[Guest post] Tesla and EUIPO hit the brakes on trade mark troll: EUIPO Cancellation Division invalidates ‘TESLA’ trade mark due to bad faith

The IPKat has received and is pleased to host the following guest contribution by former GuestKat Nedim Malovic (ASSA ABLOY), commenting on a recent decision of the EUIPO Cancellation Division regarding a trade mark registration for ‘TESLA’ obtained by a so called trade mark “troll”. Here is what Nedim writes:

Tesla and EUIPO hit the brakes on trade mark troll: EUIPO Cancellation Division invalidates ‘TESLA’ trade mark due to bad faith

by Nedim Malovic

From self- to Kat-driving cars:
Tesla's latest evolution

In a recent decision, the EUIPO Cancellation Division sided with car manufacturer Tesla, hitting the brakes on an earlier EU trade mark (EUTM), ‘TESLA’, held by Capella Eood since 2022. Declaring the earlier EUTM invalid, the Cancellation Division found that it had been filed in bad faith, driven by a speculative strategy lacking genuine business intent, and aimed at obstructing Tesla’s operations in Europe.

The decision essentially reinforces the EUIPO’s stance against trade mark trolling, underscoring the importance of genuine intent and commercial rationale when filing trade mark applications.

Background

In 2022, Tesla filed a declaration of invalidity against the EUTM ‘TESLA’, claiming that it was filed in bad faith pursuant to Article 59(1)(b) of the EU Trade Mark Regulation (EUTMR). Tesla argued that Capella Eood, represented by Mr. E.A., a known trade mark "troll," had filed numerous speculative trade mark applications to block legitimate registrations and extort financial settlements. Tesla highlighted Mr. E.A.’s systematic use of letterbox companies, unpaid fees, and strategic transfers to create obstructive positions for financial gain. Evidence showed delays in opposition proceedings and direct targeting of Tesla due to its prominence in the electric vehicle industry.

Conversely, the EUTM proprietor claimed Tesla’s accusations were defamatory and baseless. Arguing that the trade marks were inspired by unrelated sources and filed without knowledge of Tesla’s operations, the proprietor claimed Tesla had unlawfully infringed upon earlier rights for years, labelling Tesla’s actions as procedural abuse.

The Cancellation Division’s findings

Pursuant to Article 59(1)(b) EUTMR, bad faith is assessed having regard to whether the applicant’s intent at the time of filing was contrary to honest commercial and business practices. In determining bad faith, the Cancellation Division relied on Sky and Others (C-371/18) EU:C:2019:864 and Koton (C-104/18 P) EU:C:2019:287, which take into consideration the intent, filing circumstances, and any indication of abusive or obstructive purposes related to the trade mark filing. Evidence of bad faith includes lack of genuine intention to use the trade mark, knowledge of third-party prior use, and actions aimed at hindering legitimate interests.

In view of the above, the Cancellation Division considered that the following indicated that the EUTM holder had acted in bad faith:

1. Intent and timing of filing: the contested EUTM was filed shortly after Tesla’s international recognition, particularly following the Tesla Roadster’s debut. The timing suggested the EUTM holder was aware of Tesla’s growing reputation. Claims of independent inspiration - such as a newspaper article or a CD - were deemed implausible, as the filing coincided with Tesla’s rise and targeted identical goods (e.g., vehicles and accessories);

2. Pattern of speculative filings: evidence showed the EUTM holder’s history of speculative filings through letterbox companies across jurisdictions, often abandoned or withdrawn without registration. This deliberate strategy aimed to secure blocking positions against third-party brands, and reflected systematic exploitation of the EU trade mark system for financial gain;

3. Procedural tactics and lack of genuine activity: evidence also showed that the EUTM holder employed procedural delays, including repeated nonsensical restrictions of goods and services, to obstruct opposition proceedings for nearly 15 years. No credible evidence of genuine commercial activity linked to the mark was presented. Repeated transfers of the trade mark among related entities without business justification reinforced the conclusion that the filings were meant to create artificial barriers;

4. Knowledge of Tesla’s prior use and reputation: significant media coverage of Tesla’s products in Austria and beyond before the filing indicated the EUTM holder’s awareness of Tesla’s operations and reputation. Actions demonstrated opportunistic motives to exploit Tesla’s anticipated success in the EU market; and

5. Deviation from honest practices: based on the findings, the Cancellation Division concluded that the contested mark was filed with no intention of genuine use. Instead, it sought to obstruct legitimate trade mark filings and extract financial gain – clear departures from honest commercial practices. These actions breached the principles of fairness and good faith set forth in EU trade mark law.

Conclusion

This decision aligns with principles established in cases like the already mentioned Sky and Others (C-371/18), which define bad faith as intentions contrary to honest practices at the time of filing. The Division’s analysis of intent, circumstances, and broader conduct – drawing from cases like the also mentioned Koton (C-104/18) – highlight that patterns of speculative filings, use of letterbox companies, and procedural delays cumulatively demonstrate bad faith. Additionally, the filing’s opportunistic motive – exploiting Tesla’s growing reputation – further aligned with that conclusion.

From a practical perspective, this decision reinforces the EUIPO’s stance against trade mark trolling, and signals a continued commitment to safeguarding fair competition and repressing abusive practices in the trade mark system.