Trade Name Spring Cleaning

The same use it or lose it principle applied to trademarks has been applicable to trade names even before the legislative amendment. It has been possible to lose trademarks and trade names if the mark or trade name had not been used and if no acceptable reason for the lack of use had been provided. Prior to the amendment now entering into force, the revocation of a trade name required that the matter be taken to court, which meant that the interest in the matter had to be high enough to justify the resources required by the proceedings.

As of the start of May, a party suffering due to an unused trade name, or an unjustifiably extensive field of operation of a trade name, can request the revocation of a trade name in lighter and less costly proceedings at the PRH. The amendment also makes it possible to partially revoke a trade name.

Trademark Registration often Blocked by ‘General Fields of Operation’

Unused trade names have become a problem particularly when registering new trademarks, but they can also prevent the registration of new trade names and auxiliary trade names that can be confused with them. Trade names and auxiliary trade names entered in the Trade Register block the registration of trademarks if the trade name is the same or similar as the trademark and if the field of operation of the trade name is the same or similar as the goods and/or service classification of the trademark.

It is possible to register what is called a general field of operation for trade names, in other words ‘all legal business operations’, in which case the trade name registration covers all imaginable activities. A company may have actually only engaged in, for example, auto repair, but because of its registered general field of operation, its trade name could have blocked the registration of a trademark by a company operating in an entirely different field, such as game design. The services in question would be unlikely to be confused even if the trade names and trademarks would be similar or even identical. Only trade names that are genuinely being used deserve legal protection.

Administrative Proceedings in the PRH or Trial in the Market Court ?

Bringing an action for revocation of a trade name in the Market Court requires the payment of a court fee, which is currently EUR 2,050. The amount of the fee for a revocation claim in the PRH has not yet been confirmed, but it will presumably be in line with the official fee for trademark revocation and invalidation claims, which is EUR 400. PRH proceedings are, thus, more affordable.

However, in PRH proceedings, both parties bear their own costs, and the party that wins the proceedings receives no compensation for the costs it incurs or for the official fee. In Market Court proceedings by contrast, the losing party is generally ordered to pay the winning party’s legal costs, which include the above EUR 2,050 court fee, if claimed. However, bringing a revocation action to court involves the same cost risk as any trial, so you should think twice before going to trial if you are in any doubt of whether or not the trade name has been used.

There is unlikely to be a major difference in the duration of proceedings, at least if the trade name holder remains passive. Hopefully, PRH proceedings will be reasonably quick so that they become an attractive alternative to a trial.

What Now?

Like trademarks, trade names need to be cared for, and the related registered information needs to be kept up to date. Many people are surprised that the information submitted to the Trade Register is not automatically updated to the patent, design and trademark registries maintained by the PRH and vice versa. It is also worth turning a critical eye to your own IP portfolio. Do your registrations cover the goods and services relevant to your operations without gaps in protection but also without being needlessly broad, which will cause unnecessary costs and open you up to (partial) revocation claims?

Now is a good time to review your trade name registrations. If a trade name has been in the register for over five years on 1 May 2021 and its defined field of operation is significantly wider that the actual activities of the trade name or auxiliary trade name (e.g. ‘all legal business operations’), now would be a good time to specify the field of operation. If you don’t do this yourself, you are handing the power to decide on such potential specification to the authorities. No matter how much you want to avoid the costs of making a change in advance, potential revocation proceedings will give rise to costs anyway if your company has an interest in maintaining the trade name even partially. This being the case, we recommend proactively defining your fields of operation and submitting the necessary specifications to the Trade Register yourself.

Doing so is free under certain conditions until 30 April 2021. After that, an official fee will be charged for making a change.

On the other side of the coin, if you have previously been unable to register a planned trademark or trade name due to an existing trade name in the Trade Register, now would be a good time to look into whether that trade name has been used or whether it could be revoked partially or entirely in the new PRH proceedings.