(Case analysis: T-687/16Koton Mağazacilik Tekstil Sanayi ve Ticaret AŞ v EUIPO / Joaquín Nadal Esteban)

Successfully proving bad faith in a cancellation action can be a challenge. An additional hurdle can arise if the mark allegedly applied for in bad faith covers dissimilar goods or services. The General Court (GC) confirmed that bad faith must be assessed, inter alia, in the light of likelihood of confusion of the signs at issue, which presupposes not only a similarity or identity between the signs but also a similarity between the goods and services in question. Consequently, failure to prove such similarity will entitle the corresponding examiner to reject a bad faith claim.

Background

The “Koton” case started back in 2011 when Koton Mağazacilik Tekstil Sanayi ve Ticaret AŞ (“Koton Retail”) filed an opposition against Mr. Nadal Esteban’s application for the “Stylo & Koton” logo shown below. The application sought protection for, among others, business management and transport services in classes 35 and 39, respectively. The opposition was based on the earlier marks shown below and partially upheld for the services in class 35. However, the EUIPO refused the opposition in all instances in relation to the services applied for in class 39 due to the lack of similarity between the goods and services.

Not satisfied with the partial refusal, Koton Retail filed an invalidity action against the mark claiming bad faith under Article 59(1)(b) EUTMR. Koton Retail supports its claim that the applicant acted in bad faith by stating that the applicant clearly knew about the earlier “KOTON” mark as a result of a) the business relationship between them in 2004 and b) the opposition filed by the latter against Koton Retail’s international registration in Spain

The EUIPO rejected the invalidity action and Koton Retail’s subsequent appeal, leading them to bring the case before the GC. Koton Retail claimed, in particular, that the Board of Appeal erred in finding that similarity between the goods or services was a necessary condition for a successful application of an invalidity action based on bad faith. Allegedly, this condition was contrary to case-law which established that bad faith must be the subject of an overall assessment of all the relevant factors of the case, and not only likelihood of confusion.

The General Court’s decision

Despite acknowledging that the mark displayed an undeniable degree of similarity based on the shared distinctive “koton” element – leaving no doubt that the applicant had knowledge of the existence of the earlier marks at the time of filing – the GC endorsed the Board’s findings that in the absence of similarity between the services in question, the applicant could not be found guilty of bad faith.

The GC refered to the CJEU ruling in Lindt Goldhase , which held that one relevant factor in establishing the applicant’s bad faith is, in particular, the fact that at the time of filing he knew or should have known that a third party is using, in at least one Member State, an identical or similar sign for an identical or similar product capable of being confused with the sign for which registration is sought. The GC concluded that, since identity or similarity of the goods or services is a necessary condition to find likelihood of confusion, the Board had correctly concluded that bad faith had not been established.

But let’s say that similarity of the services at issue had been found – it is worth remembering, and so stresses the GC, that knowledge of use of the mark alone is not sufficient to successfully claim bad faith.

Comment

While this may sound like bad news for right holders of well-known trademarks seeking to prevent identical registrations or highly similar marks for dissimilar goods and services, free-riding on their reputation – all is not lost.

It is important to note that the GC has not been as categorical in its findings as the Board of Appeal was. The latter clearly affirmed that bad faith had to be dismissed entirely if, among other key conditions, “the coincidence in the legal protection enjoyed by the marks was not fulfilled“. In the case at issue, this condition was not satisfied since the conflicting marks were protected only for dissimilar goods and services.

It might be that the General Court is leaving the door open to the possibility of earlier marks proving reputation at the time of filing the application.