EU General Court considers bad faith claim in scenario of parties’ earlier cooperation

Bad faith pursuant to Article 59(1)(b) of the EU Trade Mark Regulation (EUTMR), presupposes the presence of a dishonest state of mind or intention (Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO (C‑104/18 P)). In an interesting decision from June this year, the General Court considered that, even if the intervener’s filing of the EUTM application in question had taken place after the applicant had presented its modernization plan, this was not sufficient to establish that there had been any bad faith on their side.

Background

In February 2017, Aéroports de la Côte d’Azur (the intervener), applied to register the following figurative mark as an EUTM:

Registration was sought for goods and services in Classes 35 (business assistance, management and administrative services, business analysis, research and information services, advertising, marketing and promotional services), 37 (vehicle repair, maintenance and refueling), 39 (packaging and storage of goods, vehicle parking and storage, transport, parking and vehicle storage, mooring), 41 (publishing and reporting, education, entertainment and sport services, education, entertainment and sports) and 43 (provision of food and drink, restaurant services) of the Nice classification.

Registration was obtained in March 2018 by decision of the Opposition Division following an unsuccessful opposition filed by Aeroporto di Villanova d’Albenga SpA (Riviera-Airport) (the applicant), which was named Aeroporto Villanova d’Albenga SpA at the time of the opposition. The applicant’s opposition was based on Article 8(4) EUTMR, read in conjunction with Italian legislation. It was rejected on the ground that the existence of the earlier rights relied on by the applicant had not been established under Italian law.

In March 2018, the applicant filed an application for a declaration of invalidity of the intervener’s mark pursuant to Articles 59(1)(b) and 7(1)(b), (c) (g) and (i) EUTMR.

The Cancellation Division rejected the application in its entirety in July 2019. The applicant appealed to the EUIPO Fourth Board of Appeal (the board) solely on the ground of bad faith within the meaning of Articles 59(1)(b) of the EUTMR. In April 2020, the board upheld the decision of the Cancellation Division and dismissed the applicant’s appeal.

The applicant subsequently appealed to the General Court.

The General Court’s decision

The applicant alleged infringement of Article 59(1)(b) EUTMR, in that the board had failed to interpret bad faith correctly and assessed the facts of the case in question in a manner that was both wrong and partial.

The General Court first considered that bad faith presupposes the presence of a dishonest state of mind with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or an exclusive right for purposes other than those falling within the functions of a trade mark, in particular the essential function of indicating origin (Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO (C‑104/18 P)).

Furthermore, the intention of a trade mark applicant is a subjective factor which has to be determined objectively by the EUIPO. Consequently, any claim of bad faith must be the subject of an overall assessment, taking into account all the factual circumstances relevant to the particular case. It is only in that manner that a claim of bad faith can be assessed objectively (Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO (C‑104/18 P)).

In the present case, the applicant had based its on its earlier use of the unregistered sign Riviera Airport. In that regard, the board had observed that:

• prior to the date on which the contested mark was filed, namely 22 February 2017, there was no airport called Riviera Airport in Italy,
• there was no evidence showing that an air transport service or any other commercially relevant service had been provided in that airport under the sign Riviera Airport, and
• the activities carried out between September 2016 and July 2017 showed only the applicant’s preparatory activities with a view to potentially relaunching Albenga Airport under the name Riviera Airport.

On the basis of the commercial documents submitted by the applicant, it was also apparent, according to the General Court, that it had added the element ‘riviera airport spa’ to its company name after initiating opposition proceedings. 

Furthermore, in the context of the proceedings before the General Court, the applicant emphasized that earlier use was no longer relevant. However, it did not put forward any specific argument to show that the board had not correctly assessed the evidence that had been submitted to it when it concluded that the documents submitted were not capable of proving actual use of the sign at issue. The General Court therefore considered that the applicant had not been able to prove actual use of its sign.

The General Court then went on to consider that the use of an earlier right by a third party on the internal market, at the time of application for registration of a mark, is not an absolute condition in order to rely on bad faith (Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO (C‑104/18 P)). The General Court therefore considered it also necessary to examine whether, irrespective of the question of whether there had been earlier use by the applicant, the intervener’s bad faith at the time when it lodged the application for registration could be established by other ‘factual circumstances’ which could constitute ‘objective, relevant and consistent indicia’.

In that context, according to the applicant, the existence of an earlier cooperation agreement between the applicant and a subsidiary of the intervener would have established that there had been a business and fiduciary relationship between the parties. Consequently, the intervener should have refrained from applying to register the contested mark.

However, the General Court observed that neither the contact which was made in February 2017 between the applicant and the intervener nor the cooperation agreement allowed the General Court to conclude that there was a fiduciary relationship which required the intervener to refrain from applying to register the contested mark or, consequently, that the latter acted in bad faith.

The General Court then went on to examine the intervener’s intention to use the contested mark.

According to the applicant, the board had limited its assessment of the intervener’s intention to use the contested mark to irrelevant considerations, such as:

• the genuine and legitimate interest of the proprietor of the mark in the light of its geographical location,
• the fact that the proprietor of a mark has a period of five years after its registration in order to begin actual use of that mark, and
• the fact that sending a cease-and-desist letter to the applicant remained within the normal scope of preserving its rights as an EUTM applicant.

In the first place, the General Court considered that it was apparent from the board’s decision that the intervener’s geographical location was not a decisive factor for concluding that there was no bad faith when the intervener had filed the EUTM application. The board also considered the fact that the intervener was the proprietor of various national trade mark registrations, namely French trade marks, with the same structure as the contested mark, specifically marks consisting of, inter alia, a figurative element resembling a stylised palm tree associated with the word ‘airport’ and the name of a place (Aéroport Nice-Côte d’Azur, Aéroport Cannes-Mandelieu, Aéroport Golfe de Saint-Tropez).

Furthermore, according to the General Court, there was a commercial strategy on the part of the intervener which entailed the protection of trade marks by registering them. The fact that the contested mark had the same structure as the earlier marks registered by the intervener since 2010 showed a coherent business strategy.

In the second place, as regards the applicant’s argument concerning genuine use, the General Court observed that the intervener’s EUTM was registered on 15 March 2018, whereas the application for a declaration of invalidity was filed on 21 March 2018. The General Court recalled that the proprietor of a trade mark has a period of five years within which to begin actual use consistent with the essential function of a trade mark. Furthermore, the applicant is not required to indicate or even to know precisely, on the date on which its application for registration of a mark is filed or of the examination of that application, the use she will make of the mark applied for, and it has a period of five years for beginning actual use consistent with the essential function of that trade mark. The fact that, when the contested decision was adopted, the intervener was yet to use the contested mark did not mean that it did not intend to use it.

Thirdly, the General Court did not consider that the cease-and -desist letter was a relevant factor in the assessment of bad faith, since such a request fell within the scope of the rights attaching to the registration of a mark.

Finally, the General Court did not accept other arguments put forward by the applicant to establish a dishonest intention on part of the intervener: it was true that the intervener’s filing of the EUTM application had taken place after the applicant presented the modernization plan for its airport to the intervener. However, when the applicant took the initiative to contact the intervener, it did not state that the underlying reason to that contact was to seek consent to use the sign Riviera Airport, nor that there was a link between its airport modernization plan and the use of the intervener’s sign. The consent that was sought from the intervener showed rather that the applicant was aware that it would be difficult for it to use that sign. The mere fact that the intervener was aware of the applicant’s new airport plan the day before it filed the application to register the contested mark was not in itself sufficient for that application to be declared invalid on the ground of bad faith, particularly as it appeared that the application for EUTM registration formed part of the intervener’s overall strategy.

It followed from all the above that the applicant’s action had to be dismissed in its entirety.