Evidence of enhanced distinctiveness in the UK irrelevant in EU Trade Mark proceedings decided post-Brexit
In Shopify Inc. v EUIPO; Shoppi Ltd, the General Court has taken a hard line against the applicant, Shopify, and agreed with the EUIPO Board of Appeal’s decision that evidence of use of an earlier EUTM “SHOPIFY” in the UK could not be relied on by Shopify in its application to invalidate the later EUTM “Shoppi”.
Shoppi applied to register their trade mark on 8 May 2017. The mark for which they were seeking registration was a dark blue, white, red and orange logo and the application covered classes 9, 35 and 38. The mark was registered on 4 May 2018.
Shopify subsequently filed an application for a declaration of invalidity of Shoppi’s newly registered EUTM with the EUIPO on 22 March 2019. i.e. at the time when the UK was still an EU Member State. Shopify’s application was based on their earlier EUTM “SHOPIFY”, a word mark covering classes 9, 35, 36 and 42.
On 6 February 2020, the Cancellation Division of the EUIPO upheld Shopify’s application of invalidity. They found that the categories of goods and services were similar, the signs were visually and phonetically similar and the overall impression conveyed by them was similar, therefore there was likelihood of confusion on the non-English speaking part of the public.
Shoppi appealed against the decision of the Cancellation Division on 28 February 2020.
On 18 February 2021, i.e. after the Withdrawal Agreement (also known as the “Brexit Agreement) came into force, the Board of Appeal upheld Shoppi’s appeal and annulled the declaration of invalidity in its entirety. It found that although both marks related to similar categories of goods and services, both marks were visually similar to a low degree, phonetically similar to an average degree and conceptually similar to a low degree.
The Board of Appeal also held that for the non-English speaking public the “-ify” element meant the mark had a slightly higher distinctive character than the minimum level and for the English-speaking public, it conveyed the meaning of: ‘to make something become a shop’ such that it had low inherent distinctiveness.
Most importantly, the Board of Appeal found that the evidence submitted by Shopify to demonstrate enhanced distinctiveness of their earlier EUTM through use was not sufficient for that purpose. Lastly, the overall assessment meant there was no likelihood of confusion.
Shopify then brought proceedings in the General Court under Article 263 of the Treaty on the Functioning of the European Union (“TFEU”) to annul the EUIPO’s Board of Appeal decision of 18 February 2021.
The Decision of the General Court
In late 2022, the General Court agreed with the Board of Appeal that the marks were only visually and phonetically similar to an average degree.
Shopify argued that the Board of Appeal was wrong in dismissing the evidence of enhanced distinctiveness relating to the UK on account of its withdrawal from the EU during the cancellation proceedings, since the relevant time for assessing enhanced distinctiveness was the date on which the application for registration of the contested mark was filed, which fell when the UK remained in the EU.
Applicability of UK evidence
The Board of Appeal decided that evidence of enhanced distinctiveness relating to the UK could no longer be relied on in EUTM proceedings as of 1 January 2021 (i.e.: the date when the Withdrawal Agreement came into force), even if that evidence predated 1 January 2021. The relevant EUTM would have to possess enhanced distinctiveness ‘in the EU’ at the time of the decision being made and it is the evidence of enhanced distinctiveness in the EU that should be taken into account, not in the UK. Therefore, insofar as the applicant stressed the enhanced distinctiveness of the earlier mark in the UK, the Board of Appeal found that element was irrelevant for the purposes of the proceedings before it.
Shopify argued that at the time of the assessment of enhanced distinctiveness, which was the date of the application for registration of the contested mark, 8 May 2017, the UK was still a Member State and so the evidence relating to the UK should still be taken into account.
The General Court held that given that the Board of Appeal’s decision was delivered after the expiry of the transition period in which EU law was continually applicable, they were correct in disregarding the evidence of enhanced distinctiveness relating to the UK which Shopify was seeking to rely on. The Court held that at the time of the contested decision being issued, the UK public was no longer part of the relevant public.
The Court clarified that whilst the date to be taken into account for assessing enhanced distinctiveness is indeed the filing date of the relevant trade mark application, there is also a requirement that the prior right must persist at the date on which EUIPO rules on the application for a declaration of invalidity. This requirement needs to be satisfied in any substantive assessment of enhanced distinctiveness.
In plain language, the decision of the General Court means that owners of EUTMs who were predominantly using them in the UK and in particular those who have relied on their enhanced distinctiveness acquired in the UK need to be aware of the fact that such evidence will be insufficient for the purposes of proceedings before the EUIPO in view of the fact the UK is no longer part of the EU.
The recommended approach for such owners is to always ensure their EUTMs are indeed used and distinctive to the relevant public in the relevant territory, i.e.: in the EU. Otherwise, if such EUTMs become embroiled in a dispute before the EUIPO, UK-only evidence will not suffice and evidential difficulties may in some cases lead to loss of protection of EUTMs.
In this case, arguably Shopify should have relied on the evidence of enhanced distinctiveness from multiple Member States, however, there is room for some sympathy towards their position in view of the fact the case was commenced and continued for a considerable period of time before the Withdrawal Agreement came into force.
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