mPAY24 v OHMI - Ultra (MPAY24) (Intellectual property) [2011] EUECJ T-275/10 (22 November 2011)

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(Community trade mark – Invalidity proceedings – Community word mark MPAY24 – Absolute grounds for refusal – Descriptive character – Article 7(1)(b) and (c) of Regulation (EC) No 207/2009 – Correction of the decision by the Board of Appeal – Non-existent act – Rule 53 of Regulation (EC) No 2868/95)

mPAY24 GmbH, established in Vienna (Austria), represented by H.-G. Zeiner and S. Di Natale, lawyers,

Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), represented by A. Folliard-Monguiral, acting as Agent,

Ultra d.o.o. Proizvodnja elektronskih naprav, established in Zagorje ob Savi (Slovenia),

1 On 4 March 2002, the applicant, mPAY24 GmbH, filed a Community trade mark application at the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) pursuant to Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1), as amended (replaced by Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (OJ 2009 L 78, p. 1)).

3 The goods and services for which registration was sought are in Classes 9, 16, 35, 36 and 38 of the Nice Agreement of 15 June 1957 concerning the international classification of goods and services for the purposes of the registration of marks, as revised and amended, and correspond, for each of those classes, to the following description:

4 The application was rejected by the examiner pursuant to Article 7(1)(b) and (c) of Regulation No 40/94 (now Article 7(1)(b) and (c) of Regulation No 207/2009). By decision of 21 April 2004 (Case R 631/2003-2), the Second Board of Appeal annulled the examiner’s decision.

5 The Community trade mark was registered on 19 April 2005 under number 002601656.

6 On 8 March 2007, Ultra d.o.o.Proizvodnja elektronskih naprav (‘Ultra d.o.o.’), the other party to the proceedings before the Board of Appeal, filed an application for a declaration of invalidity of the registration of the Community trade mark for all of the goods and services covered. It invoked absolute grounds for invalidity, in accordance with Article 51(1)(a) of Regulation No 40/94 (now Article 52(1)(a) of Regulation No 207/2009), Article 7(1)(b) and (c) of Regulation No 40/94 and Article 7(2) of Regulation No 40/94 (now Article 7(2) of Regulation No 207/2009).

7 On 10 June 2008, the Cancellation Division rejected the application for a declaration of invalidity.

8 On 24 July 2008, the other party before the Board of Appeal lodged an appeal pursuant to Articles 57 to 62 of Regulation No 40/94 (now Articles 58 to 64 of Regulation No 207/2009).

9 By decision of 22 March 2010 (‘the contested decision’), the First Board of Appeal of OHIM allowed the appeal and cancelled the Community trade mark registration. The Board of Appeal found, in essence, that the contested mark was descriptive of the goods and services which it covered and that it was also devoid of distinctive character. In particular, it found that the elements ‘pay’, which means ‘to pay’ in English, and ‘m’, referring to ‘mobile’ or ‘multi’, whether taken in isolation or together, were descriptive for all of the relevant goods and services. As regards the element ‘24’, the Board of Appeal took the view that this would be clearly understood as an indication that the goods and services are available around the clock. Therefore, in its view, the sign MPAY24 will be perceived as a combination of ‘m’, ‘pay’ and ‘24’ and no mental effort will be necessary to identify those different components. It found for that reason that the consumer will realise at first glance that the contested mark refers to a system that makes it possible to make payment via a mobile telephone around the clock. It also held that, taken as a whole, the contested mark will not be capable of distinguishing the applicant’s goods and services from those of other undertakings and that the contested mark was devoid of any distinctive character.

10 On 3 August 2010 the First Board of Appeal adopted a corrigendum on the basis of Rule 53 of Commission Regulation (EC) No 2868/95 of 13 December 1995 implementing Regulation No 40/94 (OJ 1995 L 303, p. 1) in which it corrected an obvious mistake in the contested decision by adding a new paragraph 29 thereto.

13 The applicant points out that the contested decision annuls the previous decision of the Second Board of Appeal of 21 April 2004, in which it was held that the absolute ground referred to in Article 7(1)(b) of Regulation No 207/2009 was not applicable and that the contested mark was distinctive for all the goods and services at issue. It submits that the invalidity proceedings, which complete the examination carried out by OHIM at the time of the registration of the mark, are designed to allow third parties to put forward grounds for invalidity that were not considered during the examination procedure. In the present case, the other party to the proceedings before the Board of Appeal did not put forward any new grounds for invalidity that had not been raised in the registration procedure. It follows that, by ruling on the same grounds as the Second Board of Appeal, the First Board of Appeal infringed the general principle of legal certainty and prediction.

15 The Court has already held that the principle of res judicata, which prohibits a final judicial decision being called into question, was not applicable so far as concerns the relationship between a final decision in opposition proceedings and an application for a declaration of invalidity, given, inter alia, that proceedings before OHIM are administrative and not judicial and, second, that the relevant provisions of Regulation No 207/2009, namely Article 53(4) and Article 100(2), lay down no rule to that effect (Case T-140/08 Ferrero v OHIM – Tirol Milch (TiMi KiNDERJOGHURT) [2009] ECR II-3941, paragraph 34).

16 Moreover, the Court noted that the Board of Appeal had erred in concluding that findings made in a final decision in opposition proceedings are binding in subsequent invalidity proceedings (TiMi KiNDERJOGHURT, paragraph 37).

17 By contrast, the Court held that the findings made in the final decision in opposition proceedings could not be entirely ignored in the context of a decision in an invalidity action having the same parties, the same subject-matter and the same grounds, provided that those findings or decided issues are not affected by new facts, new evidence or new grounds. That assertion is no more than a specific expression of the case-law according to which the previous decisions of OHIM are a factor which may be taken into consideration in assessing whether a sign is suitable for registration (TiMi KiNDERJOGHURT, paragraph 35).

18 It follows from the abovementioned principles that the First Board of Appeal was not obliged to follow the Second Board of Appeal’s earlier decision of 21 April 2004. Otherwise, challenging the registration of a Community trade mark which was the subject of a Board of Appeal decision on registration in the context of invalidity proceedings would, where the subject-matter and the grounds were the same, be deprived of any practical effect, even though such a challenge is permitted under Regulation No 207/2009, as is clear from the considerations set out above (see, to that effect, TiMi KiNDERJOGHURT, paragraph 36).

20 In its observations on the corrigendum of 3 August 2010 correcting the contested decision, the applicant submits that that corrigendum infringes Rule 53 of Regulation No 2868/95. It submits in essence that, contrary to Rule 53 of Regulation No 2868/95, the correction made by the Board of Appeal in adding paragraph 29 to the contested decision did not correct an error of transcription or an obvious mistake. That corrigendum must, consequently, be declared inadmissible.

21 While OHIM acknowledges that that corrigendum goes beyond correcting linguistic errors or errors of transcription within the meaning of Rule 53 of Regulation No 2868/95, it submits that, even without that corrigendum, the contested decision satisfies the obligation to state reasons with regard to each product and service in question for the purposes of the first sentence of Article 75 of Regulation No 207/2009.

22 Under Rule 53 of Regulation No 2868/95, in OHIM decisions, only linguistic errors, errors of transcription and obvious mistakes may be corrected. These are to be corrected by the department which took the decision, acting of its own motion or at the request of an interested party.

23 In the present case, the corrigendum of 3 August 2010 adds to the contested decision paragraph 29 relating to the descriptive character of the contested mark for the goods and services which it covers. Therefore, as has been submitted by the applicant and acknowledged by OHIM, the particulars added by that corrigendum do not constitute the correction of a linguistic error, of an error of transcription or of an obvious mistake within the meaning of Rule 53 of Regulation No 2868/95 (see, to that effect, judgment of 14 December 2006 in Case T-392/04 Gagliardi v OHIM – Norma Lebensmittelfilialbetrieb (MANŪ MANU MANU), not published in the ECR, paragraph 54). That corrigendum, by contrast, affects the actual substance of the contested decision and, for that reason, cannot be regarded as the correction of one of the types of error envisaged by Rule 53 of Regulation No 2868/95.

24 It must also be noted that the amendment introduced by the corrigendum of 3 August 2010 could not have been adopted on the basis of Article 80 of Regulation No 207/2009 either, which provides for the possibility for OHIM to revoke, within six months of their adoption, decisions which contain an obvious procedural error attributable to OHIM. The conditions for the application of Article 80 of Regulation No 207/2009 were not satisfied in the present case, as no obvious procedural error had been made.

25 It follows that the corrigendum of 3 August 2010 was adopted outside of the cases provided for by Regulation No 207/2009 in which the Boards of Appeal may revise decisions. It therefore had no legal basis.

26 In that regard, it is settled case-law that acts of the institutions, the bodies and the agencies of the European Union (‘EU’) are in principle presumed to be lawful and accordingly produce legal effects, even if they are tainted by irregularities, until such time as they are annulled or withdrawn. However, by way of exception to that principle, measures tainted by an irregularity the gravity of which is so obvious that it cannot be tolerated by the EU legal order must – of an institution’s, body’s or agency’s own motion, if need be – be treated as having no legal effect, that is to say, they must be regarded as legally non-existent. The purpose of this exception is to maintain a balance between two fundamental, but sometimes conflicting, requirements with which a legal order must comply, namely stability of legal relations and respect for legality. From the gravity of the legal consequences attaching to a finding that a measure is non-existent, it is self-evident that, for reasons of legal certainty, such a finding is reserved for situations which are quite extreme (see, to that effect, Joined Cases 7/56 and 3/57 to 7/57 Algera and Others v Common Assembly [1957 and 1958] ECR 39, p. 60 et seq.; Case 31/76 Hebrant v Parliament [1977] ECR 883, paragraph 23; Case 15/85 Consorzio Cooperative d’Abruzzo v Commission [1987] ECR 1005, paragraphs 10 and 11; and Case C-137/92 P Commission v BASF and Others [1994] ECR I-2555, paragraphs 48 to 50).

27 Irregularities of such a kind as to lead the EU Courts to regard a measure as being legally non-existent differ from illegalities the confirmation of which leads, in principle, to the annulment of measures the legality of which is reviewed pursuant to the Treaty, not by reason of their nature, but by reason of their gravity and their flagrant character. Where measures are tainted by irregularities of such obvious gravity that it affects the conditions essential to their adoption and existence, those measures must be treated as being legally non-existent (see, to that effect, Commission v BASF and Others, paragraphs 51 and 52).

28 In the present case, as has been found in paragraphs 23 to 25 above, the corrigendum of 3 August 2010 was marred by irregularities relating to the essential conditions of that act the gravity and flagrant character of which could not, in their entirety, escape the parties.

29 Following receipt of that corrigendum, the applicant sent a letter to the Court on 20 December 2010 in which it invoked the inadmissibility of the corrigendum. It subsequently confirmed that position in its observations on the corrigendum by adding that it had no legal basis.

30 Likewise, OHIM, in its observations on that corrigendum, also acknowledged that it went beyond the circumstances provided for by Rule 53 of Regulation No 2868/95.

31 As has been established above, the corrigendum of 3 August 2010, which was intended to amend the substance of the contested decision, was adopted without any legal basis. It must therefore be held that that procedural defect constitutes an irregularity which affects the conditions essential to the measure in question, which must in consequence be held to be non-existent (see paragraph 27 above).

32 In light of all of the foregoing, the Court will, consequently, analyse the lawfulness of the contested decision without taking account of the amendment made to that decision by the corrigendum of 3 August 2010.

33 The applicant submits that the mark MPAY24, viewed in its entirety, may be considered allusive or suggestive at most, but not directly and immediately descriptive of the goods and services which it covers. Thus, it challenges the Board of Appeal’s conclusion that the sign in question means ‘system that makes it possible to pay via a mobile telephone around the clock’. It adds that the average English-speaking consumer will have to take several mental steps in order to grasp the alleged meaning of the contested mark. The applicant submits that the Board of Appeal did not establish a direct link between the alleged meaning of the sign and the goods and services covered. The Board of Appeal, it argues, ought to have indicated the existence of a descriptive character for each of the goods or services covered by the mark or, at least, for each category or group of goods.

34 OHIM submits that the contested mark is descriptive in respect of the goods and services at issue since it is merely the sum of the three elements ‘m’, ‘pay’ and ‘24’, which are also descriptive of the goods and services at issue. It further submits that the goods and services covered by the contested mark may have a common purpose, as was held by the Board of Appeal in paragraph 21 of the contested decision. Thus, general reasoning relating to the descriptive character of the contested mark for the goods and services at issue is sufficient, and the breach of the first sentence of Article 75 of Regulation No 207/2009 alleged by the applicant is not established.

35 Article 7(1)(c) of Regulation No 207/2009 prohibits the registration of trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service. Those descriptive signs are deemed incapable of fulfilling the essential function of trade marks, which is to indicate origin (Case C-191/01 P OHIM v Wrigley [2003] ECR I-12447, paragraph 30, and judgment of 2 April 2008 in Case T-181/07 Eurocopter v OHIM (STEADYCONTROL), not published in the ECR, paragraph 35). In addition, Article 7(2) of Regulation No 207/2009 states that paragraph 1 is to apply notwithstanding that the grounds of non-registrability obtain in only part of the EU.

36 Accordingly, the signs and indications referred to in Article 7(1)(c) of Regulation No 207/2009 are those which may serve in normal usage, from a consumer’s point of view, to designate, either directly or by reference to one of their essential characteristics, goods or services such as those in respect of which registration is sought (Case T-19/04 Metso Paper Automation v OHIM (PAPERLAB) [2005] ECR II-2383, paragraph 24, and judgment of 19 November 2009 in Case T-399/08 Clearwire Corporation v OHIM (CLEARWIFI), not published in the ECR, paragraph 19).

37 In accordance with settled case-law, in order for a sign to be caught by the prohibition set out in Article 7(1)(c) of Regulation No 207/2009, there must be a sufficiently direct and specific relationship between the sign and the goods and services in question to enable the public concerned immediately to perceive, without further thought, a description of the goods and services in question or one of their characteristics (PAPERLAB, paragraph 25, and judgment of 11 February 2010 in Case T-289/08 Deutsche BKK v OHIM (Deutsche BKK), not published in the ECR, paragraph 34).

38 Thus, the distinctiveness of a trade mark must be assessed, first, in relation to the goods or services in respect of which registration of the sign is applied for and, second, in relation to the perception of the relevant public, which is composed of the consumers of those goods or services (Case T-207/06 Europig v OHIM (EUROPIG) [2007] ECR II-1961, paragraph 30, and Deutsche BKK, paragraph 36).

39 In order to be caught by Article 7(1)(c) of Regulation No 207/2009, it is sufficient that at least one of the possible meanings of a word sign designates a characteristic of the goods or services concerned (OHIM v Wrigley, paragraph 32, and Case T-344/07 O2 (Germany) v OHIM (Homezone) [2010] ECR II-153, paragraph 21).

40 Finally, with regard to neologisms, it must be borne in mind that a combination of descriptive terms is itself, in principle, descriptive of the goods or services for which registration is sought, except where, because of the unusual nature of the combination, the sign in question creates an impression which is sufficiently far removed from that produced by the mere combination of meanings lent by its component elements, with the result that the word is more than the sum of its parts (STEADYCONTROL, paragraphs 36 and 37, and CLEARWIFI, paragraph 22).

41 It is in the light of those principles that the present plea should be considered.

42 In relation to the relevant public, the Board of Appeal found, in paragraph 21 of the contested decision, that this is composed of average English-speaking consumers. The applicant does not challenge this conclusion, which must, consequently, be confirmed.

43 In relation to the letter ‘m’, the Board of Appeal held that this represented an abbreviation of the terms ‘mobile’ or ‘multi’ and could be understood as a reference to multifunctional payment systems (paragraph 22 of the contested decision). That finding by the Board of Appeal is correct, as, in the same way as the letters ‘i’ and ‘e’, which are abbreviations of, respectively, internet and electronic, the letter ‘m’ is frequently used as an abbreviation of ‘mobile’. Thus, the Board of Appeal acted correctly in holding that the letter ‘m’ could be descriptive for the relevant public.

44 In relation to the ‘pay’ element, the Board of Appeal held, in paragraph 21, that this had a clear meaning in English and that all of the goods and services covered by the contested mark could be used directly in connection with payment services. Moreover, in its judgment of 21 January 2009 in Case T-399/06 giropay v OHIM (GIROPAY), not published in the ECR, the Court held, at paragraph 32, that, where the word ‘pay’ is used in English in the context of financial institutions, it means a transfer of money paid as consideration for work done or a service rendered. It is also descriptive in the present case.

45 In relation to the ‘mpay’ element, the Board of Appeal took the view that the consumer is not required to make a mental effort in order to split the constituent elements up and to perceive ‘mpay’ as being a combination of ‘m’ and ‘pay’ (paragraph 26 of the contested decision). In its view, professional consumers or individuals who use the payment system will be aware of the technical aspects of the system and will not perceive that combination as one single word. Moreover, that combination is difficult to pronounce (paragraphs 25 and 26 of the contested decision).

46 It must be noted, in this regard, that the English-speaking consumer will identify in the ‘mpay’ element, without mental efforts, the word ‘pay’, the meaning of which he understands. The letter ‘m’ would consequently be understood as associated with the word ‘pay’ and capable of meaning ‘mobile’ or ‘multi’, as was stated in paragraph 42 above.

47 In relation to the ‘24’ element, the Board of Appeal acted correctly in holding, in paragraph 27 of the contested decision, that this was an abbreviation of ‘24 hours’, indicating that the goods and services are accessible without interruption, and that it would be immediately understood in that way. The availability of services without interruption is particularly true in the context of payment services.

49 Finally, in relation to the sign MPAY24, the Board of Appeal, in paragraph 28 of the contested decision, held that this would be perceived as a term which consists of the elements ‘m’, ‘pay’ and ‘24’, without any need for the consumer to undertake a significant mental step in order to separate those elements. That sign thus refers to a system which allows payments to be made by mobile telephone around the clock.

50 As has been already stated, the sign MPAY24 is composed of three elements, each of which is descriptive. Taken in its entirety, the sign would also be considered as descriptive, as the relevant public will be able immediately to identify in that sign, without further reflection, the three descriptive elements for the goods and services at issue. Given that the public will necessarily understand the meaning of the word ‘pay’, as meaning ‘to pay’, it will associate the other two elements, namely ‘m’ and ‘24’, with the action of paying. Thus, it is reasonable to take the view, as the Board of Appeal did (paragraph 22 of the contested decision), that the sign MPAY24 could be understood as referring to a system making it possible to pay by mobile telephone around the clock (mobile payment) or even a multifunctional payment system available around the clock (multi payment). Consequently, the impression that the public will have of that neologism will not be sufficiently removed from the sum of the three elements of which it is composed within the terms of the case-law cited in paragraph 37 above.

51 The Board of Appeal was therefore correct in finding that the sign MPAY24 is descriptive in character. Accordingly, it is appropriate to establish whether there is a sufficiently specific connection between the sign in question and the goods at issue as to justify application of Article 7(1)(c) of Regulation No 207/2009.

The existence of a sufficiently direct and specific connection with the goods covered

52 It must be recalled, firstly, that the examination of the absolute grounds for refusal must be carried out in relation to each of the goods or services for which trade mark registration is sought and, secondly, that the decision by which the competent authority refuses registration of a mark must, in principle, state reasons in respect of each of those goods or services (see order of the Court of Justice in Case C-282/09 P CFCMCEE v OHIM [2010] ECR I-2395, paragraph 37 and the case-law cited).

53 However, in respect of that latter requirement, the Court of Justice has held that the competent authority may confine itself to general reasoning for all of the goods or services concerned in the case where the same ground of refusal is given for a category or group of goods or services (see order in CFCMCEE v OHIM, paragraph 38 and the case-law cited).

54 In the present case, in paragraph 21 of the contested decision, the Board of Appeal confined itself to stating that all of the goods and services at issue could be used directly in connection with payment services.

55 The applicant submits that the goods and services covered by the contested mark do not constitute one category allowing a general statement of reasons. As the Board of Appeal’s analysis ignored the differences between the goods and services in question, it is, consequently, incomplete and incorrect. The applicant adds that the fact that the Board of Appeal supplemented its reasoning on this point by means of the corrigendum of 3 August 2010 proves that OHIM itself considered that its reasoning was insufficient.

56 OHIM, for its part, submits that the alleged breach of Article 75 of Regulation No 207/2009 has not been established.

57 In that regard, it must also be recalled that, in accordance with the first sentence of Article 75 of Regulation No 207/2009, OHIM decisions must state the reasons on which they are based. Moreover, it should be added that OHIM’s obligation to state reasons has the same meaning as that resulting from Article 296 TFEU. It is settled case-law that the statement of reasons required by Article 296 TFEU must set out clearly and unequivocally the reasoning of the body which adopted the act in question. The purpose of that obligation is twofold: firstly, to enable the persons concerned to ascertain the reasons for the measure in order to defend their rights and, secondly, to enable the Community Courts to exercise their power to review the legality of the decision (see Case C-447/02 P KWS Saat v OHIM [2004] ECR I-10107, paragraphs 63 to 65 and the case-law cited).

58 In the present case, however, as is apparent from the contested decision, the Board of Appeal did not carry out a specific analysis of the descriptive character of the sign MPAY24 in connection with the goods and services covered by the mark applied for. Consequently, in the absence of such an analysis, the Board of Appeal did not comply with the obligation to state reasons set out in the first sentence of Article 75 of Regulation No 207/2009.

59 Furthermore, even though, in accordance with the case-law cited in paragraph 53 above, general reasoning for a group or category of goods may be sufficient, it is in no way established in the present case that the goods and services covered by the contested mark form a homogeneous category allowing recourse to a general statement of reasons.

60 In light of all of the foregoing, the present plea must be upheld. It is therefore unnecessary to rule on the second plea.

61 Under Article 87(2) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since OHIM has been unsuccessful, it must, in accordance with the form of order sought by the applicant, be ordered to pay the costs.

1. Annuls the decision of the First Board of Appeal of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) of 22 March 2010 (Case R 1102/2008-1);

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