Could your trade mark be invalidated for bad faith?

Registered trade marks may be declared invalid when the holder was acting in bad faith at the time of filing the application. In the absence of a legislative definition for the concept of ‘bad faith’, recent EU case law provides some clarity and takeaways. In short, ‘bad faith’ presupposes a dishonest state of mind or intent. This defence can still be raised many years after registration.

If it is proven that the holder of a trade mark applied for it in bad faith, the registration can be invalidated. This is an absolute ground for invalidity, meaning the trade mark is deemed not to have had any effects as from the outset. Both EU and Benelux trade marks may be invalidated for bad faith.

Broad concept

Concepts of trade mark law are harmonised throughout the EU. However, neither Regulation 2017/1001 on the EU trade mark nor the Benelux Convention on Intellectual Property defines or even describes the concept of bad faith.

The case law indicates that bad faith is defined broadly and must form the object of ‘an overall assessment, taking into account all the factors relevant to the particular case’ (CJEU, 2009, Lindt, para. 37). The CJEU has ruled that bad faith presupposes a dishonest state of mind or intent. Bad faith can be present when the trade mark holder filed the application ‘not with the aim of engaging fairly in competition but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark, in particular the essential function of indicating origin’ (CJEU, 2019, Koton, para. 46).

EU case law

Although the assessment of bad faith is very fact dependent, recent case law, in particular of the Court of Justice of the EU (CJEU) and the General Court, provides useful guidance.

• Direct relationship between the parties. Contractual relations between the parties prior to the filing of the contested application may indicate whether there was bad faith on the part of the applicant. The General Court recently ruled that the holder of an EU trade mark had applied for it in bad faith since the applicant’s company had been a party to a distribution agreement which provided that the trade mark ‘belonged’ to a third party. The fact that the trade mark had not previously been registered in the EU did not open the door for the applicant to register the mark in its own name (General Court, March 2021, Earnest Sewn).

• Likelihood of confusion not necessary. In order to invoke bad faith, it is not necessary to be the holder of an older trade mark or demonstrate likelihood of confusion (CJEU, 2019, Koton). Other circumstances or indicators can establish bad faith, such as the relationship between the parties, the information they obtained or the commercial reasons for the filing. It is therefore important to keep track of information exchanged about trade marks and the commercial logic underpinning trade mark registrations.

• No intention to use. If a trade mark application covers a broad range of goods and services and there are ‘objective, relevant and consistent indicia’ that the applicant does not intend to use the mark for these goods and services, bad faith may be found (CJEU, 2020, Sky). It should however be noted that the applicant does not have to indicate, or even know precisely, at the time of filing the exact use to be made of the mark applied for. Partial or full invalidation is possible in respect of goods and services for which there was, from the outset, no intention to use the mark. Purely defensive registrations in order to ‘safeguard’ similar registrations are thus at risk (General Court, October 2020, Target Ventures).

• Intention to block third parties. This is a classic example. If the sole reason behind applying for a trade mark is to prevent third parties from accessing the market, the registration may be invalidated on the ground of bad faith.

• Repeated filings. Regularly refiling a trade mark application for the same goods and services, with the intention of circumventing the obligation to demonstrate genuine use of the mark in opposition proceedings against third parties, can amount to bad faith (General Court, 21 April 2021, Monopoly). Trade mark registers should faithfully reflect the signs companies actually use on the market to distinguish their goods or services in economic life. In the recent Monopoly case, the holder tried in vain to defend its repeated filings, arguing that they were ‘common industry practice’ and made ‘in accordance with advice from counsel’. These arguments were rejected. The mere fact that other companies may be using a specific filing strategy does not necessarily make that strategy legal and acceptable (Monopoly, para. 94). On the other hand, filing an updated version of a logo with an updated (and even enlarged) list of goods and services may not be considered bad faith (General Court, December 2012, Pelikan).

• Unfair advantage of reputation. The General Court has ruled that third parties that filed trade marks identical to the names of famous persons were acting in bad faith, as established by the chronology of events and the absence of autonomous commercial logic (football player Neymar, May 2019; Moroccan chef Choumicha, 28 April 2021).

Conclusion

Good faith at the time of filing a trade mark is presumed. However, it is important to bear in mind that a mark can still be invalidated after registration (even many years afterwards). If the party seeking invalidation can prove that the trade mark holder was acting dishonestly at the time of filing the application, the registered trade mark can be entirely or partially invalidated.

It is thus recommended that trade mark holders take a critical look at their trade mark portfolios in order to identify marks that are potentially vulnerable or at risk, e.g. they are much too broad. For future applications, it is recommended to determine a clear trade mark strategy and to document both the commercial logic underlying the application as well as genuine use of the mark on the market.

By Tanguy de Haan and Florence Verhoestraete, partners at NautaDutilh and co-heads of the Intellectual Property practice.