The Spanish High Court has recently issued a decisión (cassation appeal) confirming that insolvency proceedings are not a valid reason to justify non-use of a trademark. It is the 22nd December ruling (see here).

As most readers would know, article 10, 2008/95 EU Trademark Directive (and thus, all national trademark laws) obliges the proprietor to put the trademark to genuine use for at least an uninterrupted period of five years. Failure to comply would lead to cancellation unless proper reasons are provided (art. 12.1).

In the aforementioned decision the Spanish High Court answers negatively the question: Is bankruptcy a proper reason?

Our Supreme Court understands it is not because the very essence of bankruptcy is to keep the company alive (according the Spanish regulation on bankruptcy, article 44 precisely states that the company’s activity will not be interrupted because of the bankruptcy proceedings).

Additionally, the Court dismissed other reasons provided by the appellant such as lack of enough time to launch the product beacuse all them could be included under the usual and expected risks of conducting a business.

To reinforce the ruling’s grounds the High Court refers to CEJ’s decision on case C-246/05, 14th June 2007 Armin Häupl vs. Lidl Stiftung & Co, KG  where the European court clearly confirmed that only obstacles having a direct relationship with a trade mark which make its use impossible or unreasonable and which are independent of the will of the proprietor of that mark constitute ‘proper reasons for non-use’ of the mark.