Blind’ Spanish ruling may set alarming precedent: counsel

Thursday, 22 of September of 2022

A decision by a Spanish court could set a worrying precedent for EU trademark use and risk undermining established law if not overturned, say counsel.

The Tribunal Superior de Justicia de Madrid (the Superior Court of Madrid, or TSJM) found earlier this year that use must be proved in Spain even if the EU trademark (EUTM) was used in another member state.

Ernesto Cebollero Gonzalez, attorney at intellectual property firm Baylos in Madrid, says the judgment goes against established EU law and the official guidance from the Spanish Patent and Trademark Office (OEPM).

Another lawyer at a Spanish firm says: “The decision is completely blind to the issues at stake.”

According to the OEPM, Spain’s trademark law is bound by established EU precedent, under which genuine use is accepted across the EU so long as said use can be demonstrated in any member state.

Unitary use

The TSJM’s decision stemmed from opposition proceedings filed by an EUTM owner against a company that had applied for a Spanish national trademark.

The opposition, lodged by Netherlands-based Princes Holding in 2020, took aim at an application for the term ‘Prinz’, which had been filed by Spanish hospitality business Establiments Viena.

Princes Holding based its opposition on its EUTM for the term ‘Princes’.

In response, Viena asked Princes to demonstrate genuine use.

The opposition was dismissed in a first-instance edict but an OEPM appeal board later ruled in favour of Princes. It found that the ‘Princes’ EUTM had been used in Poland, the Netherlands and the UK (before Brexit), and that the ‘Prinz’ brand could cause confusion.

The TSJM reversed that finding.

The court found that because Viena’s application was for a Spanish national mark, Princes must also prove that it had used its EUTM in Spain. The court found that genuine use had not been demonstrated because Princes’ evidence only pertained to other EU member states.

But sources point out that past cases, including the 2012 judgment from the Court of Justice of the EU (CJEU) in Leno Merken v Hagelkruis Beheer, prove that genuine use can be established on the basis of use in any member state.

The 2015 edict in Now Wireless v OHIM reached a similar conclusion, notes Carolina Pina, partner at Garrigues in Madrid.

Cebollero Gonzalez at Baylos says EUTM owners that find themselves in opposition procedures before the OEPM could now be forced to prove use of their marks in Spain even if they had used them elsewhere in the EU.

Revocation grounds

Lara Grant, attorney at Grant IP in Alicante, says the decision fails to consider the unitary character of an EUTM , namely that use in one member state equates to use across the bloc as a whole.

Constanze Schulte, partner at Hogan Lovells in Madrid, says the judgment is both surprising and at odds with Article 21, of the Spanish Trademarks Act, which states that effective use of an EUTM must be assessed in accordance with Article 18 of the EUTM Regulation.

Grant adds that the OEPM’s rules on proof of use also clarify that the notion of ‘territories’ is to be considered in accordance with the EU Trademark Regulation.

Grant says the decision is likely to be overturned by the Supreme Court if it goes to appeal.

Pina at Garrigues agrees that European criteria or standards for genuine use should be applied to EUTMs.

She too says there are clear grounds on which the decision should be revoked.

But there’s a good chance it never will be, say sources.

The decision was handed down on June 28. In Spain, parties have two months after being notified of a decision to decide whether or not to appeal.

The month of August is not included in that calculation, making September 28 the deadline – just over a week from the time of this article's publication.

A partner at a Spanish firm with close links to Princes says an appeal is unlikely due to the applicant’s limited funds.

This would be a real pity, he adds, as the decision would then be set in stone and could become precedent for future cases.

The only way to avoid that scenario is for a lawyer to take the case on pro bono, or for the OEPM to publish new clarifications or go against the TSJM’s ruling in future opposition hearings, say sources.

Cebollero says practitioners may have to accept the decision as final.

“Given that it is the only judicial precedent, we will have to wait and see whether the OEPM aligns with it in the future or not. For the time being, whether we like it or not, practitioners will have to take it into account.”

However, Schulte notes that the same court has since handed down judgment in another trademark opposition case in which the different standard for proving use of Spanish trademarks on the one hand, and EUTMs on the other, was acknowledged.

Court concerns

There is still hope that Spanish law regarding EUTM use will become clearer in the future.

Despite their surprise at the decision, lawyers say IP owners may not have to worry about any long-term trends, thanks to reforms that were passed earlier this year.

As of January 14 2023, appeals from the OEPM regarding trademark and patent oppositions will be transferred to Spain’s commercial courts, which have specific IP expertise.

José Antonio Gil Celedonio, director of the OEPM, previously told Managing IP that the changes signified a landmark reform for Spain’s IP system.

The bill approving the change is a follow-up to a 2018 law that ported the 2015 EU Trademark Directive into Spanish law.

The partner at the Spanish firm says the TSJM, which is tasked with hearing such appeals, is not as well versed or experienced when it comes to IP cases and that the change may bring about clearer rulings.

Practitioners will have to hope that the OEPM director is right and this really does signify a landmark reform – or, at the very least, that decisions on what should be routine trademark law soon become a little more predictable.

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