law

On April 1, 2020, a new trademark invalidity procedure came into force with the French “PACTE” legislation. This law transposes the European Directive 2015/2436, commonly known as the “Trademark Package”, and establishes a new administrative action for nullity before the French National Institute of Industrial Property (“INPI“).

Previously, only the French court of first instance in civil, criminal and commercial matters (“le tribunal judiciaire”) was competent in trademark nullity actions. From now on, this competence is shared with the INPI.

This administrative procedure before the INPI makes it possible to obtain a decision within a shorter period of time (between 6 and 10 months) and at a lower cost.

Which trademark can be contested ?

An action for nullity may be filed against a registered French trademark or an international trademark designating France.

On what grounds can you file an action for nullity of trademark ?   

A trademark may be declared invalid if it is vitiated by a defect which corresponds to a ground for invalidity. For instance, this is the case if it is:

– It is devoid of a distinctive character,

– It describes the designated products and/or services;

– It misleads the public,

-It is contrary to public order or morality.

If the trademark infringes a third party right,  it forms a relative ground for invalidity.

Who can form an action for nullity or revocation of trademark?

In the past it was necessary to justify before the courts an interest in forming such action (is it a French procedural requirement in taking legal action)   . This “interest to act” (“intérêt à agir”) could even be strictly assessed by judges.

With regard to the new procedure, when the action is based on an absolute ground for nullity, it is no longer necessary to prove an interest in bringing the proceedings.

The absolute ground for invalidity is one relating to the intrinsic value of the trademark. For example, if the trademark is descriptive of the goods it designates (such as “White chocolate” for … white chocolate), then any one may form an action for nullity without having to justify any harm.

When is the INPI competent?

The distribution of actions between the judge and the INPI is determined by articles L716-2 and L716-5 of the Intellectual Property Code.

Henceforth, the INPI has exclusive jurisdiction in certain claims, including for instance :

— nullity actions based on earlier trade marks (Community or French Trademark, International Trademark designating France or the EU, well-known trade mark)

– invalidity actions based on a domain name, only if its scope is not only local and there is a risk of confusion, or

– actions for invalidity of trademarks filed by the agent or representative of the trademark owner without his consent

This is the case for actions mainly concerning nullity based on one or more absolute grounds (such as misleading nature), but also for actions mainly concerning nullity based on relative grounds (such as infringement of prior rights of a trademark or a corporate name). However, French courts remain competent in regards to invalidity actions based on copyright or rights resulting from a protected design.

What about applications before the wrong authority (INPI instead of the judge and vice versa)?

When the plaintiff files an action before the wrong court, the action will simply be declared inadmissible.

How does the procedure at the INPI work? (Art. R. 716-1 from R.716-8 of the Intellectual Property Code)

The procedure begins with a one-month pre-instruction phase. During this admissibility examination, the INPI checks that the application contains all the required documents and information (statement of grounds on which each claim is based).

Afterwards will occur an investigation phase, which may last six months, and during which written exchanges will take place between the Parties : each Parties will set out their arguments and respect each other’s’ possibility of responding to accusations (the French procedural “principe du contradictoire”).

At the end of this investigation phase, the decision-making phase will take place, over a period of three months. It will be possible to limit the action in the course of the proceedings, by limiting it to either certain goods and services covered by the contested trademark, or to only some of the contested trademarks.

If the INPI confirms the trademark’s nullity the nullity shall be pronounced within three months, by decision of the General Director of the INPI and shall take effect on the date of filing. Nullity, therefore, has retroactive and absolute effect. The decision shall be entered in the National Trademarks Register and published in the Official Bulletin of Industrial Property (BOPI).

What remedies are available against the INPI’s decision?

The INPI’s decision, like every court decision, may be appealed against before the French Court of Appeal where the applicant is domiciled.

The Parties will have one month to appeal, by electronic means, upon notification of the INPI’s decision. The compulsory details of the appeal will be required, otherwise the appeal will be inadmissible. It is important to note that this action has a suspensive, but also devolutive effect, which means that judges will be obliged to retry the case in its entirety. During the procedure of appeal, the Parties have a three months deadline to submit their conclusions, including all their claims on the merits. If necessary, a claim can be brought against the decision of the Court of Appeal : it is called a “pourvoi en cassation” in French legislation. Either the Director of INPI or the Parties can form such a claim.

Ultimately, the new nullity action procedure before the INPI, relieves the courts (the “tribunal judiciaire”) by its simplicity and speed. Hence, decisions will be rendered relatively quickly and, above all, more actions will be brought thanks to the limited costs of an administrative procedure.

ABOUT THIS TOPIC…

– How to bring an action for invalidity or revocation of a trademark before the French Trademark Office INPI?

Start-ups’ executives, having difficulty obtaining loans to raise funds, may benefit from promoting their intellectual property assets, which can be used as loan guaranties or other credits. Indeed, intangible assets are among the preferred asset classes for investors seeking strong guarantees. As such, investment funds are offering more and more original solutions to fund start-ups.

Beyond the traditional tools of funding through intellectual property such as licenses, new ways of raising funds using intangible assets are emerging: auctions (by auction houses specializing in this field), online tradings, trusts, mortgages, etc.

On which assets should you base your collateral?

• Patents

The patent portfolio of research companies is a valuable asset, provided it is kept under control. Under a mortgage, or a trust, the source of income, in order to be certain, requires the patent to be licensed.

• Trademarks, designs

If the trademarks are licensed, they can give rise to a certain and regular income. They offer a valuable guarantee if the business is successful.  For instance, in the late 1990s DreamWorks and the Tussauds Group both granted security guarantee over their IP covering both existing and future IP[1].

Moreover, designs have the advantage of having a value independent from the company’s status. Therefore, they can be a guarantee of value for investors.

• Copyrights

Copyrights lasts up to 70 years after the author’s death : as such, once ownership and value are proven, they provide a valuable guarantee for the investor. Thereupon, the World Intellectual Property Organization (WIPO) has demonstrated that the taking of guarantees over copyright in the film and music industries is widespread and increasing in the biotechnology and software industries[2].

The forerunner of this financial innovation in intellectual property, David Bowie, will be remembered when he sold the “Bowie Bonds” which provided him with a regular income of over $1 million per year earned on the 25 albums he recorded before 1990.

It is therefore important to think of your intellectual property rights as real assets, and to reconsider the way they can be used: they can become effective security interests, especially for SMEs or start-ups that are launching their business.

This is true all over the world. For example, in India the government has introduced loan guarantee schemes through the possibility of mortgaging your trademarks or patents in order to encourage start-ups and cover the risk of real commercialization failures based on assets mortgaged by intellectual property rights.

To be continued!

It now appears possible to raise funds through your intellectual property assets. Dreyfus, an expert in legal issues related to intellectual property since 2004, helps you protect and enhance your rights and advises you on how to best manage your assets.

[1] [1]« Taking security over IP » Fieldfisher – February 2015

[2] « The Challenge of IP Financing » WIPO – September 2008

Since December 11, 2019, the French opposition procedure has evolved. We provide an update on the changes and questions.

Key elements about the French opposition against trademarks

Typically, as soon as a trademark application could infringe a prior trademark right, it is possible to prevent its registration by opposing said trademark application directly before the French Trademark Office INPI.

This was the case before the reform and it hasn’t changed since: an opposition can be filed against a French trademark application or an international trademark designating France.

The time limits to act remain unchanged and are as follow:

– Regarding the registration of a French trademark application, an opposition must be filed within two months of the publication of said application in the French Official Bulletin of Industrial Property (BOPI).

– In the case of an international trademark application designating France, the opposition request is filed within two months of the publication of the registration in the WIPO Gazette of International Trademarks.

This procedure has evolved since December 11, 2019, offering a new opposition process.

In which situations does the new opposition procedure apply?

– Applicable to French trademark applications filed as of December 11, 2019, for trademarks published in the BOPI as of January 3, 2020.

– Applicable to French designations of international trademark applications, published in the WIPO Gazette as of December 11, 2020.

What is the purpose of this reform?

This reform was implemented in order to reinforce the adversarial principle, by allowing the parties to exchange and compare their arguments throughout the procedure, on the one hand; and on the other hand, to support the analysis of evidence of use of the earlier trademark.

What are the changes brought about by this new opposition procedure?

If you wish to oppose a trademark application filed after December 11, 2019, you can now :

– Base your opposition on other rights than trademark rights (which were not previously taken into account) such as well-known trademarks, company names or corporate names, trade names, signs or domain names;

– Invoke several previous rights in the same opposition (provided they belong to the same owner) ;

– Ground your opposition within one month by filing the statement of grounds on which the opposition is based. At the end of this period, the opposition is notified to the opposite party. However, it is impossible to extend the scope of the opposition during this period, either to other goods or services referred to in the initial application, or to other prior rights.

• On the rights and grounds that can be invoked

What are the rights and grounds for the opposition?

Prior to the reform, the rights and grounds on which an opposition could be based were as follows:

– Earlier trademark;

– Geographical indication or application for a geographical indication;

– Infringement to the name, image or reputation of a local authority.

With the reform, the following previous rights are added:

– Well known trademark;

– Corporate name;

– Trade name, sign and domain name ;

– Infringement to the reputation of a public establishment of a public establishment for inter-municipal cooperation;

– Name of a public entity ;

– Trademark registered by an agent without authorization.

Is the examination of evidence of use deeper?

Genuine use, or proper reasons for non-use, must be reported for each good and service invoked in support of the opposition. Thus, the earlier trademark will only be deemed to be registered for the goods or services for which this demonstration has been made. The INPI is now in charge to carry out said examination. In the past, only the courts were in charge.

As far as domain names are concerned, since the GDRP the Whois records are anonymized. How can it be justified that the person who made the domain name reservation has the right to file an opposition?

If the Whois record is anonymous, then in addition to the anonymous Whois record, any document establishing the existence and identity of the domain name holder can be provided. It can be for example the certificate from the Registrar or an invoice showing the reservation of the domain name.

• About the procedure

Which are the changes in the course of the procedure?

A phase of exchanges, also known as the “instruction phase” is set up. It starts with the notification of the opposition to the applicant. This instruction may include up to three phases of exchanges between the parties.

From now on, the procedure is no longer confined to a 6-month period. It is however subject to the principle of « silence is tantamount to rejection », within a period of 3 months. This means that if the INPI has not ruled within 3 months following the end of the exchange between the parties, the opposition is rejected.

The duration will therefore vary according to the number of replies from the parties, but in any case may not exceed 13 months.

What are the cases of suspension of the procedure?

Suspension is possible in several cases:

– When one of the rights invoked in support of the opposition has not yet been accepted or is subject to a legal action;

– At the initiative of the French trademark Office, the INPI.

The entire procedure is suspended when the opposition is based on several rights, even if the suspension concerns only one of the rights invoked.

The duration of the suspension in the event of a joint request by the parties is extended to 4 months and renewable twice, i.e. 12 months in total, instead of 6 months in the past.

• On the role of the INPI

Does the French Trademark Office INPI have more power in the new procedure?

This new opposition procedure greatly strengthens the role of the INPI.

Before the new procedure, the role conferred on the INPI in the examination of proof of use was limited: apart from cases where the lack of use was proven, the opposition procedure was not closed.

At present, where the applicant requests proof of use of the earlier trademark, it is up to the INPI to decide on the genuine nature of the use of the earlier trademark for each of the goods and services invoked in support of the opposition.

This reform reinforces the adversarial principle and, consequently, the protection of the rights of trademark owners.