Bonjour Mesdames, Messieurs,

T h e r e l a t i o n s h i p b e t w e e n t h e B e n e l u x a n d
C o m m u n i t y s y s t e m s o f p r o t e c t i o n
Presentation by
Edmond Simon
director general
B e n e l u x O f f i c e f o r I n t e l l e c t u a l P r o p e r t y
REGIONAL CONFERENCE ON THE COEXISTENCE OF THE COMMUNITY AND
NATIONAL TRADE MARK SYSTEMS IN EUROPE
Budapest, 3 November 2009

Ladies and Gentlemen,
I would like to begin by expressing my heartfelt appreciation to the Hungarian Patent Office
and in particular to President Bendzsel and Mr Ficsor for inviting me to this Conference and
thus enabling me to be with you today. It has offered me the perfect opportunity to visit this
wonderful city of Budapest again.
My presentation today is on the relationship between the Benelux system and the Community
system. Before addressing the issue itself, I would like to say a few words about the Benelux
and my Organisation by way of general introduction.
First of all, I must emphasise the fact that I am and will always be in favour of the CTM. It
was designed for companies with commercial activities on the level of the Community: as a
result our companies now pay lower fees to obtain registration of a European trade mark,
administrative formalities are less onerous and it provides a single registration valid for the
whole European Community territory. But I do have some misgivings, one of which is basic
criticism on the way the system works. In no way should this be construed as expressing an
anti-European attitude. I wanted to mention this at the start of my presentation as some people
are averse to sound debate and for want of their own opinion, try to say that any criticism on
the way the CTM works is a sign of opposition to the CTM itself. Well, in my case this is far
removed from the truth! I just wanted to make that clear!
And now a few words on the Benelux: the population is only 27 million in an area of just
77,000 square km. So it is not very big. Nevertheless we manage to speak four official
languages! With regard to trademarks and designs: our three countries no longer have national
legislation – instead trade mark law is governed by the Benelux Convention on Intellectual
Property (IP) and my Office is entrusted with its execution. To give you an idea of our
workload: in 2008 we handled 24,000 Benelux filings, 13,500 Benelux renewals and 6,000
international registrations with effect in the Benelux. For designs, the figures are even more
modest! All the indicators are showing a downward trend, which is largely due to the success
of the CTM. At the same time, the number of CTM registrations coming from the Benelux is
steadily growing: there have been 30,262 registrations since the CTM came into force in
1996, a figure which ranks the Benelux in seventh place on the international listings by state,
far outstripping China and Japan!
So it appears that Benelux companies are increasingly opting for the CTM and turning their
backs on the Benelux trademark!
One of the main reasons for this swing towards the CTM, at least in my opinion, lies in the
fact that the term “territorial use” has not been legally defined for the CTM. And moreover,
has been very narrowly interpreted by a non-competent authority.
1- The CTM was adopted by the Council on 20 December 1993 in the form of EC
Regulation 40/94 which I will refer to here simply as the „Regulation‟. Article 15,
paragraph 1 of the Regulation says the following and I quote : “If, within a period of
five years following registration, the proprietor has not put the Community trade mark
to genuine use in the Community in connection with the goods or services in respect of
which it is registered, etc etc,...” This article was clarified by a Joint Declaration of
the Commission and Council of Ministers on 22 October 1995. I will refer to this

document as the „Declaration‟ (OJ-OHIM 5/96, pp.612-623) and it says the following:
“The Council and the Commission consider that genuine use in the sense of Article 15
in a single country constitutes genuine use in the Community”. The Declaration has no
legal effect, nevertheless it is applied by OHIM in their procedures before the Office
(cf. The Manual concerning Opposition – Part 6, p 13 ). In fact, in its website update
of 20 June 2008, OHIM states, and I quote: “genuine use may be established when the
trade mark is used just in part of the Community, such as a Member State or part of a
Member State”. According to recent checks by colleagues of mine, it would appear
that since then, this reference to a single state or even to part of a state has been
deleted but not quite systematically!
2- First of all let us remember that drafting the Regulation itself took several decades and
the wording of Article 15 was revised twice before the final version as it appears in the
Regulation today. This notion of use has never been reconsidered since the date of the
Declaration even though the Community since then has considerably expanded its
borders. From twelve Member States in 1995, today the Community has grown to
twenty-seven Member States, covering some 4 million square km with a population
approaching 500 million people. It is possible – even probable – that more Member
States will join in the future. Consider Ukraine, Turkey, Croatia, Bosnia and
Herzegovina, Serbia, Montenegro, Albania, the former Republic of Macedonia and,
most recently, Iceland. Political analysis and discussion have begun and will continue
in the years to come. If all these states were to join, the total territory of the EU would
increase by a further 5 to 6% and the population by 27%.
3- OHIM‟s correct application of this Declaration means that a CTM holder in
Luxembourg, the country where I was born, simply by exercising his CTM in
Luxembourg can claim exclusive rights to his CTM throughout the entire Community.
But Luxembourg occupies only 0.05% of Community territory and has just 0.08% of
the Community‟s population. The CTM nevertheless applies equally to the other
99.2% of the Community‟s population.
4- This is the same as local use, but on a European scale. It is out of all proportion
because of (1) the vastness of the territory and the market covered by the CTM and
(2) the exclusive rights of the trade mark holder against third parties. This
disproportion is even more apparent if we bear in mind that this right used locally may
be invoked against any company wishing to register an identical or similar trade mark
in its own country or in other countries of its choice, even if the CTM holder has no
intention of ever using his trade mark in that or those countries.
5- From all this we are right in arguing whether the system as designed by the Regulation
and interpreted by the Declaration might be used as an instrument to compartmentalise
the internal market whereas the aim laid down in the First Directive 89/104/EEC of
the Council of 21 December 1988 to approximate the laws of the Member States
relating to trade marks (which I will refer to simply as „the Directive‟), was
specifically to remove all the, and I quote, “disparities which may impede the free
movement of goods and freedom to provide services and may distort competition
within the common market.” Is this system still compatible with the wish of the
European legislator as expressed in the second recital of the Regulation? That wish,

and I quote, was “to promote throughout the Community a harmonious development
of economic activities and a continuous and balanced expansion by completing an
internal market which functions properly and offers conditions which are similar to
those obtaining in a national market.” Does it, and I quote, “open up unrestricted
economic activity in the whole of the common market for the benefit of undertakings”,
as laid down in the fourth recital of the Directive?
6- Our own legislation in the Benelux has been dealing with opposition proceedings only
since 2004 and statistics show that Benelux applicants (mostly SMEs) are facing more
and more proceedings based on a CTM ( 54.6% in the last thirteen months ) , although
I want to point out once again that a CTM does not need ever to be used in the
Benelux in order to be a valid registration. There are several reasons for the increase,
but one could be that trade mark holders should be more alert in order to avoid falling
into the trap of limitation in consequence of acquiescence, another principle of
Community law (Directive, article 9). This percentage of oppositions based on a CTM
is steadily and continuously increasing (by 15% up in less than two years) and there is
no reason to believe that this increase will come to an end in the future. Every year,
applicants for Benelux trademarks are effectively confronted with more than 100,000
new CTMs (either directly through OHIM or via the Madrid Protocol), whereas the
“Benelux market” itself rarely exceeds 30,000 trademark registrations (and this
includes international registrations with effect in the Benelux).
7- These constraints hardly encourage SMEs ,which are the very heart of the Lisbon
Strategy, to file their trade mark applications on a national level, despite the fact that
the Regulation starts from the principle that , and I quote, “national trade marks
continue to be necessary for those undertakings which do not want protection of their
trade marks at Community level”. To actually check the availability of their trade
marks, SMEs must now search through three registers: the national/ Benelux register
(with a requirement for use), the international register (with a requirement for use in
the designated states) and above all in the Community register where tens of thousands
of trade marks are registered every year and where the validity is not affected by nonuse,
even over time in 26 Member-States of the Community. As I said in the case of
my home country Luxembourg, it could mean up to 99.92% of the Community‟s
population and 99.95% of the Community territory. This simply leads to a Lawyers’
Paradise where any balance between the three registration systems has vanished. This
affects all proprietors of trademarks, whether they go down the national, international
or community route. It is certainly not in the spirit of the so-called “Kok report” on the
Lisbon Strategy in which a High Level Group recommended that the protection of
intellectual property should be made more accessible to SMEs by reducing the costs.
8- This has been all the more true since the Community's accession to the Madrid
Protocol in 2004, some nine years after the Declaration. This Protocol grants those
Member States signatory to the Protocol easy access to the Common Market in order
to assert their exclusive rights. The reverse, however, is not possible under the same
conditions . Whereas businesses in China, the USA, Japan and the Russian Federation
are able to use the CTM system to impose their own trade marks on Benelux
companies without ever using them on Benelux territory, this is manifestly not the
case for those Benelux businesses that wish to impose their rights on the same
companies in their respective countries. They actually have to prove genuine use in

each of the States where they want to maintain their rights. On top of this and in view
of future developments we cannot lose sight of the fact that several of these States,
including China and the Russian Federation for example, show enormous economic
potential probably resulting in a booming number of trade mark filings. China has
already become number one in the world of trademark filings! The same economic
potential can also be seen in Brazil and India which, as we all know, are preparing to
sign the Madrid Protocol.
9- This all goes to show that the notion of use related to the borders of a single
country,or even part of a single country, must be dropped as a general principle. It has
no place in a Common Market characterised by the free movement of goods and
services and an absence of economic barriers. A CTM is protected across the
Community and there must be genuine and effective use to justify this protection of
exclusive rights, in the same way that genuine and effective use is a requisite in
national and international registration systems. This would be in line with the wish of
the European legislator expressed in the second recital of the Regulation, mentioned
above, regarding the operation of the internal market. Inspiration could be drawn from
the CFI judgement in case no. T-39/01 dated 22 February 2003 . I quote from
Consideration 37: „… this use implies that the trade mark is present on a substantial
part of the territory in which it is protected through exercise of the essential function
innate to it, in other words, to identify the commercial origin of the product or service
in order to enable the consumer buying the product or service designated by the trade
mark, to choose the same product or service in future or to buy another, depending on
the experience etc etc…” To follow the CFI in this matter would ultimately bring us
back to the version of Article 15 as proposed in the "Memorandum on the Creation of
an EEC Trade mark" in 1976. This document referred clearly, and I quote “use in a
substantial part of the common trade market”.
Ladies and Gentlemen, I am fully aware that my presentation is more political than legal.
The Regulation itself, apart from the Recitals I have just quoted, offers few legal
arguments in support of wider territorial use. One exception is Article 112 paragraph 2
indent a. In my opinion this is the only Article in the entire Regulation which presents an
implicit argument to contest the validity of the Declaration. This Article, according to
some authors, could be interpreted a contrario in that sense that the CTM can be
invalidated for not having been used according to Article 15 of the Regulation although
the CTM was put to genuine use in one or more Member States. I share this interpretation
because it is completely in line with the first Recitals of the Regulation as I understand
them: the CTM was designed for companies with commercial activities on the level of the
Community and not for companies without commercial activities on Community level. It
is as simple as that!
Article 112 does not make any sense if the validity of the Declaration was to be
recognized!
Now let us come back to the Benelux: local use or genuine use limited to one single Benelux
country as a general principle is also hard to reconcile with a decision made by our own
Benelux Court of Justice on 17 January 1981 in the well known Turmac/Reynolds case. The
Court was asked by the Dutch Supreme Court which criteria should be taken into account for

establishing genuine use in the Benelux. As to the criteria the Court ruled that all the facts and
circumstances such as kind of use, territorial scope, frequency, regularity and duration of use,
the kind of product and the kind and dimension of the company have to be taken into account
in their mutual relations. It was therefore not necessary that the trademark be used throughout
the entire Benelux . But, ladies and gentlemen, you will understand immediately that we are
very far away from the Declaration of 1995 establishing use in one Member State as a
general principle! And why do I refer to this decision of our Benelux Court, which dates back
to 1981 – long before the Regulation came into force? The reason is that the CTM and our
own Benelux trademark have some similarities .We also have one single trademark with a
unitary character for the whole Benelux territory and this territory is composed of three
different countries of different sizes. The Benelux is made up of one large, one medium and
one very small country. No fewer than four official languages are spoken in addition to
various dialects. Moreover, the Benelux legislators created the Benelux trademark some fifty
years ago for one reason : to ensure the free movement of goods within the Benelux
Economic Union . It is a principle later adopted by the European Union and anchored in the
first Recitals of the Regulation.
But I admit that genuine use has now become Community law and that in the end it will be
up to the Court of Justice of the European Communities to have the last word!
I find the recent CJ judgement of 6 October 2009 in the PAGO case to be extremely
disappointing, while the conclusions of AG Sharpston regarding the Community territory as a
whole seemed totally convincing to me ! To go back to my little home country, Luxembourg,
if I am reading the judgement correctly, 0.05% may now be considered to constitute a
„substantial part‟ of the territory of the Community!! Surely this is a contradiction in terms!
But, Ladies and Gentlemen, all is not lost! The Commission has recently begun a study into
the operation of the CTM system as a whole. It will amongst other things examine the issue of
territorial use of the CTM (Evaluation question (2) Relation between CTM system and
national trade mark systems (ii) Requirement for a CTM to be used “in the Community”) . It
is my fervent hope that all those asked to respond to the questionnaire do so carefully and that
the outcome will be balanced and based on consideration of the trademark landscape shaped
on three different registration systems : national, European and international, and the
knowledge that these three systems complement each other, with each responding to different
needs .
I am definitely not ruling out the possibility that a case of my Office will soon be brought to
the Court of Justice with different prejudicial questions relating to Article 15, paragraph 1 of
the Regulation. It is about an opposition proceeding between a Dutch CTM holder and a
Benelux trademark holder. The CTM holder exercises his trademark only on Dutch territory
(they offer legal services to SMEs based in the Netherlands ) ; the Benelux trademark holder
does not exercise his trademark in the Benelux but he needs it in order to obtain an
international registration for Sweden , an EU Member State and signatory to the Madrid
Protocol, and for Norway , a non-EU Member State, but signatory to the Madrid Protocol.
The CTM holder is seeking to stop the Benelux trademark holder to get a trademark right in
an other EU Member State whereas there is no overlap between the two markets and at the
same time obstruct the Madrid Protocol route. According to me this is a case in point to
illustrate where the aberrant situation, caused by such a narrow interpretation of CTM
territorial use, can lead to.

The huge general interest represented by the free movement of goods and services which lies
at the very heart of the Single Market deserves very prompt clarification by the one and only
authority competent to interpret the Regulation, namely the Court of Justice of the European
Communities. Besides, it would not be the first time that the Court of Justice overruled the
Declarations (see for example the decision of the Court of Justice of 7 July 2005 relating to
„retail trade‟) and neither would it be the first time that the Court of Justice very quickly
turned 180 degrees on their former jurisprudence (see for example the COMPANYLINE
decision of 12 January 2000 compared to their BABY-DRY decision of 8 July 1999 ).
So let‟s not lose hope and I trust you will rise to the challenge in the next few months. Of
course I will keep Mr Ficsor informed about the progress of the proceeding. I am quite aware
how much the Hungarian Patent Office cares about their SMEs as they play a more than vital
role in our national economies. And I am absolutely certain that the same applies to Antonio
in Portugal, his home country.
Once again I would like to thank you so much for the privilege of being with you today and
for listening to me so patiently.
- END -