Mediation in trademark disputes© (Part 2)
Author: Lyubka Vasileva Karapanova1
(Summary: Following Part 1, where the nature and major characteristics of mediation are discussed, the emphasis in Parts 2 and 3 is on the specifics of the various trademark disputes and how mediation can be beneficial for their resolution.)
II. Specifics of the disputes related to trademark rights and the possible stages at which mediation can be used
Due to the specificity of the subject matter of ownership, various disputes involving different parties may arise throughout the lifespan of the mark (from the filing of the application for registration to its cancellation, termination, or revocation), as well as in relation to the enforcement of the rights in the mark and its protection against infringement. In general, trademark disputes can be distinguished into two broad categories: administrative proceedings before the competent administrative authority (the Patent Office) and civil litigation proceedings relating to the trademark.
The first category includes all disputes relating to the registration and validity of the trademark. The right to a trademark is acquired through registration, and in connection with this procedure, as well as with any further changes in a registered trademark and/or loss of the right to it, many different administrative proceedings are or may be initiated. In some of them (the so-called "ex parte" proceedings), the only participants are the applicant, respectively the owner of the trademark, and the trade mark registration authority (the Patent Office, EUIPO, etc.), while in others, such as opposition, cancellation, or revocation proceedings, third parties are involved, and in practice the dispute is between those third parties objecting to the trade mark and the applicant/owner of that mark (the so-called "inter partes proceedings").
Once registered, the trade mark gives its owner the exclusive right to use it in relation to the goods and/or services for which it is registered; to dispose of it, and to prohibit any third party from using, in the course of trade, a sign that is identical with or similar to the trade mark to designate goods that are identical with or similar to those for which the trade mark is registered and, in cases where the mark has a reputation, even for goods that are neither identical nor similar to those for which the mark is registered. In connection with the exercise of this exclusive right, numerous disputes for infringement are also possible, and they are processed by the court according to the provisions of Chapter VI of the Marks and Geographical Indications Act (hereinafter MGIA).
Last but not least, as an object of ownership, the trademark can be transferred, pledged, or inherited. It can be subject to joint ownership, a license agreement, etc. In connection with each of these legal relationships, disputes are also possible, and in practice, they very often do indeed arise.
Mediation can be successfully used to find a mutually acceptable solution to any of the listed categories of disputes.
Applicability of mediation in proceedings relating to the registration of a trademark or a challenge to its registration
These proceedings are administrative and take place before the Patent Office as the competent public authority and, in the event of an appeal against the decision of the Patent Office, before the administrative courts. It should be noted that although the Mediation Act does not exclude the use of mediation in administrative disputes, the procedure would be applicable where the parties are of equal standing and a negotiated settlement is possible between them. To the extent that in proceedings related to the registration of a trademark or a challenge to the registration (through opposition, requests for revocation, or cancellation), the Patent Office is the deciding authority and there is no equality between it and the applicant, I believe that mediation would not be applicable in disputes between the applicant and the Office or the opponent and the Office but could always be applied in a dispute between the applicant/owner of the mark and the third party who is attacking it. Let us consider a few examples where mediation would be particularly appropriate:
1.1. At the trademark registration stage. Opposition proceedings.
The trademark registration procedure begins with the filing of an application. During the period from the filing of the application for registration of the mark to the publication of the application, the proceedings are between the applicant and the Patent Office, during which period the Patent Office carries out an examination of the regularity of the application, of the formal requirements, and a substantive examination in which it verifies whether the absolute grounds for refusal set out in Article 11 of the MTMO are not present in respect of the mark for which registration is sought. In the event that the requirements are met and there are no grounds for refusal under Article 11 of the MLGA, the Patent Office shall publish the application in its Official Gazette. Within three months from the time of publication of the application, any third party may file an opposition to the registration on the basis of Article 11 of the MLGA (absolute grounds), and any holder of an earlier right with which the mark applied for conflicts may file an opposition to the registration of that mark on the grounds set out in Article 12 of the MLGA (relative grounds for refusal).
If an opposition has been filed and it is found admissible, the Patent Office notifies both parties and, pursuant to Article 57(1) of the MGIA, gives them three months to reach an agreement. This period may be extended once for another three months at the written request of the parties and upon payment of a fee. In other words, in the opposition proceedings, the legislator itself has provided for the possibility of a negotiation of a voluntary agreement between the parties before the opposition is considered on its merits.
In the event that the parties fail to reach an agreement (or haven`t even made an attempt to do so), after the expiration of the three-month period, the adversarial phase of the opposition proceedings shall begin. The proceedings shall end with a decision either rejecting the opposition in whole or in part or refusing registration of the trade mark applied for (for all or part of the goods or services applied for). That decision shall, in turn, be subject to appeal.
It should be noted that, whether or not the parties intend to negotiate, the adversarial phase of the opposition does not commence until the expiration of the three-month negotiation period under Article 57(1) of the MGIA. Therefore, it would be beneficial for the parties to use this time to try to find a mutually acceptable solution, and mediation could be very helpful to them in trying to reach an agreement, especially if it is conducted by a mediator who is a specialist in the field of trade marks.
Typically, the person filing the opposition is the owner of an earlier similar trade mark, and the goods or services under that mark and the contested mark application may overlap in whole or in part, be similar or worded in a way that makes them similar, or may even be different. The aim of the opposition is to prevent the registration of the later trade mark application so that the owner of the earlier trade mark can retain the distinctiveness of his own trade mark. This, however, does not necessarily mean that the interests of the opponent and the applicant are mutually exclusive and that no solution can be found that can protect the interests of both parties. To the contrary, many different solutions are possible, and they depend on the specifics of the case and the interests of the disputing parties. For example, the parties could negotiate specific restrictions on the list of goods and services for which the mark is applied so that they will not overlap with those protected by the earlier mark; the applicant could withdraw his application or the opponent could withdraw the opposition in whole or in part or limit its scope; the contested application could be transferred to the opponent or, conversely, the earlier mark could be transferred to the applicant; the parties could negotiate various forms of compensation, etc. The decisions that the parties can negotiate are unlimited and depend entirely on their specific business interests and long-term objectives -factors that cannot be taken into account by the administrative organ, whose decisions are limited only to the possibilities provided by the law: to approve or reject the opposition. Account should also be taken of the fact that the applicant of the opposed trade mark also has defenses and may request evidence of genuine use of the earlier mark on which the opposition is based or, in turn, attack that mark by seeking its revocation or cancellation. All of this would put at risk not only the mark attacked in the opposition but also the earlier mark on which the opposition is based; therefore, finding a mutually acceptable solution to the dispute that eliminates or at least minimizes these risks would be beneficial to both parties.
In the event that the parties do reach an agreement, this would save them time and costs, prevent delays in the process of the trademark's registration and/or resolution of the dispute, and eliminate the associated uncertainty for both parties. In addition, the law provides for specific financial incentives upon reaching an agreement. According to Article 57, paragraph 3, if within the granted time period the parties reach an agreement and submit it to the Patent Office, the opposition proceedings shall be terminated and half of the state fee paid for the opposition shall be refunded.
Beyond the hypothesis of Article 57 of the MGIA, at the request of both parties to the dispute and after the expiry of the terms under Art. 57, para. 1, they may get an additional period of 6 months to reach an agreement, in which case the opposition proceedings shall be suspended (Article 59, paragraph 2 of the MGIA). Unlike the time limit set in Article 57, paragraph 1, of the MGIA, which is provided by law and is not conditioned by the will of the parties to negotiate, the hypothesis of Article 59, paragraph 2, item 8, presumes the submission of an explicit request by both parties. This is yet another possibility provided by law that the disputing parties may use as an opportunity to reach a voluntary settlement of their dispute before the administrative authority pronounces a mandatory ruling on the case. Here, again, mediation would be particularly useful, especially if it were conducted by a mediator who is a specialist in the field of trade marks.
1.2. Mediation in proceedings for revocation or cancellation of trade mark registration
The potential disputes relating to a trade mark are not limited to its registration.
Once a trade mark has been registered, any third party may request revocation of its registration on the grounds set out in Article 35 of the MGIA, as well as request cancellation of the trade mark if its registration has been effected in breach of Articles 2 and 11 of the MGIA (absolute grounds for refusal).
In addition, the owners of earlier rights (earlier trademarks or other rights within the meaning of Art. 36, para 3, item 2 of the MGIA) may request cancellation of the trademark if and when it is registered in violation of Article 12 (relative grounds for refusal) or its use may be prohibited on the grounds of an earlier right that enjoys protection under another law (e.g., the copyright law). The dispute may be further complicated by the owner of the contested mark, who may, in turn, seek revocation or cancellation of the earlier trade mark or challenge the earlier right on which the application for the cancellation of its mark is based.
In the framework of these contentious proceedings, it is also possible for the parties to negotiate, which may lead to a resolution of the dispute (similar to the examples given in relation to the opposition). The possibility of settlement in these disputes is expressly provided for by the law (Article 78(5)(2) of the MGIA, Article 79(1)(3) of the MGIA), and the mediation procedure would be particularly useful in facilitating negotiations between the parties. In the event that the parties reach an agreement that results in either the disputed mark being abandoned or limited to goods and/or services that do not conflict with the earlier mark or other right, or the request for cancellation/revocation of the registration being withdrawn, or the parties have reached another mutually acceptable form of conflict resolution (e.g., consent of the holder of the earlier mark/right, assignment of the mark, etc.), which makes it pointless to continue the cancellation proceedings, the proceedings shall be terminated and the disputing parties can save valuable time, financial means and effort.
The question that may arise in connection with this group of disputes is whether mediation can be applied in the case of applications for the revocation or cancellation of a registration because of contradictions with the absolute grounds for the registration, insofar as these grounds do not relate to a conflict with an earlier law but are enforced for the purpose of protecting the public interest. I believe that the answer to this question should be positive in the sense that negotiation, respectively mediation, between the owner of the trade mark and the person requesting its revocation or cancellation, will be possible regardless of the grounds on which the revocation or cancellation of the mark is requested. An argument in favor of this understanding is the fact that Article 78(5)(2) and Article 79(1)(3) of the MGIA, as well as Article 30(1) and Article 32 of the Ordinance for the Processing of Disputes under the MGIA 2 , expressly provide for the suspension of the proceedings upon request by the parties in connection with an attempt to negotiate an agreement, respectively for the termination of the dispute proceedings upon the deposit of an agreement reached between the parties, without distinguishing the grounds on which the cancellation or revocation of the registration is requested.3 It must, therefore, be accepted that the possibility of reaching an agreement between the parties applies also to the situations where the application for the cancellation of the registration or its revocation is based on a contradiction with the absolute grounds.4 This solution is logical, given that in such disputes the Patent Office does not act ex officio, but within the framework of the revocation/cancelation request brought before it; hence, its decisive competence on the dispute may be seized at any time either by the withdrawal of the request or by an agreement between the disputing parties that puts an end to the dispute.
One specific case is the ex officio proceedings for the cancellation of the mark by the Patent Office, provided for in Article 36, paragraph 6 of the MGIA and Section VIII of the Ordinance on the Processing of Disputes under the MGIA. In this hypothesis, there is no request from a third party for the revocation or cancellation of the mark, but the Patent Office considers the case on its own initiative (or at the signal of a third party). The Office carries out an ex officio check for a possible contradiction of the registration of the mark with the absolute grounds for refusal under Article 11 of the MGIA and, in the case of an established contradiction, cancels the registration. In other words, these are ex parte proceedings, with the Patent Office on one side and the owner of the mark on the other. Insofar as in these proceedings the Patent Office acts ex officio in its capacity as an administrative organ exercising powers delegated to it by law for the protection of the public interest, it is not on an equal footing with the owner of the trade mark, and negotiations between them, or mediation, respectively, will not be suitable.
In all other cases, however, negotiation between the parties to the dispute, or the use of mediation to reach a settlement on the dispute, will be possible and feasible.
End of Part 2, to be continued in Part 3
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NOTES
1 Lyubka Vasileva – Karapanova is an attorney and also a mediator, registered in the list of the Center for Mediation and Arbitration at the World Intellectual Property Organization (WIPO) as well as a mediation trainer, intellectual property representative in the sphere of trademarks and design at the Patent Office of the Republic of Bulgaria and the European Intellectual Property Office (EUIPO).
2 SG, issue 19/08.03.202.; According to the provision of Art. 30, para 7 of the said Ordinance, suspension of the proceedings on the grounds of Art. 78, para 5, item 2 of the TMGIA is allowed once in one proceeding.
3 One should note the existence of some contradictions between the provisions of Article 78, paragraph 5, item 2 of the MGIA and Article 79, paragraph 1, item 3 with regard to their scope. In the first provision, the possibility of suspension is provided for in relation to actions and applications for revocation of a trade mark; applications for cancellation are not mentioned. However, I consider this to be due to a legislative omission and not to the will of the legislature to exclude the latter from the possibility of suspension of the process in connection with the negotiation of an agreement, since the provision of Article 79, para. 1, item 3, provides for termination of the proceedings if "until the decision on the requests is taken, the parties to the dispute reach an agreement and/or the applicant withdraws the request," i.e., no distinction is made between the type of applications and whether they are for cancellation or revocation of the mark. An argument in this direction is also the provision of Article 17, paragraph 1, item 4 of the repealed Ordinance on Dispute Consideration under the MGIA (State Gazette, issue 34/2018), in which suspension of the proceedings in connection with an application for the conclusion of an agreement filed by the parties was provided for all requests, regardless of whether they are for revocation or cancellation of the mark.
4 Similarly, the issue is resolved with regard to the EU trade mark, and Decision No. 2014-2 of the Presidium of the Boards of Appeal of the EUIPO of 31.01.2014 on the amicable settlement of disputes by the competent Board (amended on 1 July 2020), provides for the possibility of using the out-of-court dispute resolution procedures: conciliation, mediation, etc., in all inter partes proceedings (this category also includes applications for cancellation and revocation of the registration) pending before the Boards of Appeal of the EUIPO. For small and medium-sized enterprises, EUIPO's services for out-of-court dispute resolution (conciliation, mediation, etc.) are also offered in the first-instance opposition and cancellation proceedings.
