume, number of fields involved and granting rate, and they are exercising and protecting their intellectual property right with a more proactive attitude. Specifically, we would like to propose the following three aspects of suggestions on IP management to the Chinese enterprises which have entered or are planning to enter European market: 1. Preparedness Adverts Peril.

This include two aspects of activities: first, carry out full investigation on the newly entered market, including various preliminary work such as the feasibility analysis of entered market of new products, access and consulting of potential IP sellers and buyers, and policy risk analysis of legal fields to be entered.

Last but not the least, it is essential to carry out comprehensive IP application activities as soon as possible to gain the protection of IP on the European market to be entered.

2. Adapt to Changing Circumstances If there is no absolutely safe prior IP protection plan, it is quite often to encounter the IP dispute proposed by a third party in the constantly changing market. If receiving a warning letter from a third party (generally a competitor) in Europe, or becoming the defendant of infringement litigation, Chinese enterprises shall take active countermeasures to respond it, instead of just waiting to be defeated.

In terms of tactics, enterprises may argue the validness of the IPR of the opposite party, undermining the foundation of the opposite party to lodge an infringement litigation via the drastic measure; or enterprises may prove that the accusation of the opposite party lack factual and/or legal basis through investigation and evidence collection.

A common situation in practice is: when receiving a warning letter from a European competitor, a Chinese enterprise may consider submitting protective order to the court which may issue preliminary injunction, stating it does not infringe IPR of the opposite party, the rights of the opposite party are invalid or other grounds. Then when the court receives the application of the opposite party for issuing preliminary injunction, it has to consider the grounds mentioned in the protective order.

This will largely reduce the possibility for the court to issue preliminary injunction based on the application of the opposite party.

3. Take Proactive Measures In case the IPR of a Chinese enterprise in Europe is infringed by a third party, to protect its own legitimate rights and interests, the enterprise shall comprehensively investigate and collect relevant evidence of infringement and damages made by the third party as soon as possible, issue warning letter to the infringer and request it to cease infringement and/or pay damages according to the condition of individual case. In addition, in emergent situation, the enterprise may protect its infringed IPR by applying to the court with jurisdiction for issuing preliminary injunction.

Certainly, if the foresaid methods are insufficient to cease infringement and compensate losses, enterprises shall file IPR infringement action to a court to request the infringer to assume corresponding infringement liabilities.

Furthermore, the more aggressive strategy that may be taken into account is: considering in the application procedures of various kinds of IP, it is impossible for the authority to conduct all-around search and examination (for example, it is impossible for patent offices to compare all technical data publicized before the application date when examining novelty). Therefore, a rather number of granted IP did not actually meet the granting conditions required by laws. In this case, enterprises may attack their competitors through the IP(s) of competitors which did not substantively meet the granting requirement, including lodging the proceedings of opposition, validness, restriction, deletion, canceling, etc.

against various IP. As the independent innovation strength of enterprises and the protection demand for independent IP are ever increasing, taking initiatives to attack the relatively weak IP of competitors will help enterprises to gain a proactive position in the competition on European market

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