06 September, 2022

You Gonna Keep That? - EU General Court Considers Trademark Registrations of Dormant Brands and Bad Faith

Many brands from the distant past have fallen by the wayside or haven't been used in years or even decades, despite some still fondly remembering them. These 'dormant' brands do also present an opportunity for revival and use of the potential remaining goodwill in those brands, but what happens when an unrelated third party decides to "revive" one of these dormant brands and register it as a trademark? The answer isn't always crystal clear, but a recent decision by the EU General Court set to look at just that and whether this could amount to a bad faith registration. 

The case of Ladislav ZdĂșt v EUIPO concerned a trademark for a figurative mark for the brand "NEHERA" (EUTM 11794112), which was applied for and registered in 2013-2014, including a number of different types of goods such as clothing and footwear. Some 5 years after registration three interveners, Ms Isabel Nehera, Mr Jean-Henri Nehera and Ms Natacha Sehnal, filed an application for a declaration of invalidity of the trademark, alleging that the registrant, Mr Zdut, had acted in bad faith when he filed the application for registration of the contested mark. This was due to the first two interveners' grandfather, Jan Nehera, having established a business using the same brand in Czechoslovakia in the 1930s and had acquired a trademark in Czechoslovakia for the same. However, the brand has not been used since the 1940s. The application was rejected at first instance by the Cancellation Division, but the decision was reversed by the Second Board of Appeal which declared the trademark invalid. Mr Zdut subsequently appealed that decision, with the matter ending up with the General Court.

Considering the law around the matter, Article 52 of the CTM Regulation sets out that an EU trademark should be declared invalid where the applicant was acting in bad faith when they filed the application for registration of that trademark. 'Bad faith' in this regard "… presupposes the presence of a dishonest state of mind or intention" so it means that the applicant "…has filed the application for registration of that mark, not with the aim of engaging fairly in competition but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark"

However, the subjective intentions of the applicant must still be assessed objectively considering all the factual circumstances relevant to the particular case. These circumstances can include: (i) the fact that the applicant knows or must know that a third party is using, in at least one Member State, 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; (ii) the applicant’s intention to prevent that third party from continuing to use such a sign; and (iii) the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is sought. 

Even Superman had no respect for historical ownership
of things

Even outside of the specific circumstances above, the General Court noted that other factors, such as the origin of the sign at issue and of its use since its creation, the commercial logic underlying the filing of the application for the trademark, the reputation of the sign at the time of the registration, and the chronology of events leading up to that filing might be very relevant. 

The General Court then turned to the actual matter at hand. It initially noted that there is currently no registration for the "NEHERA" brand in the EU, and that the earlier Czechoslovakian trademark had lapsed in the 1940s and hasn't been used since. 

Interestingly Mr Zdut had been fully aware of the existence and reputation of Jan Nehera and of the old trademark in Czechoslovakia, and even had noted that he wanted to launch the brand to ‘pay a tribute’ to the ‘great days of the Czechoslovak textile industry of the 1930s’ and in particular to Mr Jan Nehera. 

Considering the law in light of the matter, the General Court set out that "[f]ree-riding behaviour with regard to the reputation of a sign or of a name… is, in principle, only possible if that sign or that name actually and currently enjoys a certain reputation or a certain celebrity". With that in mind, the EU courts have found an intention to take unfair advantage of the surviving reputation of an earlier mark, including where that mark was no longer used or of the current celebrity of the name of a natural person, where the surviving reputation or fame was established.  

In contrast to this position, there is no usurpation of the reputation of a term claimed by a third party and, therefore, no bad faith, where that term was neither registered, used, nor renowned in the EU. 

With that in mind, the General Court noted that in the absence of surviving reputation in respect of the former Czechoslovak trademark and of current celebrity in respect of Jan Nehera’s name at the time of filing, the use of the mark wouldn't be free-riding behavior indicating bad faith. Even though Mr Zdut knew of the individual and the original trademark, it isn't sufficient to establish the existence of bad faith. 

The interveners also highlighted an intention to create a link between the name and the new brand, but the General Court saw that this wasn't in itself sufficient to support a finding that unfair advantage was taken of the reputation of the sign or of the former name. 

The General Court also focused on the lack of a current reputation in relation to the old trademark or the name. As they noted, currently both have been forgotten by the relevant public, and the applicant had made considerable efforts to build up the brand again. This was far from merely parasitically taking advantage of an existing reputation. 

The General Court also determined that it is possible, in certain specific circumstances, that reuse by a third party of a previously renowned former mark or of the name of a previously famous person may give a false impression of continuity or of inheritance with that former mark or with that person. This can happen where the applicant presents itself to the relevant public as the legal or economic successor of the holder of the former mark, when there is no continuity or inheritance relationship. That could then be considered in establishing bad faith. However, no such intention was found in relation to Mr Zdut. 

In summary, the General Court found that the concept of bad faith presupposes the presence of a dishonest state of mind or intention, which they were unable to find in the present matter, and overturned the Board of Appeal's decision. 

The case is an important reminder for any brand owners (even historical ones), or their potential legatees, to make sure that those brands are properly registered if any use of the brand is ever even contemplated. If this isn't done it may present an opportunity for a third party to jump in and take over the brand, which could very well be fully legal and without much recourse down the line. It is possible that this matter will be appealed to the Court of Justice for an ultimate decision, but in the absence of that any dormant brands could very well be up for grabs. 

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