In a recent judgment, the General Court has confirmed that repeat filings of trademarks may, in certain circumstances, constitute bad faith.
Legal framework
Under EU trademark law, a registered trademark may be declared invalid if the applicant was acting in bad faith when he filed the trademark application. As the concept of ‘bad faith’ is not defined in the legal texts, guidance on its interpretation is provided in the case-law of the EU Court of Justice (CJEU), the General Court and the EUIPO Boards of Appeal.
In the Lindt case (2009), the CJEU had already confirmed that bad faith is a broad concept which must be the subject of an overall assessment, taking into account all the factors relevant to the particular case. In the Koton case (2019), the CJEU further clarified that bad faith may be present when the applicant has filed a trademark application not with the aim of engaging fairly in competition, but rather 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 trademark, in particular the essential function of indicating origin.
In the past years, case-law has identified several specific circumstances which may lead to an establishment of bad faith. Such circumstances include, for example, the fact that the proprietor had no intent to use at the time of filing, the fact that there was no commercial logic underpinning the application, or the fact that the filing was done with the sole purpose of blocking third parties’ access to the market.
In the Monopoly case, the rather common practice of repeat trademark filings was examined.
Background
In 1998, the US games and toy company Hasbro, editor of the famous board game Monopoly, obtained an EU trademark registration for the sign “Monopoly” for goods in classes 9, 25 and 28. In 2009, an additional trademark registration was obtained for services in class 41. This was followed by another registration for goods in class 16 in 2010. In 2011, Hasbro obtained a new registration for the exact same sign in relation to goods and services in classes 9, 16, 28 and 41 which were for the most part already covered by the earlier trademark registrations.
In 2015, the Croatian company Kreativni Događaji filed an application for invalidation of the mark that had been registered by Hasbro in 2011. According to them, Hasbro had acted in bad faith when it filed the application for registration of the contested mark, on the ground that that application was a repeat filing of the earlier marks and was aimed at circumventing the obligation to prove genuine use of those marks. In 2017, the EUIPO Cancellation Division rejected the application for a declaration of invalidity.
The contested Boards of Appeal decision
In 2019, the Second Board of Appeal of EUIPO partially annulled the decision of the Cancellation Division and declared the contested mark invalid for some of the goods and services covered.
In its decision, the Board confirmed that it is not acceptable that a trademark proprietor could circumvent the genuine use requirement by disguising a re-filed mark through the mere adding of goods and services. In order to decide whether this was sufficient to conclude on the presence of bad faith, the Board examined the applicant’s intention at the time of filing. The Board thereby noted that the contested EUTM had been used as a basis of various opposition proceedings, in which it had not been necessary to provide proof of genuine use. The Board also noted that all the earlier EUTMs had been recently renewed despite the fact that there was a newly registered trademark, and that Hasbro had indicated that it was “beneficial to be able to rely on a registration without the need to prove use” and that the repeat filings were thus useful “to reduce the administrative burden”. The Board concluded that a filing strategy based on the intention to circumvent the obligation to prove genuine use of the mark, is not a legitimate business activity and does not follow commercial logic, but is incompatible with the objectives pursued by the EUTMR and may be considered as an “abuse of law”.
The General Court’s judgment
In its judgment of 21 April 2021, the General Court confirmed the findings of the Boards of Appeal. The General Court pointed out that the requirements relating to proof of use must prevent the granting of legal monopolies for an unlimited time to inactive proprietors, and that the register must faithfully reflect what companies actually use on the market to distinguish their goods and services in economic life. Therefore, although repeat filings of a mark are as such not prohibited, a filing which is carried out in order to avoid the consequences entailed by non-use of earlier marks may constitute a relevant factor which is capable of establishing bad faith on the part of the person who filed that mark. The proprietor’s argument that repeat filings are “normal industry practice” was not accepted: acting in accordance with industry practice does not automatically preclude that the circumstances in which this was done may lead to a qualification as bad faith.
Conclusion
For trademark holders, it is important to keep in mind that a five years grace period applies after registration of a trademark. After the expiry of this grace period, a trademark may be declared invalid at the request of a third party or upon a counterclaim in infringement proceedings if the trademark holder is not able to prove genuine use of the mark. If the holder is only able to prove use in respect of a part of the goods and services covered by the registration, then the mark may be partially invalidated for those goods and services for which no proof of use is provided.
Although it may seem tempting to file repeat trademarks to circumvent the proof of use requirement or to avoid a loss of rights as a result of non-use (so-called evergreening), the Monopoly case demonstrates that such behaviour may be qualified as a filing in bad faith, which may lead to an invalidation of the newly registered trademark.
This case-law does not mean that repeat filings are prohibited per se, and, as the General Court pointed out in its judgment, the applicant’s good faith is presumed until proven otherwise. It may have as a result, however, that this presumption of good faith will be more easily rebutted by the cancellation applicant if there is a repeat filing for identical goods and services, and that it will then be up to the trademark holder to provide plausible explanations regarding the objectives and commercial logic underpinning the repeat filing. For trademark holders, it is thus recommended to develop a clear strategy to determine which registrations should be renewed, which trademarks might need to be updated and when. And, last but not least, to avoid making statements that the logic behind the repeat filing was to circumvent the proof of use requirement.
