In the recent judgement of 21 April 2021, the General Court rejected the application of Hasbro against the decision of the Second Board of Appeal of the European Union Intellectual Property Office (“EUIPO”) that partially cancelled the trademark MONOPOLY for the classes of products and services identical to those protected by earlier registrations. The General Court considered that re-filing of an identical trademark for identical goods or services amounts to bad faith where the applicant seeks to artificially extend the grace period for proof of genuine use.
On 30 April 2010, Hasbro, Inc. (“Hasbro” or the “Applicant”) filed an application for the registration of an EU trademark consisting of the word sign MONOPOLY for certain products and services listed in Nice classes 9, 16, 28 and 41. The trademark was registered under no. 9071961 on 25 March 2011.
Hasbro was also the owner of three other EU word trademarks MONOPOLY, previously applied for. The classes of products or services were overlapping to some extent.
The Croatian board game seller Kreativni Dogadaji d.o.o. filed on 25 August 2015 an application for a declaration that the contested trademark MONOPOLY was invalid in respect of all the goods and services covered by that trademark, arguing that the Applicant re-filed the trademark in bad faith, as the application was a repeat filing of the earlier trademarks. It argued that with the re-file, the application was aimed at circumventing the obligation to prove genuine use of those trademarks. The application was grounded on article 52(1)(b) of the Regulation no. 207/2009 (now article 59(1)(b) of Regulation 2017/1001).
The Cancellation Division of EUIPO rejected the application, but on 22 July 2019 the Second Board of Appeal of EUIPO partially annulled the decision and declared the contested trademark MONOPOLY invalid for some of the goods and services covered. It found that with regard to the goods and services which were identical to the goods and services covered by the earlier trademarks, Hasbro has acted in bad faith when it filed the application for registration of the contested trademark.
Judgement of the General Court
In its judgement of 21 April 2021, in Case T‑663/19, Hasbro, Inc., v (EUIPO), the General Court affirmed the decision of the Board of Appeal.
The Applicant argued that the Board of Appeal did not carry an overall assessment of all relevant factors in the case, and only focused on one aspect, respectively the administrative advantage of not having to prove genuine use of the re-filed trademark. It also argued that the Board of Appeal erred in finding that any re-filing would automatically amount to a bad faith registration and that the administrative efficiency was not the main or substantial reason for the re-filing. The General Court rejected this part of the plea, and found that the Board of Appeal did carry an overall assessment and did not consider that any re-file would amount to bad faith; rather, the Board of Appeal held that the information in the case file showed that the applicant had intentionally sought to circumvent a fundamental rule of EU trademark law, namely that relating to proof of use, in order to derive an advantage therefrom (Case T-663/19, para. 72).
In the overall assessment, the Board of Appeal considered various factors, including (i) that the Applicant had relied on the contested trademark and on the earlier trademarks in the context of two sets of opposition proceedings, (ii) that the argument on reduction of administrative burden does not stand as the earlier trademarks were not surrendered and there would be an additional work and increased investment with regard to the identical trademarks, (iii) that it is more administratively efficient to oppose a later trademark on the basis of a recent trademark that was not subject to proof of use, which is one of the factors that the Applicant acknowledged it considered when re-filing, (iv) that the Applicant argued this is normally industry practice, which implies that using such strategy was intentional.
The Applicant also argued, inter alia, that:
- No harm was caused by its activity. The General Court rejected this plea, as obtaining an advantage or causing a harm is not relevant for assessing bad faith. Also, the fact that use could be proven is irrelevant, as only the intention of the applicant is relevant.
- There was no specific examination of each of the earlier trademarks. The General Court rejected this plea, as the fact that the extensions of the grace periods in respect of the earlier trademarks were not too long is irrelevant. The intention of the applicant at the time of filing the application for registration is relevant instead.
- The Applicant’s practice was common and widely accepted. The General Court rejected this plea, as the fact that this practice might be used by other companies is irrelevant. What matters is if such strategy in the circumstances of the case complies with the trademark laws. The circumstances in this case pointed to the conclusion that the Applicant sought to circumvent the rules relating to proof of use.
The judgement in Case T-663/19 serves as a reminder of the fine line between exercising a right (to obtain protection of a trademark) and the abuse of that right (protection is sought to circumvent other rules). The public interest objective of article 52(1)(b) of Regulation no. 207/2009 (now article 59(1)(b) of Regulation 2017/1001) is that of preventing trademark registrations that are abusive or contrary to honest commercial and business practices.
The judgment also serves as a reminder of the case law on bad faith registration.
Bad faith is not a defined concept in the trademark legislation. The lack of any definition is intentional, as the judicial body is left with freedom to determine, depending on the proven facts of the case, which are the elements that converge towards bad faith registration.
The concept was analysed by the CJEU in the judgement of 11 June 2009 in Case C-529/07, Chocoladefabriken Lindt & Sprüngli AG v. Franz Hauswirth GmbH („Lindt”) where few factors for determining bad faith registration were discussed.
It is worth reminding that the judgement in the Lindt case was issued at the request for a preliminary ruling regarding the interpretation of article 51(1)(b) of the Regulation 40/1994 on the Community trademark according to which a “Community trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings, […] (b) where the applicant was acting in bad faith when he filed the application for the trade mark” (the article was kept in article 52(1)(b) of Regulation 207/2009 and subsequently in article 59(1)(b) of Regulation 2017/1001).
The court has held that in determining if registration was made in bad faith, courts must consider all the relevant factors specific to the particular case. It also referred to the three factors specified in the questions referred for the preliminary ruling, without other factors being excluded.
The three factors considered by CJEU in Lindt were (i) the fact that the applicant knows or must know that a third party is using, in at least one Member State, an identical or similar sign for an identical or similar product capable of being confused with the sign for which registration is sought; (ii) the applicant’s intention to prevent that third party from continuing to use such a sign; and (iii) the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is sought.
The Lindt case was confined to question by the referring court as to the criteria to assess whether there is bad faith in a situation in which it has been established that there exists a likelihood of confusion. Nevertheless, bad faith is not limited to this situation alone (see, e.g. Case C‑104/18 P, Koton Mağazacilik Tekstil Sanayi ve Ticaret AŞ v EUIPO, paras. 48 and the following).
CJEU applied the same principles in preliminary ruling concerning the similar provision found in the Directive to approximate the laws of the Member States relating to trademarks (article 4(4)(g) of Directive 89/2014/EEC, article 4(4)(g) of Directive 2008/95, article (5)(4)(c) of Directive 2015/2436).
As such, in Case C-320/12, Malaysia Dairy Industries Pte. Ltd v. Ankenavnet for Patenter og Varemarker, the Court held that “bad faith” within the meaning of the mentioned provision is an autonomous concept of European Union law (para. 29) and should be construed in the same manner as in the context of Regulation 207/2009, as both pieces of legislation pursue the same objective, namely the establishment and functioning of the internal market (para. 35).
Consequently, the mentioned provision must be interpreted as meaning that, in order to permit the conclusion that the applicant is acting in bad faith within the meaning of that provision, it is necessary to take into consideration all the relevant factors specific to the particular case which pertained at the time of filing the application for registration (para. 36-37).
The General Court constantly applied the above interpretation in claims for cancellation of community trademarks (now EU trademarks), and it held that all relevant circumstances of the particular case should be assessed. Also, lack of any factors listed in the Lindt judgment or any other judgment does not impede a finding of bad faith (see, e.g. Judgement of 28 October 2020 in Case T-273/19, Target Ventures Ltd v. EUIPO, Target Partners GmbH, paras. 31-32, 34 and the decisions cited therein), as the concept of bad faith cannot be confined to a limited category of specific circumstances (T-663/19, Hasbro, para. 56).
Bad faith registration of a trademark must be understood in the context of trademark law, which is that of the course of trade. Also, the rules on trademarks are aimed, in particular, at contributing to the system of undistorted competition.
In this context, trademark owners should be mindful that bad faith is a concept that is not confined to few limited situations found in the existing case-law; rather, it is a notion that will be flexibly and rather broadly assessed, to include for example, re-filing of identical trademarks if the intention was to circumvent requirements of proving genuine use, or lack of any intention to use the trademark in connection with the goods and services covered by that registration.