No get-out-of-jail-free card for Hasbro as General Court affirms bad faith in MONOPOLY appeal

Monopoly may not be quite a favourite in the board gaming community, but the eponymous trade mark decision of last week by the General Court (GC) is sure to become a darling of trade mark professionals. The GC affirmed an important 2019 ruling by the European Union Intellectual Property Office's (EUIPO) Second Board of Appeal (BoA), finding that repeat filings of earlier trade marks may, in specific circumstances, constitute bad faith [BoA decision here, Katpost here; GC decision here, case no T-663/19].

From properties to houses to hotels: the development of the bad faith doctrine

The decision forms part of a recent line of cases expanding the scope of application of Article 59(1)(b) of Regulation 2017/1001 (the European Union Trade Mark Regulation or EUTMR). Although the Court of Justice of the European Union (CJEU) has long stated that the assessment of bad faith "must be the subject of an overall assessment, taking into account all the factors relevant to the particular case" [e.g. C-529/07 Lindt & Sprüngli, at 37], higher case law on the issue was scarce, and bad faith provisions were mostly applied in cases of deliberate registrations of third-party signs.

Recently, however, the European and national courts, as well as the EUIPO, have shed radiant light on different types of "factors relevant" that may constitute bad faith. To wit:

  • The concept of bad faith is broader than deliberate registrations of third-party signs for identical or similar goods; the (lack of) commercial logic underlying the application may itself suffice to establish bad faith [C-104/18 P Koton, at 51, 62]

  • Bad faith exists where trade marks are filed with no intention to use, but only if at the time of application there existed a dishonest intention of undermining the interests of third parties or an intention to obtain exclusive rights for purposes falling outside the functions of the trade mark [C-371/18 Skykick at 75, Katpost here]. In particular, the concept of bad faith covers abusive filing practices such as "priority traps" laid by trade mark squatters [T-82/14 Copernicus, at 48-49].

  • The registration of a trade mark intended to parody or even "annoy" another trade mark holder may not constitute bad faith [[2021] EWHC 719 (Ch) One More Thing, Katpost here, appeal may follow].

  • The registration of a copyright work may constitute bad faith [Cancellation no. 33843 Flower Thrower, Katpost here; the suggestion was already raised in E-5/16 Vigeland, at 61, Katpost here].

The decision in Monopoly further expands this line of cases by addressing the legality of repeat filings of earlier trade marks.
Live footage of the BoA and GC giving Hasbro a run for its money

Mr. Monopoly goes to town: background and decision

Hasbro is a publisher of toys and games. Among its portfolio is the iconic Monopoly franchise. Over the years, Hasbro filed a series of MONOPOLY word marks: in 1996 for classes 9, 25 and 28; in 2008 for class 41; in 2010 for class 16. Then, in April 2010, it filed another MONOPOLY trade mark, covering classes 9, 16, 28 and 41. This latter application partially covered new goods and services, but to a significant extent also covered goods already protected by the earlier marks.

Kreativni Dogadaji, a Croation company, filed a cancellation action against the latter MONOPOLY mark, stating that it was a repeat filing and therefore done in bad faith. The EUIPO's Cancellation decision rejected the request [here].

The BoA

The BoA reversed. It started its analysis by stating that it is perfectly for a legitimate for companies to direct their commercial interests towards further goods and services and to register additional trade marks for such new goods and services [at 64]. Conversely, the BoA stated that is not allowable to make a repeat filing to circumvent the use requirement of Article 18 EUTMR [at 66].

Next, the BoA observed that the April 2010 trade mark was used as the basis for recent opposition proceedings, and that in those proceedings genuine use of the mark had only been proven for board games, but not for any other goods or services [at 71]. This raised the question what Hasbro's commercial logic had been when filing the April 2010 trade mark. The BoA dismissed Hasbro's suggestion that the repeat filing "made [its life] easier in terms of administration", noting that if anything, repeat filings increased costs [at 73].

Crucially, Hasbro's witness had testified that "for commercial reasons it is only sensible for [a company] to oppose a later filed mark using a recent mark that is not subject to non-use in order to reduce the cost of providing evidence and attending hearings, that is, that it is more administratively efficient not to have to provide it" [at 75].

That admission led the BoA to conclude that Hasbro's intention "was indeed to take advantage of the EU trade mark rules by artificially creating the situation where it would not have to prove genuine use of its earlier marks for the goods and services mentioned" [at 81]. As a result, the April 2010 filing was made in bad faith insofar as it covered goods and services already covered by the earlier marks, and the BoA annulled the trade mark for those goods.

The GC

As stated above, the GC agreed with the BoA that the April 2010 filing was done in bad faith and dismissed Hasbro's appeal. Notable aspects of the decision are the following:
  1. The applicant's good faith is presumed until proven otherwise [at 42]. But once this presumption is rebutted by the applicant, it is for the proprietor of the mark to provide plausible explanations regarding the objectives and commercial logic pursued by the application [at 43].

  2. A repeat filing made to avoid the consequences entailed by non-use of earlier marks may constitute a relevant factor which is capable of establishing bad faith on the part of the person who filed that mark [at 57, 69].

  3. Hasbro's filing strategy was not only inconsistent with the objectives pursued by the EUTMR, but also called to mind the doctrine of abuse of law [at 72].

  4. At 77, the GC seemingly agreed with the BoA's finding that even if the desire to avoid having to provide proof of use is only one of several reasons for the repeat filing, those other reasons do not, in themselves, make such a strategy acceptable.

  5. For the purposes of assessing bad faith, it is irrelevant whether the applicant in fact obtained an advantage or caused harm through the repeat filing [at 81].

  6. The fact that the repeat filing was not done just before expiry of the grace period and therefore did not result in a "particularly long" extension thereof is irrelevant [at 89].

  7. The suggestion that the filing strategy "was common in the industry" and that Hasbro "acted in accordance with advice from counsel" was likewise no defence against a finding of bad faith [at 94].

  8. The bad faith extends to all goods comprised in a more general category of goods in the earlier filing (in this case, "games" were held to include "gaming machines", "slot machines" and "playing cards") [at 105].
Second prize in a beauty contest: thoughts on the decision

A point of criticism is that the GC's representation of Hasbro's statement seems somewhat unfair. By stressing repeatedly "that the applicant admitted, and even submitted, that one of the advantages which justified the filing of the contested mark was not having to furnish proof of genuine use" [e.g. at 89], one gets the impression that Hasbro sought not to have to furnish such proof altogether. It seems to this Kat that's not quite what Hasbro's witness meant to say.

Then again, it could be that the GC is effectively telling us that any repeat filing for identical goods will prima facie constitute bad faith. The statement of Hasbro's witness effectively decided the case and in hindsight, Hasbro is likely to regret its admission that it wanted to avoid having to prove genuine use every time it files an opposition. It will, however, be rare for such statements to be submitted in proceedings; after this decision, no sane trade mark proprietor would admit anything coming close.

Perhaps, then, the GC wanted to extend the reach of its decision beyond the facts of this particular case by paraphrasing Hasbro's admission in a more general way, applicable to a broader category of future decisions. The observation that in this particular case, the filing strategy even "called to mind" abuse of law lends support to this interpretation: apparently, the GC felt that this case went beyond mere inconsistency with the objectives pursued by the EUTMR, a classification now perhaps applied to "regular" repeat filings without specific commercial justifications.

After all, "not having to furnish proof of genuine use" is a direct result of any repeat filing, whether there is an admission on the file or not. And no obvious examples come to mind where a repeat filing would be based on an appropriate commercial logic. If this Kat's guess is true, the GC's decision may yet achieve infamy akin to the board game whose name it carries.

No get-out-of-jail-free card for Hasbro as General Court affirms bad faith in MONOPOLY appeal No get-out-of-jail-free card for Hasbro as General Court affirms bad faith in MONOPOLY appeal Reviewed by Léon Dijkman on Thursday, April 29, 2021 Rating: 5

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