A Brief history on the Nice Classification

Nice Classification is a system of classifying goods and services for the purpose of registration of trademarks.  On June 15, 1957, Nice Classification was established via an agreement, concluded at the Nice Diplomatic Conference . It was later revised at Stockholm, in 1967 and at Geneva , in 1977. It is administered by the World Intellectual Property Organisation (WIPO).

Nice Classification basically classifies goods and services in a systematic manner under different headings for the purpose of registering the marks. Under Nice Classification goods and services are classified under 45 headings, i.e goods are classified under classes 1-34 and services under classes 35-45.

It is mandatory for all the countries party to the Nice Agreement to classify and register their marks in accordance with the Nice Classification.

Summary of the Nice Agreement

The Nice Agreement states that the contracting states, in their official documents or publication for registering their marks must state the class/ classes in which their goods or service belongs to or falls under.

The Agreement has created a Union, which has an Assembly. The task of the Assembly is the adoption of the biennial program and budget of the Union.

The Nice Agreement formulated a Committee of Experts who’s role is to decide on the transfer, insertion, change and deletion of terms of the Nice Classification of goods and services. The latest edition of Nice (Nice 11) entered into force on 1 January, 2017.

History of Nice Classification

In order to understand how Nice Classification came to being a discussion has to be done on the history of Trademarks.

Greek inscriptions   found on Etruscan vases dated 800-400 BC are a proof of the fact that trademarks were present even during the ancient times . However the first ever Trademark dispute recorded, was centuries later i.e. Southern vs How (1618). The reason behind this is not at all astonishing as only few documents have survived the passage of time.

“The Historical Foundations of the Law Relating to Trade-Marks “ is  a well written and a vital source of secondary information from which the history of classification can be worked out. This seminal work was done by Frank Schechter in 1925 and he did such a good job that almost every piece of work that touches the history of trademarks has made a reference to Schechter.

Schechter believed that the inception of the trademark laws was found in the medieval economic structure that was the Guild (a medieval association of craftsmen or merchants, often having considerable power). The guilds at that time ran their own hearings and had their own mechanism for dispute resolution by setting up tribunals. They were completely against the ideas of their members taking legal action against each other outside their own jurisdiction. Hence this explains the lack of trademark disputes in the actual court of law. It was this system of the guilds that sewed the seeds for a trademark classification system.

In the medieval economy two types of trademarks existed i.e. Merchants marks and the Production mark. 

The Merchants mark signified who the proprietor of the goods was whereas Production mark indicated the origin of the goods.

The whole idea behind merchant marks was to assist the merchant or the owner to reclaim his goods that had been lost through a shipwreck, piracy or any other accident. The merchant mark was basically used as an evidence to determine the owner of the goods.

The other form of mark prevalent during the medieval times was the Production mark , the function of which was to indicate the origin/source of the goods. Today the owner or the proprietor of the goods chooses a mark according to his taste and design but earlier, during the medieval times, the owner had very little option and choice in its use and design. Trademarks which are now considered as an asset, were just a distinct liability back then.

The guilds were in manufacturing business in the 15th century, and in order to maintain their reputation and efficient standards it was they who introduced the concept of monopoly. These monopolies were allowed back then for the sake of efficiency and to maintain high standards.  As there was no retail chain,  the consumers purchased goods directly from the manufacturers and therefore the supervision by the guilds was simplified.  In order to further simplify the supervision process, the guilds system was made in a manner where the craftsmen would literally be next to each other which enabled the consumers to personally inspect the goods at the manufacturers door step before buying. This way it was impossible for the craftsmen to compete with one another on an individual level.

Unfair competition was partly curbed by the guild supervision this way, but in addition to this guilds were trying to attain strict monopoly in their trade by not even allowing traders from the nearby towns to compete with them in their trade.

The modern trademark classification system allows for competition between the traders having goods or services in the same class. The manner in which the guild system was set up, with little imagination one can see it as an attempt to form a classification of goods but completely different from the modern method. Each craft or guild lived within a stone’s throw of each other, for example let’s talk about manufacturing of cloth, the weavers, dyers, fullers etc lived in close proximity to each other. This raises a question that if there was no competition amongst the guilds then how was the classification system born from the guilds?

The answer to this question is that it wasn’t. The actual change came about with the decay of the guilds and the natural increase in the geographical area and nature of the market place. The guilds did not need a classification system nor were they trying to achieve one. They were a manufacturing unit and laid more importance on supervision hence they were in such close proximity to each other and the consumer. The significance of the guilds is that they laid a foundation for the modern classification system.

Then how did a modern classification system arise from this medieval economy? The answer to this lies in the ultimate recognition of individual goodwill amongst traders in the same guild, i.e. intra-guild competition has to be recognised before the guild, as a partitioned entity of a manufacturing process, can be seen as a classificatory phenomenon.

In short the guilds were using production marks to create a monopoly for their goods and restrict the movement of outside goods within their territory. The marks were a liability and not as asset for the guilds. However this aspect changed eventually due to the increase in the geographical area of the market place. Slowly, as the markets started expanding, and the distance started increasing ,the consumer from far off started recognising goods via their production marks. Due to this breakdown of the consumer/vendor interface these marks started gaining the modern trademark  characteristics, as a result individual goodwill of the craftsmen became recognised and hence intra-guild competition was now possible. Trademarks was thus evolved from a mere mark of origin to a mark of quality.

When trading was done face to face, the consumer bought goods directly from the producer. This eliminated the use of the trademark as the consumer knew from whom he was buying the goods therefore trademark was not necessary. However, the moment, a maker, gained reputation through the excellence of his product, he started using a trademark in order to distinguish his goods from the other manufacturers.

By the end of the middle ages, a production mark had become an asset serving two major functions which were as follows

a) indication of origin

b) as a sign of individual manufacturer’s goodwill.

This led to a shift of manufacturers from the earlier prevalent feudal environment to a capitalist one and now individual recognition for good work started being recognised which further resulted into individual competition and a need for creation of separate classes.

Conclusion

Classification has not and has never been a concept developed overnight. This history has played an important role in the formation of the modern classification system. The development of classification has more or less followed the footsteps of the development of the trademark law in general. The modern classification system was not possible unless and until someone actually wrote it down and a made separate lists, however to reach that point where it would be deemed necessary or have the required meaning was possible only due to such elaborate and detailed history that prece