The near-impossible hurdle lawyers must clear before being granted permission to appeal to the Court of Justice of the EU in trademark cases has effectively made the EU General Court the final arbiter in disputes, counsel tell Managing IP.
As of May 2019, trademark decisions that had already been considered on appeal twice (by the EUIPO’s Boards of Appeal and then by the General Court) could only be heard by the CJEU if they raised an issue that was “significant to the development of EU law”.
In addition to the standard appeal document, prospective appellants must now file a separate seven-page brief within two months of a General Court ruling. This brief must show that the issue raised is significant with respect to the unity, consistency or development of EU law rather than simply challenging a first-instance decision.
Since that rule came into force, more than 30 requests for appeal have been filed and zero granted. In the year leading up to the change (May 2018 to May 2019), 65 appeals were filed and seven were ultimately successful. The year before (May 2017 to May 2018), 48 appeals were filed and one was successful.
Speaking to Managing IP, in-house counsel and private practice lawyers say meeting this hurdle and keeping within strict limitations imposed by the CJEU make appealing beyond the General Court “almost impossible”.
One source tells us it would be “very bad for legal development” if all cases were to end at the General Court, adding, “We need guidance from the CJEU”.
However, a member of the EUIPO Boards of Appeal (BoA) tells us it is right that the CJEU should only consider “exceptional cases” that have a material impact on EU law. “Any case that does come before the CJEU should be very significant,” he adds.
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Every word matters
Verena von Bomhard, partner at Bomhard IP in Spain, who obtained the figures on the CJEU’s appeal acceptance rate post May 2019, says cramming significant arguments into just seven pages (while ensuring it is compliant with 1.5 line spacing) is very difficult.
“Every word has to be worth its weight in gold,” she tells Managing IP.
Stefan Martin, a member of the EUIPO’s BoA in Alicante, Spain, says the CJEU has been moving in this direction for the past few years and has mostly been refusing appeals.
He notes that there will have already been three levels of adjudication prior to any CJEU ruling – a first instance decision from the EUIPO, a decision from the “quasi-judicial and independent EUIPO BoA” and lastly, the General Court.
“Parties should get accustomed to the fact that CJEU hearings are only for exceptionally important cases and that the last instance will usually be the General Court,” he says.
Paul Maeyaert, partner at Fencer in Belgium, says that prior to May 2019, appeals were often lodged because of alleged inconsistency or a wrong interpretation of the relevant EU regulations.
While it is probably true that a third review is not always needed, we now face the opposite situation whereby it is “almost impossible” to have a case heard, Maeyaert says.
He adds: “What is ‘significantly’? There is not one decision of the General Court that has passed the test since the new procedural rules entered into force.”
Martin says he believes it will take time and experimentation for parties to ascertain what will meet the requirements, but adds that they will not give up.
He points out that in the US, it is rare for a trademark case stemming from a USPTO decision to go all the way to the Supreme Court, unless there is a wider issue of law at play. He cites the 2017 Matal v Tam case, which centred on morality and offensiveness, as an example.
“You can expect the CJEU to only accept a case that has a material impact on EU law,” he says.
Mixed opinions
Other lawyers warn that taking options away from applicants could be damaging and that the decision may not clear up inconsistencies between the EUIPO and General Court.
Vittorio Aversano, former senior IP counsel at Bulgari and head of online legal enforcement at Brandit in Switzerland, says requiring an extra brief to back up the grounds of the appeal may ease the burden between the court and the appellant but could affect the latter’s rights.
“Appellants should always have the chance to have their appeal examined by the court, both for approval or rejection. Introducing further restrictions to appealing might discourage the whole trademark litigation system,” he says.
Unlike Martin, Von Bomhard at Bomhard IP says parties could claim they are being restricted to just one judicial decision.
“The EUIPO is an executive body, and while it is independent you could argue that the BoA is an extension of that. Ordinarily, you would have at least one, probably two, judicative decisions in a process. In this instance, there is just one [the General Court].”
But Ricardo Lopez, legal counsel at French dating site AdopteUnMec in Paris, says the strict requirements will help the CJEU manage its workload and remind parties that an appeal [at the CJEU] is an extraordinary measure.
“This higher bar can be positive for the parties, because it helps them to reach a final enforceable decision sooner, instead of delaying it even more with a fourth instance.”
He adds: “Without a bar, there is always a risk for parties to abuse and to use the multiple instances as a mechanism to delay a final decision.”
Laura Fresco, partner at Hoyng Rokh Monegier in Amsterdam, says although more decisions can help to refine legal principles, “'bad' cases also make bad law”.
“Allowing all kinds of appeals can lead to confusion and may make it more difficult for national courts to apply EU law, taking into account the sometimes rather cryptic CJEU judgments.”
She adds: “Lawyers obviously have a responsibility here as gate keepers before advising their clients to go up to the CJEU. That being said, I hope the new system does not create such a bar that it causes a chilling effect on the development of EU law.”
Alternative avenues
As well as ensuring the CJEU only deals with significant issues of law, sources say, the CJEU also took this step to reduce its workload, having had to wade its way through multiple appeal requests over the past few years.
However, Von Bomhard says the measures could have the reverse effect of increasing the court’s backlog.
“A knock-on effect may well be an increased number of referrals from national courts. These are far more cumbersome for the court to deal with – the court has to notify all member states, provide translations and is duty bound to answer the questions.”
However, Martin at the EUIPO says a spike in national referrals is unlikely.
“It’s not an easy route to go down. I cannot see there being 60 to 70 national referrals a year – which was roughly how many appeals from General Court decisions the CJEU was dealing with every year.”
Von Bomhard adds that she would discourage clients from pursuing appeals at the CJEU and that they may be better off simply bringing a product bearing an applied-for trademark to the market, even in the event of an unfavourable EUIPO or General Court decision.
“It is not guaranteed that the trademark will be challenged in an infringement action or that any challenge will be successful.”
She adds: “Many counsel will oppose a trademark application for register hygiene. Oppositions are fairly straight forward to file, but that does not always translate into subsequent infringement litigation.”
Maeyaert at Fencer says while this is an option, applicants should be wary.
“In some cases, the likelihood of confusion or the likelihood of association can be more easily shown by taking into account the way the mark is used in real factual market circumstances. However, the negative decision of the administrative body or bodies will always hang overhead as a sword of Damocles.”
For now, parties who want to avoid impending disaster may have to make do with the General Court providing the final word.
In the meantime, practitioners will keenly await that first case that the CJEU deems significant enough to hear.
