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Bad faith registrations

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01/07/2014

In a case before the General Court [1] Simca Europe Ltd had obtained registration of the work mark SIMCA as a Community Trade Mark for goods in Class 12.

Peugeot Citroen brought a cancellation action on the basis of Article 51(1)(b) of the Community Trade Mark Regulation [2]. Article 51(1)(b) provides that a Community Trade Mark shall be declared invalid where the applicant was acting in bad faith when he filed the application for the trade mark.

In essence, Peugeot alleged that the application for registration had been made in bad faith with the sole objective of preventing Peugeot from marketing vehicles under the SIMCA name.

Peugeot relied on the fact that it was the holder of an international registration for the mark SIMCA, which designated a a number of EU Member States (in some cases as far back as 1959). Peugeot maintained that the mark had been registered purely for the purpose of extortion or “blackmail” so that Peugeot would be compelled to pay compensation for the cancellation of the mark; it was a “speculative” mark or a “blocking” mark.

The Board of Appeal upheld the cancellation action, finding that Peugeot had prior rights and that, although it had stopped manufacturing vehicles under the SIMCA name in the 1970s, the brand nonetheless enjoyed a reputation in relation to motor vehicles and that the sole purpose of the registration application was to “free-ride on the reputation of [Peugeot’s] registered marks and to take advantage of the good reputation of those marks through the deliberate unlawful use of the sign SIMCA”. Simca appealed.

The General Court had no difficulty in dismissing the appeal. In cases such as this, which concerned registrations arguably made in bad faith, the question of bad faith had to be determined by means of an overall assessment of the relevant factors, including the fact that the applicant knew or should have known that a third party had been using, in at least one Member State, an identical or similar sign for identical or similar products liable to be confused with the sign in respect of which registration was sought. Further, the intention of preventing a product from being marketed might, in certain circumstances, be indicative of bad faith on the part of the applicant. Here, as the applicant had previously worked as an independent contractor for Peugeot, he was found to be aware of the brands’ reputation in relation to Peugeots’ previous usage.

The General Court considered that the Board of Appeal had been entitled to find that the real purpose of the application for registration had been to “free-ride” on Peugeot’s reputation and to take advantage of that reputation.

Though not new law, the case is a helpful summary of relevant considerations that a court will take into account when determining a cancellation action on the basis of Article 51(1)(b) of the Community Trade Mark Regulation

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[1] Case T-327/12
[2] Regulation No 40/94 (now Regulation No 207/2009)