Technical result and bad faith – potentially connected but separate grounds - the ECJ

What do the colour pink, medical prostheses, and the EU trade mark regulation have in common? Quite a bit, as it turns out, when the pink colour of technical ceramic materials is the result of the use of chromium oxide to ensure hardness and strength, and the owner of a lapsed patent covering that technical effect is accused of attempting to extend its monopoly via trade mark protection. 

Background

The conflict between CeramTec and Coorstek started on 13 December 2013 when the former brought an action for infringement and parasitic competition against the latter. In response, Coorstek filed a counterclaim for a declaration of invalidity of three trade marks key to Ceramtec's case.

EUTM no. 010214195 colour trade mark for pink Pantone 677C (edition 2010)2)	EUTM no. 010214112 figurative trade mark claiming the colour Pantone 677C	EUTM no. 010214179 3D shape mark claiming the colour Pantone 677C

By judgment of 25 June 2021 the Court of Appeal, Paris, France, cancelled the subject trade marks on the ground that CeramTec had filed the applications in bad faith as they had believed, at the date of the filing, that chromium oxide, which caused goods to take on a pink colour, had the technical effect of ensuring hardness and strength of ceramic materials. 

As its patent for the technical solution had expired, CeramTec was inferred to have intended to extend its monopoly to prevent competitors from using chromium oxide in their competing ceramic materials to the extent that the goods would take on a pink colour. In other words, CeramTec was held to have sought protection for the trade marks not to protect the colour pink as an indicator of origin but to stifle competition in the use of chromium oxide on the market. 

Appeal to the Court of Cassation

The decision to cancel the trade marks was appealed by CeramTec. It submitted to the Court of Cassation (France) that the absolute grounds preventing registration of trade marks which consist exclusively of the shape, or another characteristic, of goods which is necessary to obtain a technical result (Article 7(1)(e)(ii)) cannot characterise bad faith unless there is a clear attempt to circumvent or ignore the conditions for registrability. 

In essence, CeramTec argued that it should not be possible to establish bad faith unless it is proven that the trade marks actually seek to protect a technical solution. It further submitted that it discovered after the expiry of the patent and the filing of the subject applications, that chromium oxide, which causes the pink colour, in fact produced no technical result. 

Coorstek, on the other hand, submitted that Articles 7(1)(e)(ii) and 52(1)(b) pursued different objectives and the applicability of the latter could not be made contingent on the applicability of the former. Whether or not the subject marks were intended to protect a technical solution was irrelevant and it was only the applicant's intention that was to be taken into account.

Referral to the ECJ

The Court of Cassation referred three questions to the ECJ:

• Are absolute grounds for invalidity under Article 7 (and 52(1)(a)) independent from "bad faith" under Article 52(1)(b)?

• If not, may the bad faith of the applicant be assessed by reference solely to the absolute ground for refusal of registration set out in Article 7(1)(e)(ii) where no finding has been made that the sign for which registration as a trade mark was sought consists exclusively of the shape of the product which is necessary to obtain a technical result?

• Is "bad faith" excluded where the applicant filed for registration of trade marks with the intention of protecting a technical solution and then subsequently discovered there was no connection between the technical solution in question and the signs which constituted the trade marks applied for?

The ECJ's decision

The ECJ effectively sided with Coorstek. The decision can be summarised as follows:

• Articles 52(1)(a) and 52(1)(b) are autonomous but not mutually exclusive. 

• "Bad faith" applies where the proprietor of an EU trade mark has filed the application for registration of the mark not with the aim of engaging fairly in competition but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark. "Bad faith" depends on the factual circumstances of the case and the intention of the applicant and it is not necessary to prove that the trade marks in question actually circumvent other grounds against registrability. 

• The court must base its decision on the intention of the applicant at the time of filing of the application. Facts that come to light after the filing of the application are not relevant unless they serve as indica of the applicant's intention at the time of filing.

In particular, the ECJ reaffirmed that the relevant circumstances for assessing whether there was bad faith on the part of the applicant also include the nature of the contested mark, the origin of the sign at issue and its use since its creation, the scope of the expired patent, the commercial rationale underlying the filing of the application for registration of the contested mark and the chronology of events characterising that filing.

What does this mean for you?

There is nothing unexpected in the ECJ's decision. It has effectively reaffirmed the position that technical effect and bad faith relate to independent grounds. It is possible for a mark to fall foul of absolute registrability requirements and not be filed in bad faith and vice versa. All factual circumstances and factors need to be taken into account when assessing these grounds but for "bad faith" the applicant's state of mind is key.

We expect the present decision to influence considerations in the TETRA BRIK shape mark case reported here. There, the Board of Appeal found that it was not necessary to consider the trade mark applicant's state of mind when it filed the trade mark application because the contested mark was not necessary to obtain a technical result even though "bad faith" had been argued by the applicant for cancellation. As this case has been appealed further, we would expect the General Court to take another look at the "bad faith" claim even if it is not guaranteed to succeed.