IN THE UK OFFICE

Under the POSTKANTOOR Spell
MERLIN on Drafting Restrictions of Goods

Overcoming objections or conflict by excluding goods and services from trade mark applications is eminently practical.

It has, however, increasingly come to require great care in drafting following last year’s decision by the ECJ in POSTKANTOOR (Case C-363/99 Koninklijke KPN Nederland NV v Benelux-Merkenbureau). In that case, the ECJ held that in the interests of legal certainty, registration cannot be allowed on the basis of restrictions indicating that goods and services do not possess a particular characteristic.

The ECJ’s ruling has puzzled national courts and registries almost since it was uttered. The nature of acceptable restrictions, and the skillful drafting needed, were explored recently in the U.K. Patent Office in an appeal to a person appointed by the Lord Chancellor in the matter of an opposition by Merlin Biosciences Ltd. to SVM Asset Management Ltd.’s trade mark application for MERLIN (O-043-05).

 

The Facts in MERLIN

Merlin Biosciences had opposed SVM’s application for MERLIN in respect of financial services in Class 36. Opposition was based on, inter alia, Merlin Biosciences’ earlier trade mark registration for MERLIN in respect of services in Classes 35 and 36 including “the provision of venture capital to the pharmaceutical biotechnological and bioscientific sectors.”

In the course of negotiations, SVM offered to restrict its application by adding the following words to the end of its specification: “; but not including the provision of venture capital.”

SVM drew this offer, which was unconditional and repeated 3 times, to the hearing officer’s attention. SVM did not in fact make the restriction, on the grounds that to file an amendment before the hearing officer had decided whether further services should be excised would be a waste of resources. In the event, Merlin Biosciences did not accept the offer and the hearing officer did not take it into account in his decision.

On appeal, SVM argued that the hearing officer was wrong not to consider the specification as though it had been amended, because the amendment was a complete answer to the opposition under Section 5 (1) of the Trade Marks Act 1994 (identical mark, identical services) and was material to the opponent’s remaining case. Merlin Biosciences countered that the offer had never been accepted and no amendment had been made, so that it would have been inappropriate for the Hearing Officer to consider the proffered restriction.

On appeal, Richard Arnold QC acting as the Appointed Person held that the hearing officer had erred in not considering the restriction. Mr. Arnold QC took into account that the restriction had been offered 3 times and was unconditional.

He accepted SVM’s resource reasons for not formally amending the application before the hearing officer had decided the case.

At the appeal hearing, furthermore, the Appointed Person proposed, and SVM accepted, a further restriction to Class 36, involving the addition of the following words to the end of the claim: “and not including the provision of any such services to the pharmaceutical biotechnological or bioscientific sectors.”

 

Acceptable Restrictions?

Merlin Biosciences argued that both restrictions were impermissible in the wake of POSTKANTOOR, being indicators that the services claimed did not possess certain characteristics.

In its submission, the exclusion of specific services and the restriction of the pool of potential recipients of services both amounted to an attempt to register on a condition that the remaining services did not possess the characteristics of including venture capital services, or of being capable of being supplied to certain sectors.

These arguments met with short shrift. The Appointed Person considered that a clear exclusion of specific services was not barred by POSTKANTOOR because it was not “framed by reference to the absence of particular characteristics of the services,” but rather by restrictions on the scope of the services claimed. The mere fact that the restriction was couched in negative language did not bring it within the POSTKANTOOR prohibitions.

Although the position in respect of the second restriction was found to be more arguable, the Appointed Person came to the view that a restriction on the pool of potential service recipients did not amount to a restriction indicating that the sevices did not possess a certain characteristic.

He considered that the position might be different in respect of goods, where the nature of the product remains the same regardless of who the intended purchasers are. In contrast, it was possible to define services in part by the identity of the recipients. The nature of services might change fundamentally depending on the sector to which they are provided.

 

 

Comment

 

Given that the Appointed Person himself proposed the second restriction, it is not perhaps surprising that he upheld its validity. However, the point is arguable and it is not difficult to see how a decision on the point could have gone the other way.

Whether the nature of services really can be defined by their target market can be strongly contested: is it really right to say, for example, that credit card services provided to doctors are any different from credit card services provided to lawyers? It is possible that a different target market may sometimes render a service recognisably distinguishable from the same service rendered to others, but if this is so it must be largely a matter for a factual enquiry, with the outcome dependent on the circumstances of each case. It is difficult to accept that the matter can be as simple as implied in Merlin.

The Appointed Person’s robust recognition of the restriction offered by SVM, however, should be applauded. There is no reason why a registration authority cannot make a decision dependent on a particular restriction being made, and where that restriction has been offered unconditionally and brought before the authority in question, it is only right that it should be taken into account.

The Appointed Person’s approach here is in start contrast to OHIM’s continuing unwillingness to recognise offered restrictions that have not been irreversibly entered as amendments by the offering party. A party’s reluctance to enter amendments before a decision is handed down is understandable, as once a restriction has been made, the excised goods or services cannot be retrieved. Until a decision is handed down, it remains possible that no restrictions at all, or only a lesser restriction, may be required. It is unduly onerous to compel parties to rush to make unalterable, and possibly ultimately unnecessary, restrictions to applications for rights.

Meanwhile, it is worthwhile noting that Merlin Biosciences were prompted to challenge the validity of the restrictions in this case largely because they were couched in negative terms. Very often negative language will be more convenient and appropriate, and this decision confirms that negative language does not automatically contravene POSTKANTOOR.

Nonetheless, the POSTKANTOOR practice is still evolving and its ultimate ambit remains unclear. For now, every case should be considered independently and restrictions worded with care.