European IP Holding Co Factors

European Intellectual Property
Holding companies
IP management factors to consider
Niall Tierney
Barrister-at-Law (Ireland)
Solicitor (England & Wales)
European Trade Mark & Design Attorney
T: + 44 20 782 499 6664
F: + 44 20 7820 1621
E: niall@contegoip.co.uk

1. Introduction – Intellectual Property Holding Companies;
2. The Community Trade Mark (CTM);
3. The Madrid Agreement/Protocol;
4. Link between CTM and Madrid systems;
5. The European Community Design;
6. Overlap between RCD and CTMs;
7. Notable IPHC jurisdictions;
8. An overview.
Copyright Niall Tierney, 2012. All Rights Reserved

Intellectual Property Holding Companies (IPHCs)
An IPHC allows for efficient management and monetisation of Intellectual Property
Rights;
Numerous European countries offer attractive tax advantages through a locally owned
holding company;
Special factors apply when placing Trademark and Designs within an IPHC;
To ensure that a Trademark and Design portfolio is managed to its maximum
advantage care needs to be taken where to incorporate an IPHC;
A country that is attractive from a tax advantage may not necessarily facilitate an
effective IPR management strategy;
The decision to locate will depend on factors such as existing commercial presence
within the European Union, legal system, IPHC jurisdiction being a member of EURO
zone, etc.

The Community Trade Mark
One of the most effective ways of owning, enforcing and managing a centralised
Trademark portfolio in the European Union is by using the CTM system;
The CTM is a unitary Trade Mark right that provides protection in all 28 Member
States of the European Union;
A CTM avoids the necessity of having to seek separate Trademark protection in each
European Member State;
Holder of a CTM is given an exclusive right to use the relevant Trade Mark throughout
the European Union and to prevent others from using without consent, identical or
similar signs in relation to identical and/or similar goods/services;
In some cases, it is possible for the holder of a CTM to seek temporary relief against
suspected infringers by way of an injunction through a 'Community Trademark' court
in the European Union. If granted, the injunction will be enforceable in all EU Member
States;

The Community Trade Mark
A CTM is an 'all or nothing' right;
It is not possible for a CTM to cover some European Member States and not others;
A CTM can be challenged by the holder of a prior right from any European Member
State;
If a CTM is cancelled, it is cancelled for the whole of the European Union;
The holder of an unsuccessful CTM always has the option of converting it into
separate European national registrations.
A significant feature of conversion is that the converted applications can date back to
the date the CTM was originally filed;

Enforcing European (CTM) Trade Marks by an IPHC
Courts in the EU Member State where the Defendant is domiciled or has an
establishment have jurisdiction in cases where a CTM is infringed;
If Defendant is not domiciled in an EU Member State, then the courts of the EU
Member State where the Defendant has an establishment will have jurisdiction;
If the Defendant is not domiciled or has an establishment in an EU Member State,
then the Courts where the Plaintiff is domiciled will have jurisdiction;
If the Plaintiff is not domiciled in an EU Member State, then the courts of the EU
Member State where the Plaintiff has an establishment will have jurisdiction.
If neither the Plaintiff nor the Defendant are domiciled or have an establishment in an
EU Member State, the Courts where OHIM is based (Spain) has jurisdiction.

CTM Infringement Scenario One

CTM Infringement Scenario Two

CTM Infringement Scenario Three

Law governing CTM as an object of property
• Article 16 of the CTMR regulation stipulates that CTM as an object of property shall be dealt with
as if it is a national trade mark registered in the European Member State where:-
• the proprietor has its seat or domicile, or
• The proprietor has an establishment.
• Where the above two conditions do not apply, a CTM shall be dealt with as an object of property in
the country where the European Trademarks Office (OHIM) has its establishment, i.e. Spain.
• The above is of importance because if there is an issue regarding the transfer of a CTM, care needs
to be taken to ensure that CTM is owned by a company in a country with a preferential legal
system
• It is suggested that if the parent of an Intellectual Property Holding company is itself based in a
Common law jurisdiction, it may want to ensure that the law which potentially governs the transfer
of CTMs held by an IPHC is also a Common law country. In such a scenario, it would be advisable to
ensure that all CTMs are held in the name of an Irish IPHC.

Madrid Agreement/Protocol
A centralised system that allows for the protection of Trademarks on an international
basis by means of a single application filed with the World Intellectual Property Office
(W.I.P.O) in Geneva, Switzerland;
By designating the European Union (CTM) as part of the International
application/registration, a trademark owner avoids the need to separately designate
those countries of the European Union where it wishes to protect its International
Trademark;
The CTM designation is examined in the same way as it would be if it was filed directly
with OHIM;
Unless an objection is raised by OHIM within 18 months of filing, or the CTM
designation is opposed, protection of the International Trademark is automatically
granted;
Even if a CTM designation is rejected or successfully opposed, it is still possible to
convert it into separate European Member state designations with the same filing
date of the CTM designation.

Link between CTM and Madrid systems
Another feature of the link between the CTM and the Madrid systems is that it is
possible to use a CTM as the basis of an IR;
Link facility is effectively only available to European domiciled businesses or
businesses with a real and effective commercial presence in Europe;
A corporation without a European Union domicile or real and effective commercial
presence in the European Union cannot use its CTMs as a basis of a Madrid (IR)
application;
By placing Trademarks in a European Union incorporated company; businesses with
no real and effective commercial presence in the European Union can overcome the
hurdle of the ‘Link’ facility;

Designating CTM as part of Madrid system
International Registration (IR) may be centrally attacked if the base
registration/application upon which the IR is based is successfully challenged during
the first five years of the IR’s life;
Note: an Irish IPHC that bases a Madrid Protocol IR application on a 'Part A'
registration (Trademarks registered on the basis of inherent distinctiveness) registered
before 1996 could avoid the ‘five year’ central attack provision;
Under Irish Trademark law, pre 1996 'Part A' registrations are immune from invalidity
attack on the grounds of non-distinctiveness;
Pre 1996 ‘Part A’ registrations can still be cancelled if they fall into disuse for a
continuous five year period;

When not to designate CTM as part of Madrid system
It is not possible to seek International protection for a list of goods/services wider
than those of the base application or registration;
Trademark owners seeking protection in Europe for goods/services broader than that
sought in their home country would be better advised to file a standalone CTM
outside of the Madrid Protocol;
Unlike some countries (notably the US); there is no requirement to file proof of use in
order to keep the CTM alive;
If a US registration is likely to die as a result of a failure to file the required ‘Five Year’
Declaration of Use and that registration forms the basis on an IR designating the
European Union, the entire IR would fail.
Copyright Niall Tierney, 2012. All Rights
Reserved

Separately designating European Member States as part
of an Madrid (IR) application
IPR owner still has the option of separately designating those European countries
where trademark protection is desired;
As a CTM, and corresponding designations, in an International registration, can
potentially fail in their entirety, having numerous separate European registrations for
the same Trademark provides more security;
Also, in some European countries, a domestic European Trademark registration
provides a defence in the case of an infringement claim by the holder of an earlier
Trademark. lt is doubtful that a CTM could provide a similar defence.
Drawback of separate European designations is the administrative burden of having to
respond to any objections and/or oppositions that may be raised against the national
designation. As it is a requirement to appoint a local lawyer in the event of an objection
and/or opposition, costs could easily spiral out of control;
By designating the CTM, it will only be necessary to deal with OHIM in the event of an
objection and/or opposition;

The European Community Design
In Europe, designs can be protected if:
– They are novel, i.e. no identical design has been made available to the public;
– Have 'individual character', an 'informed user' finds that its overall impression is
different to other designs.
One of the most effective ways of protecting designs in the European Union is through
the 'Community Design' system;
A European 'Community Design' can be protected in either, its registered or
un-registered form.
In its un-registered form, a Community Design is protected for a period of three years
from the date it was first made available to the public within the European Union.
A Community Design allows its holder to prevent third parties from using either
identical designs or designs that have the same overall impression on an 'informed
user'. It can however only prevent the direct copying of the protected design.

The European Registered Community Design (RCD)
A Registered Community Design (RCD) allows its owner to prevent the use of identical
designs or designs of the same overall impression even if they have been innocently
created;
The RCD system is effectively a 'deposit' system where the application is filed and
registration is granted shortly thereafter; normally within three to four weeks of filing.
An RCD registration lasts for an initial period of five years, but can be renewed
thereafter for a further twenty years upon payment of a renewal fee.
An RCD is enforceable throughout the European Union and, like the CTM, can be used
as a tool to prevent the importation of counterfeit goods into the European Union.
If a third party successfully challenges the validity of an RCD, it falls for the whole of
the European Union and it is not possible to subsequently convert it into separate
national registrations

The European Community Design
An alternative to filing an RCD would therefore be to separately seek registration in
those European countries where protection is required.
Design law has been harmonized throughout the European Union so the requirements
of registration are effectively the same in each European Member state.
Seeking EU national separate registrations is however costly and administratively
cumbersome.
Anybody wishing to challenge the validity of the design would then have the expense
of bringing separate invalidity challenges in each country where the design is
registered.

Overlap between RCD and CTM systems and Hague
CTM and RCD systems both can afford protection to certain types of designs such as
logos and graphic symbols;
As it can take up to nine months for a CTM to be registered, filing an RCD may be a
quicker route to protection for logos, designs and graphic symbols;
Legal advice should however always be sought from European Intellectual Property
counsel before pursing this route in view of the possibility that a pre filed CTM may
destroy the novelty of the relevant design;
Nationals of countries that are members of the Hague Agreement can designate the
European Union in the same way a CTM can be designated as part of a Madrid (IR)
Trademark application;
Not possible to use an RCD as the basis of a Hague Design application.

Notable European IPHC jurisdictions
Country CTM Madrid Hague Legal
System
EURO zone Corporate
Tax Rate
Cyprus Yes Yes Through EU Common
and Civil Law
Yes 10%
Ireland Yes Yes Through EU Common Law Yes 12.5%
Luxembourg Yes Yes Yes Civil Law Yes 5.7% on IPR
royalty
income
Malta Yes No Through EU Common and
Civil Law
Yes 35%
Netherlands Yes Yes Yes Civil Law Yes 25.5%
Switzerland No Yes Yes Civil Law No 25%
United
Yes Yes Through EU Common Law No 23%
Kingdom

Suggested IPHC strategy
An Indian IPR Holder
• Majority of business in the
Europe with EURO zone
countries.
• Newly established presence
in the European Union.
• India not a member of
Madrid Protocol;
• India has a Common law
legal system;
IPHC jurisdiction - Ireland
• Ireland is a member of Madrid
Protocol –therefore an Irish based
(Indian owned) IPHC can own and
file Madrid applications;
• Irish based IPHC can use CTMs it
holds as the basis of a Madrid IR
application;
• Ireland has a same legal system as
India;
• As Ireland is a EURO zone country
there are no currency downsides
when an Irish IPHC files CTMs
where fees are in EUROS.
• Ireland has a Double Taxation
Treaty with India.

Suggested IPHC strategies
A Swiss based IPR Holder
countries;
• Switzerland is a member of
Madrid system;
• Switzerland has a Civil law
legal system.
IPHC jurisdiction - Switzerland
• Switzerland is a member of Madrid
Protocol –therefore a Swiss company
can own and file Madrid applications;
• Swiss based IPHC can designate CTMs
as part of a Madrid IR application;
• Swiss based IPHC will not be able to use
its CTMs as the basis of a Madrid (IR)
application because it is not domiciled
in EU Member State and does not have
a real and effective commercial
presence;
• Corporate Tax Rate is 25%, but can be
reduced depending on which Canton
where the IPHC is located.

A US IPR Holder
countries.
• USA is a member of Madrid
Protocol;
• USA has a Common law
legal system;
• No real and effective
operation in the European
Union.
IPHC jurisdiction - Ireland
• Ireland is a member of Madrid
Protocol. Therefore an Irish company
can own and file Madrid applications;
• An Irish (US owned) based IPHC can use
CTMs it holds as the basis of a Madrid
IR application because it is based
within in the EU;
• Corporate Tax Rate is 12.5%. Can be
reduced to 2% under over 15 year
under amortization rules;
• Ireland is a member of the EURO zone.
Therefore the are no currency
exchange implications when dealing
with OHIM.
• Ireland has same legal system as the
USA.
• Ireland has a Double Taxation
agreement with the USA.

A Russian IPR Holder
countries.
• No real and effective
operation in the European
Union.
• Russia is a member of
Madrid System;
• Russia has Civil Law legal
system;
IPHC jurisdiction: Luxembourg or
Netherlands
• Luxembourg and the Netherlands are members of
Madrid Protocol. Therefore Russian owned IPHC
companies incorporated in these countries can own
and file Madrid applications;
• A Dutch or Luxembourg based IPHC can use CTMs it
holds as the basis of a Madrid IR application
because it would be based within in the EU;
• Corporate Tax Rate can be as low as 5.178% in
Luxembourg;
• Luxembourg and the Netherlands are both
members of the EURO zone. Therefore the are no
currency exchange implications when dealing with
OHIM.
• Along with Belgium, Luxembourg and the
Netherlands are part of the unified Benelux Trade
Marks Office;
• Luxembourg and the Netherlands have a Civil Law
legal system

Factors to consider when choosing a European IPHC
Will the IPHC be able to use CTMs it owns as the basis of a Madrid (IR) application?
Will the IPHC be located within a EURO zone country?
Is the parent company from a Common law or Civil law country?
Does the ultimate parent originate from a country with the same language where IPHC is
located?
May have to take CTM infringement proceedings in a country where language and legal system
is not familiar to parent company .
Does the IPHC have a Double Taxation Treaty with the country of the ultimate parent company?
Do the tax advantages ultimately outweigh the disadvantages of not locating in a country where
the management of an IP portfolio is easiest?

Thank You

European IP Holding Co Factors

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