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If there’s ever a competition to find the finest view from a trademark office, the Community Trademark Office will make the short list. As staff members enjoy a subsidized lunch on the outdoor terrace of the office restaurant, the Mediterranean shimmers in front of them. Off to the side is a picturesque view of the Spanish port city of Alicante. And then there are the perks. Employees at the Office for Harmonization in the Internal Market (OHIM), as the office is otherwise known, receive tax-free salaries, generous vacation time, free health care and an excellent pension package. The setting may be perfect, and the benefits great, but applicants aren’t pleased by what’s happening in Alicante. There are delays, delays and then more delays. The office is separated into three main sections: Examination, Oppositions and an independent Board of Appeals. In its early days, delays were concentrated in the examination section. After the office opened in April 1996, the staff struggled to cope with a higher-than-expected number of applications. “The original estimates were that we would receive from 15,000 to 25,000 applications in our first year. We actually got something like 43,000,” says vice president Alexander von Muhlendahl. It took three years to clear the backlog at the examinations stage. But now the oppositions department and the Board of Appeals are experiencing a slowdown. What’s the problem? As they say in real estate, it’s location, location, location. Although Alicante is beautiful, it is also remote — and people don’t want to move there. The office has struggled to recruit an experienced, multilingual staff. And for trademark applicants that means delays. When the office was awarded to Spain in 1994 by the European Union it was expected that it would be built in Madrid or Barcelona. The Spanish government instead decided to build the office in Alicante, possibly because of internal Spanish politics. Situated on the coast about 300 miles south of Barcelona, in the region of Valencia, the city lacks the vibrant cultural and social infrastructure of Spain’s two major cities. Outside of the summer’s holiday charters, there are few regular international flights into the local airport. Trademark experts with experience and the ability to speak at least two EU languages can pick and choose where they work. And they’re not choosing Alicante. Nor will the office lower its hiring standards to accommodate staffing needs, says Eric Dijkema, head of one of the five groups in the office’s examination division. “Office policy is always to demand a high standard of qualifications, [and] there is no concession on this,” he says. Top officials prefer to focus on what they have achieved, rather than how far they have to go. Von Muhlendahl calls the creation of the office in this port city “the Alicante miracle.” In its first five years, the office received just under 250,000 applications and registered more than 130,000 trademarks, a record 38,504 of them in 2001. Says von Muhlendahl: “People have said that to establish this office from scratch and to handle the volume of work we have had would be impossible.” The office may be out of the way, but the need for a central European Trademark Office had been building for decades. “The view was that, as Europe was going to become an internal market, it needed unitary rights,” von Muhlendahl explains. By the late 1980s the momentum to establish a unitary system was unstoppable. Between December 1993 and February 1996, a series of regulations was issued setting out the location, mode of operation, fees and structure of the body that would grant trademark rights. Now the office is fully operational as a public body within the EU, enjoying complete legal, administrative and financial independence. Von Muhlendahl believes that over time the Community Trademark will supplant national trademarks. The Community Trademark has its pros and cons. It is much less expensive to obtain than is an ordinary trademark in more than two or three European countries. And holders of a Community Trademark can prevent anyone else from having that mark in any country within the EU. On the downside, an application can be denied by the office if any member state objects. And delays at the office mean that it is sometimes faster to receive a trademark at the national level. One of the greatest tasks confronting those at the Trademark Office has been the creation of a system from nothing more than the EU’s 1993 Regulation. Though the regulation sets out the absolute and relative grounds for refusal of trademark registration, it has been up to the staff at Alicante to develop practices and procedures. It hasn’t been easy. “People coming from the different member states have different views and attitudes toward issues such as distinctiveness,” says Dijkema. “We have had to set up our own standards in order to get a European practice.” To make matters worse, staff training has been limited, and takes place mostly on the job. To compensate, examiners are given a great deal of support during the examination process. “We always do language checks with native speakers to see if they feel there is a descriptive element to the mark,” says Dijkema. “We can also bring in people from a higher level where a case is particularly difficult,” he adds. The office is receiving guidance from the emerging set of case law. This guidance comes from the board of appeal inside the office, the Court of First Instance of the European Communities and finally the European Court of Justice. One recent case has had a significant effect on examination procedure. Procter & Gamble’s Baby-Dry mark was refused registration at the examination and appeal stages within the office because it was descriptive of the function of the product — a baby’s diaper. The Court of First Instance upheld its decision. But the European Court of Justice reversed the three previous decisions in September 2001, stating that the term was not descriptive. “I thought the decision was wrong,” says von Muhlendahl. “However, the ECJ is the place that makes the law. The decision must be accepted and implemented.” According to O’Reilly, who was head of the examinations division before taking up his current post, the ruling forced a fundamental rethinking of examination procedures. After much deliberation the office issued new guidelines for looking at a mark that contains more than one word. The office now applies a two-pronged test: Is the structure of the words unusual? And is the mark part of a longer expression? “The more you can answer yes to those two questions, the more you can say the mark can be registered,” says O’Reilly. He adds that because the office is in its infancy, current law and practice is fluid. “What was unthinkable five years ago might be thinkable now,” says O’Reilly. The office is also facing another significant challenge — the expansion of the European Union. Within the space of the next two years, 10 countries, including Poland, Hungary, the Czech Republic and Slovenia, could become member states. Paul Maier is in charge of bringing these nations into the fold. He explains that there will be significant benefits for owners of Community Trademarks. “On the date of enlargement [Community Trademark holder's] rights will automatically be in place in the new member states. Your mark can never be canceled even if other owners have prior rights in those countries.” But EU expansion isn’t all good news for mark holders. As a self-supporting EU agency, the office has to pay for itself. An application costs 975 euros ($950), and registration costs 1,100 euros. The money generated runs the office. A wave of new entries will mean more languages for examination and publication, more seniority claims, an expansion of the opposition process and the possibility of having to make provisions for the Cyrillic alphabet. The costs of applications from the newly added countries will likely be higher than the fee income they bring in. “IP protection is still not a reflex action in many of these countries,” says Maier. “In the history of the office, we have had only around 1,000 applications, combined, from the candidate states, and half of these have been from Turkey. It is a huge threat to the office moneywise.” Maier believes that the renewal fees, which should start pouring into the office’s coffers in 2006 (trademarks are good for 10 years) will be its long-term salvation. In the short term, money will be tight. Already a cut in fees and second-phase building at the office have been scrapped. “I hope we will not have to increase fees, but this office has to be self-supporting,” says Maier. “As a matter of philosophy we are here as a service and should give the best possible service at the best possible price.” In the end, he says, decisions will be made away from Alicante. Says Maier: “We are in the hands of out political masters.” Employee perks, one hopes, will remain in place.

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