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EU General Court confirms ‘chain of priority’ is unlawful

Successive trade mark applications seen as bad faith

18 July 2019

In Copernicus-Trademarks Ltd v EU Intellectual Property Office, T-82/14, July 7 2016, the EU General Court confirmed that creating a ‘chain of priority’ claims based on successive national trademark applications is an unlawful filing strategy and, therefore, an EU trademark application which benefited from a priority chain was held to be invalid on the grounds of bad faith.

Background

Maquet GmbH, the intervener in this case before the General Court, filed an EU trade mark application on 29 July 2009 for LUCEA LED in Class 10. The application was published for opposition purposes on 17 August 2009.

On 16 September 2009, Copernicus EOOD filed an EU trade mark application for LUCEO in Classes 10, 12 and 28. Copernicus, represented by an agent referred to in the decision of the General Court as ‘Mr A’,claimed priority in respect of its application from an Austrian application which was filed on 16 March 2009.

With this priority claim, Copernicus’ application was relied on to oppose Maquet’s application. A notice of opposition was filed on 12 November 2009 by Capella EOOD, the successor in title to Copernicus’application. Capella was also represented by Mr A.

The LUCEO mark was registered on 26 October 2010. On 3 May 2011 Maquet applied for a declaration that the mark was invalid. Maquet relied on Article 52(1)(b) of Regulation 207/2009, namely that Copernicus had acted in bad faith when filing the application for LUCEO. Maquet claimed that the LUCEO application was part of an unlawful filing strategy. Copernicus, and other entities represented by Mr A, had employed a strategy of filing for German and Austria trade marks on six-month rotations (as the Board of Appeal stated,“in Austria in March, in Germany in September”) but then failed to pay the fees in relation to those applications. The effect was to create a continual chain of priority, with the ultimate purpose of opposing subsequent EU trade mark applications (eg, Maquet’s application) and requesting a payment to settle the opposition, in this case €75,000.

The Cancellation Division agreed with Maquet that the LUCEO application had been filed in bad faith, and on 14 December 2012 declared the mark invalid. By this date the LUCEO mark had been transferred to Copernicus-Trade marks Ltd (the applicant) via Verus EOOD, both of which were represented by Mr A. The applicant appealed the decision. The proprietor of the mark was changed again by Mr A on 13 November 2013 to Ivo-Kermartin GmbH, however the decision of the Board of Appeal which upheld the findings of the Cancellation Division was addressed to the applicant. It found that the LUCEO mark had been applied for solely to oppose the LUCEA LED application. The decision was appealed to the General Court.

Decision

The General Court held that the concept of bad faith in Article 52(1)(b) of Regulation 207/2009 relates to the subjective motivation behind the filing of an application, which must be assessed by taking into consideration the specific and objective circumstances of the filing. One such objective criterion is the commercial rationale underpinning the filing (see Chocoladefabriken Lindt & Sprüngli, C-529/07 [2009] ECR I-4893). Article 52(1)(b) requires a dishonest intention, and conduct “which departs from accepted principles of ethical behaviour or honest commercial and business practices”.

The applicant challenged the Board of Appeal’s findings that Mr A was engaged in an unlawful filing strategy. It also challenged the findings of the Board of Appeal in respect of the intended use of the mark and that the LUCEO mark was filed as part of an unlawful filing strategy. The applicant’s primary argument was that its filing strategy was in order to develop the trade mark for commercialisation and was therefore a legitimate strategy.

The General Court disagreed with the applicant. It held that the applicant did not attempt to distinguish its activities from those of Mr A and the other entities involved. The Board of Appeal had found that Mr A was involved in a strategy to keep a priority claim alive for the LUCEO mark since 2003, and as part of his activities had been involved in around 3,000 national applications which appeared to be for a similar purpose.

The fact that a small number of those applications were registered did not affect the Board of Appeal’s findings that Mr A was engaging in a strategy of filing blocking applications.

By filing and allowing the applications to lapse due to non-payment of fees, Mr A was able to circumvent the priority period in Article 29(1) and the five-year grace period for use in Article 51(1)(a) of Regulation 207/2009 at minimal cost. Although Mr A claimed to have paid a “six-figure” sum in respect of filing fees, he failed to provide any evidence of this to the Board of Appeal. Further, no evidence of commercialisation of any of the marks applied for was provided. In any event, the General Court considered this irrelevant as it did not preclude a finding that the economic success of the strategy did not depend on the use of the marks but in achieving financial settlements with the proprietors of applications which had been opposed. A number of previous decisions where Mr A exploited the same strategy were referred to by the Board of Appeal.

The General Court agreed with the Board of Appeal that the applicant and other entities linked with Mr A were engaged in the systematic filing of national applications, with a view to allowing these applications to lapse due to non-payment of fees having relied upon the application to claim priority in a different jurisdiction. This was not a legitimate business activity and was contrary to the objectives of Regulation 207/2009. As such the General Court upheld the findings of the Board of Appeal and the LUCEO mark was declared invalid.

Comment

It is not uncommon for various iterations of a trade mark to be filed over a period of time when developing a new brand. The General Court noted that nothing precludes a proprietor from filing successive applications which modify the sign, the specification or the geographical scope of the filing in order to achieve this. The General Court agreed with the Board of Appeal that nothing in this case suggested that developing brands was the real motivation behind the activities of Mr A.

The General Court in this case held that the trade mark agent associated with all the proprietors of the LUCEO mark had no intention of using the mark for its essential function, namely to distinguish goods and services of one undertaking from another. The systematic filing strategy, along with the use of various different proprietors in an attempt to mask the strategy, pointed towards circumventing the six-month limit on priority claims to seek financial settlements from third party applicants. Interestingly (and perhaps ironically), the strategy arguably only came to light as the lawyer acting for the intervener was Mr A’s former business partner.

This article first appeared on WTR Daily, part of World Trade Mark Review, in August 2016. For further information, please go to www.worldtrade markreview.com.