Advocate General’s Opinion in Case C-382/21 P – The battle for “Taco Tuesday” trade mark is over

 

Advocate General Tamara Ćapeta issued her Opinion in Case C-382/21 P The KaiKai Company v 'EUIPO'

On 13 July, the Opinion of Advocate General Tamara Ćapeta ('AG') in Case C-382/21 P between The KaiKai Company Jaeger Wichmann ('KaiKai') and EUIPO was published.

We would remind you that the Advocate General's Opinion is not binding to the Court of Justice, its role being to propose, in complete independence, a legal solution to the case before it. The Judges of the Court of Justice are now beginning their deliberations in this case.

 

This case arises from the action brought by EUIPO against the judgment of the General Court by which the Court annulled the decision of the Third Board of Appeal of EUIPO, which had refused to recognise the right of priority in the application submitted by KaiKai for the registration of gymnastic and sports equipment as Community designs. KaiKai's priority claim was based on an earlier international patent application filed under the Patent Cooperation Treaty (PCT).

Appeals against the GC's judgments may be lodged with the CJEU, but only on points of law.

The present appeal is based on only one ground, relating to the alleged infringement by the General Court of Article 41(1) of Regulation No 6/2002 on Community designs ('CDR').

 

Legislation

Article 41(1) CDR states:

'A person who has duly filed an application for a design or utility model right in or for any State party to [the Paris Convention], or to the Agreement establishing the World Trade Organisation, or his successors in title, shall enjoy, for the purpose of filing an application for a registered Community design in respect of the same design or utility model, a right of priority of six months from the date of filing of the first application'.

Article 4 of the Paris Convention provides:

• Article 4(A)(1) ‘Any person who has duly filed an application for a patent, or for the registration of a utility model, or of an industrial design, or of a trade mark, in one of the [States party to the Paris Convention], or his successor in title, shall enjoy, for the purpose of filing in the other countries, a right of priority during the periods hereinafter fixed.’
• Article 4(C)(1) ‘The periods of priority referred to above shall be twelve months for patents and utility models, and six months for industrial designs and trade marks.’
• Article 4(E)

‘(1) Where an industrial design is filed in a country by virtue of a right of priority based on the filing of a utility model, the period of priority shall be the same as that fixed for industrial designs.

(2) Furthermore, it is permissible to file a utility model in a country by virtue of a right of priority based on the filing of a patent application, and vice versa.’

 

Background to the dispute:

On 24 October 2018, KaiKai filed a multiple application for the registration of twelve Community designs with EUIPO, and claimed priority based on the previous international patent application No. PCT/EP. 2017/077469, which it filed under the PCT on 26 October 2017, 12 months earlier than the application before EUIPO.

The EUIPO examiner accepted the multiple application in accordance with Article 41(1) CDR but refused the claimed priority right because the six-month period set out in that provision had been exceeded.

KaiKai lodged an appeal against that decision considering that the applicable priority period was twelve months and not six months. The Third Board of Appeal of EUIPO dismissed the appeal in the same terms as the EUIPO examiner had done. KaiKai appealed the Board of Appeal's decision before the General Court, alleging infringement of essential procedural requirements and infringement of the CDR.

The General Court, in its judgment of 14 April 2021, stated that, while EUIPO had rightly considered that an international application under the PCT can be invoked to claim the priority of a Community design, it had erred in applying a priority period of six months rather than twelve months. The court noted that Article 41(1) CDR is silent as to the priority period arising from a patent application and stated that Article 4 of the Paris Convention must be taken into account to fill that legislative gap.

The General Court stated that the Paris Convention allows for priority claims between pairs of intellectual property rights of a different nature, and that it is therefore possible to base a priority claim for an industrial design on an earlier patent application. It indeed considered that the relevant priority period for the pair consisting of a previous patent and a subsequent design depended on the period assigned by the Paris Convention for patents, as it interpreted Article 4(C)(1) as a general rule according to which the nature of the prior right determines the duration of the priority period —to which Article 4(E)(1) is an exception—.

 

On 23 June 2021, EUIPO lodged the present appeal against the judgement of the General Court before the Court of Justice of the European Union on a single ground alleging infringement of Article 41(1) of the CDR, divided into three claims. The first is that the General Court interpreted CDR contra legem. The second is that the General Court attributed direct effect to the Paris Convention contrary to EU law. The third is that the General Court incorrectly interpreted the Paris Convention and the PCT.

The AG reduces the case to two main issues: the applicability of the Paris Convention before the EU Courts and the interpretation of the Paris Convention.

 

Applicability of the Paris Convention before the EU Courts

EUIPO argues that the General Court erred in law by substituting Article 41(1) of CDR with the (wrongly interpreted) provisions of the Paris Convention and argues that giving direct effect to the Paris Convention is contrary to the case-law of the CJEU.

While it is true that the EU is not a party to the Paris Convention, it is a party to TRIPS —Agreement on Trade-Related Aspects of Intellectual Property Rights— which is one of the WTO agreements. The TRIPS Agreement itself does not regulate priority rights, but its Article 2(1) refers to the Paris Convention.

The AG admits, as EUIPO argues, that case-law has excluded the direct effect of WTO agreements. However, the nature of the WTO agreements, and not their unclear wording, was the main reason for the case-law which, in principle, excluded their direct effect.

The WTO system is flexible, explains Tamara Ćapeta, and this flexibility allows the EU political institutions to opt for solutions which the Court might not find to be in conformity with WTO requirements. In order to allow such political margin for manoeuvre, the Court considered that it should not review the validity of EU legislation in relation to WTO law. She argues that, rather than expressing that choice as a sort of deliberate self-restraint, the Court has used the legal concept of direct effect; thus, the Court has exercised its power of judicial review of EU legislation when it found that the EU legislature did not intend to make use of the political flexibility left by the WTO system.

The AG distinguishes between two different and mutually exclusive situations on which the direct applicability of WTO law depends:

 

First situation. The Court considers that the relevant EU legislation was with a view to implementing a WTO-based commitment, not only when the obligation entered into requires further implementation, but also when the legislature decided to align its legislation to those commitments.

Second situation. The Court considers that the EU legislature wanted to adopt a specific EU solution, notwithstanding its WTO obligations.

*That does not mean that the EU solution is not in conformity with WTO law, but that it is adopted without seeking to adapt it.

 

EUIPO argues that the Paris Convention should not be recognised as having direct effect in order to safeguard the political margin of manoeuvre left by the TRIPs Agreement to the EU institutions, in particular the possibility to deviate from the requirements of the Paris Convention when regulating Community designs. However, they do not question its possible interpretative effect.

The AG argues that if the Court refuses to recognise direct effect with a view to safeguarding the political margin of manoeuvre of the EU institutions, the same reasons militate in favour of refraining from an interpretation in conformity. If the reason for precluding the direct effect of the Paris Convention is to enable the EU legislature to exclude a previous patent application as a basis for claiming priority rights for a subsequent Community design —as EUIPO argues—, the AG thinks that it makes no sense for the Court to interpret the CDR in that way either. 

Finally, the AG recommends to the CJEU that if it does not share her assessment that the Paris Convention can have direct effect in the present case, it should declare that the General Court erred in law by even attempting a conforming interpretation.

  

Limits of the obligation of conform interpretation

Conform interpretation is a specific interpretative method that imposes creativity in order to achieve a result required by the target rule (here, Article 4 of the Paris Convention). It should, therefore, be employed only in the first situation.

EUIPO claims that the General Court interpreted Art. 41(1) of CDR contra legem by finding a legislative gap in that provision, as it considers that in Art. 41(1) patent applications are clearly and unequivocally excluded as a valid basis for claiming a right of priority.

In the context of conforming interpretation, the General Court should not be prevented from finding a legislative gap based on the alleged requirement of the Paris Convention to allow for the pair consisting of a previous patent and a subsequent design. The AG considers that the type of situation in the present case corresponds to the first situation we have raised above, and therefore states that finding a gap in CDR would be justified and that the General Court did not err when it sought to interpret CDR in conformity with the Paris Convention.

However, Tamara Ćapeta adds that the Paris Convention does not contain such a rule requiring a twelve-month priority period and accuses the General Court of having wrongly interpreted the Convention.

 

Interpretation of the Paris Convention

There are two principal issues of interpretation of the Paris Convention in relation to which the parties disagree:

First, EUIPO argues that the General Court was wrong to consider that the Paris Convention allows a previous patent as a basis for a subsequent design application.

Second, EUIPO argues that the General Court wrongly found that the Paris Convention establishes a general rule according to which the earlier right determines the length of the priority period and from which Art. 4(E)(1) is an exception —it therefore wrongly concluded that KaiKai could benefit from a priority period of 12 months—.

The AG considers that, although the General Court correctly held that the Paris Convention allows for a priority claim based on the pair consisting of a previous application and a subsequent design application, it erred in law by recognising a twelve-month priority period.

 

A previous patent application as the source of priority rights for a subsequent design application

EUIPO argues that the General Court misinterpreted the general rule of the Paris Convention on the identity of a subject matter, as it holds that each type of industrial property right only gives rise to a right of priority for the same type of right.

The AG considers that EUIPO seems to use the rule on identity of subject matter in a formal sense and argues that the Paris Convention Guide seems to suggest a substantive understanding, where the reference to the same subject seems to entail the substance of the novel idea for which protection is sought, and not the form in which it is protected.

The AG concludes that the General Court did not err in law when it interpreted the Paris Convention as allowing the use of a previous patent application as the source of priority rights for a subsequent design application, provided that the subject matter of both applications is the same in substantive terms.

 

Priority period for a subsequent design application based on an earlier patent application

EUIPO contends that there is no general rule according to which the length of the priority period is determined by the nature of the earlier right and submits that the General Court erred in law when it found such a rule.

Article 4(C)(1) of the Paris Convention attributes a priority period of twelve months to patents and utility models and a priority period of six months to industrial designs.

The AG agrees with EUIPO that the General Court was wrong to find that there is a general rule in the Paris Convention according to which the length of the priority period depends on the first filing. She is thus on the view that the length of the priority periods as they are provided in the Article 4(C)(1) of the Paris Convention depends on the nature of the subsequent, rather than the first, application. She therefore concludes that the length of the priority period in this case would be six months.

The AG concludes that the CJEU should declare that the General Court erred in law in so far as it concluded that, under the Paris Convention, an application for a design, if based on a previous patent application, benefits from a priority period of twelve months, rather than six months. She proposes that the CJEU interpret the Paris Convention as allowing for the application for a subsequent design, including a Community design, to be based on a previous patent application, provided that there is a substantial identity of subject matter. And she states that, in such a case, the length of the priority period is six months, as attributed to industrial designs by the Paris Convention.

 

In summary, Tamara Ćapeta is of the opinion that the single ground of appeal is partially well founded and, consequently, suggests that the CJEU should set aside the judgment under appeal.

 

 

The “Taco Tuesday” trade mark is now free to use… except in New Jersey

“Taco Tuesday” belongs to the world now. Anyone can use the phrase, and anyone can celebrate it.

On 18 July, the Taco John's restaurant chain announced that it will abandon the "Taco Tuesday" trade mark and end a legal battle against the other taco chains led by Taco Bell that sought to free the famous phrase.

Taco John's has owned the trade mark in the US since 1989, in all states except New Jersey (where it is owned by a local restaurant, Gregory’s). Taco Bell filed a challenge with the US Patent and Trademark Office urging the office to cancel the trade mark so that it is "freely available to all who make, sell, eat and celebrate tacos" and launched a fierce campaign, with the visible face of Lakers star LeBron James.

While Taco John's has dropped the trade mark fight, the company challenged Taco Bell and other competitors to invest the money earmarked for the trade mark dispute in the non-profit Children of Restaurant Employees (CORE), which provides financial assistance to restaurant workers when they or their family members face health problems.

"This is a shared victory with taco allies everywhere. Taco John's decision to join the movement and free Taco Tuesday means that countless businesses large and small, restaurants and taco vendors can now embrace, celebrate, and defend 'Taco Tuesday' freely," said Taco Bell CEO Mark King in a statement.

From now on, any restaurant in the United States, except in New Jersey (where Gregory’s is still resisting), can legally use the phrase "Taco Tuesday”. Happy Taco Tuesday to all of you!

 

This is our last weekly post before the summer break. We will be back in September with more IP news!