Insights | May 19, 2021

The General Court: Re-filing an EU trademark may constitute an act of bad faith

In a recent case regarding re-filing of the MONOPOLY trademark, the General Court has rejected the appeal of Hasbro, Inc. The decision of the General Court supports the conclusion that a new European Union trademark (EUTM) application for a mark already registered as an EUTM in respect of the same goods or services may be regarded as having been filed in bad faith.

Background

The decision T-663/19 of the General Court was issued on 21 April 2021. The case related to the trademark use requirement and the interpretation of what constitutes an act of bad faith when filing an EU trademark application. If an EU trademark has not been used in respect of the registered goods or services, it can be cancelled provided that the mark has been registered for more than five years. As a fresh registration is exempt from the use requirement for the first five years, the question in this case was whether the act of re-filing the same trademark, and thereby postponing the use requirement, would qualify as an act of bad faith and subject the registration to a declaration of invalidity.

The Intervener, Kreativni Dogadaji d.o.o., filed an application for a declaration of invalidity against Hasbro Inc.’s (the Applicant) EUTM registration for the MONOPOLY mark on the grounds that the Applicant had acted in bad faith when filing the application for registration. The Intervener claimed that the application was a repeat filing of the Applicant’s earlier trademark registrations, and was aimed at circumventing the obligation to prove use of those marks.

The Cancellation Division of the EUIPO rejected the application for a declaration of invalidity and found that the Intervener’s allegations were not supported by any evidence. The Intervener appealed the decision before the Boards of Appeal of the EUIPO, and the Second Board of Appeal found that the evidence showed that the Applicant had acted in bad faith. Therefore, the Board annulled the decision in respect of goods and services that were covered by the earlier registrations and declared the contested mark partially invalid.

The decision of the General Court

In its appeal to the General Court, the Applicant disputed the Board of Appeal’s decision on multiple grounds. First, it claimed that the Board of Appeal had not made a proper overall assessment of the circumstances, but had instead only focused on the advantage gained by the Applicant for not having to prove use of the re-filed mark, ignoring other justifications put forward by the Applicant. The General Court rejected the claim and found that the Board had made a correct overall assessment of the case and, in accordance with the criteria set out in the Lindt case (C-529/07), the Board was correct to take the Applicant’s intentions into consideration.

The General Court pointed out that the re-filing in itself was not found to be indicative of bad faith, but instead the determining factor was the information that showed that the applicant had intentionally sought to circumvent a fundamental rule of EU trademark law, namely that relating to proof of use, in order to derive an advantage therefrom. The Applicant had admitted and even submitted that one of the reasons justifying the re-filing was that, by re-filing, the applicant would not have to prove genuine use of the mark. Therefore, the General Court agreed with the Board of Appeal’s approach in finding that such conduct was contrary to the objectives of Regulation No 207/2009, the principles governing EU trademark law, and the rule relating to proof of use.

Secondly, the Applicant alleged that it could not have acted in bad faith as no harm had been caused by the Applicant’s activity, and the game “Monopoly” was so famous that the Applicant could have easily proven the use of the mark. The Court considered such arguments irrelevant. Also, the Applicant’s argument that the Cancellation Division would be swamped by cases brought on the same grounds if the contested decision were upheld was rejected as mere speculation.

Further, the Applicant claimed that the re-filing could not have been made in bad faith, because the date of the later filing was not near the end of the five-year grace period for the earlier mark. The Court was not convinced by this argument and held that it is the applicant’s intention that matters, not the length of the extension of the grace period enjoyed by the Applicant.

The Applicant also sought to justify the re-filing by claiming that it is common and accepted industry practice. The General Court rejected the argument as unsubstantiated and stated that the simple fact that other companies may use a similar strategy does not necessarily make the strategy legal and acceptable.

Finally, the Applicant contested the Board’s decision insofar as it also declared the contested mark invalid in respect of goods which the Applicant did not find to be identical to the goods relating to the earlier mark. The Board of Appeal had concluded that (i) “gaming machines”, “slot machines” and “playing cards” covered by the contested mark; and (ii) “games” covered by an earlier mark are identical, because the latter is a general category encompassing the specific items. The applicant disputed this finding, but the Court rejected the claim and considered that the Board cannot validly be criticized for having found these goods to be identical.

In conclusion, the General Court dismissed the appeal in its entirety.

Takeaways and comments

Regardless of the outcome of the decision, the Court explicitly confirmed that the re-filing in itself cannot be regarded as constituting bad faith on the part of the trademark applicant unless it is coupled with other relevant evidence. The specific reasons given by the Applicant for the re-filing were clearly a decisive factor in this case, so the decision does not mean that re-filings are categorically no longer an option.

Nevertheless, the decision is likely to increase interest in invalidity applications based on arguments relating to bad faith on the part of trademark owners, so they should review and reconsider their filing strategies very carefully. The burden of proof for establishing the circumstances implying bad faith lies with the invalidity applicant, but if objective circumstances overturn the presumption of good faith, it is then for the trademark owner to provide plausible explanations for the re-filing.

Special attention should also be given to how the Court assessed the identity of goods between the earlier marks and the re-filing. Goods that fell within a more general category covered by the earlier marks were also considered identical to the latter and therefore declared invalid. Hence, the risk of invalidation does not concern literally identical goods and services only.