This case highlights the importance of due diligence to ensure that you cover all grounds when acquiring a new trade mark.
A challenge to a Community trade mark (CTM) on the basis of bad faith can only be filed once the trade mark has been registered. This is established by Article 52 (1)(b) of the CTMR which says:
1. A Community trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings:
(b) where the applicant was acting in bad faith when he filed the application for the trade mark.
Our readers will be aware that bad faith applications hinge on the facts of each case. In this case, the trade mark SIMCA was filed before the Community Trade Marks Office for “vehicles; apparatus for locomotion by land, air or water” in class 12. The trade mark was registered on 18 September 2008 for all these goods.
On 29 September 2008, GIE PSA Peugeot Citroën filed an invalidation action on the grounds that the registered proprietor acted in bad faith. On 29 May 2011, Simca Europe Ltd was entered as the new proprietor of the registered trade mark, having acquired the trade mark from the original registered proprietor and applicant. In support of bad faith, GIE PSA Peugeot Citroën claimed that at the time the trade mark had been filed, the original proprietor had acted in bad faith. They included the following allegations in their application:
- The sole objective in making the application was to prevent use of SIMCA in order to market the goods covered by the new registration.
- The original applicant had knowledge of their earlier rights in SIMCA (including German, Spanish, Austrian and Benelux registrations) for, amongst other things, “motor vehicles”.
- Even though the marks were not used in recent years, their rights were maintained.
- SIMCA was a “known” motor vehicle which was created as early as 1934 and with an earlier priority date of 1935. GIE PSA Peugeot Citroën had themselves acquired the trade mark in 1978.
- Use of the trade mark SIMCA had been worldwide including the European Union.
- The original applicant had been approached twice to surrender the trade mark and subsequently it was claimed that the original applicant had “blackmailed” GIE PSA Peugeot Citroën for financial compensation.
- The parties had a contractual relationship which ended shortly before the Community trade mark was filed.
The Board of Appeal and General Court found in favour of GIE PSA Peugeot Citroën. They held, overall, that account must be taken of the original trade mark. The original applicant had knowledge of the earlier trade mark(s) and was aware of its reputation. Moreover, the original applicant had admitted carrying out searches on the Internet and via OHIM’s online database to see whether the trade mark was still registered. It was considered that the Board of Appeal was entitled to infer that the application was an attempt to “free ride” on the reputation already gained in this trade mark and to take advantage of that reputation.
This case demonstrates the potential vulnerability of trade marks which have a bad faith element at the time of filing. The consequences of such a bad faith element can be passed on to the new proprietor. In fact, in this case, the Board of Appeal said that the new proprietor “had to accept direct liability for the conduct” of the original proprietor and the trade mark was successfully invalidated.
We would recommend that care is taken when acquiring existing registered rights. A thorough due diligence exercise should include (amongst other issues) looking into the original adoption of the trade mark itself.