Time will tell: EU top court clarifies when UK interest is lost in General Court EUTM appeals after Brexit

The EU's highest court (the "ECJ") has upheld an EU General Court's first instance decision that UK rightsholders continue to have a cause of action before the General Court in appeals against European Union Intellectual Property Office ("EUIPO") decisions in EU trade mark ("EUTM") claims after Brexit as long as any such decision was made on or before the end of the Brexit transition period on 31 December 2020 (EUIPO v Indo European Foods (C-801/21 P)).

Previously

Back in April 2020, during the Brexit transition period, the EUIPO's Board of Appeal ("BoA") had rejected an opposition to the registration of a figurative EUTM comprising the verbal element 'BASMATI':

The opposition had been brought in 2017 by Indo European Foods ("IEF") on the basis of earlier UK unregistered rights in 'BASMATI' under Art. 8(4) EUTMR (in this case, the 'extended' form of the UK law of passing off). The BoA upheld the first instance decision of the EUIPO's Opposition Division, which found there to be insufficient evidence to support IEF's claim.

IEF appealed the BoA's decision to the EU General Court.

The General Court's proceedings in EUIPO v Indo European Foods (T‑342/20) straddled the end of the Brexit transition period, meaning that IEF's UK unregistered rights (if any) ceased to have effect in the EU on 31 December 2020, after the appeal had been lodged but before it concluded. Therefore, the EUIPO argued that IEF's cause of action had ceased to exist and the appeal had thus become inadmissible mid-proceedings.

The General Court dismissed the EUIPO's procedural arguments as to inadmissibility due to Brexit, and further upheld IEF's appeal annulling the BoA's decision on substantive grounds, as it considered that the BoA had misapplied the UK law of passing off.

The EUIPO appealed the decision to the ECJ only in relation to inadmissibility.

The ECJ decision

In the appeal the ECJ agreed with the General Court in relation to the (in)admissibility of IEF's claim.

Specifically, the ECJ found that IEF's interest in bringing proceedings had not disappeared following the end of the Brexit transition period because IEF's cause of action in the General Court was not based on any UK unregistered rights in 'BASMATI' (as it was in the opposition before the EUIPO). Instead, it was based on the BoA's decision which was itself detrimental to IEF's economic interests and, as it had been issued prior to the end of the Brexit transition period, IEF's interest would continue to exist until the conclusion of the General Court proceedings.

The ECJ did not consider when an opposition against an EUTM application loses its purpose before the EUIPO. Indeed, the ECJ indicated that the General Court's (or indeed its own) assessment had no bearing on the effects of Brexit on opposition proceedings in the EUIPO. Conversely, that remained a matter for the EUIPO to consider (paras 94-95 of the judgment).

Comment

While this ECJ decision applies existing case law and does not depart from longstanding EU legal principles, it nonetheless crystallises the point in time at which the issue of standing before the EU General Court must be assessed in an appeal against a BoA decision in an EUTM opposition. In particular, UK rightsholders will only be able to appeal BoA decisions issued on or before the end of the Brexit transition period on 31 December 2020.

This provides much needed clarity on the impact of Brexit on EUTM court appeals, but it is bad news for any opponent relying on prior UK rights whose proceedings in the EUIPO are ongoing; currently suspended (e.g., in a cooling off period); or have been decided by the BoA on or after 1 January 2021. They are now precluded from appealing any unfavourable decision to the General Court.

Looking ahead

What this decision does not address is the more interesting and, perhaps, more pressing question of the point in time at which the issue of standing before the EUIPO must be assessed in an opposition against an EUTM application based on a prior UK right. In particular, what happens to any such opposition which started before the end of the Brexit transition period but concluded (or will conclude) afterwards. This is the subject of the pending ECJ case EUIPO v Nowhere (C-337/22 P). (You can read our blog on the General Court's decision in this case here: General Court rules UK trade marks must be considered in EUTM oppositions filed before Brexit). An equivalent case with regard to invalidity actions Shopify v EUIPO (C-751/22 P) is also currently pending in the ECJ.

Despite the dwindling number of such cases, clarification on these matters is much needed in light of two contradicting lines of case-law in the General Court as to whether the existence of a relative ground for an EUTM opposition based on a prior UK right has to be assessed: (i) at the latest, at the time when the EUIPO gives a decision on the opposition; or (ii) at the time of filing of the EUTM application being opposed. The EUIPO's current practice follows the former, thereby rejecting oppositions based on prior UK rights which conclude on or after 1 January 2021 as a matter of principle.

Going back to IEF's opposition, in light of the above, there is a chance that (despite winning its appeal in the ECJ) IEF will see its opposition rejected once more as the BoA will find itself considering the subject matter anew well after the end of the Brexit transition period. That is because, if standing for an EUTM opposition based a prior UK right is to be assessed at the time when the EUIPO gives a decision on the opposition, it remains unclear what date that would be in circumstances where the case is sent back to the BoA following a General Court annulment—i.e., in IEF's case, is it the date of the first BoA decision taken before the end of the Brexit transition period or the date of the second BoA decision after the General Court's remittance post-Brexit? The General Court hinted at the former obiter in the first instance decision whereas the EUIPO strongly argued the latter.

The irony of this potential outcome was not lost on the ECJ, which nonetheless considered it appropriate to allow IEF's appeal as a matter of legal principle without further clarifying this point. It is hoped that the ECJ will consider these matters in its upcoming decision on the appeal from the General Court in EUIPO v Nowhere (C-337/22 P).

As such, until further clarification, the Brexit effect on EUIPO proceedings remains unclear and paradoxical. Time will tell, but it might be too late.