• Who's Maintaining That Licensed CTM?

    Exclusive licensees may use a CTM to the exclusion of all others, even the registered proprietor. When it comes to renewal, however, they are hardly on a par. One exclusive licensee, the coffee producer Jurado Hermanos, learned this the hard way recently in Jurado Hermanos SL v OHIM (Case T-410/07), when its efforts to renew the licensed CTM in the absence of express consent from the proprietor failed.

    Asleep at the controls?

    The licensee in Jurado had fallen out with the licensor, but still held an exclusive license for the CTM word mark JURADO. The license was recorded on the CTM Register.

    OHIM notified both the proprietor and the licensee of the forthcoming renewal deadline by letter dated 26 September 2005. No action was taken and the CTM expired on 25 April 2006. OHIM informed the proprietor of this by letter dated 24 November 2006.

    In March 2007, the licensee re-emerged and hastily applied for restitutio in integrum, claiming that it had not received notice of the CTM's expiry and had only just learned of it by chance after consulting OHIM's website. Relief was denied, the Second Board of Appeal holding that the licensee had never been a party to the renewal proceedings and therefore had no rights that could be restored.

    On appeal, the CFI confirmed this finding. It held that OHIM's obligation in respect of renewal was strict: under Article 47 (1) CTMR, renewals could only be made by the proprietor of the mark or by a person expressly authorised by him. An implied authorisation would not do.

    The licensee in Jurado had never offered proof that it had been expressly authorised by the proprietor to renew the CTM, either within the license agreement or separately. As such, it never had any standing to renew the right, notwithstanding the existence of its exclusive license. The CTM remained unresurrected, and the licensee lost its licensed right.

    Comment

    This decision is a salient reminder that CTMs farmed out to exclusive licensees cannot simply be ignored thereafter by the registered proprietors.

    OHIM is under no legal obligation to communicate renewal deadlines to all parties with an interest in a CTM, and a proprietor would be cavalier to assume that licensees are monitoring renewal deadlines and notifying the proprietor where action is needed. True, it is in a licensee's interest to do so, but there is no guarantee.

    If a CTM proprietor wants a quiet life, then any exclusive license agreement should cover all relevant matters, including an express authorisation to renew the CTM if the license is still in force. Indeed, Jurado confirms that an express authorisation to renew a CTM on behalf of the proprietor can be included in a license agreement. If that had been the case here, Jurado might have had a stronger footing in its restitutio claim, although chances are it would still have failed since the first instance decision found that Jurado had not taken all due care to meet the renewal deadline.

    If licensing proprietors do not want to relinquish control over whether or not rights are renewed in their name, then they must be vigilant in monitoring renewal deadlines and provide timely written authorisations if their licensees are to renew.

    In practice, though, even if a licensee renews against the wishes of a proprietor based on an older, express authorisation in the license, the proprietor can always surrender the CTM at any time. The potential for damage arising from such a term in a license would therefore appear to be minimal.

    Licensees for their part must not assume that the registered proprietor is alert to the actions and deadlines relevant to maintaining a CTM. An exclusive license is a valuable right, and with it comes great responsibility. If licensees fail to take reasonable measures to ensure that the licensed right remains in force, they can expect little sympathy from the courts if it does not.

    For licensees, therefore, noting and monitoring renewal deadlines and ensuring that the necessary action is taken is not just a sensible precaution. It is a highly commercial one, too.