Grand Board Settles Conversion Controversy

The value of conversion lost some of its shine in 2006, when the Opposition Division ruled that a CTM opposition based on an earlier CTM later converted into national applications must fail. This controversial finding has at long last been put right, however, by the ruling of OHIM’s Grand Board of Appeal in Cardiva SL v Cardima Inc. (Case R 1313/2006-G).

Battle Engaged

Cardima Inc. was the owner of a pending CTM application for a CARDIMA Logo for medical and surgical equipment and related goods and services in Classes 9, 10 and 42.

Cardiva Inc. owned prior Spanish rights in a similar mark, CARDIVA Logo, and it also applied to register its logo as a CTM for medical and surgical equipment and related goods and services in Classes 10, 35 and 39.

The parties soon engaged in cross-oppositions before OHIM. Cardiva’s opposition to the CTM for CARDIMA Logo was decided first, and as a result of Cardiva’s Spanish rights the Opposition Division refused the CTM for CARDIMA Logo for the goods in Classes 9 and 10. Cardima’s CTM survived for the Class 42 services, but Cardima converted the Class 9 and 10 claims into national applications in the UK and the Benelux within two months of the opposition decision rejecting its CTM in those classes.

After Cardiva’s opposition was decided, OHIM resumed examination of Cardima’s opposition to Cardiva’s CTM. That opposition was based on Cardima’s earlier CTM application in Classes 9, 10 and 42, which was now registered only in Class 42 but had been converted in the UK and the Benelux for Classes 9 and 10. The Opposition Decision decided not to take into account the UK and Benelux conversions, however, on the basis that these were autonomous and independent rights that were not expressly pleaded within the three-month opposition term. Indeed, they could not have been pleaded at the time because they did not then exist.

The Opposition Division upheld Cardima’s opposition, but only against Cardiva’s Class 10 claim.

The Conversion Controversy

Cardiva appealed, and in reply to the appeal Cardima argued that the decision had been right, but that the Opposition Division should also have taken into account Cardima’s conversions in the UK and the Benelux, which were now registered.

The issue was referred to OHIM’s Grand Board of Appeal, reserved for cases involving questions of major legal importance.

In accepting the case, the Grand Board noted that the position of CTM conversions arising during the pendency of an opposition was not addressed by either the CTM or the CTMIR. The issue had arisen once before in Case R 286/2002-3 (HAVANA), and the decision taken there accorded with the practice enshrined in OHIM’s Opposition Guidelines, namely that conversions arising after an opposition was filed and not pleaded within the three-month opposition period were to be disregarded.

The impact of this practice was that while an opponent could retain its earlier CTM priority date in conversion countries and could indeed rely on those rights in later invalidation proceedings against the opposed CTM, it could not rely on those same rights in the opposition already pending.

The Grand Board noted that although the Opposition Division had not referred expressly to HAVANA or the Opposition Guidelines, it was nonetheless bound to follow the Guidelines. However, the Grand Board noted that it was not itself obliged to follow earlier Board of Appeal decisions or the Guidelines, and it proceeded to examine the issue anew.

OHIM Practice, Overruled

The Grand Board held that both the Opposition Division, and the Opposition Guidelines, had been wrong.

It ruled that CTM conversions arising during the pendency of an opposition were to be regarded as relevant pleaded earlier rights. The mere fact that they only arose after the expiry of the inextensible three-month opposition term was irrelevant; the conversions arose from and were linked directly to the earlier CTM pleaded. The Grand Board noted that CTMs themselves were equivalent to regular national filings in EU countries under Article 32 CTMR, and that the CTM filing date was therefore to be regarded as effectively a filing date in each and every member state. That position should not change simply because the CTM’s potential as national rights was realised through national conversions.

The Grand Board ruled that conversions were not autonomous and independent of the CTM from which they sprung but were, on the contrary, closely linked to it procedurally and substantially, and the link with the CTM through preservation of the filing date accorded by the Office always remained. It was not open to the Opposition Division to disregard the outcome of a pending CTM on which an opposition was based.

The Grand Board went on to examine the appeal, taking into account Cardima’s CTM in Class 42 and its UK and Benelux registrations arising from the conversions in Classes 9 and 10. It rejected the appeal, upholding the finding that there was a likelihood of confusion in respect of Cardiva’s application in Class 10.

Comment

Cardima’s arguments were not essential to defeat Cardiva’s appeal, and the outcome of the case was no better or worse for Cardima than the decision at first instance.

The outcome for brand owners generally, however, is a vast improvement. OHIM’s practice of disregarding conversions filed during an opposition was little known, but in cases where it became relevant it gave rise to great costs and inconvenience. Opponents who needed to convert an earlier CTM on which opposition was based could not derive the benefit of the legal continuity between the CTM and the national conversions in the opposition proceeding itself. Instead, they had to file separate invalidation proceedings based on the national conversions. The potential for added costs and delay in achieving legal certainty was clear, and the practice severely undermined the value of CTM conversions.

Following the decision in Cardiva, however, OHIM’s former practice can no longer stand and conversions arising during an opposition will be recognised and regarded as the earlier rights that they are.

With this decision the Grand Board has restored some of the lost sheen to conversion and reinforced its value and status as a continuation of legal rights conferred by OHIM. The conversion “safety-net” is critical to the success of the CTM system and the decision underscores the close relationship between the CTM and national rights. For those who worry that national offices will become redundant when aggressive cuts in OHIM filing and registration fees are implemented, the key importance of conversion is a standing reassurance. Long may it continue.