On 12 March 2009 Advocate General Eleanor Sharpston QC provided her Opinion to the ECJ in Chocoladefabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH. The Opinion provides useful guidance on the interpretation of bad faith in Community Trade Mark applications.

Lindt, based in Switzerland, and Hauswirth of Austria, made and sold chocolate Easter bunnies. Lindt had made and sold bunnies since the early 1950s, and in Austria since 1994. In June 2000, Lindt applied to register as a three-dimensional Community Trade Mark the form and presentation of its bunny wrapped in gold-coloured foil and decorative elements including a design with the words ‘Lindt Goldhase’. The mark (the CTM) was registered on 6 July 2001.

Hauswirth had made and sold its own chocolate bunnies since 1962. These had different distinctive elements (for those interested in such details, the bunnies wore ribbons but unlike the Lindt product had no bell), and bore no identifying name. The label was affixed to the base of the product.

Following registration, Lindt raised proceedings against Hauswirth for trade mark infringement on the basis of a likelihood of confusion as to the origin of Hauswirth's product. The crux of the dispute was Hauswirth's counterclaim that Lindt's application was made in bad faith and therefore the CTM should be declared invalid under Article 51 (1) (b) of the Community Trade Mark Regulation. Hauswirth's grounds for bad faith resulted in the referral of the following questions to the ECJ:

  1. Does an applicant act in bad faith where he knows that a competitor in a Member State is using the same sign or a confusingly similar sign, and he applies for the trade mark in order to be able to prevent that competitor from continuing to use the sign?
  2. If the response to (i) is negative, does an applicant nonetheless act in bad faith where he knows that the competitor has already acquired unregistered “valuable property rights” (rights acquired under Austrian competition law and German trade mark law) in such earlier marks?
  3. Is bad faith excluded if the applicant’s sign has already obtained a reputation with the public and is therefore protected under competition law?

In response, the Advocate General outlined that intention to prevent competitors from using unregistered signs which they had otherwise been entitled to use (particularly if that use was substantial and longstanding and enjoyed a degree of legal protection) is an indication of bad faith. However, bad faith may not be found if the third parties/competitors had been deriving unjustified benefit from the applicant's mark.

Whilst this is useful guidance on the application of bad faith where an application is made with a view to address use of similar marks by third parties, the Attorney General emphasised that the test remains a subjective issue, ascertained on a case by case basis.