Brandsquatting in an expanded Europe
Posted on 19/06/2003 by
As a result of a time lag between now and May 2004, a type of "brandsquatting" could be one of the consequences for international brandowners of an expanded Europe.
A type of brandsquatting plaguing international brand owners will likely attend the expansion of the European Union. Readers will be familiar with the plague of domain name cybersquatting afflicting the Internet world. In May 2004, 10 new countries will join the European Union: the Czech Republic, Poland, Slovenia, the Slovak Republic, Hungary, Lithuania, Estonia, Latvia, Cyprus and Malta - bringing with them an expanded market of 100 million new Europeans with their 450,000 trade marks.
Under current trade mark rules, a brand owner can obtain a single trade mark covering the current 15 countries in the European Union. This is a unitary right, which means that the trade mark must be available for registration in each of those 15 countries. When the union expands in less than a year’s time, existing European trade marks, known as Community Trade Marks or CTMs, will be automatically expanded to include these 10 new member countries. The CTMs will be expanded at no additional cost.
Drawbacks to expanded coverage
But there is a downside to this expanded coverage. It results from the time lag between now and next May. During this time opportunists in those 10 countries can apply for other people’s trade marks, thus blocking the use of the CTMs, at least initially. International brand owners are, on past history, likely targets of this sort of activity. The preference of trade mark owners to brand across the entire market will mean that the additional attraction of 100 million extra consumers will be tempered by the possibility of opportunist brandsquatting.
While the rules governing CTMs will prevent an existing CTM from being cancelled because registration has already been secured by a third party in the expanded states, a brandsquatter will be able to use the local trade mark infringement law against a legitimate brand owner. As is the case with cybersquatting of domain names, trade mark registrations made in bad faith are likely to be able to be overturned. Unfortunately, there is as yet no uniform definition of what constitutes bad faith as this has yet to be agreed by the Community Trade Mark Office administering the CTMs and the governments of the expanded states.
Bad faith registration While a bad faith registration may ultimately be overturned, there will be time delays and costs in doing so, and brand owners may find it easier to buy the local trade mark, in the same way that many have been forced to pay to dispose of troublesome domain name cybersquatters in the internet world. It is little short of blackmail.
Another problem resulting from the expansion of the European Union will be the ability from November onward, for those in those expanded states to oppose any CTM applications on the basis of an existing local registration. This means that owners of the CTM applications could well face oppositions from people in countries which are not yet members of the European Union, but who can prevent them from obtaining registration of their CTM throughout the European Union. This forces them to adopt national registrations in the individual countries of the European Union at greatly increased cost, rather than having a single trade mark covering Europe.
How do brand owners protect themselves?
Brand owners can take several steps to protect themselves. They can file an international trade mark application under the Madrid Protocol, which would cover eight of the 10 countries, and file national trade mark applications in the countries which are not participating in the international trade mark system. After May 2004, if they have established that the coast is clear and there are no conflicting marks, then these national applications could be dropped in favour of the CTM which would then be expanded to cover all of the European Union states without impediment.
It is, of course, impossible for brand owners to know which of them are going to be singled out as brandsquatters’ targets, but those picked on by unscrupulous opportunists may face time delays and extra costs in obtaining European-wide coverage in an expanded Europe.
This article was also published in The Independent, 18 June 2003