The General Court of the CJEU has provided further guidance about the factors that will be considered, particularly the commercial logic of the registration, when deciding whether a trade mark has been registered in bad faith.

The facts

Hub Culture Ltd is a global collaboration network. In 2007, it established a global digital currency called VEN and holds a US word mark by the same name. Venmo Inc is a US company which was set up in 2009 and is now owned by PayPal Inc. It provides online payment services in the US using the unregistered mark VENMO.

In June 2010, Hub Culture wrote to Venmo claiming that their use of the sign VENMO could lead to confusion in the US market and proposed exploring the possibility of a commercial resolution. However, far from following through with their proposal, Hub Culture filed an application with EUIPO for the registration of the sign VENMO as an EU trade mark. They did not inform Venmo of their application.

In April 2011, VENMO was registered as an EU trade mark. Venmo raised proceedings to invalidate the trade mark and was successful in the Cancellation Division. However, the decision was overturned by the Board of Appeal, and Venmo appealed to the General Court.

The law

The EU trade mark registration system is based on the “first-to-file” principle: a sign may be registered as an EU trade mark so long as it is not precluded by an earlier mark. However, if the applicant was acting in bad faith upon filing of its application, the trade mark must be declared invalid.

EU legislation does not define or describe “bad faith”. Therefore, the court referred to "the Lindt Bunny case", and stated that account must be taken of all relevant factors that relate to the case when the application was filed. In particular, the court must determine:

  1. Did the applicant know that a third party was using an identical or similar sign for identical or similar goods?
  2. By filing the application, was the applicant intent on preventing the third party from using the sign?
  3. What is the degree of legal protection enjoyed by the third party’s sign, and the sign for which registration is sought?

In relation to the second question, the intention to prevent a third party from marketing a product may, in certain circumstances, constitute bad faith. This is particularly the case when the applicant applies to register the sign as a trade mark but has no intention of using it because their sole objective is to prevent the third party from entering the market.

The decision

Venmo’s case was based solely on the ground that Hub Culture had acted in bad faith. The court agreed and declared that the trademark was invalid.

Referring to COLOURBLIND, T-257/11 (where Shepherd and Wedderburn successfully defended a trade mark owner in a similar claim of bad faith) the court found that there was no plausible commercial logic in Hub Culture registering the sign VENMO. Hub Culture had never used the sign VENMO. This was the case prior to its application and thereafter. Hub Culture argued that the trade mark VENMO was intended to protect the use of its sign VEN MONEY. However, Hub Culture failed to demonstrate active and genuine use of the sign VEN MONEY and, even if they had, they conceded that “mo” cannot be understood as a natural abbreviation of “money”.

The court also considered the context in which the application was made. In June 2010, Hub Culture communicated with Venmo to propose exploring possibilities of a commercial resolution to the matter. However, the court found that Hub Culture had instead chosen to “appropriate” Venmo’s sign soon after the parties had met in November 2010.

Comment

Invalidation for bad faith is a notoriously fact sensitive area. It is for the applicant to prove that the mark has been registered in bad faith and it is often difficult to prove that this is the case. That said, this decision and the decision in COLOURBLIND demonstrate how the court will seek to take account of all the surrounding circumstances before forming an objective view about the trade mark owner’s intention at the time of filing.