On 4 April 2011 the applicant, Holzer y Cia, SA de CV, filed an application to register the EU trade mark for ANN TAYLOR (word) for "clocks and watches".

The famous US fashion brand Ann Taylor (Annco, Inc.) owns the mark ANN TAYLOR (word) in the US for clothing in class 25, as well as several identical and similar trade mark registrations for the same goods in a number of countries.

Annco, Inc. applied to invalidate the trade mark, arguing it was apparent that the mark had been filed with the aim of forming an association between that mark and the identical ANN TAYLOR sign which any registration would directly benefit from.

Second bite of the cherry

The same applicant filed a second EU trade mark on 18 September 2012, for identical goods as those in the above case. The mark was registered on 25 March 2013. In 2014, Annco, Inc. filed an application for a declaration of invalidity on the same basis.

What is bad faith?

The court looked carefully at the meaning of bad faith. Although the concept is not defined in EU law, it refers to the subjective motivation of the applicant, such as "a dishonest intention" or "a sinister motive" which departs from honest and commercial business practices.

Bad faith can be rebutted by the applicant demonstrating plausible explanations on the objectives and commercial logic pursued when applying for the mark at issue.

The court confirmed that bad faith is a concept that cannot be confined to a limited category of specific circumstances. One example of this – which was particularly relevant in this case –was exploring the origin of the contested sign and its use, to understand the commercial logic underlying the filing of the application.

Board of Appeal's decision

The Board of Appeal noted that the contested mark and the marks used by Annco, Inc. were identical. Use of Annco, Inc's mark was traced back to 1954 in the US for clothing goods, a related market to clocks and watches.

The goods covered by the contested mark were products proximate to the clothing industry – the same industry to which the applicant's goods belonged. Therefore, there was a close correlation between them. This is particularly the case for luxury goods sold under well-known brands of reputed designers.

The Board of Appeal went on to find that the applicant had knowledge of Annco, Inc.'s marks at the time it filed the mark ANN TAYLOR (word) in Mexico. These circumstances reflected the intention of the applicant to appropriate dishonestly the ANN TAYLOR mark registered in the US for clothing. Its commercial strategy was to extend the protection of its earlier Mexican marks, a clear indication of bad faith. Arguments that the names "Ann" and "Taylor" are common in English speaking countries were dismissed.

Evidence was also produced that the applicant had attempted to contact Annco, Inc's managers in order to obtain a licence agreement towards the early 2000s. This was before it applied for the trade mark ANN TAYLOR in Mexico in 2003.

Arguments from the applicant disputing the evidence in support of this were dismissed.

Consequently, the Board of Appeal concluded that the applicant had sought to lay its hands on the ANN TAYLOR sign in a manner that fell short of standards of acceptable commercial behaviour.

The applicant's actions showed that it had prevented Annco, Inc. from extending the use of its ANN TAYLOR mark to watches in the EU, as part of its commercial strategy. The appeal was therefore dismissed and the decision of the Board of Appeal upheld.

This case is a useful reminder about the grounds for bad faith and what factors the court will take into consideration. Although there is no clear guidance, the concept is carefully discussed in this judgment.

Clearly, in this case the applicant's actions when the marks were filed – its strategy disseminating from the Mexican trade mark registrations and the failed attempts to strike up a licensing deal – were a part of its broader efforts to preclude Ann Taylor from extending its trade mark portfolio in relation to watches.

The court deemed these factors clear indicators of bad faith.

Case Ref: T-3/18 and T4/18