Bad faith and chocolate bunnies

It's not yet available on the Curia website, but the Luxembourg jungle-drums have been beating out the news that the Court of Justice of the European Communities has delivered its ruling in Case C-529/07 Chocoladefabriken Lindt & Spruengli. Word from the Kat's friend Stephanie Bodoni (Bloomberg) is that Lindt & Spruengli’s Community trade mark for a chocolate Easter bunny wrapped in gold foil may be at risk if a competitor can prove L&S gained their legal protection in bad faith. Says Stephanie:

"The European Court of Justice today said that “an overall assessment” of relevant factors must be made to check whether Lindt, Switzerland’s oldest chocolate maker, acted in bad faith when it applied for the EU protection in 2000.

“To determine whether there was bad faith, consideration must also be given to the applicant’s intention at the time when he files the application” for the trade mark, the EU court in Luxembourg ruled today.

After acquiring its EU trade mark, Lindt sued Austria’s Franz Hauswirth GmbH, for making “confusingly similar” products to its own 57-year-old rabbit, wrapped in gold foil with a bell and red ribbon around its neck. Sylvia Kaelin, a spokeswoman for Kilchberg, Switzerland-based Lindt, declined to immediately comment, saying she had not seen the ruling

“Even in such circumstances, and in particular when several producers were using, on the market, identical or similar signs for identical or similar products capable of being confused with” Lindt’s product, the Swiss company’s application “may be in pursuit of a legitimate objective,” the court said. In addition, the extent of Lindt’s reputation at the time “might justify the applicant’s interest in ensuring a wider legal protection for his sign,” said the court. Lindt started selling the bunnies in Austria in 1994. Chocolate bunnies have been sold in Austria and Germany since at least 1930, according to court documents".

It remains for the Austrian court, which referred the case for a preliminary ruling, to apply it to the facts. The IPKat -- who is keeping off all chocolates for health reasons -- reserves the right to comment on this ruling once he gets his paws on it.

STOP PRESS: 11.34am: text of judgment now available here

No simple test for bad faith bunnies

Today Advocate General Eleanor Sharpston QC gave her Opinion to the Court of Justice of the European Communities in the latest round of the Battle of the Bunnies, Case C‑529/07 Chocoladefabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH.

Swiss-based Lindt and Austrian-based Hauswirth both made and sold sacramental bunnies for the Easter chocolate trade. Lindt had made and sold bunnies (right) since the early 1950s, with its first Austrian rabbit roll-out taking place in 1994. In June 2000, and applied to register as a three-dimensional Community trade mark the form and presentation of its bunny wrapped in gold-coloured foil, with red and brown markings, wearing round its neck a red ribbon with a bell attached, and bearing on its haunch a design including the words ‘Lindt Goldhase’. This mark was registered on 6 July 2001.

Hauswirth made and sold its own chocolate bunnies (left) from 1962. These were usually decorated with a ribbon, but not a bell, and bore no identifying name; its label, affixed to the underside, was normally invisible when the rabbit was placed on its base.

Following registration, Lindt sued Hauswirth for trade mark infringement proceedings, alleging a likelihood of confusion. Hauswirth counterclaimed that Lindt's registration was made in bad faith and that its trade mark should therefore be declared invalid. The Handelsgericht (Commercial Court) in Vienna dismissed Lindt's claim and upheld the counterclaim. On appeal by Lindt to the Oberlandesgericht (Higher Regional Court), that judgment was quashed, but not on grounds which gave Lindt satisfaction. According to Hauswirth, the appeal court ruled simply that, since Lindt’s presentation had acquired a reputation before the mark was applied for, Lindt could not be held to have acted in bad faith; that, however, while disposing of Hauswirth’s counterclaim, did not uphold Lindt’s main claim.

Both parties appealed further to the Oberster Gerichtshof (Austrian Supreme Court), which considered that (i) there was a likelihood of confusion between the two presentations; (ii) a number of other models have been marketed since the 1930s, bearing a greater or lesser degree of similarity with Lindt’s presentation, and Lindt was aware of at least some of those models before it applied to register its trade mark; (iii) before Lindt's application was made, the various producers, or at least some of them, had acquired ‘valuable rights’ to the protection of their products under Austrian competition law and German trade mark law, even though none of them had been registered; (iv) by registering the mark, Lindt wanted to ‘create a basis for taking proceedings against other manufacturers’ products which were already available and at least some of which were known to it in Germany’. The court then decided to seek a preliminary ruling on the following questions:

"1. Is Article 51(1)(b) of [the Trade Mark Regulation] to be interpreted as meaning that an applicant for a Community trade mark is to be regarded as acting in bad faith where he knows, at the time of his application, that a competitor in (at least) one Member State is using the same sign, or one so similar as to be capable of being confused with it, for the same or similar goods or services, and he applies for the trade mark in order to be able to prevent that competitor from continuing to use the sign?

2. If the first question is answered in the negative:

Is the applicant to be regarded as acting in bad faith if he applies for the trade mark in order to be able to prevent a competitor from continuing to use the sign, where, at the time he files his application, he knows or must know that by using an identical or similar sign for the same goods or services, or goods or services which are so similar as to be capable of being confused, the competitor has already acquired “valuable property rights”?

3. If either the first or the second question is answered in the affirmative:

Is bad faith excluded if the applicant’s sign has already obtained a reputation with the public and is therefore protected under competition law?’

The Advocate General has advised the Court to rule as follows:

"In order to determine whether ‘the applicant was acting in bad faith when he filed the application for the trade mark’ within the meaning of Article 51(1)(b) ..., a national court must take account of all the available evidence from which it is possible to conclude that the applicant was or was not acting knowingly in a manner incompatible with accepted standards of honest or ethical conduct. In particular:

– an intention to prevent others from using similar signs in respect of similar products may be incompatible with such standards if the applicant was, or must have been, aware that others were already legitimately using similar signs, particularly if that use was substantial and longstanding and enjoyed a degree of legal protection, and if the nature of the sign was dictated to some extent by technical or commercial constraints;

– however, such an intention would not necessarily be incompatible with those standards if the applicant himself had enjoyed similar or greater legal protection in respect of the mark applied for and had used it in such a way, to such an extent and over such a time that the use by others of their similar signs could be considered to derive unjustified benefit from the applicant’s sign, and if those others were not constrained in their ability to choose dissimilar signs".

The IPKat is fascinated by this: can the bad faith of an applicant for registration of a Community trade mark be determined by the issue of whether the use by third parties of their own signs, after the date of application for the Community trade mark, could be considered as deriving an unjustified benefit from the applicant's sign? And surely competitors can never be constrained in their ability to choose dissimilar signs, if the use of a dissimilar sign is by definition incapable of constituting an infringement of the registered right. Merpel says, the most important bit of this Opinion is at [75] where she says:

" ... the gist of my analysis is that there is no simple, decisive test for establishing whether a trade mark application was submitted in bad faith. The various sets of circumstances which have been advanced before the Court as exhaustively delimiting the notion of bad faith are in fact illustrative examples of that concept. Bad faith is a subjective state – an intention incompatible with accepted standards of honest or ethical conduct – which is ascertainable from objective evidence, and which must be assessed case by case. It requires, at least, knowledge of the circumstances from which incompatibility with accepted standards of honest or ethical conduct may be deduced. Whether the trade mark applicant possesses such knowledge is an issue which may be determined by reference to the common state of knowledge in the economic sector concerned, if direct evidence is lacking. An intention to prevent competitors from continuing to use unregistered signs which they have hitherto been entitled to use and to defend against competition from other such signs is indicative of bad faith. However, the assessment must take account of all relevant factual and legal elements which might justify such an intention or, on the contrary, underline its dishonest or unethical nature".

Make your own chocolate bunny here

Temperatures rise in ECJ chocolate bunny melt-down

Via the IPKat's friend Stephanie Bodoni (Bloomberg) comes news of the fight over Lindt & Sprüngli AG's Community trade mark right to a chocolate Easter bunny wrapped in gold foil. This right was gained "honestly and fairly", said Lindt, and it should be able to block the making of copies by competitors, Lindt told the Court of Justice of the European Communities. Lindt, Switzerland's oldest chocolate maker, is denying an Austrian competitor's claims that it acquired its EU-wide protection in bad faith at a hearing this week in Case C-529/07.

Lindt's trade mark is being used to prevent the Austrian company Franz Hauswirth GmbH from making products that are allegedly confusingly similar to its 56-year-old trade mark rabbit, which is wrapped in gold foil with a bell and wears a red ribbon around its neck. "Here is a product that's been around for some 50 years and sold about 20 million times in the EU in 2000, when we applied for the trade mark", said Gesine Hild, Lindt's lawyer. "The company acted in good faith when it sought the right to exclude the use of that same product by others".

Franz Hauswirth GmbH has been making chocolate rabbits since 1960 in Austria. It faces the stark option of having to change the look of its own bunnies or to cancel Lindt's EU trade mark registration. Hild said that, while Lindt was aware of competing products in Europe when it applied for the EU trade mark in 2000, it didn't know of the Austrian company's products,. Three years later Lindt learned of Hauswirth's bunny at a fair in Switzerland where Hauswirth presented them as "a new product".

The ruling is expected in around a year from now.

More on the Battle of the Bunnies from the IPKat here and here

Trade mark trolls reach the UK

The IPKat has been tipped off about this story from the BBC about a trade mark "troll" who has registered or applied to register trade marks which correspond with the names of existing Scottish businesses and have then offered to sell or "lease" them to the businesses in question for large sums of money. The person in question appears to be targeting the juice bar sector and has registered 40-odd juice-related names.

The IPKat notes that the existing businesses may be able to oppose or invalidate registrations based on marks protected by passing off, and perhaps to rely on bad faith grounds. However, the Kat has a niggling doubt - is it truly bad faith to register in a first to file system?

Fianna didn't Fail

The IPKat has come across a rare example of two major political parties working together with a single aim. The two parties in question are the Irish parties, Fianna Fail and Fine Gael and the aim was to defeat an application by a third party to register their names (and that of Sinn Fein) as UK trade marks.

The third party was a Mr Patrick Melly. He applied to register the three names as trade marks for fresh fruit, vegetables and salad, potatoes, tomatoes, malt, all the produce of Ireland, lemons, bananas in Class 31 and business administration, office functions in Class 35.

He then sent letters to the General Secretaries of Finna Fail and Fine Gael which read:

We are instructed by Fine Gael Limited, a Company registered in England under registration number 05473574. The Company has recently filed an application to register the name “Fine Gael” with the UK Patent Office and the European Trade Mark Office as a Trade Mark.

Our client is now planning to commence trading in Northern Ireland and the Republic in the name of Fine Gael Limited and intends to fully enforce its rights as the proprietor of the trademark. It would appear to our client that your party may inadvertently breach the terms of the trademark and it would not wish to see your client embarrassed by having to make any public retractions or apologies to our client. Our client would also not wish to put the party into a position whereby it is forced to change its name in some material way.

Our client would wish to enter into negotiations with your party for the grant of a license for the use of the trademark “Fine Gael” and would hope that this is of interest to your party.

Melly also appears to have written to the UK Treasury Solicitor indicating that if he did grant licences to the parties, he would place political conditions on them relating to the way in which public appointments were made.

The remarkable (though understandable on the state of the law) thing is that the Hearing Officer held that the parties could not oppose the registration.

Mr Geoffrey Hobbs QC reached the same argument on three of the four arguments put forward by the parties.

The party names could not benefit from Art.6bis protection as famous marks because there was no proof that the party names had been used as (unregistered) trade marks, nor was the evidence submitted sufficient to establish that they were well known in the UK.

The party names were also not protected by passing off as the parties had no goodwill in the UK.

The ban on registering deception marks also couldn’t help the parties. Mr Hobbs QC divided deceptive registration situations into two types: absolute and relative. Absolute covers deception as to what is being made available, relative covers deception as to who is making it available. The ban on registering deceptive marks was said to only be absolute deception. Concerns about who is making it available should be left to the relative grounds for the refusal of registration. The fear was that UK consumers would wrongly believe that the parties were using their name for fundraising purposes, which would be a relative type of deception, and consequently not covered under the absolute grounds.

However, the parties did succeed in showing bad faith. Although there is no ECJ case law on bad faith, the LCAP thought it legitimate to pay attention to the well-established Community law principle that “Community law should be interpreted and applied so as to confer no legitimacy on improper behaviour. Returning to the theme of absolutes and relatives, the LCAP found that the hearing officer was entitled to find that the relative position of the parties was not harmed, in that they would still be able to continue with their previous activities, even if Mr Melly’s application proceeded to registration. However, the hearing officer had paid insufficient attention to the absolute position of Mr Melly, who displayed a lack of integrity in threating to use the registrations in a way which would stop the parties from using their names or, more seriously (because the previous threat could probably be avoided with some good legal advice), by forcing the parties to distance themselves from his use of their names.

The IPKat finds it remarkable that the application for registration almost got away with registering the name of the major political parties in our very near neighbour. The parties didn’t help themselves here by failing to adduce evidence of recognition in the that went beyond mere assertions. Even if they had though, this wouldn’t have helped too much because the problem here was essentially lack of use as a trade mark. This put pay to both Art.6bis and goodwill for the purposes of passing off.