Monkey Business: Invalidating a Trademark Registration on the ground of ‘bad faith’, from Lindt in 2009 to Banksy in 2021

AUTHOR: NAOMI SCHEMBRI

Dr Naomi Schembri, an Associate at City Legal, writes about the notion of ‘bad faith’ as a ground for invalidating a trademark registration. In this Article, the author delves into the interpretation of ‘bad faith’, also by reviewing the most prominent jurisprudence of the Court of Justice of the European Union (the “CJEU”) and the European Union Intellectual Property Office (the “EUIPO”) on the matter, with the scope of illustrating the prominence this notion has amassed in recent years, particularly in limiting the rights of brand owners which might have had ulterior motives in officially registering their mark than genuine use.

 Published on 7th July, 2021

What is a Trademark?

Trademarks are instruments of commerce, and as such, the idea of registering a trademark traditionally centered around protecting the interests of the proprietor.

As trademarks evolved and became more heavily regulated – with EU influence coming in through two separate, yet related streams, being Directive (EU) 2015/2436 Of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trademarks (Recast) (the “Directive”), and Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trademark (codification) (the “Regulation”) – stakeholder competing interests started to be considered. This in the sense that trade mark law now attempts to achieve a balance between the interests of: (i) the trader/proprietor, who seeks to protect the image, the reputation and the distinctiveness of his goods or services; (ii) the rival trader, who wishes for the opportunity to legitimately compete with the trader in a free market; and (iii) the consumer, who wants to be able to associate goods and/or services with a particular trader without being misled and confused as a result of goods and/or services having the same or similarly confusing marks but being of inferior quality, for instance.

Trademarks may therefore be seen as an important badge of origin for the manufactured product, which badge of origin acts as an emblem benchmarking the standard and quality of the product. The essential function of a trademark is therefore that of ensuring that the consumer or end-user can identify the origin of the products or services concerned by giving him the possibility to distinguish said products or services from similar products or services bearing different origin, and to ultimately be able to do this without any confusion.[1] This grants added commercial value to a trademark, and – consequently – trademarks are vigorously protected and fought over.

The Notion of ‘Bad Faith’

Under Maltese law, also in line with the transposed Directive, bad faith on the part of the proprietor at the moment of registration of the trademark shall be tantamount to an absolute ground for invalidity of any such registered mark.[2]Similar provisions are also found in the Regulation.[3]

An allegation that a trademark registration has been made in bad faith may therefore have ground-breaking consequences for the proprietor. This notwithstanding, legislative enactments, both at a national as well as at a European level, offer little to no guidance as to how ‘bad faith’ is to be interpreted in this context. The difficulty for legislators to come up with a plausible definition for the term seems to primarily arise from the fact that bad faith may be found to subsist in several scenarios, and hence what constitutes bad faith will most often vary depending on the circumstances of the case at hand.

It is for this reason that case law has been proved as the most reliable source in interpreting the notion of bad faith in the context of trademark registrations.

One of the very first cases where the CJEU pronounced itself on the notion of bad faith was Chocoladefabriken Lindt & Sprüngli AG vs Franz Hauswirth GmbH (Case C-529/07) decided in 2009,[4] where the Court, although refraining to provide an express definition of bad faith, established criteria relevant to determining bad faith on the part of an applicant when filing an application to register a trademark. The dispute concerned Lindt’s registration in the year 2000 of the three-dimensional mark representing a chocolate bunny wrapped in gold foil wearing a red ribbon with a gold bell around its neck. After the registration of said mark, Lindt proceeded to take legal action against manufacturers, amongst which Hauswirth, producing similar products with similar presentation to that of the chocolate bunny protected by said mark. The issue here was that Hauswirth’s manufacturing of chocolate bunnies went back a number of years, also preceding the registration date of the contested mark, a fact which Lindt was well aware of at the time of registration. Consequently, Hauswirth argued that the primary scope behind Lindt’s registration of the contested trademark was to eliminate competitors from the market in which they had been operating for a number of years, and hence made in bad faith.

In its considerations as to whether bad faith was present on Lindt’s part at time of registration, the Court outlined that knowledge, or presumed knowledge, on the part of the applicant as to a third party’s use of a similar shape is not in itself sufficient to prove bad faith on the applicant’s part. Rather, the Court outlined that such a determination must be subject to an overall assessment which takes into account all relevant factors particular to the case at hand. Particular consideration must be given to the applicant’s intention at the time when the registration was filed; which, although subjective, may be determined by reference to the objective circumstances of the case. Accordingly, registration made on the basis of an intention to prevent a competitor from manufacturing a product may, at times, be found to have been made in bad faith, this particularly when it becomes apparent from the circumstances of the case that the applicant had no real intention to make use of the mark itself. When applying such considerations to this specific case, the Court ruled that there were strong indicia of bad faith on the part of Lindt at the moment of registration, as a consequence of which Lindt’s registration was revoked.

In Carlos Moreira vs EUIPO (T-795/17) decided by the General Court of the European Union in 2019,[5] the Court further elaborated on the relevant principles that may be taken into account when considering bad faith. Moreira had managed to register the word sign ‘NEYMAR’ in respect of clothing, footwear and headgear. Subsequently, Mr Neymar Da Silva Santos Júnior, the Brazilian professional footballer, who had no connection whatsoever with Mr Moreira or the products for which the latter managed to register the contested mark, intervened by filing an application to have such mark declared invalid.

Whilst quoting the principles established by the CJEU in the Lindt case (above), the General Court in this case further stated that, as part of the overall assessment which is to be made on the basis of the facts at hand, consideration may also be had of the origin of the contested mark; use since registration; commercial logic underlying the registration; as well as the timeline of events leading up to the same registration. In an attempt to describe what bad faith is, the General Court held that this concept relates to a subjective motivation on the part of the applicant equal to a dishonest intention or other sinister motive which departs from accepted principles of ethical behaviour or honest commercial and business practices. The Court confirmed that the applicant was acting in bad faith when he filed the application for registration of the mark ‘NEYMAR’.

Another European judgement wherein the Court further examined and elaborated upon the notion of bad faith is that of Sky plc and Others vs Skykick UK Limited and Skykick Inc (C-371/18) decided in 2020.[6] This case concerned various marks including the word mark ‘Sky’, of which Sky plc and Others were alleging the infringement by Skykick. One of the arguments raised by Skykick in defense was that the contended marks were registered by Sky plc in bad faith as the latter had no intention to use them in relation to all of the goods and services for which registration was obtained. From the facts brought forward, the Court noted that it is evident that, at the moment of registration of the contested marks, Sky and Others had no genuine intention to use such marks for all the goods and services listed in the registration, which registration covered goods and services that fell outside of the business model of Sky, and hence Sky had no commercial reason to seek protection therefor. This led the Court to confirm that where it is objectively evident that in filing its registration for a mark the applicant had no real and genuine intention to fairly engage in competitive practices – but, rather, that the applicant’s intention was to undermine, with dishonest practices, the interest of third party competitors, or to generally obtain an exclusive right beyond those legitimately granted through a trademark – such filing would have been made in bad faith.

In April 2021, the General Court handed down another salient decision in Hasbro, Inc. vs EUIPO (T-663/19).[7] The dispute here concerned the registration by Hasbro of the word mark ‘MONOPOLY’. Kreativni Događaji d.o.o., a Croatian company manufacturing board games, amongst which the game ‘DRINKOPOLY’, intervened to seek a declaration of invalidity as to Hasbro’s latest registration of the ‘MONOPOLY’ mark with the main argument being that Hasbro acted in bad faith when it registered the contested mark as it had already obtained protection over the goods and services listed in its registration through earlier registered marks, with Hasbro’s intention at time of registration therefore having been solely intended to circumvent the legal obligation to prove genuine use of such prior registered marks and undermine third-party rights to fairly compete with it.[8] Hasbro, unfortunately for it, admitted that it actually engaged in this practice intentionally for various reasons, amongst which “administrative efficiency” in not having to prove genuine use of the contested mark. This coupled with other facts that emerged throughout the present proceedings, led Hasbro being found to have been in bad faith when it re-applied for the registration of the contested ‘MONOPOLY’ mark.  This notwithstanding, the Court did not go as far as declaring that re-filing of marks following a five-year term automatically amounted to bad faith but rather that each case is to be considered and determined on the basis of the facts specific to it.

Finally, a very recent cancellation which has gathered considerable interest is that where a trade mark owned by Banksy over his image ‘Laugh Now’ depicting three monkeys holding a board with text “laugh now, but one day we’ll be in charge”, was declared invalid by the EUIPO on the basis of bad faith at time of filing.[9] Banksy’s registration was opposed by Full Colour Black, the same company which was successful in invalidating another of Banksy’s graffiti trademark back in 2018 – ‘The Flower Thrower’ – on the same ground of bad faith. Full Color Black managed to prove to the satisfaction of the EUIPO that, at the time of filing, Banksy had no intention of making genuine use of the trademark and that his true intention, similar to Hasbro, was to circumvent the legal requirement of proving genuine use and extend the five-year period through the strategy of ‘evergreening’.

Final Comments

The development of the notion of bad faith in the context of trademark registration as exposed through various judgments of the European Courts which, as may be seen through the cases summarised in this publication, is happening at a consistently fast pace, requires brand owners in particular to garner familiarity with the requirements of genuine use, actions that may potentially lead to a determination of bad faith with the risk of losing rights over a particular trademark and legitimate registration of trademarks.

Whether you are considering registering a trademark for the very first time, determining your re-filing strategies, desirous of contesting a trademark registration, or simply require any other assistance in relation to trademark law in general, please ensure that you seek professional guidance on the matter.

 

For more information on how we may assist with any of your trademark and trademark registration needs, please contact:

Dr Antonio Depasquale, Managing Partner –

adepasquale@thecitylegal.com

Dr Emma Grech, Partner –

emma.grech@thecitylegal.com

Dr Naomi Schembri, Associate –

naomi.schembri@thecitylegal.com

 

DISCLAIMER: The information contained in this document does not constitute legal advice or advice of any nature whatsoever. Although we have carried out research to ensure, as far as is possible, the accuracy and completeness of the information contained in this article, we assume no responsibility for errors or other inconsistencies herein.

 

References:

[1] See, inter alia, Joined Cases C‑456/01 P and C‑457/01 P Henkel v OHIM [2004] ECR I‑5089; as well as Article 4(2) of the local Trademarks Act (Chapter 597 of the Laws of Malta).

[2] Article 5(2), Trademarks Act (Chapter 597 of the Laws of Malta).

[3] Article 59(1)(b) of the Regulation.

[4]https://curia.europa.eu/juris/document/document.jsf?text=&docid=74488&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=15144167

[5] https://curia.europa.eu/juris/document/document.jsf?text=&docid=214045&pageIndex=0&doclang=en&m

[6]https://curia.europa.eu/juris/document/document.jsf?text=&docid=222824&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=2006514

[7]https://curia.europa.eu/juris/document/document.jsf?text=&docid=240162&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=2396565

[8] On the fifth year following registration, a trademark becomes vulnerable and subject to revocation if the proprietor fails to prove that it has been put to genuine use. To eliminate this vulnerability, various applicants have resorted to ‘evergreening’ i.e. re-registering the same mark, covering the same or similar goods and services, anew at the end of the five year term each time with the scope of not having to prove genuine use and thus eliminating both the risk of having such mark revoked on such basis as well as competition.

[9] https://files.lbr.cloud/public/2021-05/banksy%20monkey%20trademark%20cancellation.pdf?PjoCw7xOfeYRlSa6qorTXr9hkL4QcK1Y=