Grand Board of Appeal clarifies correct practice regarding conversion of an EUTM into national applications

The unitary character of a European Union trade mark (EUTM), namely that an EUTM is a single right with equal effect in all EU member states, is a fundamental principle of the EU trade mark registration system. This unitary nature affords trade mark applicants significant cost and administrative benefits. By means of a single trade mark application, a trade mark owner can obtain (and maintain) registered trade mark protection across all 27 EU member states at a fraction of the cost of seeking individual national protection separately in each EU country.

However, the unitary nature of an EUTM has its downsides. One is that if obstacles to registration of an EUTM exist in just one, or a few, EU countries, these country specific obstacles can block protection as an EUTM. Examples of such obstacles are where a trade mark is considered descriptive (and therefore ineligible for registration) in only one EU language or where a third party successfully opposes or cancels an EUTM based on an earlier conflicting right in only one member state. In these circumstances, an EU trade mark will be refused (or cancelled), leaving the trade mark owner with no protection anywhere in the EU despite the fact that the grounds for refusal applied in only certain EU countries.

Conversion

All is not necessarily lost in these situations however because of an in-built safeguard mechanism of the EUTM system called “conversion”. Conversion involves turning an EUTM into separate national applications in EU countries often (although not exclusively) by first withdrawing the EUTM. These national applications retain the benefit of the original EUTM filing date. That said, there are limits to when conversion is permitted. Article 139(2)(b) of the relevant section of the EU Trade Mark Regulation 2017/1001 (EUTMR) blocks conversion “in a Member State in which, in accordance with the decision of the Office or of the national court, grounds for refusal of registration or grounds for revocation or invalidity apply”

For example, if an English-language trade mark is refused registration because it is descriptive, then conversion would not be permitted in countries where English is at least an official language (Ireland and Malta). Or, if an EU trade mark is successfully opposed or cancelled on the basis of a national Spanish mark, conversion would not be permitted in Spain.

The long-standing practice of the European Union Intellectual Property Office (EUIPO) was that this conversion blocking mechanism took effect as soon as a decision issued and before the expiry of the period to appeal that decision. This practice was based on a 2006 decision of the EUIPO’s Grand Board of Appeal (the Optima decision (Case R 331/2006-G)), and formed part of the EUIPO’s official guidelines. The reasoning for this was that a “decision” in Article 139(2)(b) meant a “final” decision and the EUIPO deemed a decision to be final as soon as it issued, rather than once the appeal period had expired. As a result, if a trade mark owner wanted to retain the option of converting its EUTM in all EU countries, it was forced to incur the costs of appealing an unfavourable decision (to avoid this decision becoming “final”). After filing the appeal, the EUTM could, before the appeal decision issued, be converted in all EU member states.

Then a 2022 decision of the EUIPO’s Fourth Board of Appeal (Case R 1241/2020-4, ‘Nightwatch’) challenged this practice. The Board of Appeal held that, contrary to longstanding EUIPO practice, a decision only becomes final once the appeal period has expired and so, where an EUTM application is withdrawn before the expiry of this period, conversion should be allowed in any EU member state. This decision caused rather a stir in the world of trade marks.

Reference to the Grand Board of Appeal

For the first time ever, the EUIPO’s Executive Director in 2024 exercised his right under the EUTMR to refer this point of law to its Grand Board of Appeal (Grand Board) to consider whether the EUIPO’s practice was legally correct.

While Article 66 of the EUTMR expressly stated that decisions only took effect from the date of expiry of the appeal period, that Article was not understood by the EUIPO to mean that withdrawal of a refused EUTM application during the appeal period stopped the decision being final.

The core issue was the correct interpretation of “decision of the office” in Article 139(2)(b) EUTMR which blocks conversion. The main questions which the Grand Board was asked to consider were whether:

• “decision of the Office” includes a refusal of an application withdrawn before the deadline for appealing and/or an appealed refusal of an application withdrawn before an appeal decision;
• “decisions of the Office” includes refusals by the Boards of Appeal of an EUTM application withdrawn before the deadline for appeal to the court;
• it made any difference if the decision resulted from the EUIPO’s own objection or from a third-party challenge.

In its opinion of October 2024 (R0497/2024-G), the Grand Board upheld the Nightwatch decision and said that the correct interpretation is that conversion of a refused EUTM application (whether resulting from the EUIPO’s own objection or from a third-party challenge) in any member state cannot be blocked where the application was withdrawn before the refusal could take effect (i.e. during the 2-month appeal period), even if no appeal was actually filed against that refusal. It held that Article 139(2)(b) EUTMR does not apply since there has been no final decision.

Thus, conversion in all EU member states is possible even where the EUIPO determines that an obstacle existed in all or part of the EU.

The Grand Board clarified that the change did not apply to judgments or orders of the Court of Justice (the highest appeal body) since they become final on the date of delivery of the judgment or the date of notification of the order. The Grand Board refuted the idea that permitting conversion in these circumstances circumvents the EUTM appeal mechanism or is an abuse of process. On the contrary, it held that the old practice encroached upon the competence of national offices affected by the conversion request by imposing on them an EUTM application refusal, as if it had been a final decision reflecting the ultimate conclusion of the EUIPO or judicature on the matter.

Consequences

The welcome clarification that EUTM applicants do not need to file an appeal in order to convert their refused EUTMs will generate costs savings.

Applicants still need to remember to withdraw the application during the appeal period. Applicants are also reminded of the strict deadline for filing a conversion request.

The EUIPO has revised the conversion chapter of its published Trade Mark Guidelines to reflect the Grand Board’s opinion.