Case C‑104/18 P

Koton Mağazacilik Tekstil Sanayi ve Ticaret AŞ

v

European Union Intellectual Property Office

Judgment of the Court (Fifth Chamber), 12 September 2019

(Appeal — EU trade mark — Regulation (EC) No 207/2009 — Absolute grounds for invalidity — Article 52(1)(b) — Bad faith at the time that an application for a trade mark is filed)

1. EU trade mark — Surrender, revocation and invalidity — Absolute grounds for invalidity — Applicant in bad faith when lodging the trade mark application — Concept of bad faith — Scope

   (Council Regulation No 207/2009, Art. 52(1)( b))

   (see paragraphs 45, 46)

2. EU trade mark — Surrender, revocation and invalidity — Absolute grounds for invalidity — Applicant in bad faith when lodging the trade mark application — Criteria for assessment — Need to prove the existence of the likelihood of confusion between the marks at issue — Precluded

   (Council Regulation No 207/2009, Art. 8(1)(a) and (b), (2) and (5), Art. 52(1)(b), and Art. 53(1)(a))

   (see paragraphs 51-54, 56)

Résumé

In the judgment in Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO (C‑104/18 P), delivered on 12 September 2019, the Court of Justice set aside the judgment of the General Court ( 1 ) and clarified the concept of ‘bad faith’ at the time that an application for a European Union trade mark is filed.

Mr Nadal Esteban and Koton Mağazacilik Tekstil Sanayi ve Ticaret, an undertaking which is the proprietor of KOTON figurative marks, had a business relationship until 2004. On 25 April 2011, Mr Esteban filed an application for registration as a European Union trade mark of the figurative sign STYLO & KOTON for goods and services in Classes 25, 35 and 39 of the Nice Agreement. ( 2 ) Following the partial upholding of the opposition filed by Koton Mağazacilik Tekstil Sanayi ve Ticaret, based on its KOTON marks registered for goods and services in Classes 18, 25 and 35, the mark STYLO & KOTON was registered for services in Class 39. Koton Mağazacilik Tekstil Sanayi ve Ticaret then brought an application for a declaration of invalidity on the basis of Article 52(1)(b) of Regulation No 207/2009, ( 3 ) pursuant to which the bad faith of an applicant when filing the application for the trade mark is an absolute ground for invalidity.

The General Court, confirming the decision to dismiss the application for a declaration of invalidity adopted by the European Union Intellectual Property Office (EUIPO), held that there could be no bad faith since there was neither identity nor similarity capable of causing confusion between the goods or services in respect of which the marks had been registered. Hearing the appeal, the Court of Justice was called upon to clarify the concept of ‘bad faith’.

First of all, the Court of Justice stated that while, in accordance with its usual meaning in everyday language, the concept of ‘bad faith’ presupposes the presence of a state of mind or of a dishonest intention, that concept must moreover be understood in the context of trade mark law, which is that of the course of trade. The rules on the EU trade mark are aimed, in particular, at contributing to the system of undistorted competition in the Union, in which each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trade marks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin. Consequently, the Court of Justice held that a trade mark must be declared invalid on the ground of bad faith where it is apparent from relevant and consistent indicia that the proprietor of that trade mark 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, in particular the essential function of indicating origin.

Next, the Court of Justice held that it is not apparent from the judgment of 11 June 2009, Chocoladefabriken Lindt & Sprüngli (C‑529/07, EU:C:2009:361), that the existence of bad faith may only be established in the situation where there is use on the internal market of an identical or similar sign for identical or similar goods capable of being confused with the sign for which registration is sought. There may be situations where the application for registration of a trade mark is liable to be regarded as having been filed in bad faith notwithstanding the fact that, at the time of that application, there was no use by a third party on the internal market of an identical or similar sign for identical or similar goods. In the case of an application for a declaration of invalidity based on Article 52(1)(b) of Regulation No 207/2009, there is no requirement whatsoever that the applicant for that declaration be the proprietor of an earlier mark for identical or similar goods or services. Moreover, in cases where it transpires that, at the time of the application for the contested mark, a third party was using, in at least one Member State, a sign identical with or similar to the contested mark, the existence of a likelihood of confusion between those signs on the part of the public need not necessarily be established. In the absence of any likelihood of confusion between the sign used by a third party and the contested mark, or if there has been no use, by a third party, of a sign identical with, or similar to, the contested mark, other factual circumstances may, depending on the circumstances, constitute relevant and consistent indicia establishing the bad faith of the applicant.

Lastly, the Court of Justice found that the General Court had not taken into consideration, in its overall assessment, all the relevant factual circumstances as they appeared at the time that the application was filed, whereas that point in time is decisive. Since it was claimed in the application that the mark should be declared invalid in its entirety, the application therefore had to be examined by assessing Mr Esteban’s intention at the time that he sought registration of that mark. Consequently, the Court of Justice set aside the judgment under appeal.

( 1 ) Judgment of the General Court of 30 November 2017, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO — Nadal Esteban (STYLO & KOTON) (T‑687/16, EU:T:2017:853).

( 2 ) The Nice Agreement concerning the international classification of goods and services for the purposes of the registration of marks of 15 June 1957, as revised and amended.

( 3 ) Council Regulation (EC) No 207/2009 of 26 February 2009 on the [European Union] trade mark (OJ 2009 L 78, p. 1).