Recently, the Fifth Board of Appeal (BoA) of the EUIPO affirmedthe Cancellation Division’s declaration of invalidity of a trade mark under Article 59(1)(b) of the EU Trade Mark Regulation (EUTMR). While the BoA’s assessment serves as a useful summary and a concise application of the Court of Justice of the EU (CJEU) case law on trade mark applications made in bad faith, the defences submitted by the proprietor of the invalidated mark suggests an ongoing uncertainty regarding the scope and application of bad faith, despite the extensive discussion of it, remarkably in Lindt, Koton, and SkyKick[see also IPKat here on bad faith].
Background
Professor Biscuit of Oxford, on duty to sniff out bad faith!
On 23 November 2020, Iron & Smith Kft. (EUTM proprietor), filed an application to register the word mark “BREITLING FOR WOMEN” for several goods in Class 3 of the Nice Classification, including perfumes and aromatic oils. However, after its registration, Breitling SA – which has the mark “BREITLING” registered in Class 14 and operates in the horological sector – applied for a declaration of invalidity of the trade mark in its entirety on several grounds, including bad faith.
Breitling SA argued that the EUTM proprietor was, or at least should have been, aware of the earlier trade mark BREITLING and that its intention at the time of filing the application was not to obtain an exclusive right to benefit from the functions of a trade mark. To support these points, Breitling SA, first of all, asserted that it has established a certain level of reputation in the horological sector and thus, its trade mark enjoyed a ‘certain power of attraction’ prior to 23 November 2020. This, according to Breitling SA, suggested that the EUTM proprietor ought to have known its earlier mark. Breitling SA further claimed that there exist objective indicia suggesting that the EUTM proprietor was acting in bad faith. Particularly, the reproduction of the earlier word mark in an identical manner and the existence of a pattern of registering several other trade marks in the past with this same strategy – i.e., applying to register signs that consist of a well-known trade mark and a non-distinctive phrase such as ‘NEW BALANCE FOR HER’ and ‘ASTON MARTIN HOMME’ – (not only by the EUTM proprietor itself but also by other companies that have the same CEO as the EUTM proprietor’s) demonstrate an ‘intentional and fraudulent bad faith on the part of the business group of the EUTM proprietor’.
The EUTM proprietor merely refuted the allegations, without attempting to explain the commercial logic of these actions. And since the Cancellation Division could not find a reason for the EUTM proprietor’s choice of the specific phrase, other than a deliberate intention to create an association with BREITLING, thereby unjustifiably benefiting from its reputation, it concluded that the registration should be invalidated.
The EUTM proprietor appealed.
BoA decision
On appeal, the EUTM proprietor argued that there exist other trade marks including the word ‘Breitling’ registered in relation to clothes (i.e., THOMAS BREITLING), allegedly a ‘more similar [sector] to the watches sector’ than the cosmetic/perfumery sector, and that this invalidates Breitling SA’s application. However, this claim was quickly dismissed given the existence of a coexistence agreement allowing the name ‘Thomas Breitling’ to be used in very specific conditions, preventing any confusion with BREITLING.
The EUTM proprietor further attempted to dispel the burden of providing a commercially logical reason for choosing the specific phrase as its trade mark by arguing that there does not exist a requirement of providing statements of reasons alongside trade mark applications under the EUTMR. It, nevertheless, submitted that it ‘wishes to manufacture and market goods that bear [this specific sign]’.
These defences are, however, neither here nor there, as the CJEU case law demonstrates that when the good faith presumption is rebutted by objective circumstances that suggest aims that are not in compliance with fair competition and honest practices, it is the applicant of such a trade mark who needs to demonstrate – and indeed, who is the only one capable of doing so – that it still had a legitimate objective and is not abusing the trade mark system [see to that end, for instance, Lindt, paras 47-48; SkyKick, paras 75-77]. Additionally, when compared to the severity of the bad faith accusation and the potential outcome of invalidation, the mere defence of demonstrating the existence of other trade marks including ‘Breitling’ does not seem to be the most reasonable litigation strategy. This is because it does not tell anything about the EUTM proprietor’s intentions and thus appear as an ‘illogical and irrelevant’ fact.
Against this background, the BoA concluded that the lack of persuasive explanation of the commercial logic of choosing this specific phrase, combined with the consistent parasitic strategy adopted by the company’s CEO in filing applications constituted key evidence allowing for a finding of bad faith at the time of filing the application. Furthermore, the wide recognition BREITLING has established, which inevitably meant that, by 23 November 2020, the EUTM proprietor knew the existence, use, and reputation of this earlier mark, in the absence of a commercially justifiable reason for simply adding ‘for her’ at the end of this well-known trade mark meant that the EUTMR proprietor in fact intended to abuse the trade mark system (within the meaning of SkyKick para 75).
Comment
Art. 59(1)(b) EUTMR, as interpreted by the CJEU, plays a crucial role in ensuring that trade marks applied for with illegitimate or dishonest intentions are removed from the register. This function is significant, serving purposes ranging from safeguarding fair competition in the market to preventing clutters.
As this case demonstrates, the bad faith doctrine also operates as a check point for assessing whether an applicant genuinely intends the mark to fulfil its essential functions: indicating commercial origin, guaranteeing quality, communicating messages to the consumers, and acting as an advertising tools [as identified in L’Oréal v Bellure, para 58]. In the case at hand, it appears evident that the EUTM proprietor sought to step into the shoes of other trade mark proprietors and derive an unfair advantage, rather than to, say, communicate a specific message to consumers.
A further benefit of the bad faith doctrine is that it ‘keeps the marks free for those who will actually make use of [them]’. As Breitling SA pointed out, given the proximity between the horological and cosmetics sectors – and the common practice of watch brands such as Omega or Cartier expanding into cosmetic and perfumery goods – extending its mark to Class 3 would be a logical commercial step for it, as a luxury watch company. The existence of a trade mark, including the word ‘Breitling’ in that Class would, however, substantially impede Breitling SA’s ability to pursue that strategy.
It should be emphasised that this is in no way to suggest that trade marks should also serve as reservation tools for hypothetical or potential markets. Rather, it highlights the need for precautions to be in place where legitimate expansions face unjustified obstacles. The bad faith ground for invalidation strikes a fair balance by requiring a trade mark owner accused of attempting to obtain an unfair advantage – or of lacking intention to use its mark – to explain the commercial logic behind its application. Ultimately, considering that producing a trade mark merely involves the ‘selection’ of words, images, or colours – rather than a complex creative process that might be challenging to justify – it cannot be deemed unreasonable or unfair to place a burden on the relevant trade mark owner to demonstrate a legitimate basis for that selection, only when a persuasive threat of invalidation on grounds of bad faith arises.
Photo credit: Niamh Gilert
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