CANCELLATION No 26 909 C (INVALIDITY)
Edvin Pejovič, Izvidniška cesta 27, 6276 Pobegi, Slovenia (applicant), represented by Odvetniška družba Čeferin o.p., d.o.o., Taborska cesta 13, 1290 Grosuplje, Slovenia (professional representative)
a g a i n s t
ETA živilska industrija, d.o.o., Kajuhova pot 4, 1241 Kamnik, Slovenia (EUTM proprietor), represented by Law firm Sibinčič Križanec l.f. Ltd., Dalmatinova ulica 2, 1000 Ljubljana, Slovenia (professional representative).
On 17/03/2020, the Cancellation Division takes the following
1. The application for a declaration of invalidity is rejected in its entirety.
2. The applicant bears the costs, fixed at EUR 450.
The applicant filed an application for a declaration of invalidity against European Union trade mark No 15 632 871 ‘TALIS’ (word mark) (the EUTM). The request is directed against all the goods covered by the EUTM, namely the following:
Class 30: Vinegar.
The application is based on Slovenian trade
mark registrations No 9 971 228
SUMMARY OF THE PARTIES’ ARGUMENTS
The applicant claims that there exists a likelihood of confusion between the contested EUTM and the earlier national and international trade mark registrations.
He argues that an application for the declaration of invalidity of an EUTM based on relative grounds can be filed by the proprietor of an earlier trade mark. Although the applicant is not the proprietor but a pledgee of the earlier trade marks, this does not affect his rights to file such an application.
The applicant’s rights are based on a writ by the County Court of Koper, Slovenia, of 29/09/2011, No I 222/2011, concerning an enforcement procedure against the applicant’s debtor, Beohemija d.o.o. (now Stečajna masa Beohemija d.o.o. – u stečaju, in the following ‘Beohemija’) for the recovery of debt amounting to EUR 2 000 000. On that basis, and owing to an additional proposal of the applicant, the competent court has also issued writ No I 222/2011 of 09/05/2013 and writ No I 222/2011 of 13/04/2016, according to which the original enforcement procedure is continued with the seizure and sale of ten Slovenian trade marks and four international registrations. A notice with regard to the seizure and sale of those trade marks has been published in the Slovenian trade mark register.
According to the applicant, his claim subject to enforcement procedure No I 222/2011 is based on a contract regarding the transfer of business share in the company Pejo Šampionka d.o.o. (in the following ‘Pejo Šampionka’), which has been concluded in the form of the directly enforceable notarial act No SV 806/08 of 12/06/2008.
By judgement of 16/04/2018, 32 P. 23 80/2017, the Commercial Court of Beograd confirmed the applicant’s claim against Beohemija, as well as the right to a separate repayment of the claim, the amount of which represents the value of the seized trade marks. The judgement has become final on 06/06/2018 and, according to writ No R-St 314/2015 of the District Court of Ljubljana, enforceable within in the territory of Slovenia.
Consequently, so the applicant claims, he has been granted a lien on the Slovenian trade marks concerned as from 09/05/2013, and as from 13/04/2016 on the respective international registrations designating the EU. According to the applicant, this encompasses all the rights of the pledgee, including the right to prevent or to prohibit the devastation of the property seized as collateral to insure repayment of the debt.
The applicant explains that a lien is the right of a pledgee, in the event of the non-payment of a secured claim, upon maturity to receive the payment with interest and costs of the pledged property’s value ahead of all other creditors of the pledger. The subject of a lien can be things, rights and securities, provided they can be disposed of and have a pecuniary value. For the duration of the lien, the pledgee has the same legal protection as an owner, and may under the same conditions demand the return of the pledged property, the cessation of disturbance, and the protection of the possession. A lien is an exclusive right and can, as such, be invoked against anyone. Its objective is to ensure the possibility of at least partial repayment of the debt to the creditor. A pledgee, therefore, reasonably expects that seized property will ensure the repayment of debt to the expected extent. In the light of the above, a pledgee has to be granted an opportunity to contest any attempt to undermine the value of the seized trade marks.
According to the applicant, the pledger may use the seized property in accordance with its economic purpose or in accordance with an agreement with the pledgee and does not have the right to alienate it or encumber it without the consent of the pledgee. The pledged (debtor) is, therefore, obliged to maintain the value of the seized property. If through his actions or inactions the pledger reduces the value of the seized property, or in some other way worsens its condition, the pledgee may demand that the property be delivered into his direct possession or that of a third person on his behalf. The same applies in case of seizure of an intellectual property right. In the present case, the debtor (and owner of the earlier trade marks) has not taken any action to protect the seized trade marks by opposing the registration of the contested EUTM. The latter can be considered a devastation of seized property rights that can be protected only by granting active legal standing to a pledgee of the respective rights.
By decision of 23/01/2018, No III Ips 14/2017, so the applicant claims, the Supreme Court of the Republic of Slovenia has adopted this same position with regard to the registration of the trade mark ‘Taliss’ by Šampionka d.o.o. (in the following ‘Šampionka’). The Court clearly stated that the very nature of the pledge narrates that the pledgee has to be granted the right to prevent devastation of an intellectual property right that is subject to lien (and with that an active legal standing in procedures that can prevent such devastation). Otherwise the pledge would become a hollow right without any meaning or effect.
Therefore, the applicant puts forward, an active legal standing must be granted to him as a pledgee of an earlier trade mark in terms of Article 63(b) and Article 46(1) EUTMR.
Moreover, the applicant claims that the contested EUTM has been filed in bad faith. The EUTM proprietor knew at the time of filing of the existence of earlier trade marks which are in conflict with the EUTM. What is more, the proprietor was aware that the objective trade marks are subject to a lien of the applicant, granted by decision No I 222/2011 of the County Court of Koper.
The applicant argues that he and the EUTM proprietor have entered into a contract of transfer of business interest of the company Pejo Šampionka. In this relation, a notarial act has been concluded, according to which the second instalment of the purchase price of the share is determined at EUR 2 000 000. Since the latter has not been paid, the applicant was forced to initiate an enforcement procedure against the holder of the earlier trade marks, under which it has obtained the lien on the earlier trade marks.
Against this background, the applicant further argues, the holder of the earlier trade marks and the companies KPMS d.o.o. (in the following ‘KPMS’) and Šampionka have decided to register new, identical trade marks, with the intention to successfully prevent the repayment of debt in procedure No I 222/2011. This is apparent from the fact that Pejo Šampionka has transferred the earlier trade marks to Beohemija, and its business operations, in the light of a bankruptcy procedure, to the company Milanče d.o.o. (in the following ‘Milanče’). The effect of the latter transfer has been annulled by decision of 05/06/2011, No Pg 78/2011, of the District Court of Nova Gorica, also ordering Milanče to transfer all trade activities to Pejo Šampionka. When Milanče itself entered into a bankruptcy procedure, all its business activities have been transferred to Šampionka. Immediately after the sale of Pejo Šampionka to Beohemija, Pejo Šampionka bought business share in Šampionka. The latter is owned by KPMS, which holds a share of 56,85%, and which applied for the registration of the contested EUTM.
The applicant puts forward that it is clear from the above that KPMS is a partial owner of Šampionka, which is a by-pass company of Pejo Šampionka, owned by Beohemija. Šampionka is, therefore, de facto part of the pyramidal ownership of the holder of the earlier trade marks, Beohemija.
According to the applicant, the fact that Šampionka and Beohemija entered into a contract based on which Beohemija allowed Šampionka to manufacture and sell products under its trade marks proves that Šampionka knew that Beohemija is the holder of the earlier trade marks.
Moreover, other trade marks registered by Šampionka have been annulled on the initiative of the applicant, whereas Beohemija did not oppose the registration of any trade marks by Šampionka, although such registration very much affects the value of its own trade marks.
The applicant argues that the existence of a direct or indirect relationship between the parties prior to the filing of the EUTM can also be an indicator of bad faith on the part of the EUTM proprietor (01/02/2012, T-291/09, Pollo Tropical chicken on the grill, EU:T:2012:39, § 85 to 87 et al.). In his view, the same can be applied in case of the existence of a relationship between the EUTM applicant (former proprietor) and the proprietor of the earlier trade marks, when they both have malicious intentions.
The contested EUTM has been transferred from KPMS to Šampionka and further to its current proprietor. The applicant has no doubt that the EUTM proprietor will effectively market the EUTM, thereby degrading the value of the earlier trade marks.
According to the applicant, all this proves that the contested EUTM has been filed in bad faith, namely with the purpose to counterbalance the effect of the seizure of the earlier trade marks in enforcement procedure No I 222/2011 and, consequently, to prevent the enforcement of the applicant’s claim.
Following a communication by the Office in relation to deficiencies with regard to the identification of the earlier trade marks invoked, the applicant submitted further evidence in this relation, namely notifications by WIPO and extracts from WIPO’s database with regard to the earlier international registrations invoked in the present and in parallel proceedings, as well as extracts from the database of the Slovenian Intellectual Property Office with information on the earlier national trade marks.
According to the applicant, these documents reflect a decision of the Slovenian trade mark office, according to which all transfers of ownership in relation to the earlier national marks recorded in favour of Šampionka are to be considered null and void. The extracts show Beohemija as the holder of the international registrations.
Moreover, the applicant submitted observations by the Bankruptcy Trustee of Bankruptcy Estate Beohemija Ltd., who is the successor of Beohemija. According to these observations, Bankruptcy Estate Beohemija Ltd. has obtained ownership of the earlier marks. The applicant also points to a transfer of ownership of the contested EUTM.
In support of his observations, the applicant filed the following evidence:
The EUTM proprietor opposes the application, which it considers partly inadmissible, since the applicant is neither the owner of the earlier trade marks nor a licensee and, consequently, not authorised to file an application for invalidity, and for the remainder unfounded.
It claims that, on the basis of a business transfer agreement of 14/02/2018, it is the proprietor both of the earlier trade marks as well as of the contested EUTM, although this change of ownership has not yet been reflected in all of the respective registers. It follows that no likelihood of confusion can exist between the marks, since the goods marketed under them originate from the same undertaking.
The EUTM proprietor argues that the applicant has no legal interest in a declaration of invalidity of the contested EUTM, since such a declaration, which cannot interfere with the pledge or the lien on the earlier trade marks, would not improve his legal position. The applicant’s right to be repaid from the sum achieved with the sale of the earlier trade marks would remain intact, regardless of the outcome of the present proceedings.
The EUTM proprietor explains that, following the judgment of the Supreme Court of the Republic of Slovenia, No III Ips 14/2017, of 23/01/2018, with regard to the cancellation of Slovenian trade mark registration No Z-201470920 ‘Taliss’, Article 164 of the Law on Property Code (LPC) can be interpreted so extensively that a pledgee may demand return of the pledged property, the cessation of disturbance and the erasure of a trade mark. The new case law grants to the pledgee active legitimation (active legal standing as applicant) under Slovenian law to file an action for erasure, however, only if it files the claim in order to maintain the value of the pledged property right. In any event, the aforementioned provision may not be interpreted in such a manner that the economic interest of a pledgee suffices to object the registration of a trade mark based on grounds for invalidity in cases where the earlier trade marks are not at risk, and even less so in cases where it is the exclusive goal of the application to disable the rights of the proprietor.
The EUTM proprietor argues that the contested EUTM cannot lead to a deterioration of the applicant’s economic situation, since the proprietor continues to market the signs concerned, which cannot reduce, but if anything increase, the value of the earlier trade marks. On the other hand, if the contested EUTM were to be declared invalid, the proprietor would not be entitled to use the signs in the EU, and could not reapply for any other EU trade marks under the threat that the applicant would successfully claim invalidity. Consequently, the invalidity of the contested EUTM would ultimately destroy the market value of the earlier trade marks because consumers would lose confidence in and contact with the signs at issue.
Moreover, the EUTM proprietor puts forward that, in principle, only the EUIPO can rule on cancellation actions against EUTMs, whereas the national courts are not entitled to issue any rulings that affect the validity of those trade marks. Therefore, the decisions of national courts cannot affect the decision on the present proceedings, which shall be taken solely on the basis of the EUTMR. Article 59(1)(b) EUTMR, however, does not provide for an EUTM to be declared invalid on the ground of deterioration of earlier trade marks.
The EUTM proprietor claims that none of the arguments and evidence presented by the applicant can be subsumed to the notion of bad faith, since the alleged acts and omissions of Šampionka relate only to the execution of contracts and the enforcement of claims. The Office is not competent to decide on these matters.
The EUTM proprietor requests that the applicant submit proof of use of the earlier trade marks.
The EUTM proprietor asks the EUIPO to invite the companies Šampionka and KMPS to join the present proceedings as intervening parties, or else the EUTM proprietor would be deprived of its right to fair trial.
In support of its observations, the EUTM proprietor filed evidence in the form of trade mark and business register extracts, court decisions, and an agreement on the transfer of intellectual property between Šampionka and Beohemija of 14/05/2012.
The applicant reiterates his position and claims that the EUTM proprietor’s position with regard to the applicant’s legal standing is wrong, unfounded, and goes against the basic principles of trade mark regulations, including the EUTMR, which stipulates that a trade mark is to be “regarded as an object of property which exists separately from the undertakings whose goods and services are designated by it. Accordingly, it should be capable of being transferred, of being charged as security in favour of a third party and of being the subject matter of licenses.”
According to the applicant, the rigid interpretation of Article 46(1) and Article 60 EUTMR by the proprietor is unacceptable, since it deprives the applicant of the right to prevent the devastation of an intellectual property right that is subject to lien, and with that of an active legal standing in procedures that can prevent such devastation.
The applicant further criticises that the EUTM proprietor has not presented the business transfer agreement of 14/02/2018 that it concluded with Šampionka, although it is putting forward arguments that refer to this agreement. The applicant is convinced that the EUTM proprietor has good reasons not to present said agreement, namely the fact that it includes provisions which confirm that both parties were aware of the fact that there are earlier identical trade marks, and that the applicant has legal rights (lien) on those trade marks.The applicant has repeatedly and unsuccessfully called upon the EUTM proprietor and on Šampionka in national proceedings to present said agreement, which would prove that the EUTM proprietor acted in bad faith and was at all times aware that the rights of the applicant will be seriously affected and basically annulled if a new registration is allowed, and a new proprietor will have rights derived therefrom. It is, therefore, necessary that the EUIPO calls upon the EUTM proprietor to present the agreement in the present proceedings as part of the evidence.
The applicant argues that the wording of Article 9 EUTMR should not be interpreted solely with regard to trade mark rights. If all rights are to be upheld as equal and part of a system that is based on principles of law, also other rights connected to trade mark rights and to their value must be upheld effectively.
According to the applicant, the fact that the EUTM has been filed in bad faith cannot be changed simply by the proprietor’s unsupported reference that it has acquired ownership of all trade marks. WIPO has already declared the registration of the aforementioned trade marks null and void, and the Slovenian Intellectual Property Office has rejected the transfer of ownership.
The applicant explains that the fact that another trade mark has been registered, which is identical to an earlier trade mark, changes the economic position of the applicant entirely, since the value of the trade mark that has been pledged to the applicant has substantially decreased by that registration. The fact that another, identical trade mark exists also influences the will and readiness of potential buyers of the pledged trade marks. It is possible that after the registration of the contested EUTM, no buyers will apply for their sale and purchase, since they are aware that there is another holder of an identical trade mark.
As regards the EUTM proprietor’s assertion that its rights would be affected, the applicant puts forward that no one can claim that his rights or interests have been affected if those rights and interests arise form actions that were aimed at harming other people’s rights and interests.
He further argues that the position of the Supreme Court of the Republic of Slovenia is that a pledgee has active legitimation to annul a trade mark which is the same or similar to the one on which he has a pledge, because new trade marks that are the same or similar decrease the value of earlier trade marks and, therefore, affect the value of assets that are being pledged.
The applicant considers the EUTM proprietor’s argument that the goods sold under the trade marks at issue come from the same undertakings irrelevant. There can, nevertheless, be confusion amongst consumers because of the likelihood of association.
In support of his observations, the applicant filed the following evidence:
The EUTM proprietor has asked the Office to invite the companies Šampionka and KMPS to join the present proceedings as intervening parties, while the applicant deems it necessary that the Office calls upon the EUTM proprietor to submit an agreement with Šampionka as evidence in the present proceedings.
However, the Cancellation Division does not deem either of these actions necessary in order to take a decision in the present case.
As regards the EUTM proprietor’s request for proof of use of the earlier marks, this request is inadmissible pursuant to Article 10(1) EUTMDR, since it has not been submitted by way of a separate document as required by Article 10(1) EUTMDR. Moreover, in view of the findings in the following section on ‘SUBSTANTIATION’, the Cancellation Division considers it irrelevant.
In the case of an application for invalidity based on relative grounds pursuant to Article 60(1) EUTMR, the applicant must prove the existence, validity and scope of protection of the earlier rights invoked, as well as submit evidence proving its entitlement to file the application for cancellation (Article 16(1)(b) EUTMDR in conjunction with Article 7(2) EUTMDR).
Article 63(1)(b) EUTMR lays down that applications for invalidity based on relative grounds according to Article 60(1) EUTMR in conjunction with Article 8(1) EUTMR may only be filed by the persons mentioned in Article 46(1)(a) EUTMR, namely by the proprietors of earlier trade marks referred to in Article 8(2) as well as licensees authorised by the proprietors of those trade marks.
Therefore, the applicant had to demonstrate that he is either the proprietor of the earlier marks invoked, or a licensee authorised by the proprietor. With regard to the latter, Article 2(2)(h)(iii) EUTMDR requires that the applicant submit a statement to that effect and indications concerning the authorisation.
From the evidence submitted by the applicant it can be seen that he is not the proprietor of the earlier marks invoked. Neither did he prove or claim to be a licensee.
Instead, the applicant bases his claim that he is entitled to file an application for invalidity on the grounds of Article 60(1)(a) EUTMR on the fact that he is a pledgee of the earlier trade marks. He explains that, for the duration of the lien, the pledgee has the same legal protection as an owner, and may under the same conditions demand the return of the pledged property, the cessation of disturbance, and the protection of the possession. If through his actions or inactions the pledger reduces the value of the seized property (including intellectual property), or in some other way worsens its condition, the pledgee may demand that the property be delivered into his direct possession or that of a third person on his behalf. According to the applicant, the Supreme Court of the Republic of Slovenia has stated that the very nature of the pledge narrates that the pledgee has to be granted the right to prevent devastation of an intellectual property right that is subject to lien (and with that an active legal standing in procedures that can prevent such devastation). Otherwise the pledge would become a hollow right without any meaning or effect.
The Cancellation Division notes that the decision of the Supreme Court of the Republic of Slovenia of 23/01/2018, No III Ips 14/2017, concerns the interpretation of national legislation based on Article 4 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, in which it is laid down that Member States shall recognise as persons entitled to seek application of the measures, procedures and remedies referred to in this chapter, inter alia, ‘all other persons authorized to use those rights, in particular licensees, in so far as permitted by and in accordance with the provisions of the applicable law.’
It has to be noted that Directive 2004/48/EC is addressed to the Member States, who are required to implement it into national law. Consequently, aside from the question if a pledgee has, in fact, the right to use a pledged trade mark, any rights foreseen by Directive 2004/48/EC can only arise and would have to be granted under national law. While it may be the case that, according to national law the pledgee has the right to prevent the devastation of an intellectual property right that is subject to lien, and while there may be ways to exercise this right, it cannot be exercised on the basis of earlier rights pledged by the applicant and Article 60(1)(a) EUTMR in conjunction with Article 8(1) EUTMR, since Article 46(1)(a) EUTMR does not provide for a pledgee to file an application for invalidity on these grounds. The list of persons entitled to file such an application laid down in the aforementioned provision is exhaustive and does not foresee any exceptions.
This does not deprive the applicant, in his position as pledgee, of his right to prevent the devastation of the earlier trade marks or of his entitlement under national law to demand that the earlier marks be delivered into his direct possession.
Until he is, however, in direct possession of the earlier trade marks, i.e. their proprietor, or has obtained an authorisation by way of a license agreement, the application based on the earlier rights invoked by the applicant and on Article 60(1)(a) EUTMR in conjunction with Article 8(1)(a) and (b) EUTMR has to be rejected as unfounded.
ABSOLUTE GROUNDS FOR INVALIDITY – ARTICLE 59(1)(b) EUTMR
Contrary to what the EUTM proprietor contends, Article 63(1)(a) EUTMR does not require the applicant to show an interest in bringing proceedings (25/02/2010, C‑408/08 P, Color Edition, EU:C:2010:92, § 36 et seq.). According to this provision, any natural or legal person who under the terms of the law governing it has the capacity in its own name to sue and be sued can file a request for a declaration of invalidity based on Article 59(1)(b) EUTMR.
Article 59(1)(b) EUTMR provides that a European Union trade mark will be declared invalid where the applicant was acting in bad faith when it filed the application for the trade mark.
There is no precise legal definition of the term ‘bad faith’, which is open to various interpretations. Bad faith is a subjective state based on the applicant’s intentions when filing a European Union trade mark. As a general rule, intentions on their own are not subject to legal consequences. For a finding of bad faith there must be, first, some action by the EUTM proprietor which clearly reflects a dishonest intention and, second, an objective standard against which such action can be measured and subsequently qualified as constituting bad faith. There is bad faith when the conduct of the applicant for a European Union trade mark departs from accepted principles of ethical behaviour or honest commercial and business practices, which can be identified by assessing the objective facts of each case against the standards (Opinion of Advocate General Sharpston of 12/03/2009, C‑529/07, Lindt Goldhase, EU:C:2009:361, § 60).
Whether an EUTM proprietor acted in bad faith when filing a trade mark application must be the subject of an overall assessment, taking into account all the factors relevant to the particular case (11/06/2009, C‑529/07, Lindt Goldhase, EU:C:2009:361, § 37).
The burden of proof of the existence of bad faith lies with the invalidity applicant; good faith is presumed until the opposite is proven.
Outline of the relevant facts
The applicant is a pledgee of several earlier national and international trade mark registrations, which are identical to the contested EUTM and cover the same scope of goods. The EUTM proprietor does not dispute having been aware of these facts at the time of filing.
By way of registering the contested EUTM, so the applicant claims, the EUTM proprietor is trying to counterbalance the effect of the seizure of the earlier trade marks and, consequently, to prevent the enforcement of the applicant’s claim.
According to the applicant, the EUTM proprietor and the proprietor of the earlier marks are linked undertakings, or at least operate together on the basis of business contracts. Yet the applicant is of the opinion that, even if the goods sold under the trade marks at issue came from the same undertakings, there could be confusion amongst consumers because of a likelihood of association. The omission by the proprietor of the earlier marks to defend the latter, in the view of the applicant, shows bad faith.
The applicant explains that the fact that the contested EUTM has been registered has substantially decreased the value of the trade marks pledged to the applicant. The fact that another, identical trade mark exists also influences the will and readiness of potential buyers of the pledged trade marks.
He further argues that it is the position of the Supreme Court of the Republic of Slovenia that a pledgee has active legitimation to annul a trade mark which is identical or similar to the one on which he has a pledge, because such new trade marks decrease the value of those earlier trade marks and, therefore, affect the value of assets that are being pledged.
The applicant points out that the Slovenian trade mark office has issued a decision according to which all transfers of ownership from Beohemija to Šampionka in relation to the earlier national marks are to be considered null and void.
Assessment of bad faith
Essentially, the applicant claims that the (former) EUTM proprietor knew, at the time of filing of the EUTM, of the existence of earlier trade marks, that they are in conflict with the EUTM, and that they are subject to a lien of the applicant. The EUTM was filed in order to decrease the value of those earlier trade marks, thereby eventually preventing the applicant from exercising the rights granted to him by way of the aforementioned lien.
In the view of the applicant, the wording of Article 9 EUTMR should not be interpreted solely with regard to trade mark rights. In this regard, he explains that, if all rights are to be upheld as equal and part of a system that is based on principles of law, also other rights connected to trade mark rights and to their value will have to be upheld effectively.
First, the Cancellation Division notes that there is no legal basis to extend the scope of the EUTMR to other fields of law. Therefore, the concept of a bad faith trade mark application in accordance with Article 59(1)(b) EUTMR cannot be applied outside the framework of this legislation.
Second, as stated in case-law, the fact that the EUTM proprietor knows or must know that a third party has been using an identical/similar sign for identical/similar goods for which a likelihood of confusion may arise is not sufficient for a finding of bad faith (11/06/2009, C‑529/07, Lindt Goldhase, EU:C:2009:361, § 40). In order to determine whether there was bad faith, the EUTM proprietor’s intentions at the time of filing must also be taken into account.
If there is commercial logic to the filing of the EUTM and it can be assumed that the EUTM owner intended to use the sign as a trade mark, this would tend to indicate that there was no dishonest intention. For example, this could be the case if the EUTM owner had a commercial incentive to protect the mark more widely, for example an increase in the number of Member States in which the owner generates turnover from goods marketed under the mark. The decision to protect a mark at both national and EU level is a choice dictated by the proprietor’s marketing strategy. It is not for the Office or the Court to interfere with this choice (14/02/2012, T-33/11, Bigab, EU:T:2012:77, § 23, 29; 01/02/2012, T-291/09, Pollo Tropical chicken on the grill, EU:T:2012:39, § 58).
The ground of bad faith applies where it is apparent from relevant and consistent indicia that the proprietor of an EU trade mark filed its application for registration not with the aim of engaging fairly in competition, but with the intention of undermining the interests of third parties, in a manner inconsistent with honest practices, 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 (12/09/2019, C-104/18 P, STYLO & KOTON (fig.), EU:C:2019:724, § 46).
The applicant has expressed that he has no doubt that the EUTM proprietor will effectively market the contested EUTM. Moreover, given the apparent consent of the proprietor of the earlier marks with regard to the application and registration of the contested EUTM, it cannot be concluded that the (former) EUTM proprietor’s intention was to engage unfairly in competition under trade mark law, for example, by way of misappropriation of the rights of a competitor. The application for the registration of the contested EUTM appears to follow commercial logic, in particular, taking account of the applicant’s allegation that there is a link between the EUTM proprietor and the proprietor of the earlier marks. The applicant has not put forward any arguments or evidence that would suggest otherwise.
The registration of the contested EUTM is not equivalent to a transfer of ownership of the earlier marks which have been pledged by the applicant. In principle, it is the EUTM proprietor’s right to file an application for such a registration which, moreover, as set out above, appears to be in line with normal business strategy. The fact that it may potentially affect the applicant’s pledge is, in itself, not sufficient for a finding of bad faith under Article 59(1)(b) EUTMR. The applicant did not put forward sufficient facts and evidence to substantiate his claim that the value of the earlier marks pledged by him has actually decreased by the filing and registration of the contested EUTM.
At this point, it must be recalled that if the evidence raises doubts on the assessment of bad faith, the uncertainty has to be resolved to the benefit of the EUTM proprietor, as in the European Union trade mark system, good faith is presumed until proof to the contrary is adduced (13/12/2012, T-136/11, Pelikan, EU:T:2012:689, § 57).
As illustrated above, the applicant failed to put forward sufficient facts, objective indications and evidence that would allow for a positive finding of bad faith without having to resort to assumptions and suppositions.
As regards the applicant’s argument that bad faith might be applicable when the parties involved have or have had any kind of relationship, such as (pre-/post-) contractual relationships, this only applies to actions between the parties involved in such a relationship, giving rise to mutual obligations and a duty of fair play in relation to the legitimate interests and expectations of the other party (13/11/2007, R 336/2007‑2, CLAIRE FISHER / CLAIRE FISHER, § 24). In other words, it can only be an indicator of bad faith with regard to actions taken by one of those parties to the detriment of the other, for example, with a view to the misappropriation of the rights of that other party. As stated above, this does not appear to be the case here. It cannot, however, be interpreted as an indicator of bad faith vis-à-vis a third party, which does not form part of that relationship.
In the light of the above, it cannot be concluded that the contested EUTM was filed in bad faith. It follows that the application has to be rejected as unfounded.
According to Article 109(1) EUTMR, the losing party in cancellation proceedings must bear the fees and costs incurred by the other party.
Since the applicant is the losing party, he must bear the costs incurred by the EUTM proprietor in the course of these proceedings.
According to Article 109(7) EUTMR and Article 18(1)(c)(ii) EUTMIR, the costs to be paid to the EUTM proprietor are the representation costs, which are to be fixed on the basis of the maximum rate set therein.
The Cancellation Division
According to Article 67 EUTMR, any party adversely affected by this decision has a right to appeal against this decision. According to Article 68 EUTMR, notice of appeal must be filed in writing at the Office within two months of the date of notification of this decision. It must be filed in the language of the proceedings in which the decision subject to appeal was taken. Furthermore, a written statement of the grounds of appeal must be filed within four months of the same date. The notice of appeal will be deemed to be filed only when the appeal fee of EUR 720 has been paid.