Does public interest defeat abuse of rights? Yes, if there is an absolute ground for invalidity of a Community trade mark!

In Case T‑396/11, ultra air v OHIM - Donaldson Filtration Deutschland, the General Court examined the applicability of the concept of 'abuse of rights', in relation to an application for a declaration of invalidity of a Community trade mark, under Articles 56(1)(a), 7(1)(b) and (c) of Regulation 207/2009. The Court annulled the decision of the Fourth Board of Appeal of OHIM, clarifying that, in light of the public interests enshrined in the above provisions, the motives and earlier conduct of the applicant cannot affect the scope of the assessment conducted by OHIM. Therefore, 'there can be no question of an abuse of rights on the part of the applicant for a declaration of invalidity'.
In 1999, ultrafilter GmbH (now Donaldson Filtration Deutschland GmbH) applied for registration of the word sign 'ultrafilter international', for goods and services in Classes 7, 11, 37, 41 and 42 of the Nice Agreement (essentially filters and devices for drying, cleaning and cooling air, gases and liquid, and related services for installation, repair and training). The examiner rejected the application ex Article 7(1)(b) and (c) of Regulation 40/94 (now 7(1)(b) and (c) of Regulation 207/2009), finding that the sign was descriptive and lacked a distinctive character. On appeal, however, it was found that the mark had become distinctive, within the meaning of Article 7(3), in the German and English-speaking member states. Consequently, the sign was registered as a Community trade mark (CTM) on 27 September 2005 (No. 1121839).

In 2008, ultra air GmbH filed an application for a declaration of invalidity of the CTM under Article 51(1)(a) of Regulation 40/94 (now Article 52(1)(a) of Regulation 207/2009), alleging infringement of Articles 7(1)(b) and (c) and 7(3). The Cancellation Division upheld the application, recognizing that the sign was descriptive and devoid of any distinctive character. The Fourth Board of Appeal, on 18 May 2011, annulled the decision rendered at first instance and declared the application inadmissible, as vitiated by an abuse of rights. The Board noted that, with its application, ultra air did not pursue the public interest objectives laid down in Articles 7(1)(b) and (c) and Article 7(3). Rather, the company seeked to use the sign 'ultrafilter' [which, says Merpel, is also a mathematical concept] itself as a trade mark, alone or in combination with other terms, and had resorted to the application for invalidity only after its own application for registration of a figurative CTM comprising the word 'ultrafilter' (No. 5329529) had been rejected. Proof of these hidden intentions, according to the Board, came from the fact that the manager of the applicant had previously defended the distinctive character acquired by the contested mark through use, when he was a manager of the CTM's proprietor company. Thus, the action amounted to an abuse of rights, as the application had sought to attain objectives other than those which are legitimate under trade mark law.

The applicant challenged the Board of Appeal's decision before the General Court, alleging infringement of Article 56(1)(a) of Regulation 207/2009 (and of Article 52(1)(a) - but this plea was swiftly rejected by the Court). Ultra air submitted that Article 56(1)(a) 'grants all natural and legal persons the right to lodge an application for a declaration of invalidity on the basis of Article 52 [...] without making that right subject to a balancing of the possible personal interests of the applicant for a such a declaration with the general interests safeguarded by that provision'. Therefore, an abuse of rights cannot preclude the examination of an application for a declaration of invalidity, and the Board should not have investigated, nor taken into account, the applicant's possible bad faith. The plea also argued that (1) Article 7(1) aims to prevent the monopolization of a sign vitiated by an absolute ground for refusal, and thus allows its free use without any abuse of rights, (2) the rejection of an application for registration of a trade mark cannot prevent the applicant from lodging an application for a declaration of invalidity of a similar sign, and (3) considerations on the manager's behaviour were manifestly irrelevant.

The General Court first observed that the application for a declaration of invalidity under Article 56(1)(a) of Regulation 207/2009 'is an administrative procedure and not a court action' [to the effect that, as noted in Case C‑408/08 P Lancôme v OHIM, the application is not subject to the rules of admissibility applicable to judicial proceedings]. It then highlighted the differences between the requisites of admissibility for the actions laid down, on one hand, in Article 56(1)(a), and, on the other, in Articles 56(1)(b) and (c):
Article 56(1)(a) provides that an application for a declaration of invalidity based on an absolute ground for invalidity may be submitted by any natural or legal person and any group or body set up for the purpose of representing the interests of manufacturers, producers, suppliers of services, traders or consumers, which has the capacity in its own name to sue and be sued, whereas Article 56(1)(b) and (c), concerning applications for a declaration of invalidity based on a relative ground for invalidity, reserves the right to make such an application to certain specific persons who have an interest in bringing proceedings. Consequently, it is apparent from the scheme of that article that the legislature intended to restrict the group of persons able to apply for a declaration of invalidity in the latter case, but not in the former.
Abuse of rights? Get out of here!
In this perspective, Article 56(1)(a), read in conjunction with Article 52(1)(a), establishes an administrative procedure that enables OHIM to review the validity of a CTM registration, in order to protect, inter alia, the public interests enshrined in Articles 7(1)(b) and (c). The former provision prevents the registration of non-distinctive signs, which cannot fulfil the essential function of a trade mark; the latter ensures that 'descriptive signs relating to one or more characteristics of the goods or services in respect of which registration as a mark is sought may be freely used by all traders offering such goods or services' (see Case C‑173/04 P Deutsche SiSi-Werke v OHIM, and Case C‑191/01 P OHIM v Wrigley). Thus, the motives and earlier conduct of the applicant cannot affect the scope of the assessment conducted by OHIM in light of these provisions: the rejection of the application for invalidity due to an abuse of rights would prevent the examination of the substance of the plea and defeat the objectives and function of Articles 7(1)(b) and (c). The Court added:
Given that, in applying the provisions at issue in the context of invalidity proceedings, OHIM does not rule on the question whether the rights of the proprietor of the mark take precedence over any rights which the applicant for a declaration of invalidity might have, but ascertains whether the rights of the proprietor of the mark were validly obtained in the light of the rules governing the registrability of marks, there can be no question of an ‘abuse of rights’ on the part of the applicant for a declaration of invalidity.
Applying the above reasoning, and relying on Article 52(1) (which allows the defendant in an infringement proceeding to bring a counterclaim for invalidity), the General Court observed that the fact that a party may file an application for a declaration of invalidity, with a view to subsequently use the contested sign, is compatible with the public interest safeguarded by Article 7(1)(c), and cannot amount to an abuse of rights in any circumstances. Similarly, considerations on the role and conduct of the manager of the applicant cannot affect the right to bring an action under Article 56(1)(a): a similar conclusion would be incompatible with the public interest. From a more general perspective, the Court noted that the admissibility or validity of an application for a declaration of invalidity does not depend on the good faith of the applicant. Consequently, 'even supposing that an application for a declaration of invalidity does form part of an overall confrontational commercial strategy, involving acts of unfair competition, the removal from the register of a mark which is either descriptive or devoid of distinctive character is a consequence of trade mark law', and cannot be avoided on the basis of the applicant's conduct.

The General Court rejected OHIM's arguments pointing to Article 9 of First Council Directive 89/104/EEC, which, like Article 54 of Regulation 207/2009, prevents the proprietor of an earlier mark from applying for a declaration of invalidity of a subsequent mark, where the proprietor has acquiesced, for a period of five years, in the use of the later CTM. The Court clarified that this provision 'merely regulates situations concerning two [conflicting] interests of a private nature'. Accordingly, it bears no effect on the absolute grounds for refusal established in the public interest by Articles 7(1)(b) and (c), 'which vitiate registration from the outset and which, in accordance with Article 52(2), are rendered inapplicable only if the mark in question has acquired a distinctive character after its registration'.
Does public interest defeat abuse of rights? Yes, if there is an absolute ground for invalidity of a Community trade mark! Does public interest defeat abuse of rights? Yes, if there is an absolute ground for invalidity of a Community trade mark! Reviewed by Stefano Barazza on Friday, May 31, 2013 Rating: 5

1 comment:

  1. What baffles me is that, even if an absolute ground of refusal is present, you still need an application for invalidity to trigger its applicability post grant. Then, why shouldn't a bad faith application be rejected as inadmissible? Since there has been no judgement on the substance of the application, any other company could submit another application and get the trademark invalidated.

    ReplyDelete

All comments must be moderated by a member of the IPKat team before they appear on the blog. Comments will not be allowed if the contravene the IPKat policy that readers' comments should not be obscene or defamatory; they should not consist of ad hominem attacks on members of the blog team or other comment-posters and they should make a constructive contribution to the discussion of the post on which they purport to comment.

It is also the IPKat policy that comments should not be made completely anonymously, and users should use a consistent name or pseudonym (which should not itself be defamatory or obscene, or that of another real person), either in the "identity" field, or at the beginning of the comment. Current practice is to, however, allow a limited number of comments that contravene this policy, provided that the comment has a high degree of relevance and the comment chain does not become too difficult to follow.

Learn more here: http://ipkitten.blogspot.com/p/want-to-complain.html

Powered by Blogger.