Trademark lawyers and brand owners may have been keeping at least one eye on the EU General Court last week in the hope that it might provide some clarity on bad-faith registrations.
However, the court may have instead thrown another spanner in the works, while also providing an interesting lesson in the importance of expert witness testimony.
Losing a monopoly
In a judgment handed down on Wednesday, April 21, in Hasbro v EUIPO, the court found that toy company Hasbro’s re-filing strategy related to the board game Monopoly was designed to avoid having to prove genuine use.
According to the court, the company’s 2011-registered EU trademark (EUTM) for ‘Monopoly’ covered identical goods and services to earlier ‘Monopoly’ EUTMs stretching back to 1998. The General Court affirmed a 2019 decision by the EUIPO’s Boards of Appeal (BoA) to invalidate Hasbro’s EUTM for goods and services in classes 9, 16, 28 and 41, which include games and entertainment.
Croatian board game seller Kreativni Događaji sought to invalidate the ‘Monopoly’ mark in 2015. Under EU Regulation No. 207/2009 (Community trademark regulation), EUTMs can be invalidated if the owner cannot prove genuine use five years after registration.
In its appeal to the General Court, Hasbro argued that it was “fanciful” to suggest that the ‘Monopoly’ EUTM had not been used, and that being required to prove use would pose significant costs and result in a flood of similar cases centring on re-filed marks.
However, the court rejected these arguments, finding evidence that Hasbro had acted in bad faith.
It seems it was right to do so, too.
In a scarcely believable portion of the General Court’s judgment (paragraph 70), it notes that a senior Hasbro witness admitted during the BoA case that “one of the advantages which justified the filing of the contested mark was based on the fact that it would not have to furnish proof of genuine use of that mark”.
The court was quick to pick up on such brazenness.
“Such conduct cannot be held to be lawful,” it said, adding: “Not only is the filing strategy … inconsistent with the objectives pursued by Regulation No. 207/2009, but it calls to mind a case of an abuse of law.”
The admission, according to the BoA’s judgment, was made by Sara Beccia, Hasbro’s global managing trademark and copyright attorney.
In a recent interview with Managing IP, new BoA president Joao Negrão noted that the Hasbro case was one of only a few where the BoA conducted an oral hearing solely to better understand the commercial logic of one of the parties.
One source tells us that this is very unusual for the BoA – which usually assesses an application without the need for expert witnesses or testimony. Even if it does call for this, it is entirely at the parties’ discretion, says the source.
“I think they slightly shot themselves in the foot there,” they add.
Richard May, associate director at Osborne Clarke in the UK, says it is interesting that something said during the oral hearing appears to have played a major part in the outcome, especially as these types of hearings are a rarity.
“I don’t think it can be said, as Hasbro argued, that the BoA focused too much on the oral admission, but I think it certainly contributed to Hasbro’s loss. I know the BoA is keen to conduct more oral hearings, but brand owners may think it’s safer to stick to written submissions after Hasbro's experience.”
Shift in onus?
However, while the court clarified that there is no way around proving use, it may have kick-started a shift in the onus for proving bad faith – potentially transferring the pressure onto the shoulders of brand owners.
According to Sarah Wright, head of IP at CMS Cameron McKenna Nabarro Olswang in London, there is a disconnect in the judgment.
While paragraph 42 confirms that the good faith of an EUTM owner is presumed and it is the applicant seeking invalidity who must prove bad faith, paragraph 44 notes that the EUTM owner is best placed to provide the EUIPO with information on their intention at time of filing.
“While the burden of proving bad faith has not formally shifted – there is now a greater onus on the proprietor to explain his intention at the time of filing and this will likely focus the minds of many brand owners and encourage them to document and record their intentions at time of filing,” Wright says.
It is not hard to see why brand owners, or those in the IP team, may find this disconcerting.
It will not only require an element of crystal ball gazing to account for any potential future use but will also require more collaboration with different teams within the business, including sales and marketing, to predict and plan for future developments.
With many IP teams complaining of feeling as if they operate in a silo, perhaps now is the time for long-overdue changes.
According to May at Osborne Clarke, a requirement to set out intentions early will involve a “big educational piece internally”.
The decision, he adds, has opened the door for re-filings of the same mark to be attacked. “The biggest implication will be increased costs as brand owners will now almost certainly have to rely on their older marks more often, which are subject to the expensive exercise of proving use.”
Despite the fact that UK courts are no longer bound by the ruling, May believes they are likely to adopt the same approach because re-filings arguably already fall within the bad-faith test clarified by the Court of Justice of the EU and the England and Wales High Court in Sky v SkyKick.
EUIPO examiners do not have the power to reject such applications at the outset, notes May. “Brand owners will just have to be more selective when choosing which marks to rely on.”
As the dust settles, brand owners must decide which strategy to adopt – invest more in research at the filing stage or rely on older registrations.
