Autor

Saskia van der Meijden-Bullens

Rechtsanwalt

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Autor

Saskia van der Meijden-Bullens

Rechtsanwalt

Read More

28. Mai 2024

Bad faith in trade mark applications

  • Briefing

The Benelux Office for Intellectual Property is one of the offices that takes part in the European Union Intellectual Property Network (‘EUIPN’). The EUIPN aims to achieve a unified trade mark system in the EU by developing common practices, services and tools. The most recent common practice (‘CP13’) was published on 22 March 2024 and will enter into force ultimately by 22 June 2024 and focuses on bad faith in trade mark applications. The assessment of bad faith in trade mark applications can be a difficult matter, as the concept is not defined, delimited or described in trade mark legislation. Although EU case law provides guidance, the concept still remains subject to different interpretations. 

CP13 aims to provide a common understanding of the general notion of bad faith and of other concepts, including terminology related to its assessment, as well as factors and scenarios that may prove relevant in the assessment. 

Two non-exhaustive aspects of bad faith are differentiated. The first aspect deals with the misappropriation of the right(s) of the third party where the trade mark applicant is targeting the interests of a specific third party. Relevant factors in this regard are a i) dishonest intention, ii) the applicant’s knowledge that the third party is using an earlier identical/similar right, iii) the degree of legal protection enjoyed by the third party’s earlier right, iv) the degree of identity/similarity between the contested trade mark and the earlier right, v) a lack of honest commercial logic behind the filing of the contested trade mark and vi) the chronology of events leading up to the filing of the contested trade mark. 

The second aspect concerns the abuse of the trade mark system where the applicant applied for the contested trade mark for purposes other than those falling within the essential functions of a trade mark. 

The most typical and relevant scenarios of bad faith are explained below in more detail and illustrated with recent case law.

Misappropriation of the right(s) of a third party 

Parasitic behavior

Parasitic behavior covers situations where, from the analysis of all the circumstances of the case, it is evident that the contested trade mark was filed with the dishonest intention to free-ride on the reputation of an earlier right, or to benefit from an earlier right regardless of its degree of recognition on the market. Relevant to the finding of parasitic behavior is, in addition to the factors mentioned above, the origin of the contested trade mark and its use since its creation.

For example, EU trade mark SIMCA was filed in bad faith, as an earlier trade mark SIMCA was protected in several EU Member States and, although the mark had not been used during the preceding decades and its reputation had diminished over the years, it still had a certain degree of reputation (a ‘surviving/residual reputation’) among the public interested in cars. The General Court (“GC”) observed that the existence of the SIMCA trade mark as a ‘historical’ mark was a well-known fact, and that the former proprietor was aware of the mark’s surviving/residual reputation. Consequently, the GC considered that registration of the identical contested trade mark was deliberately sought with the intention to create an association with the earlier rights and to take advantage of their surviving/ residual reputation on the motor vehicle market, thus to ‘free-ride’ on that reputation, and even to compete with those earlier trade marks if they were re-used by the claimant in the future.

Breach of a fiduciary relationship

Under this bad faith scenario, the existence of a fiduciary relationship between the claimant and the applicant, prior to the filing of the contested trade mark, needs to be established. 
Therefore, it should be checked whether there was any agreement of business cooperation between the claimant and the applicant of a kind that gives rise to a fiduciary relationship, or if such a relationship was imposed by law. For example, this fiduciary relationship should impose on the applicant, whether expressly or implicitly, a general duty of trust and loyalty as regards the interests of the claimant as the earlier rights proprietor. For this scenario, the previous relationship between the parties is thus a relevant factor to the finding of bad faith, in addition to the factors mentioned before.

The applicant of the EU trade mark GRUPPO SALINI for example could not have been unaware of the claimant’s long-standing use in Italy and abroad of the non-registered mark/sign SALINI (standalone or with the word ‘costruttori’), according to the GC. There was a previous relationship between the parties: the GC took into account that the applicant had a substantial holding in the claimant’s share capital and its executives held high-level positions in the claimant’s management and was, thus, ‘well-informed’ about the claimant’s commercial expansion and increasing reputation. However, the ‘well-informed’ status was insufficient – alone – to conclude bad faith and other factors were further examined, inter alia, the chronology of events leading up to the filing (including a corporate dispute prior to the filing and an increase in the cancellation applicant’s turnover and reputation). In view of the above, the GC confirmed the existence of bad faith since the applicant’s intention was to usurp the rights over the trade mark of the claimant.

Abuse of the trade mark system

Defensive registrations

Bad faith may also be constituted if the applicant is deliberately seeking to obtain a trade mark registration in respect of a broad range of goods or services with no intention to use it in relation to all or some of them, but potentially, for example, to prevent third parties from using the registered trade mark for the sale of those goods and/or services. 

Despite there being no requirement of an intent to use a trade mark, there is also no justification for protecting trade marks unless they are actually used on the market according to the genuine use requirements prescribed by EU or national law. This is because maintaining the registration of a non-used trade mark could limit the range of signs that can be registered as trade marks by others and also deny competitors the opportunity to use that trade mark or a similar one for identical or similar goods and/or services. 

When assessing bad faith in the context of this scenario, the applicant of the contested trade mark should not be required to prove the use made of this trade mark. This is because it is not a matter of examining the genuine use but rather of assessing whether, at the time of filing of the contested trade mark, the applicant had the (possible) purpose or intention of making use of it on the market in accordance with the essential functions - in particular the essential function of indicating origin - of a trade mark.

The intention of making use of the trade mark on the market in accordance with the essential functions of a trade mark lacked in the following case. The owner of EU trade mark TARGET PARTNERS applied for EU trade mark TARGET VENTURES. However, the sign TARGET VENTURES had already been used on the EU market by a third party. The applicant was also the owner of the domain names ‘targetventures.com’ and ‘targetventures.de’, but those were merely a means of redirection to the applicant’s official site ‘www.targetpartners.de’. The applicant further confirmed that its business was identified in the minds of clients exclusively with the name TARGET PARTNERS. In this case, the GC concluded that the application constituted bad faith, as it was more likely that the application was filed in order to strengthen the protection of the verbal element ‘target’ of the applicant’s earlier trade mark rather than to use the trade mark as a means of origin.

Re-filing 

In the context of a re-filing scenario, it is important to first highlight that a proprietor can have a legitimate interest in re-filing a trade mark application. 

For instance, this might be the case when the proprietor of an earlier registered trade mark, according to its new marketing strategy, evolving business needs or changes in consumers’ demand, decides to seek registration of a modernized/ updated version of its earlier registered trade mark(s) or to cover an updated list of goods and  services. 

Thus, only under specific circumstances, when it is proved that the applicant’s intention, when re-filing the trade mark application, was to abuse the trade mark system, will the re-filing be considered made in bad faith.

For example, the applicant of EU trade mark MONOPOLY, who was also the owner of several previously registered EU trade marks for MONOPOLY protected in the same classes, admitted in an oral hearing before the Boards of Appeal that one of the advantages of that strategy was the reduction of the administrative burden in many opposition proceedings where the applicant had to prepare and submit evidence. The GC observed that the aim of the applicant’s re-filing was that of not having to prepare and submit proof of use of the contested trade mark, thus extending, with regard to the earlier trade marks, the five-year grace period for non-use of the trade mark. However, such conduct must be held to be contrary to the objectives of the EU trade mark regulation, to the principles governing EU trade mark law, and to the rule relating to proof of use. 
In the case at issue, it should be mentioned that the finding of bad faith affected only those goods and services in the contested trade mark that were found identical to those covered by the earlier trade marks.

Filing for speculative purposes

Where an application for registration of a trade mark is diverted from its initial purpose and is filed speculatively or solely with a view to obtaining financial compensation, bad faith may exists. 

This scenario is illustrated by the following case, in which the bad faith claimant filed EU trade mark application LUCEA LED. The applicant registered the contested EU trade mark LUCEO claiming priority based on an Austrian trade mark. The applicant filed an opposition against the application for LUCEA LED, and the claimant filed an invalidity action against the application for LUCEO based on bad faith. The GC confirmed that the applicant pursued an unlawful filing strategy consisting in successively chaining together applications for registration of national trade marks. The GC found, inter alia, that the chain of applications for registration of German and Austrian trade marks LUCEO was intended to grant a blocking position to the applicant for a period exceeding the six-month period of reflection (in order to claim priority for an EU trade mark application) and the five-year grace period of non-use. The applicant used this blocking position to oppose applications for identical/similar trade marks by claiming priority of its earlier LUCEO trade marks and requested financial compensation only after the claimant made contact. This filing strategy was found incompatible with the objectives of the EU trade mark regulation and qualified as an abuse of law, because the trade mark applications were diverted from their initial purpose and were filed speculatively or solely with a view to obtaining financial compensation.

To conclude

CP13 is intended to serve as a guideline on assessing bad faith in trade mark applications. The entire text of CP13 can be found here in English, Dutch and French.
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