Author

Julia King

Senior Associate

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Author

Julia King

Senior Associate

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21 June 2023

Brands Update - June 2023 – 2 of 5 Insights

Filing multiple retaliatory revocation actions might not be an abuse of process after all: a narrowing of the Sandra Pabst decision

  • In-depth analysis

The EU's Grand Board of Appeal, in its 2020 "Sandra Pabst" decision, held that certain actions (including the filing of numerous retaliatory revocation actions) may constitute an abuse of law and process, resulting in the dismissal of the actions without the need to examine the owner's evidence. Surprisingly, the decision was not applied in the recent case of Dieter Hang vs. Formula One Licensing B.V., arguably narrowing a precedent useful to brand owners contending with aggressive and retaliatory counterparties.

What has happened? 

  • Dieter Hang is a German individual who has previously owned trade mark rights in FORMEL 1 (meaning FORMULA 1 in English) and previously sold commemorative medals and coins under the signs FORMEL 1 and FORMULA 1, ceasing in 2015. 

  • Over the past 25 years, Mr Hang and Formula One have clashed on numerous occasions, with Mr Hang bringing various actions at the German IP Office (IPO), the EU IP Office (EUIPO), the Regional Court of Frankfurt am Main, the Regional Court of Mannheim, the Regional Court of Hamburg, and the Regional Court of Munich. 

  • To date, Mr Hang has filed 69 revocation actions against Formula One's registered EU trade mark rights (EUTMs), asserting that they have not been put to genuine use in the EU. The Cancellation Division differentiated these actions from those in Sandra Pabst and held that they were not an abuse of law and process.
  • It instead held that Formula One had not provided sufficient evidence of use of FORMULA ONE in respect of goods and services in classes 4, 9, 16, 18, 25, 28, 35, 38, 41 and 42, and upheld the revocation of EUTM Registration No. 000770479 in these classes.

  • It is difficult to see how Mr Hang's actions do not fulfil the Sandra Pabst criteria, given that they are numerous, retaliatory, and do not seem to have a commercial rationale. The decision appears to narrow the applicability of the Sandra Pabst decision to scenarios where the cancellation applicant has filed indiscriminate revocation actions against registrations owned by one particular entity, with the aim of achieving undue financial benefit. 

  • In this case, the revocation actions filed by Mr Hang were against similar marks (FORMULA 1 and GRAND PRIX) and Mr Hang was not a traditional trade mark squatter (looking only to extort money from the trade mark owner), having previously had a business selling Formula 1 related memorabilia.

  • In forming this conclusion, the Cancellation Division has missed an opportunity to acknowledge that abuse of law and process may take many forms and that retaliatory and commercially illogical actions may also be abusive. Formula One filed evidence to show the economic distress that these actions were having on its legal department, but this was dismissed by the EUIPO.

  • Formula One has appealed and we will await the Board of Appeal's view to see whether this decision is overturned.

Want to know more? 

Background to the dispute

Formula One is the owner of all commercial and IP rights relating to the FIA Formula One World Championship. It owns trade marks such as F1, FORMULA 1, GRAND PRIX, FIA FORMULA ONE GRAND PRIX and the official logos of the championship.

It first came across Mr Hang in 1998, in respect of his applications to register conflicting trade marks at the German IPO. In 2010, Mr Hang attempted to register various conflicting trade marks at the EUIPO, and Formula one also opposed these applications, which were later withdrawn or abandoned.

In response, Mr Hang initiated in 2011 opposition and invalidity proceedings against several of Formula One's applications and registrations. In that same year, Mr Hang launched criminal complaints against Formula One and its legal representatives, before initiating another wave of invalidity actions at the EUIPO. Formula One applied to invalidate the German registrations upon which Mr Hang had based his opposition and invalidity proceedings. Its action was successful and Mr Huang's proceedings were rendered baseless and therefore concluded.

More recently, Mr Hang filed over 60 revocation actions against Formula One's core and non-core trade mark registrations at the EUIPO. He also filed a claim for damages at the regional German courts, asserting that Formula One was infringing his now-cancelled German trade mark rights, alongside claims for fraud.

The parties' submissions in the revocation actions

Against this backdrop, Formula One made submissions that Mr Hang's revocation actions constituted an abuse of law and process. The company argued that it did not have the time, money or resource to defend a multiplicity of revocations, which were clearly retaliatory and did not serve a commercial purpose (given that Mr Hang appeared to have ceased to have any real interest in FORMEL 1 in 2015).

For his part, Mr Hang submitted that the evidence did not show an abuse of law or process, and that, by contrast, Formula One's EUTM registrations were an abuse of law and process because they had been filed for an excessively broad specification on which Formula One could not have had an intention to use the marks. 

Mr Hang differentiated these revocation actions from the Sandra Pabst case by submitting that:

  • His actions were not filed in the name of a 'postbox' company.

  • He had not offered to purchase Formula One's registrations from them in exchange for withdrawal of the revocation actions. By contrast, in one of the disputes at the regional German courts, Formula One had, of its own accord, offered to pay Mr Hang £100,000 to withdraw his numerous cancellation actions.

The Cancellation Division's decision

The Cancellation Division held, first of all, that Formula One's evidence relating to the various claims brought by Mr Hang at regional German courts could not be admitted into the proceedings, noting that "any proceedings before national courts or authorities and the findings in those proceedings are, in this regard, unrelated and cannot, therefore, play any role in the Office’s assessment".

It asserted that revocation actions may be brought before the EUIPO by any party, and that that party is not obliged to give reasons for the filing of its action. The procedures must not, however, be used for fraudulent or abusive ends. The burden of proof on the proprietor in showing that the actions were abusive is rather high. It is only where the proprietor can show that the actions were "primarily driven by illegitimate objectives that the action can be dismissed on this ground".

In differentiating Sandra Pabst from the revocation actions at hand, the Cancellation Division placed particular weight on the fact that all of the trade mark registrations that had been attacked by Mr Hang had more in common than simply their ownership. They were all related to the FORMULA ONE and GRAND PRIX brands. By contrast, the cancellation applicant in Sandra Pabst had attacked a long list of registrations, which had nothing in common, other than their ownership.

It also dismissed Formula One's claims that Mr Hang's actions made no business sense. Clearly, the Cancellation Division held, there was some commercial logic to filing the actions in response to Formula One's attacks. The Cancellation Division held that the facts did not support the conclusion that Mr Hang was trying to obtain an undue advantage over Formula One (unlike Sandra Pabst, where the applicant's actions were centred on blocking legitimate third party attempts to register trade marks in future).

The Cancellation Division took the rather optimistic (and, it must be noted, unsupported) view that Mr Hang could have been filing the revocation actions to resume his business under the FORMEL 1 / FORMULA 1 trade marks. Although his behaviour may have been unusual, the Cancellation Division held that there was neither evidence of blackmailing, nor of economic threat to Formula One.

It therefore dismissed Formula One's arguments regarding Mr Hang's abusive behaviour and proceeded to analyse the evidence that the company had filed in support of its claim to genuine use of FORMULA ONE.

The evidence of use

The evidence Formula One had filed consisted of photos, fan catalogues, screenshots, Internet excerpts and excerpts from its website, along with figures to support the number of visitors, as well as the total number of page views. 

The Cancellation Division's assessment of this evidence did not divert from that required under the EU Trade Marks Regulation and, on the basis of the evidence filed by Formula One, reasonably concluded that no evidence had been submitted to show genuine use of FORMULA ONE in respect of goods and services in classes 4, 9, 16, 18, 25, 28, 35, 38, 41 and 42.

The Cancellation Division therefore revoked the registration in these classes and ordered both parties to bear their own costs.

What next?

For now, we continue to advise brand owners to collate and save evidence of use of their trade mark registrations, cautioning that abuse of law submissions are unlikely to prevail at the EUIPO unless the fact pattern accords with Sandra Pabst (traditional trade mark squatting against numerous marks).

Formula One has appealed and we will await the Board of Appeal's view to see whether this decision is overturned.

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