CJEU determines that mistaken beliefs about trade mark functionality can be relevant for assessing bad faith in CeramTec decision

Yesterday, the CJEU delivered its judgment in CeramTec GmbH v Coorstek Bioceramics LLC (Case C‑17/24). The decision explores the relationship between the grounds of refusal to register a trade mark on the basis of functionality and bad faith. The CJEU held that the applicant's belief that a sign performs a technical function - even if that is later proved wrong - may form part of the relevant and consistent indicia that a trade mark application was made in bad faith.

Background

Think Pink! The applicant's beliefs about
functionality, even if later proved wrong,
 are relevant for assessing bad faith.
Photo by Anna Shvets via Pexels.

As outlined by the IPKat when the referral was made, the French Supreme Court (Cour de Cassation) submitted the request for a preliminary ruling. CeramTec is a developer and manufacturer of ceramic products, including a pink-coloured hip-replacement implant. It was believed that the use of chromium oxide, which produced the pink colour, had the function of ensuring the hardness and strength of the ceramic balls of the implant. CeramTec obtained a European Patent to a ceramic matrix composite used in the production of this hip-replacement implant. The patent expired on 5 August 2011.

On 23 August 2011, CeramTec applied to register three European Union trade marks: the three-dimensional mark  in the colour ‘pink, Pantone 677 C’ (pictured below), a figurative mark of the colour ‘pink, Pantone 677 C’, and a mark consisting in the colour pink, Pantone 677 C. All were registered on the basis of acquired distinctiveness, then CeramTec commenced infringement proceedings against its competitor Coorstek. Coorstek responded by filing an invalidity request to the EUIPO on the grounds of functionality, then withdrew.

While the French proceedings were ongoing, it was discovered that the chromium oxide (which created the pink colour) did not actually have the technical effect as assumed and described in the patent. Coorstek filed a counterclaim for invalidity on the grounds of functionality and bad faith. After the case made its way through the French courts, who invalidated the trade marks, the Cour de Cassation referred three questions to the CJEU:

1. Is Article 52(1)(a) of the old Regulation No 207/2009 to be interpreted as meaning that the grounds for invalidity are autonomous and mutually exclusive, or in other words, that the absolute grounds in Article 7 are independent from, and do not overlap with, the ground of bad faith?
2. If the answer to the first question is negative, may the bad faith of the applicant be assessed independently from Art. 7(1)(e)(ii) Regulation 207/2009, where there was no finding that the trade mark consists exclusively of the shape of the product which is necessary to obtain a technical result?
3. Is Article 52(1)(b) of Regulation No 207/2009 to be interpreted as meaning that bad faith is to be ruled out where the applicant has applied for registration of a trade mark with the intention of protecting a technical solution and, after the application was made, it is discovered that there was no connection between the technical solution in question and the signs which constitute the trade mark applied for?

Advocate General Biondi delivered his opinion in February, which was covered by the IPKat here. CeramTec was dissatisfied with the AG opinion and applied to re-open the oral proceedings. The CJEU refused this request, affirming that the oral proceedings will not be re-opened simply because a party disagrees with the AG opinion.

The CJEU judgment

Question 1

EUTM No. 10 214 179  

As a reminder, under Article 7(1)(e)(ii) of Regulation No 207/2009, a sign which consists exclusively of the shape of goods which is necessary to obtain a technical result is to be refused registration. Article 52(1)(b) provides that an EU trade mark will be declared invalid where the applicant was acting in bad faith when they filed the application for registration.

The CJEU agreed with the AG opinion that the two grounds are autonomous: "each of those two causes is set out in a separate point [...] which are separated by a semi-colon, reflecting the intention of the EU legislature to distinguish between them." Article 52 does not contain any introductory expressions that indicate the grounds must be examined in any order of priority in relation to each other. Furthermore, case law establishes that the absolute grounds for invalidity in Article 7 are autonomous from each other, and each has its own scope.

The two grounds in question (functionality and bad faith) also have different nature and purpose. The functionality exclusion recognises that such signs cannot perform their functions as a trade mark, and for technical functionality, serves to prevent indefinite extensions of the life of other rights (i.e. extending the monopoly conferred by a patent). By contrast, bad faith is focused on ensuring that economic operators compete fairly.

The CJEU also agreed with the AG opinion that there was nothing in the text to show that the grounds are mutually exclusive. While courts may confine themselves to a single ground during proceedings, there is nothing to prevent them from considering other grounds.

Question 2

The CJEU reiterated that the concept of 'bad faith' presupposes the presence of a dishonest state of mind or intention, evidenced by "relevant and consistent indicia" (Koton C‑104/18). When taking into account all of the factual circumstances relevant to the particular case, the CJEU saw no reason why it would be necessary to disregard factual circumstances which contribute or could contribute to characterising the absolute ground for invalidity laid down in Article 52(1)(a). The CJEU continued at [60]:

The applicant’s opinion as to the suitability of the sign, in respect of which registration as a trade mark is sought, for expressing, in whole or in part, that technical solution is included – but cannot be the only one – among the factors capable of substantiating the existence of an intention, which is unrelated to the functions of the trade mark, of preventing competitors from entering the market which the applicant has dominated as a result of its patent. 

Question 3

The CJEU considered the final question to be asking whether bad faith may be assessed on the basis of circumstances arising after the filing of the application. As explained in earlier cases, bad faith is assessed at the time of filing the application for registration.

While circumstances, even after the filing, may serve as indicia of the applicant’s intention at the time of lodging the application, that is not the case for anything the applicant only learned after the application was filed. Clearly, such post hoc evidence would not alter their earlier perception. CeramTec's later realisation about the lack of technical function could not change their past intentions.

Final Thoughts

Following the UK Supreme Court's decision in Sky v Skykick at the end of last year (see IPKat here), this Kat was delighted to see further exploration of the concept of bad faith and the factors that can be taken into account when assessing an applicant's intention. The CJEU judgment also represents an important development in our understanding of the overlaps between patents and trade marks. This Kat will reflect on this decision for some time to come [Merpel: and probably reserves the right to change her beliefs about the judgment at a later date].