What is bad faith? AG Kokott provides some indications

Last Thursday Advocate General (AG) Kokott handed down her Opinion in case C-104/18 P Koton Mağazacilik Tekstil Sanayi ve Ticaret AŞ v Euipo (C-104/18 P). The main issue in this case relates to the notion of  bad faith and how can it be established.

So far, bad faith seems to be The IPKat’s topic on the month (see here).

In her Opinion the AG underlined that the Court of Justice (CJEU) has made some fundamental findings in regard of bad faith and also hat the General Court (GC) has been able to deeply examine the problem. However, a definitive clarification is yet to be provided.

Background

Mr Nadal Esteban filed an application with the EUIPO for the registration of a trade mark in classes 25, 35 and 39.

Koton Mağazacilik Tekstil Sanayi ve Ticaret AŞ (Koton) filed a notice of opposition on the basis of its own earlier figurative marks registered for classes 25 and 35.

The opposition was successful for these two classes, while the trade mark was registered for the services in class 39. 

Koton filed an application for invalidity against that trade mark on grounds of bad faith. 

The Cancellation Division dismissed the application, just as the Board of Appeal dismissed the appeal and the GC dismissed the action against the decision of the Board of Appeal. The three decisions were based on the ground that Koton’s trade marks do not extend to the services for which the trade mark at issue had been registered

Koton filed an appeal against the GC’s decision before the CJEU.

Analysis

In her Opinion AG Kokott took into account:

• The need for use in relation to identical or similar goods or services to establish bad faith;
• The admissibility of the argument of the original overlap of the application with the goods and services protected for earlier trade marks;
• The original overlap of the application with the goods and services protected for earlier trade marks.

First of all, the AG considered that the GC had committed a serious error in law by stating that bad faith on the part of the applicant within the meaning of Article 52 (1)(b) of the trade mark regulation (now article 59(1)(b) of regulation 2017/1001) presupposes that a third party is using an identical or similar sign for an identical or similar product or service capable of being confused with the sign for which registration is sought. This led the GC to state that Mr Esteban had not acted in bad faith.

AG Kokott recalled that the ground for invalidity in Article 52 (1)(b) does not require that the applicant is the proprietor of a trade mark for identical or similar goods or services: anyone may, in principle, apply for a declaration of invalidity of a trade mark on ground of bad faith. To assess the existence of bad faith it is necessary to take into account all the relevant factors: this follows from the subjective nature of bad faith and the object of the bad faith.

In the past the CJEU ruled that an application for registration of a trade mark is made in bad faith when the applicant:

• does not aim to use that mark in accordance with its essential function;
• does not intend to use the trade mark or he intends to use the mark to mislead consumers;
• has applied with the sole aim of preventing an imminent trade mark application by others;
• wishes to establish the basis for acquiring a descriptive domain name.

AG Kokott acknowledged that, nonetheless, the GC took other factors into account and did not consider the identity or similarity of the services as an indispensable element to establish bad faith.

After this, AG Kokott considered that the fact that EUIPO used in its response the argument concerning the overlap of the goods and services is sufficient to make this aspect part of the appeal proceedings as it was part of the undisputed facts of the case from the beginning in the proceedings before the GC.

Thirdly, AG Kokott affirmed that article 52(3) suggests the divisibility of a trade mark application filed partly in bad faith. At the same time, bad faith is not an inherent defect in the trade mark itself but stems from the circumstances in which it was applied for. AG Kokott recognized that dividing an application for registration between a part filed in bad faith and a part filed in good faith would offer an incentive to apply to register trade marks for a larger set of goods and services.

This point is extremely interesting as it provides an overview about some of the questions object of the referrals for a preliminary ruling made by the High Court of Justice, Chancery Division, United Kingdom in case C-371/18 Sky plc, Sky International AG, Sky UK Limited v Skykick UK Limited, Skykick Inc [covered by the IPKat here].

AG Kokott considered that in the case at stake there was not no need to make definitive findings on whether an application for registration could or even must be split into a part filed in bad faith and a part filed in good faith and that it would be necessary for the applicant to show that, by filing the application, he pursued a legitimate economic purpose or an “economic logic”.

Conclusion

AG Kokott suggested that, because of the very nature of the bad faith ground for invalidity, the application of article 53(3) to article 52(1)(b) should be somewhat limited.

Unfortunately the question of the overlap of the original application with the goods and services protected for the earlier trade marks did not need to be further analysed. The AG considered this to be “highly explosive”, “in view of the earlier practice of filing applications for trade marks for entire classes of goods and services which the applicant was not even able to, let alone wished to cover comprehensively”.

Are we about to see a further development of the requirement of clarity and precision for the identification of the goods and services covered by an application to register a sign as a trade mark following the line of case C-307/10 IP TRANSLATOR? Further guidance on this subject - this time from the CJEU - is keenly awaited.