TM FILING IN BAD FAITH: IT IS AN “ABSOLUTE GROUND FOR INVALIDITY” (ABSOLUTELY!)
A very interesting decision has been issued by ECJ on 12 September 2019 (Case C-104/18 P - Koton Mağazacilik Tekstil Sanayi ve Ticaret/ EUIPO), concerning the filing in bad faith of an application for a EUTM.
Namely, the ECJ has annulled the decision of the General Court of the European Union (T-687/16) and the decision of the Second Board of Appeal of EUIPO (Case R 1779/2015-2), providing a different (and in my opinion correct) interpretation of article 52 (1) (b) Reg. EU 207/2009 (now art. 59 (1)(b) of Reg. EU 2017/1001), which provides for an absolute ground of invalidity of the TM “where the applicant was acting in bad faith when he filed the application for the trade mark”.
In the contested decision of the EUIPO (as confirmed by the General Court), the claim based on art. 52 (1) (b) of the appellant was dismissed since the contested TM was applied for goods and services in classes completely different from the class for which the sign of the appellant was registered.
In other words, those courts excluded the “bad faith” since any likelihood of confusion between signs was excluded due to the differences between the products/services for which the signs at hand were registered.
In my opinion, ECJ correctly has set aside the judgments by ruling that, since article 52 (1)(b) refers to “absolute grounds” of invalidity, which do not require any assessment of the likelihood of confusion between signs, nor between products/services for which the signs should be registered/used. Likewise, ECJ stressed that it is not required that at the time of the contested application, a sign identical/similar for similar/identical products/services was used.
On the other hand, ECJ stressed that the purpose of the “absolute ground of invalidity” based on the “bad faith of the applicant” is aimed at “contributing to the system of undistorted competition in the Union, in which each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trademarks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin” (as any other absolute ground of invalidity) and more specifically it “applies where it is apparent from relevant and consistent indicia that the proprietor of an EU trade mark has filed the application for registration of that mark not with the aim of engaging fairly in competition but 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 trade mark, in particular the essential function of indicating origin recalled in the previous paragraph of this judgment”.
From ECJ’s ruling, it might be inferred that the likelihood of confusion between signs/services/products might amount to an index of the potential “bad faith” of the application, however it cannot amount to a mandatory requirement of the “bad faith”, otherwise, a “relative ground of invalidity” (see art. 53 Reg. 207/2009, now art. 60 of Reg. 2017/1001) would become a requirement for the application of an “absolute ground of invalidity”.
Absurd not absolute!