A February 23 2012 decision of the Swiss Federal Supreme Court has given welcome guidance on the requirements of proof in a trademark matter where one party claimed the other party's lack of intention to use its registered trademarks in Switzerland, and the nullity of the marks in question.
Yello Strom GmbH, a German energy distribution company, held several Swiss and international trademark registrations designating Switzerland, all containing the element 'YELLO'. Applications were filed in 1994, 1999 and 2002 claiming protection for a wide range of goods and services. In May 2005 Sunrise Communication AG, a Swiss telecommunications provider, launched a telecommunications service under the name 'Yallo' and registered several trademarks containing the element 'YALLO'. In response to Yello's demand for cancellation of the YALLO trademarks due to conflict with its YELLO marks, Sunrise invoked Yello's non-use and lack of any intention to use the YELLO-trademarks in Switzerland.
According to Swiss trademark law, in common with other jurisdictions, the trademark holder loses the right to assert its trademark rights if it has not used the mark in connection with the goods or services claimed for an uninterrupted period of five years (Article 12(1) of the Federal Trademark Act). Pursuant to Swiss case law, based on the doctrine of preventing the abuse of legal rights, trademark protection cannot be claimed if the trademark has been registered without any intention of use, but rather with the intention to prevent a corresponding trademark registration by third parties, to enlarge the scope of protection of trademarks actually used or to extract financial or other benefits from a former user. A lack of intention to use a trademark leads to its nullity. The owner of the defensive mark cannot invoke the five-year grace period under Article 12 of the act.
In this case, the non-use of the YELLO trademarks was undisputed, other than in relation to the use of one particular mark by Yello's licensee, a music band named Yello, where Sunrise failed to convince the court of its argument of non-use. For the rest, Yello opposed the previous instance's presumption of a lack of intention to use its trademarks and challenged the allocation of the burden of proof made by the previous instance. As the burden of proof of the existence of an alleged fact lies with the party that derives rights from that fact (Article 8 of the Civil Code), the Federal Supreme Court noted that the party invoking the nullity of an allegedly defensive trademark (Sunrise) bears the burden of proof. Nevertheless, the court held that it must be taken into account that the lack of an intention to use is both a negative fact and an internal fact, so it cannot be proven by the challenging party. Therefore, within the parties' general duty to cooperate, the party not bearing the burden of proof (Yello) may be required to substantiate, or at least explain, why its trademark registration is part of a fair trademark strategy, notwithstanding the alleged inconsistencies or prima facie evidence for a lack of intention produced by the other party. If the court considers such an explanation to be implausible, abstract evidence of a typical defensive constellation will suffice to establish the lack of intention to use a trademark.
According to the Federal Supreme Court, Yello had failed to substantiate any intention to use the trademarks and could not demonstrate the existence of a fair trademark strategy. Instead, the court considered Sunrise's argument sufficient to establish a typical defensive constellation, among other things, as it proved the following:
- Yello pursued trademark registration activities to the broadest extent possible (as regards content and geographical spread, even in countries where it was prevented by law from exercising its core business activity) to prevent third parties from using trademarks containing the term 'Yello';
- Yello extended the scope of protection for its trademarks to goods and services not compatible with the marketing of its actual business activities;
- Certain YELLO trademarks were registered after the date of rejection of the draft Federal Electricity Market Act 2002 (ie, a time when there was no longer any prospect of Yello operating in its core business area in Switzerland); and
- The new international trademark registration in 2008, without any change to the goods and services to be protected and with no added protection gained through the change to a capital 'Y', indicated that Yello's intention was only to anticipate an impending revocation of its trademarks for non-use.
The court also stated that the use of trademarks in Germany allowed no conclusions to be drawn regarding an intention to use in Switzerland. However, cessation of use in Germany for certain goods and services did back up the presumption of a lack of intention to use in Switzerland.
The Federal Supreme Court's decision clarified the requirement for establishing lack of intention to use a trademark and how to claim nullity of a defensive trademark registration successfully. An intention to use the mark for the protected goods and services in Switzerland remains key. While an overly wide description of goods and services will not of itself lead to a finding of full or partial nullity of the trademark, it will certainly be a factor in supporting such a finding. Faced with a claim of this sort, the trademark holder must show more than a general intention to expand and diversify its business into new territories and product areas.
For further information on this topic please contact Sylvia Büchi or Roger Staub at Froriep Renggli by telephone (+41 44 386 6000), fax (+41 44 383 6050) or email (firstname.lastname@example.org or email@example.com).
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