In this interesting case, the ECJ held that there was no bad faith where an applicant applied to register an old, currently unused and forgotten trade mark to which it had no connection. 

What has happened?

• Any person may apply to invalidate a trade mark registration on the ground that the mark was applied for in bad faith. 
• There is no statutory definition of "bad faith" in EU or UK legislation. According to the caselaw, bad faith can arise where an applicant applies to register a mark with the intention of undermining, in a manner inconsistent with honest practices, the interests of a third party. 
• The court will consider various factors to determine whether there is dishonesty and whether the interests of a third party have been undermined. Where the use of the contested mark would take unfair advantage of the reputation of a third-party mark or there is a likelihood of confusion between the marks, bad faith is more likely to be found.
• In Ladislav Zdút v EUIPO, the EJC has given useful guidance on whether bad faith is present when a person applies to register an historic mark – in this case the mark, Nehera - previously used and registered by a third party to which the applicant has no connection. 
• The ECJ held that there was no bad faith in this particular case. The evidence suggested that the Nehera name had been forgotten. Absent any current reputation or fame, there could be no unfair advantage. In any event, the applicant had invested considerable time and money in resurrecting the brand – he was not exploiting in a "parasitic" way the past reputation of the Nehera name. Similarly, the applicant had not misled or confused the public into thinking he was connected with the former Nehera name or mark.
• The decision was issued post-Brexit and so does not bind the UK courts or tribunals. It suggests that (in EU member states) resurrecting an old third party brand is permissible if that brand does not have any residual fame and if done transparently. 

Want to know more? 

The background

Jan Nehera was a businessman in the fashion sector in Czechoslovakia in the 1920s to 1940s. The business traded under his surname and had almost 1000 employees and more than 130 retail outlets in Europe (including Czechoslovakia), the USA and Africa. Mr Nehera owned a Czechoslovak trade mark registration for NEHERA from June 1936 until it lapsed in 1946. The Nehera business continued to operate during the Second World War. On 1 January 1946, it was nationalised by the Czechoslovak State and continued its activity under a new name. Mr Nehera died in 1958.

In May 2013, Ladislav Zdút (a Slovakian) applied to register NEHERA as an EUTM for clothing and related goods. The mark was registered - and use began - in 2014. Mr Zdút has no connections with Mr. Nehera, his family or the original Nehera business.

In 2019 Mr Nehera's grandchildren applied to invalidate Mr Zdút's EUTM registration on the basis that it was applied for in bad faith given their grandfather's past use and registration of NEHERA for fashion goods. 

Earlier rulings

The Cancellation division dismissed the application for invalidity on the ground that bad faith had not been established. 

Reversing this decision, the Board of Appeal found bad faith due to the following:

• The trade mark was a well-known mark and had been put to genuine use by Mr Nehera.  
• Mr Zdút's was aware of the existence and celebrity of Mr Nehera and of the former Czechoslovak trade mark, which retained a certain surviving reputation and was of historic value. 
• Mr Zdút had attempted to create an association between himself and the former Czechoslovak trade mark.
• Mr Zdút's intention was to take unfair advantage of ("free-ride" on) the reputation of Mr Nehera and of the former Czechoslovak trade mark registration. 

Mr Zdút appealed to the ECJ, arguing that:

• The family had not shown that the former Czechoslovak trade mark was still registered or used on the date his EUTM application was filed. Therefore, they are not proprietors of any right in the sign or in the name Nehera.
• They had failed to establish that Mr Nehera and the former Czechoslovak trade mark still enjoyed a residual fame or reputation on that date.

ECJ's ruling

In determining whether there was bad faith the ECJ considered a variety of factors, including the factual and historical context, the degree of legal protection of the earlier mark, the use and reputation of the earlier and later marks, the likelihood that the use of the later mark would take unfair advantage of any reputation of the earlier mark, the risk of confusion, and the extent of the applicant’s awareness of these factors. 

The ECJ agreed with Mr Zdút that there was no bad faith, making the following points: 

• For the purposes of bad faith, taking unfair advantage of the reputation of a sign or name is, in principle, only possible if that sign or name "actually and currently" enjoys a certain reputation or a certain celebrity. In the absence of a surviving reputation of the NEHERA mark and of current celebrity of Mr Nehera’s name, the subsequent use of that mark by Mr Zdút was not, in principle, free-riding behaviour.
• The mere fact that a trade mark applicant knows or ought to know that a third party has, in the past, used a mark identical or similar to the mark applied for is not sufficient to establish the existence of bad faith. The decision was not therefore altered by the fact that Mr Zdút was aware of Mr Nehera and of the former Czechoslovak trade mark registration. Mr Zdút had admitted that he was intentionally looking for an old, currently unused and forgotten brand, which he could use to launch his own women’s clothing business. The evidence submitted confirmed the brand had been forgotten.
• The existence of a link between a later trade mark and a former sign or name is not sufficient, on its own, to support a finding that unfair advantage has been taken. Mr Zdút devoted considerable effort, time and money to revive the Nehera mark. This did not "exploit in a parasitic way" the past reputation of the former Czechoslovak trade mark and the name of Mr Nehera. Rather, it showed that Mr Zdút had made his own commercial efforts to revive the former trade mark. Referring to the historic trade mark was not contrary to honest practices in industrial or commercial matters. 
• Mr Zdút had not misled (or confused) the public into believing that he had continued the work, or was the legitimate successor, of Mr Nehera. In certain specific circumstances, reuse by a third party of a previously renowned former mark or of the name of a previously famous person may give a false impression of continuity or of inheritance with that former mark or with that person. However, here, by stating that he had revived and resurrected a mark, Mr Zdút suggested an interruption and therefore a lack of continuity between Mr Nehera’s activity and his own. 
• Ultimately, the former Czechoslovak trade mark and Mr Nehera’s name no longer benefited from any legal protection at the date on which the contested EUTM was filed. As such Mr Nehera’s descendants did not hold any right that might be susceptible to fraud.

What does the decision mean for you?

• As ever with a bad faith case, the presence or absence of a dishonest state of mind or intention was key here.
• The lack of residual reputation or fame of the Nehera mark was also critical. 
• Much will depend on the precise facts of the case – if there is any actual or current use of or reputation in, the mark, a claim of bad faith might well succeed. Likewise if any connection is inaccurately implied between previous owners and the current use, it will be hard to claim honest intentions.

This article was authored by Alison Cole.