The CJEU has clarified that there is no requirement for the later mark to cover identical or similar goods or services to the earlier mark for a finding of bad faith
In 2011, Mr Nadal Esteban, a Spanish individual, filed an European Union Trade Mark (EUTM) application for a figurative mark comprising the words STYLO & KOTON in stylised font, with particular stylisation of the two 'O's in KOTON, in Classes 25 (‘Clothing, footwear, headgear’), 35 (‘Advertising; business management; business administration; office functions’) and 39 (‘Transport; packaging and storage of goods; travel arrangement’).
Koton Mağazacilik Tekstil Sanayi ve Ticaret AŞ (Koton), a Turkish undertaking which produces and sales clothing, footwear and accessories, opposed the application on the basis of a likelihood of confusion with its earlier registrations in two figurative marks comprising the word KOTON with highly similar stylisation of the two 'O's along with a large logo element again in the same stylisation, in Classes 18, 25 and 35.
The opposition was successful in relation to Classes 25 and 35 but was rejected for Class 39 (a decision that was upheld on appeal). Following registration of the application in Class 39 in 2014, Koton filed an invalidity action on the basis that the applicant was acting in bad faith when he filed the application for the trade mark. This action was rejected by the EUIPO on the basis that it had not been sufficiently proven that Mr Esteban had acted in bad faith.
Koton appealed to the EUIPO Board of Appeal and was again unsuccessful, with the Board finding that even though the marks were similar and Mr Esteban had knowledge of Koton’s earlier rights, bad faith could not apply due to the goods and services covered by the registration being different to the goods and services upon which Koton was relying. This decision was subsequently upheld by the General Court, leading to an appeal by Koton to the CJEU.
The CJEU judgment
The CJEU set aside the judgment of the General Court and annulled the decision of the EUIPO Board of Appeal.
In doing so, the CJEU clarified that when seeking a declaration of invalidity on the ground of bad faith, there is 'no requirement whatsoever that the applicant for that declaration be the proprietor of an earlier mark for identical or similar goods or services' (para. 53 CJEU judgment). The CJEU also confirmed that there is no requirement to establish the existence of a likelihood of confusion in order for a claim of bad faith to be successful.
The General Court was found to have misread the law in concluding that there must be use of an identical or similar mark for identical or similar goods or services for bad faith to apply. That approach was too restrictive. Further, all relevant factual circumstances at the time of filing of the application were not taken into account in the General Court’s overall assessment (including that Mr Esteban had initially sought registration in the overlapping Classes 25 and 35, as well as the registered Class 39). Therefore, the General Court had erred in law.
The case has now been remitted back to the EUIPO to issue a new decision following a fresh overall assessment.
Opposition and invalidity actions on the ground of bad faith place a high burden on brand owners to prove that the trade mark applicant has acted in bad faith (i.e. not in accordance with honest practices in industrial or commercial matters).
This judgment should be welcomed by brand owners who invest significant time and resources in developing and protecting their trade marks. It gives hope that bad faith actions against copycats and those trying to take advantage of brand owner’s hard-earned accomplishments can be successful, even if there is an attempt to avoid enforcement by differentiating the goods and services applied for from those usually associated with and/or protected by the brand owner’s earlier rights.
It will be interesting to see if the EUIPO comes to a different decision in light of the CJEU’s findings.
A link to the judgment can be found here.