The establishment of the Community Trademark has had important consequences for trademark owners both within and without the European Union. While non-Europeans may view the Community Trademark with concern about being disadvantaged by this new system, they may also use the system if they perceive that it will be advantageous for them to do so.

The concept of a Community Trademark is an old one, dating at least to 1964, when a working group under the aegis of the Common Market prepared a draft of a "Convention on European Trademark Law." The draft was not made public until nine years later, in 1973. Although two subsequent drafts appeared in 1976 and 1978, the first concrete proposal for a regulation on the Community Trademark did not appear until 1980.

In the years following submission of the proposal to the Council of the European Communities, debate took place centering around the need for harmonization of national laws of the member states, with a view to eliminating the potential for discrimination among different applicants and owners of trademarks in the member states due to variances in the national trademark laws.

Unequal treatment of trademark applicants and proprietors contravenes the Treaty of Rome, in which is enshrined the freedom to place goods and services into the stream of commerce within the fifteen member states of the European Union. [25] A two-pronged approach has been developed to prevent unequal treatment, one prong of which is harmonization of the national trademark laws of the member states, and the other is the establishment of a European Community Trademark valid in all member states.

The mechanism to achieve harmonization of national trademark laws is the First Council Directive to Approximate the Laws of the Member States Relating to Trademarks (89/104/EEC) (OJ 1989 L40). This directive was known as the "first" directive, in that it was thought that additional directives may be necessary in the future. The Directive applies to all registered national trademarks with respect to goods and services, but requires EU member states to develop their own procedure for registration and maintenance of national trademarks. The Directive establishes use requirements and a single exhaustion doctrine, as well rules governing licensing and acquiescence by trademark owners in use by third parties. The Directive also sets forth a common definition of a trademark and establishes absolute and relative grounds for refusal of registration and for cancellation of national trademark registrations.

European Council Regulation (EC) No. 40/94, of December 20, 1993, that took effect on March 15, 1994, and Commission Regulation (EC) No. 2868/95 (Rules) of December 13, 1995, effective April 1, 1996, deal with the direct implementation of the Community Trademark, and are primarily addressed in this paper.

The Office for Harmonization in the Internal Market began accepting applications as of January 1, 1996 and all applications filed between that date and April 1, 1996 received a filing date of April 1, 1996. [26]

European Council Regulation (EC) No. 40/94 establishes the Community Trademark. Under the Regulation, a single application submitted to a central office will result in a registration valid in all the Member States of the European Union. The Regulation does not abolish national trademark protection but creates a community that co-exists with national trademarks. As will be seen below, existing trademarks may provide grounds that bar registration of a Community Trademark.

The European Commission's Harmonization Directive has now brought the trademark laws of all of the member states of the European Union into uniformity. The Regulation that establishes the Community Trademark goes beyond standardization, by creating an alternative to national trademark registration. Non-Europeans will, in general, approve of the preclusion of the use of national trademark laws as barriers to their entry into the European market, as preferential treatment will not be accorded local applicants at the expense of applicants from non-EU member states.

One of the principal advantages of the Community Trademark, from the point of view of an applicant outside the EU, is that one need not be an EU national to obtain a Community Trademark Registration. Not only may all EU nationals file, but nationals of World Trade Organization countries, Paris Convention countries and nationals of countries that the EU has acknowledged extend to EU nationals the same trademark rights accorded their own nationals may file as well. This ensures that almost anyone is eligible to file for a Community Trademark. The exclusion of nationals of non-EU, non-Paris Convention and non-World Trade Organization member states that do not accord reciprocal rights to foreign applicants will not affect a great number of applicants.

One general concern to non-Europeans with respect to matters before the Community Trademark Office, is the Office's location in Alicante, Spain. This location was chosen by Spanish politicians with political debts to pay to appease local party officials, not for convenience of access as a trans-European center. There are no direct flights there, for example, from any major non-European cities, or, for that matter, from any European city, save Madrid. Remoteness makes hearings before the Office too burdensome, and makes the offices desire to discourage hearing practice less a point of contention.

One advantage for all applicants, both European and non-European is the convenience of filing. Applicants may file through a national office, incurring only what are envisioned to be nominal extra charges, or directly at the Community Trademark office. For applicants having an interest in obtaining protection in more than two countries of the European Union, the Community Trademark may become the most cost-effective route to registration as an applicant need file only one application, as well as pay the costs of prosecuting one application, rather than fifteen separate national applications. It is not necessary that an applicant appoint a Spanish attorney or agent to file an application, as any agent who is competent to do so in one of the EU member states may file.

However, if the actual costs in practice should rise in time, either through unforeseen difficulties, or through fees set purposefully too low in order to encourage initial Community Trademark filings, and then later raised, the cost advantages of the Community Trademark could, however, shift in favor of national filings. At present, the official filing fee for an application for an individual trademark in and up to three classes is 975 EURO and the registration fee for an individual trademark in and up to three classes is 1100 EURO. Long term cost problems will probably be mitigated somewhat, due to the expected lower maintenance costs of a Community Trademark registration, as opposed to thirteen national registrations (one in each of the twelve member state registers and the Benelux register).

Non-Europeans can appreciate the ease of filing in any national office while only incurring nominal extra fees, as they are able to obtain trademark coverage in the entire European Union from an EU member state where they may have a base, while non-Europeans filing from overseas like the convenience of filing at the Community Trademark Office directly.

Applicants who have registered a particular mark in one or more EU member states may claim "seniority" in that mark with respect to those member states, and thereby preserve the priority of the national registration for their Community Trademark, provided that the protection sought is no broader than that provided by the earlier national registrations. This acts in effect to preserve the status quo with respect to a particular mark in a particular jurisdiction, and may tempt both non-European as well as European trademark owners into using the Community Trademark system, especially as, if the Community Trademark application is granted, the national registration can be allowed to lapse, as the earlier national priority will be embodied in the Community Trademark registration. Moreover, a Community Trademark proprietor can convert a CTM application into a national registration under various circumstances, while retaining the priority date of the CTM application.

An added cost not welcomed by non-Europeans is that of searching prior to filing. Search fees will add to the costs because they should be made in all member states of the EU, as opposed to merely the countries of interest when filing by individual country, as a prior right in any one state may serve to block registration in the entire community. Several of the EU trademark offices currently conduct searches of their own register with respect to pending Community Trademark applications, although such searches are conducted only after an application is filed and are not a substitute for a thorough search before filing. Many have argued that improvements in the system are needed, while others propose to drop Search Reports altogether. Common complaints include the fact that the Search Reports, which are intended to give the applicant an opportunity to withdraw the application if it is found that prior rights exist, do not allow the applicant such an opportunity before full publication of the application by OHIM. Another complaint is that the reports are too broad, encompassing marks completely different than the mark applied for, or too narrow in that they do not include device marks. For these and other reasons, the Search Reports are not considered reliable by many.

Conversely, the value of a national search conducted pursuant to an application for a Community Trademark is less than ideal for the owner of a national registration, as the results of such national searches will not be communicated to the owner of the national registration. The only notification of potentially conflicting applications that the Office will communicate to trademark owners will be given to owners of prior existing Community Trademarks. As a result, trademark watch services are much more important, both for applicants and owners of prior national registrations, as a filing in even one of the EU nations may block an entire Community Trademark application.

The one central examination standard and examining authority offered by the Community Trademark regime was desirable, and applicants who choose to file for a Community Trademark will avoid the frustration of obtaining a registration in one European country but not in another, as can be the case with differing national examination and registration standards. In practice we have experienced a surprising lack of uniformity in examination standards which makes predictability of the registrability of marks difficult and is a serious practice defect.

The Community Trademark Office examines marks for inherent registrability but not for conflicting prior rights. The Office searches through the Community Trademark Register for prior Community registrations, but not for national registrations and notifies the applicant of any findings. Ten national Trademark Offices, namely all jurisdictions except France, Germany and Italy, [27] also search their register for prior conflicting registrations and notify the Office of any findings, which will, in turn, pass them on to the applicant, but not to the proprietor of the national registration. The importance of having trademarks monitored through a Watch Service is essential, as national registrations will neither be cited against applications for Community Trademarks nor will the owner of such registrations be notified of such applications if they have merely national rights.

The language requirement may pose a problem for applicants whose native language is not one of the five official Community Trademark Office languages, [28] although use of a local agent will obviously mitigate this. Where the language requirement could prove daunting is in translation costs, as applicants must designate a second CTM language in which to conduct Office proceedings and oppositions.

Oppositions may be brought on the basis of earlier national registrations, applications or, earlier non-registrable intellectual property rights. All trademark owners will derive comfort from the enforceability of their prior rights with respect to Community Trademark applications, and will like the enforceability of any common law rights derived from usage of their trademarks in the United Kingdom and Ireland, as those of a common law background are familiar with this concept. All applicants attempting to register a mark throughout Europe will appreciate a single opposition proceeding settling the matter, rather than fighting the same battle in thirteen trademark jurisdictions. In fact, where more than one opposition is filed against an application for a Community Trademark, the Office may, but is not obliged to, adjudicate them all at one time.

Applications may be opposed within three months of publication for opposition, in an action brought before the Office in Alicante, and may be based on rights in any one of the European member states. An opposer can file in any of the five languages of the Office, but must provide translation at his own expense if he does not choose one of the two languages of the application in question. Applications that are opposed successfully, or are otherwise refused, may be converted into national applications retaining the original priority date.

It was anticipated that non-Europeans would also like the centralized, transnational nature of proceedings at the Office, as this would lessen the likelihood of discrimination on nationalistic grounds, where applicable, particularly as being foreign on occasion is perceived as a detriment in opposition proceedings in certain countries.

As is often the case, however, the members of the European Community have not been willing to subjugate their nationalism completely. The cumbersome result is the duality of the system: the CTM, encompassing one registration covering the fifteen EU countries and potentially extending to other states that have expressed interest in joining the EU; and national registration maintained in each nation.

By enabling a trademark owner to file a single application for registration covering all fifteen countries of the European Union, the advantage of the Community Trademark registration is the requirement of only one application and one renewal, versus the multiple filing required for national registrations. Nationals of most countries of the world are thereby able to take advantage of this system.

This duality has, however, resulted in claims of conflicting rights of priority. When one party files an application for a Community Trademark, it is possible for a prior registrant who has a registration on the national registry of one or more of the member states to claim that this gives him a superior right which is sufficient to defeat a community application. This benefits the smaller trademark proprietors who would not wish to bear the increased costs of a community registration.

A Community Trademark proprietor has exclusive rights to the use of the trademark in the entire territory of the EU. A trademark proprietor may prevent registration of marks that are identical to its existing mark and are for identical goods or services. This is also true if the marks and goods or services are similar, provided that there is a likelihood of confusion on the part of the public.

Where a similar mark is used for dissimilar goods or services, protection will be available where the CTM has a reputation in the EU and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the CTM.

The ten year term of registration is becoming standard in Europe, in accordance with the Trademark Harmonization Directive. Use of a Community Trademark in any one country of the European Union will be sufficient to satisfy the requirement to use the Community Trademark. Five years' nonuse renders a registration vulnerable to cancellation, although use in one EU member state is deemed use in all of them. All registrants will prefer this, but those who are engaged in their first tentative steps into the EU market will take particular relief in being able to develop an initial market in one of the EU nations while being able to reserve their trademarks in all the others by virtue of the Community Trademark's EU-wide validity. This is a very valuable provision to the smaller non-European multinational.

Where for a period of five years, the proprietor of an earlier national registration has acquiesced in the use of a later CTM in the member state in which the earlier trademark is protected, there shall be no basis for invalidating or opposing the CTM. This does not apply to use of the CTM in the other member states.

A Community Trademark Registration is renewable for ten-year periods, although renewals obviously will not be applied for until at least ten years after grant of the first Community Trademark Registration. As a result, any cost benefit to be derived from having to renew only one registration as opposed to thirteen will not be realized for some years. Thus, for marks registered to take advantage of a short-lived product, for example, renewal costs will not enter into the equation of whether a CTM or national registrations are preferable.

Recordal of a license at the Community Trademark Office is required to be effective against third parties. The benefit of this, that only one recordal in Alicante is necessary, will be appreciated particularly by non-Europeans who may have one EU-wide licensee. Assignments need not include goodwill, although they too must be recorded to be effective against third parties. Recordal of an assignment is not permitted where the public is likely to be misled. Of course, a Community Trademark cannot be assigned on a country-by-country basis.

Actions for infringement, and appeals therefrom, are brought in the individual member states in courts specially designated to hear Community Trademark matters, which will apply EU law, not national law. Non-Europeans may like this because application of a Community law may result in less jingoistic treatment than would application of national law, however, it must be noted that the same national authorities that would apply national law would now apply Community law, leaving at least some potential for bias against non-Europeans. In view of this, nationals of non-European countries whose countries may be engaged in a trade conflict with the nation in which they are called as a defendant in an infringement action could still be subject to unfair nationalistic treatment disguised as the application of Community Trademark law.

As stated above, five years' unexplained nonuse renders a Community Trademark registration vulnerable to cancellation. Cancellation actions for this and other reasons may be brought before the Community Trademark Office, which as a central authority, is presumably free of the potential for favoritism of nationals over foreign applicants.

The Community Trademark regime creates a dual system of trademark registration in that national trademark laws remain in force, and no plans to do away with them anytime soon are envisioned.

Under the Regulation and Rules, a party whose Community Trademark application is rejected, either based on prior rights or inherent registrability of goods, has the opportunity to convert the application to a series of national applications that retain the Community Trademark application priority date. Thus, the Regulation actually condones and envisions the continued existence of national trademark registers.

A Community Trademark does not therefore take precedence over a national trademark. Ideally, a trademark regime in the manner of the Benelux system would have been implemented; one that would make the Community Trademark the only trademark in the EU. However, due to politics and nationalistic sentiment, a system was adopted that will allow two competing systems of registration to be in force in the European Union. As new national registrations in the EU member states continue to issue, they will be a continual source of new barriers to the registration of Community Trademarks. Naturally, if use of the system becomes too onerous, applicants, particularly non-Europeans who may be less familiar with EU systems may decide to continue to obtain national registrations, and to stay with a system that they know better.

It is also expected that when trademark protection in a majority of EU countries is desired for an important mark it still may be wiser to file nationally than under the Union. This too will guarantee the continuity of two somewhat competing systems, and as long as they coexist the chance of easy registration is mitigated.

Harmonization of trademark laws is undeniably the wave of the future, as countries throughout the world begin to adopt similar practices in order to accommodate international trade. The proliferation of various trade regimes, most notably the World Trade Organization, but others such as NAFTA and the Andean Pact as well, will encourage the development of a global standard in trademark law. The Community Trademark is the European Union's attempt to create a single standard to apply to all trademark owners in Europe. However, the national systems will coexist with it, along with the Madrid system, which has the added benefit of extension to non-EU member states.