Double-dealing tyres? General Court addresses bad faith trademark registrations

When it comes to bad faith trade mark registrations,
recently there has been a controversial decision that could open the floodgates
for more frequent invocation of bad faith as an invalidity ground. On 29
September 2021, the General Court of the European Union issued a contentious
ruling in the case ‘Univers v. Shandong’ regarding the invocation of bad faith
as an invalidity ground for the EU trade mark ‘AGATE’ (T‑592/20).
The Court held that an EU trade mark registration may be filed in bad faith
with presumed knowledge and intention, when no commercial logic underlies in
the application.

Factual background and EUIPO proceedings

 

In March 2017, Univers Agro Ltd.
(‘Univers’) sought to register the word sign ‘AGATE’ as an EU trade mark
(‘EUTM’) with the European Union Intellectual Property Office (‘EUIPO’). The
application was granted, and the trade mark was registered for the goods of
Class 12 of the Nice Agreement; i.e. automobile tyres.

Shandong Hengfeng Rubber & Plastic
Co. Ltd. (‘Shandong’) is the proprietor of a 2009 Chinese figurative mark
comprising the word element ‘AGATE’ for the same goods in Class 12. It filed
with the EUIPO for the invalidity of Univers’ trade mark in September 2017,
based on the absolute invalidity ground of bad faith.

In February 2019, the Cancellation
Division of the EUIPO declared Univers’ trade mark invalid on the grounds that
its application was filed in bad faith ‘with the aim of taking advantage of
the lack of formal protection of the intervener’s mark in Bulgaria, by coupling
its clients and the market share created by the intervener’s commercial partner
and distributor, Omnifak Ltd.’

On appeal in July 2020, the EUIPO Boards
of Appeal (‘BoA’) confirmed this decision and stated that it was – given the
chronology of the events – practically impossible that Univers had no knowledge
of the Bulgarian use of the Chinese mark, and conversely had no intention to
honestly use the trade mark in the course of trade.

General Court decision

 

Univers appealed subsequently to the
General Court of the European Union to investigate the absolute ground of bad
faith. Univers argued that it had no knowledge of existence and use of the
Chinese ‘AGATE’ mark in Bulgaria, and it had no intention of filing the EUTM in
bad faith.

The Court first pointed out that the
concept of ‘bad faith’ in the context of trade mark law applies where it is
apparent from ‘relevant and consistent’ indicia that the proprietor of
an EU trade mark has filed the application with the intention of
dishonestly undermining the interests of third parties, or with the intention
of obtaining an exclusive right for purposes outside the trade mark functions,
such as the indication of origin.

This intention must be objectively
determined from all the factual circumstances relevant to the case at hand.
Factors taken into account that may induce a so-called ‘presumption of
knowledge’ were the duration of prior use of the ‘AGATE’ mark in Bulgaria,
and the amount of imported tyres. The Court also considered Univers’ quick enforcement
of its ‘AGATE’ mark after registration and wonders how Univers could possibly
be only aware of the Chinese ‘AGATE’ trade mark after the registration, but not
before.

Moreover, Univers did not provide any
evidence relating to its extended commercial activities as to why they wish to
extend their agricultural activities to the tyre sector. According to the
Court, this ‘lack of commercial logic’ is an important indicia to assess
bad faith. The Court held that – in light of all the relevant factual circumstances
– Univers had no honest intention to use the EU trade mark ‘AGATE’ when filing
the application.

The Court thus decided that Univers had
both knowledge of prior use of the Chinese ‘AGATE’ trade mark in Bulgaria,
including the corresponding tyre import, and that Univers had no intention to
honestly use the EUTM when it filed its application. The Court therefore held
that Univers did not have the honest intention of preventing any infringement
of its freshly registered mark, and that its actions were a planned endeavour
with the goal of hindering Shandong, and taking advantage of its failure to
protect the Chinese mark ‘AGATE’ in Bulgaria.

Conclusion and key takeaways

 

This decision of the General Court sheds
light from a new perspective on the doctrine of bad faith in European trade
mark law. It further deepens the prerequisites for bad faith trade mark
applications, and sets out which relevant factual circumstances may contribute
to a presumption of knowledge and dishonest intention.

In practice, applicants will need to be
very careful that they not only fulfil the requirement of using the trade mark
in the course of trade, but also that their business decisions are commercially
logical, e.g. that the applicant’s company decisions to step into new
markets make sense commercially. Since this is a far-reaching interference in
the self-determination of entrepreneurs, the consequences of this decision are
not to be overlooked.

 

Picture: https://www.flickr.com/photos/38118987@N06/11852186364

Toyota Tyre Hotel – Bed by Toyota UK,
16.12.2013

Licensed under a CC BY-NC-ND 2.0-licence
(https://creativecommons.org/licenses/by-nc-nd/2.0/)