The General Court of the European Union confirmed that the Board of Appeal has extensive authority to admit evidence presented for the first time only in the course of proceedings before it. However, the Board of Appeal must, of its own motion, justify the fulfilment of the conditions for the admission of such evidence. In doing so, it is irrelevant whether the opposing party has challenged the submittal and admission of such evidence in the course of the proceedings. The duty to justify is part of the right to good administration established in the Charter of Fundamental Rights.

Judgment of the General Court of November 30, 2022 in ADS L. Kowalik, B. Wlodarczyk v EUIPO – ESSAtech (Accessoire pour télécommande sans fil), T-611/21

Facts

On December 7, 2017, the Polish entity ADS L. Kowalik, B. Włodarczyk s.c. filed for registration of a Community design applicable to remote controls:

On May 20, 2019, ESSAtech, a Czech entity, filed a cancellation request with EUIPO on the basis of Article 25(1)(b) in conjunction with Article 8(1) and (2) of Regulation No. 6/2002 („Regulation”).

On April 6, 2020, the EUIPO Invalidation Division dismissed the application.

ESSAtech appealed the decision to the EUIPO Board of Appeals. As part of the appeal, the company submitted a letter containing new evidence and arguments in the case. The Board of Appeal granted the request, annulling the decision of the Cancellation Division while declaring the contested design invalid. It stated that the appearance characteristics of the product in question are dictated solely by its technical function, and therefore the right to the contested design should be invalidated.

Action before the General Court

ADS L. Kowalik, B. Wlodarczyk s.c. filed a complaint with the General Court seeking annulment of the Board of Appeal’s decision. It alleged a violation of:

• Article 8(1) in conjunction with Article 25(1)(b) of the Regulation, and violation of Article 41(2)(c) in conjunction with Article 41(1) of the Charter of Fundamental Rights of the European Union (the „Charter”).
• Article 63(1) in conjunction with Article 63(2) of the Regulation, as well as a violation of Article 41(2)(c) of the Charter in conjunction with Article 41(1) thereof.

In support of ground 2), the Applicant alleged that the Board of Appeal mishandled the evidence and arguments that were presented by the Applicant for cancellation for the first time in the proceedings before the Board of Appeal.

The General Court’s ruling

The General Court upheld the appeal, finding that the decision of the EUIPO Board of Appeal was invalid. The court pointed out that based on Article 63(1) of the Regulation, in the case of cancellation proceedings, EUIPO’s factual examination is limited to the facts, evidence and arguments presented by the parties. It follows from the wording of Article 63(2) of the Regulation that EUIPO may disregard facts or evidence that the parties concerned did not submit in a timely manner. The court found that, contrary to EUIPO’s assertions, the Board of Appeal was not exempt from justifying the admission of new evidence solely because admissibility had not been challenged by the applicant during the proceedings. The Board of Appeal should examine the admissibility of facts or evidence on its own motion and provide reasons for its position.

According to the Court, accepting the EUIPO’s reasoning that the justification of the decision would depend on whether the admissibility of evidence was challenged by a party during the proceedings would confer on the parties to the proceedings an examination of compliance with the rules for admitting evidence. The Board of Appeal may admit facts or evidence presented to it for the first time. However, this is subject to certain conditions under Article 27(4) of Delegated Regulation 2018/625. This is possible firstly when they may be relevant to the outcome of the case, and secondly, they were not previously presented for compelling reasons. The court acknowledged that under Article 63(2) of the Regulation, the Board of Appeal is granted broad discretionary powers in deciding whether to take into account evidence that was first presented precisely before it in the proceedings. However, the Board of Appeals is obliged to exercise its discretionary powers in accordance with its administrative duty to give reasons for its decisions. The court notes that the Board of Appeal’s decision should meet the requirement of the duty to provide justification, stemming from, among other things, Article 41 of the Charter of Fundamental Rights, from which derives the right to good administration, and Article 63 of the Regulation. The ruling also implies that EUIPO’s decision should be self-sufficient. The justification is to be contained in its wording, and not derived from explanations provided at a later date. An exception may be the occurrence of special circumstances, giving urgency to the case and allowing the justification to be supplemented in later explanations, which, however, did not occur in the case at hand.

Comment

Justification is an important element of an administrative decision. It is thanks to its content that the concerned parties have the opportunity to learn the reasons why the decision was issued. On its basis, the EU Court can also conduct a review of the legality of the decision. It follows from the case law that a statement of reasons can be implied if learning the reasons and control is still possible, which, however, was not the case in the proceedings in question. Thus, the EU General Court emphasizes the importance of EUIPO’s compliance with procedural obligations.