Understanding Bad Faith in EU Trademark Law

Running analysis on trademark activity in the European Union over the last decade, from 2010 to 2019, reveals that the market appears extremely healthy. The volume of new applications is growing steadily and at a relatively rapid rate.

In the EUIPO we have seen a 59% increase of some 47 thousand new applications when comparing 2010 and 2019. The success rate during this period was also extremely positive with 89% of new applications attaining registration on average.

Top EUIPO Nice Classes

It is interesting to note that the top five EUIPO Nice Classes by application over this period did not alter. We see Class 35 (Advertising and Business), Class 9 (Electrical and Scientific Devices), Class 42 (Research and Development), Class 41 (Education and Entertainment), and Class 25 (Clothing) dominating filings in the EUIPO. The only real change is that Class 9 has surpassed Class 35 as the top class for new applications.

Oppositions

We can also see a significant number of opposition filings year on year in the EU. The opposition volumes cover similar trademarks, where some of them might even carry the intention of taking unfair advantage of the earlier trademark. In terms of opposition data during the last decade we see an annual average of some 15,800 oppositions, with an 8% decline in the volume of oppositions filed in 2008.

Six Insights into Bad Faith Applications in the EU

A notable drawback to this trademark growth in the EUIPO is the inevitable by-product and rise of bad faith applications, which are becoming increasingly common. To find out more about bad faith applications in the EU we invited our clients (and friends) Carolina Calheiros and Jan Gerd Mietzel to examine and discuss the meaning of bad faith in EU trademark law.

Partners at international law firm Rolim, Mietzel, Wohlnick & Calheiros LLP Carolina and Jan Gerd are experienced attorneys with decades of combined experience in European trademark law.

In this article, Carolina and Jan Gerd share six insights into bad faith applications in the EU and more specifically, the Sky vs. Skykick case with us all.

1. How do you assess the counter parties’ bad faith in your disputes?

CC: It’s more that you would not assess bad faith in some specific examples, such as in the case of Sky v Skykick. Just the fact that you would not find that there was an intention of use of the mark at the moment of filing — that alone would not be a bad faith act.

JGM: Maybe one different perspective to take on this question is also (I mean in the case that we were looking at here, Sky v Skykick) it was obviously a counterclaim that raised this issue of bad faith. So, I mean Skykick raised that point because they wanted to try to invalidate trademarks that were attacking their application, their registration. And so, I think this question was rather broad.

Of course, you could also look at if you are in a position where you feel that you are not being attacked, but something that was filed was clearly filed in bad faith. Often, I think it is cases where a filing occurs, and someone doesn’t have a prior registered right. They will then look at the filer and say — well he pre-empted me — I wanted to obtain a registered right in that particular jurisdiction — or in this case in the EU as such — and then come up with the rationale for why that would be a bad faith filing. The problem then, in going more specific now in this question, is that unfortunately, I think that bad faith really is a very, very case-specific issue.

You can see that when you look, for instance, at the Outsource 2 India case which was also a recent decision by the Court of Justice, which really went very, very deeply into the specifics of the two parties’ prior communication with each other — succinctly analyzing different correspondences that were exchanged — and what they meant, what the different parties had actually implied, what they had wanted to guarantee to the other party. So, I think that makes answering this question rather problematic in the sense that there is definitely no fixed solution as to a problem. In saying — what is bad faith – needs to be analyzed in that particular case — and you really need to look very, very specifically at the case at hand, to gather together the relevant arguments that you could then use to attack whatever application, or registration in this case, invalidation that you want to attack.

CC: Also, some office examples such as the Neymar case.

JGM: A very good point. You can also look at the trademark portfolio of the filer. In some cases, if you are really lucky, then, of course, that person will have other trademarks where you can then try to ascertain some kind of a strategy as to bad faith filings. All those things of course in the end can be used, but as I said really it is very particular. First of all, I would say, you look — is it a filer, is it a registration affected by somebody with whom you had prior dealings? Were you in any way already in contact with them and what, if so, can you glean from this prior contact? If this is not the case, then of course you have to analyze it more on an objective level. Then the trademark portfolio would definitely be a good idea – to look into that — can you get something from that?

CC: Wrapping up, I think some examples are the filing, the portfolio, the relationship that you might have with the other party before and well, the extent of the goods and services, as well as the “too” broad term that you might use — although this is not like a black and white issue — but it is also something that one would need to keep in mind and be more careful when you are applying for a trademark.

2. Some brand owners have re-filed toconsolidatetheir previous filings or to avoid non-use actions, or because they have legitimately not yet launched in respect of certain goods or services. What advice do you have for these companies?

JGM: I would say at the moment it is a problematic practice. We really don’t know how it is going to develop. From my perspective, I actually don’t agree. I mean I find repeat filings problematic. I could name (but I won’t!) a few companies where I would say that they really use this instrument in a way that I personally would characterize as bad faith — especially if it is then used as an instrument of a very, very broad attack against all manners of use against the specific trademark.

The Monopoly case, for instance, I didn’t see this as bad faith and I would not have sided with the Board of Appeal on this decision. I also did not agree with the way that it was reasoned, because for instance, when they said that they kept their trademarks — the trademarks that Hasbro had were actually renewed before the new registration matured to registration — so between the filing and the registration they renewed their prior marks. I would say that is totally good business practice because of course, you would not want your old rights to lapse before the new one that consolidated them is actually on the register. So, for me, that really did not make a lot of sense. And this brings us back to the very case by case analysis there are a lot of things that I would have said — they look very much like Pelikan and then they were decided in a completely different manner and so of course we were not there at this oral decision that led to this Hasbro decision — maybe they made some very unfortunate statements in that respect.

As I said, on re-filing, the one thing that I would be very careful about is to go even broader. I think that is not a good strategy. Really think about what you want, what you need and normally of course when you do a re-filing then you will also be able to see what did I actually use my trademarks for? Do I have to add something in different areas? And this would be more important — can I take something away from the prior filings to kind of limit that down to make people see that this is actually a change that is totally in line with the use, or at least the bona fide intention of use, that I have.

And again, as I have already stressed, if you are looking at a word or device mark then, if you have the opportunity to, even if it is just slight, as we saw in the Pelikan case — use the opportunity for some modernization and go with that. That would be my advice.

3. Can observations be filedon the basis ofbad faith, like you can now in Ireland?

JGM: If the question refers to Observations as the ones stipulated in Art. 45 EUTMR (on which third parties can rely to explaining to the EUIPO on which grounds, under Articles 5 and 7 EUTM, the trade mark should not be registered ex officio), then the answer is no, because under the EUTMR, bad faith does not constitute an absolute ground of refusal that needs to be assessed (or could even be assessed) prior to registration.

But in accordance with Art. 63 (a) EUTMR, an invalidation action based on Art. 59 or Art. 60 EUTMR (which includes an invalidity action based on the allegation of bad faith in accordance with Art. 59 (1) (b) EUTMR) can be brought by “any natural or legal person and any group or body set up for the purpose of representing the interests of manufacturers, producers, suppliers of services, traders or consumers, which, under the terms of the law governing it, has the capacity in its own name to sue and be sued”.

4. Isn’t it rather the company SkyKick acting in bad faith, who tries to parasitize from the older SKY trademark?

JGM: In this respect, I would say that the conflict is a typical example of a dispute between the holder of a prior mark (in this case SKY with its “SKY” trademarks) and the applicant for a younger mark (in this case SkyKick with the application for “SkyKick”). The holder of the prior right perceives its trademark to be infringed (because according to him, the trademarks are “too close for comfort”, i.e., there is confusing similarity on the level of the signs as well as of the respective goods and/or services) and the applicant argues that his application keeps the necessary distance from the prior right to avoid such confusing similarity.

The application for a potentially conflicting sign by itself is not sufficient to assume an act of bad faith (on the part of the applicant). The holds true even when the applicant is aware of the existence of the respective prior right. As the prior case law illustrates, there must be further elements that would then lead to a characterization of the applicant’s intent (at the time of filing) to be perceived as a bad faith intent.

In the SkyKick case, one might question whether the applicant was well advised when trying to obtain registration of a trademark that commenced with the term “Sky”, even though the Sky group is well known for very aggressively enforcing its trademark rights. But one might also question whether the prior rights held by the Sky group should really be interpreted in such a broad manner as to essentially preclude any third party from filing/holding a trademark that includes the term “Sky”. This kind of dispute exemplifies the typical question at the heart of most opposition or infringement proceedings in which the courts are asked to decide on the issue of confusing similarity between two trademarks. It does not and should not – from my perspective at least – generally be understood as an issue of bad faith on the part of the applicant for (or holder of) the younger mark.

5. How important is it to monitor for any applications by third parties that might contain bad faith intent and how do you make a call on which of those to oppose?

JGM: I think this question can be more broadly phrased to ask, “How important is it (for the holder of a trademark) to monitor for potentially conflicting applications?” The applicant’s intent can (and will likely) play a role in how the issue should be addressed (out-of-court as well as in subsequent legal proceedings) from a legal perspective but does not — from my perspective — have a significant impact on the question of if and to what extent a trademark should be monitored.

A decision on whether and how to monitor depends more on how aggressively the holder of the respective right wants to enforce/defend its rights (e.g., shall monitoring only cover the use/application for identical trademarks or — as in the case of “Sky” — also the inclusion of a specific term in a younger sign) and on the territory that should be monitored (will you only look at markets where you already hold prior trademarks or will you also monitor jurisdictions in which you have not yet become active but might consider doing so).

From a perspective of safety, broad monitoring and enforcement of your rights seems recommendable but this of course must be weighed against the costs associated with such monitoring (and the subsequent actions).

6. Do you consider the filing of a figurative-word mark in bad faith when the previouswordmark was successfully opposed? The figurative-word mark includes the opposed word(s).

JGM: Such a sequence of events might be used when trying to establish that the applicant did act in bad faith, but it would — again from my perspective — certainly not be a clear indication that bad faith was actually present at the moment of filing. In the example presented, the applicant might also simply have considered filing for a trademark that created a more significant distance to the prior right than the word mark he had previously tried to register (and failed). He might then have come to the conclusion that adding a graphic element would serve this purpose (of creating a greater distance and avoiding confusing similarity). If this was the case, then bad faith would not have played a role.

DISCLAIMERS:

*This is an informational opinion article of the author. The views and opinions expressed in this article are those of the author and do not necessarily represent official policy or positions of Corsearch or its clients.

*The above trademarks and logos are not affiliated with or owned by Corsearch, and are used for illustrative purposes only as public record from the respective Trademark Offices.

*The above-mentioned brands are noted for factual reporting purposes only, the listing of the brands does not imply any relationship with Corsearch or its related entities.