Royalton Overseas v OHIM–S.C. Romarose Invest (KAISERHOFF), Case T-556/12
Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv050, first published online: March 22, 2015
Does the annulment of the OHIM Board of Appeal decision in Royalton/KAISERHOFF on suspension requests herald a new standard for procedural matters in appeals? The General Court has issued its first ruling annulling a substantive decision of the OHIM Board of Appeal on the basis of a manifest error of assessment. The particular issue concerned the Board's broad discretion in the procedural matter of refusing a suspension request.
The applicant Royalton Overseas Ltd filed an application for a figurative Community trade mark for the KAISERHOFF logo for goods in classes 8 and 21. This application was opposed by S C Romarose Invest Srl on the basis of an earlier Romanian registration for KAISERHOFF for goods and services in classes 11, 21 and 35. The opposition was partially upheld and Royalton appealed.
In its statement of grounds and in additional observations filed afterwards, Royalton requested that the proceedings be suspended on the basis that a cancellation action filed by Royalton against the opponent's earlier registration was pending before the Bucharest Municipal Court, Romania. The Board of Appeal did not suspend the proceedings and instead issued a decision upholding the Opposition Division decision and dismissing the appeal.
The Board of Appeal's decision on the suspension issue was based on two main points:
The cancellation action could not be taken into account as it was brought after the appeal was filed and the statement of grounds was submitted.The Board of Appeal also rejected the applicant's arguments that the registration certificate filed in respect of the opponent's registration was incorrect as it did not reflect limitations on the goods resulting from a third party opposition. It held that no copy of the original decision limiting the opponent's registration had been provided but, even if it had been provided, the outcome would not have been different in the light of the high degree of similarity of the marks. The General Court refused to admit additional documents provided for the first time before it confirmed the limitation to the opponent's registration, and this issue was not explored further.
The Board had serious doubts about the true intentions of the applicant in requesting suspension of the proceedings, especially as the applicant had filed other cancellation actions against the opponent's registration in the past which had been concluded.
In regard to the cancellation action against the opponent's earlier registration in Romania, the applicant filed a further certificate of the Romanian court, confirming the existence of that action, and the opponent filed evidence of two previous cancellation actions filed against that registration by the applicant. The court also refused to admit these additional documents provided for the first time to the court, in line with the decision on new evidence in ARTHUR ET FELICIE (Case T-346/04).
The Board of Appeal also alleged that no copy of the original cancellation action had been provided and that the English translation provided did not show that the opponent's earlier registration was currently the subject of the cancellation action. OHIM, before the court, accepted that a copy of the original action had indeed been provided along with the translation and that the documents filed identified the opponent's earlier registration as the subject. However, OHIM maintained that the Board of Appeal was correct to be uncertain whether this was a delaying tactic in view of the two earlier cancellation actions taken by the applicant. The court held that Article 76(1) of the Community Trade Mark Regulation (CTMR) requires that OHIM examines carefully and impartially all of the factual and legal aspects of the case (in line with Case T-427/11 BIODERMA) and that the Board of Appeal had failed in this duty of diligence by omitting to consider the evidence of the cancellation action which was before it. The court then considered whether the Board of Appeal could still validly refuse the request for suspension, notwithstanding the existence of the cancellation action.
The court confirmed that the Board of Appeal has a broad discretion as to whether to suspend proceedings. However, this discretion is not unfettered and can be judicially reviewed if a manifest error of assessment or misuse of powers has occurred (as established in Atlas Transport).
In this case, it was made clear that the Board does not automatically have to suspend proceedings because one party requests it or merely because the earlier registration is the subject of a cancellation action. Even if the Board had examined the file properly and identified the cancellation action, it could still have formed the view that the request for suspension should be refused, to strike a proper balance between the interests involved. The Board's line of reasoning would have led it to refuse the request in any event.
The court confirmed that, in exercising its discretion, the Board must observe the general principles governing procedural fairness applicable across the European Union (EU). These principles include a requirement that the Board take into account not only the interests of the applicant but also those of the other parties. The decision on suspension therefore requires a weighing of the competing interests (as per Atlas Transport). The court then examined whether the weighing of interests was correctly performed in refusing the suspension.
The court considered that the Board had held that the cancellation action was irrelevant in any event as it had been brought after the appeal was filed and the written statement of grounds submitted. The court cited the STELLA decision (Case T-27/09) to the effect that it is possible for cancellation proceedings to proceed even if opposition proceedings based on that mark are pending. Cancellation and opposition proceedings are distinct, autonomous and independent. However, where the cancellation action follows after opposition proceedings, this can at most justify a suspension of the opposition on the basis that if the cancellation action succeeds, the opposition would be devoid of purpose (see further under ‘Analysis’ below).
The court held that it is not possible to conclude that the filing a cancellation action while opposition proceedings are still pending is evidence of bad faith. Thus the Board of Appeal could not validly base its refusal of the request for suspension solely on the fact that the cancellation action was filed after the appeal had been lodged and the written statement setting out the grounds of appeal had been submitted.
The Board had also based its decision on its serious doubts as to the applicant's true intentions, arising from the fact that the applicant had filed two previous cancellation actions while the opposition proceedings were pending. The Board believed that the motivation for these actions was to delay the outcome of the opposition proceedings in the present case or in other proceedings involving the parties. The court criticized the unelaborated reference by the Board to ‘other proceedings involving the parties’ and the lack of explanation as to what interest the applicant could have in delaying the opposition proceedings. The only reason that the court could deduce was that the Board believed the applicant anticipated a negative outcome in the opposition. The court considered this reason to be ‘not only abstract but also unsupported by any objective evidence and accordingly cannot justify the Board of Appeal's refusal to grant the request for suspension’. The court held that the previous cancellation actions had been concluded on procedural grounds (failure to pay stamp duty and withdrawal) and their merits had not been examined. This explained for the court why a third action had been filed. The court concluded that the Board's presumption that the applicant was seeking to delay the opposition without examining the circumstances of the earlier cancellation actions failed to take into account all aspects of the applicant's situation. The Board did not look at the whole picture and therefore could not be said to have properly weighed the various interests involved. Therefore the Board had infringed Article 76(1) CTMR in its consideration of the request for suspension. As this issue had to be dealt with before the consideration of the likelihood of confusion, the decision was annulled.
The decision is interesting in that it reflects the high standard which it applies to consideration by OHIM Boards of Appeal of suspension requests. Although the Boards have a broad discretion in dealing with such requests, it is clear that it is incumbent on them to weigh the competing interests of all of the parties and to give proper consideration to the circumstances applicable to the request. Reasons that are abstract or insufficiently grounded in reality will not be sufficient. The General Court also referred to ‘objective evidence’ underlying the grounds of the decision. This decision makes it clear that the OHIM Boards of Appeal, although independent, are nonetheless still bound by the general principles of law governing procedural fairness such as weighing competing interests and cannot engage in manifest errors of assessment or misuse of powers in considering suspension requests.
This decision is also enlightening in its analysis of the interaction between cancellation and opposition actions. The court pointed out that, if a cancellation action filed after an opposition based on the challenged mark were to succeed, the opposition would be ‘devoid of purpose’. Significantly, the court did not say that the opposition would be bound to fail, merely that it would be devoid of purpose as the applicant could simply file a new application after the cancellation decision concludes, which also means that there is no advantage to the owner of the earlier mark to file opposition where its earlier mark is the subject of cancellation proceedings. The distinction between ‘devoid of purpose’ and ‘bound to fail’ presumably stems from the difference between a cancellation action such as invalidity, which renders the mark void ab initio, and a revocation action that would only cancel the registration from a particular date, which may be after the relevant date for the opposition (see the UK IPO Appointed Person's decision in Opposition O-338-10, re Application No. 2389521 NOW WIRELESS).
This decision is the first time a decision of the OHIM Boards of Appeal concerning suspension has been considered in the larger picture of overlying general legal principles and has been found wanting, notwithstanding the broad discretion of the Boards.
Although the administrative law principles of manifest errors of assessment and misuse of powers in procedural matters have only to date been explored in suspension requests, they could potentially have a role in analysing the exercise of other discretionary powers of the Boards.
The approach of the Boards to procedural matters can be difficult to predict, as they are not subject to the same rules of practice as the other divisions of OHIM. The practices and procedures of the Boards of Appeal are largely undocumented and different Boards often take different approaches to the same procedural issue. There seems to be little appetite in OHIM or the Boards to develop rules of practice for appeals, in case this is seen as interfering with the independence of the Boards. Against this background, the application of general legal principles – such as the need to weigh competing interests, the extension of the principles of manifest errors of assessment and misuse of powers from administrative law to judicial review of Board of Appeal suspension requests and perhaps other procedural matters in future and the willingness of the General Court to hold the Boards of Appeal to a high standard of assessment in such matters – are highly important safeguards.