Shopify v Shoppi: (post) Brexit judgment

In a trademark dispute concerning the likelihood of confusion between the trademarks Shopify and Shoppi, the decision of CFI dealt not with the similarity of the marks but with Brexit. Prior to Brexit Shopify Inc. had applied to a declaration of invalidity against the trademark registration of the EU trademark Shoppi.
However, the EUIPO's decision on this was issued after the end of the post-Brexit transitional period. So, the question is: Was the Board of Appeal obliged to take into account the use of the earlier trademark Shopify in the United Kingdom (UK)?

The facts

The EU figurative mark Schoppi was registered in 2017 by Mr. Rossi, Mr. Vacante, and Shoppi Ltd (UK) for goods in the IT industry, advertising services, and electronic communication services. The e-commerce company Shopify Inc. (Canada) subsequently filed an application for a declaration of invalidity against the registration of the EU figurative mark Schoppi, based on likelihood of confusion with the earlier EU word mark SHOPIFY.

This application was initially granted by the Cancellation Division of EUIPO but later being rejected by the Board of Appeal. This was because the Board of Appeal believed there was no sufficient likelihood of confusion, in particular, due to the low degree of distinctiveness of the earlier Shopify mark. In the board's view, the applicant had not provided evidence of the earlier mark's increased distinctiveness through use.

Therefore, controversial was the period for which Shopify had to prove a high distinctive character through use in the UK. The Board of Appeal did not consider the evidence of use of the earlier Shopify mark in the United Kingdom (UK) and denied an obligation for that. According to the Board of Appeal evidence of reputation or enhanced distinctiveness in relation to the UK could no longer support or contribute to the protection of an EU trademark from 1 January 2021, even if such evidence existed before 1 January 2021. This is because there was a need to review the enforceability of the earlier mark, and this is no longer possible in the UK after Brexit.

Shopify appealed against this decision to the European Court (CFI).

Shopify - (post) Brexit ruling

The agreement on the withdrawal of the United Kingdom from the European Union and from Euratom, which has been in force since 1 February 2020, provided for a transitional period from 1 February to 31 December 2020. After the end of this transitional period, the trademark law of the Union would no longer apply to the UK.

In the present case, although the contested mark was applied before the expiry of the transitional period, the contested decision was adopted after the expiry of that period.

However, the proprietor of an earlier IP right in invalidity proceedings must prove that he can prohibit the use of the disputed mark not only on the filing date of that mark but also on the date on which the EUIPO decides on the application for a declaration of invalidity. The CFI considers that proof of the enhanced distinctiveness of the earlier mark acquired through use in the UK is only relevant to the application for a declaration of invalidity of the contested mark if that use can still be relied on at the time the EUIPO decides on the application for a declaration of invalidity.

However, that was no longer the case in the UK after Brexit. The CFI confirmed that the matter of enforceability must be examined prior to a substantive assessment such as that of the enhanced distinctiveness of the earlier mark. In the present case, as the contested decision was taken after the expiry of the transitional period, the Board of Appeal was obliged to disregard the use of the earlier mark in the UK (which was no longer enforceable against the interveners at the time of the contested decision) and thus disregard this evidence.

Reference to the decision APE TEES

In vain, the applicants referred to the decision Ape Tees, which concerned a trademark appeal that also covered the pre- and post-Brexit. But, the question of enforceability must be examined before a substantive assessment such as that of the enhanced distinctiveness of the earlier mark.

In the end, the appeal was dismissed (CFI, T 222/21).

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