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Do not pass Go, do not collect £200, do not register trade marks in bad faith

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In its recent decision, the EUIPO issued a partial invalidation of Hasbro's EUTM registration for MONOPOLY on the grounds of bad faith because the mark covered goods and services which were identical to those covered by three prior registrations made by Hasbro for the MONOPOLY mark.

On 22 July 2019, Hasbro Inc. suffered a partial defeat before the Second Board of Appeal at the EUIPO in relation to its EU trade mark (EUTM) registration for the internationally renowned board game, Monopoly. In its decision, the EUIPO issued a partial invalidation of Hasbro's EUTM registration for MONOPOLY on the grounds of bad faith because the mark covered goods and services which were identical to those covered by three prior registrations made by Hasbro for the MONOPOLY mark.

Background

On 30 April 2010, Hasbro filed an application to register the word mark MONOPOLY for a variety of goods and services in Classes 9, 16, 28 and 41. The mark was registered on 25 March 2011 ('the contested MONOPOLY mark'). Hasbro had also successfully registered three previous EUTMs for the MONOPOLY mark in 1998, 2009 and 2010 for assorted goods and services in Classes 9, 25 and 28, Class 41 and Class 16 respectively.

On 25 August 2015, Kreativni Dogadaji d.o.o., a Croatian company, filed an application for a declaration of invalidity of the contested MONOPOLY mark in relation to all the goods and services it covered. Kreativni Dogadaji argued that Hasbro had filed the application for the Contested MONOPOLY Mark in bad faith.

The crux of Kreativni Dogadaji's argument that Hasbro was acting in bad faith was based on the five-year grace period granted to EUTM owners which runs from the date of registration and after which the mark becomes subject to 'use requirements' within the EU. If the mark is not put to genuine use after the grace period has expired, the registration will be exposed to cancellation for non-use in relation to the goods and services it covers. By (re)filing the contested MONOPOLY mark for identical goods and services and adding a few additional ones, it was argued that Hasbro was attempting to circumvent the use requirement.

At first instance, the EUIPO's Cancellation Division dismissed the request for invalidation on the basis that bad faith had not been proved. The Cancellation Division considered that it was established practice for companies to apply for EUTM registrations covering a large range of goods and services.

Kreativni Dogadaji therefore appealed to the Board of Appeal.

The Appeal

On appeal, the Board recognised that it was an undisputed fact that Hasbro had already filed and registered identical MONOPOLY trade marks on three previous occasions. The Board noted that the contested MONOPOLY mark did cover a greater range of goods and services in Classes 9, 16, 28 and 41, although many were identical or highly similar. In its judgment, the Board acknowledged that for a company to apply for a large variety of goods and services was common practice and such conduct did not depart "from accepted principles of ethical behaviour or honest commercial and business practices." Accordingly, the Board found that for some of the goods and services, Hasbro was pursuing a completely legitimate business strategy.

However, the Board determined it was not acceptable simply to repeat earlier applications for identical goods and services covered by the earlier MONOPOLY marks merely by adding additional goods and services. The Board, citing the case of Pelikan (T-136/11) amongst others, discussed the guidance provided by case law for determining a finding of bad faith, as this concept is not defined in the EUTM Directive or Regulation.

The Board noted that all the relevant factors specific to a particular case must be accounted for, especially the applicant's intention of preventing a third party from continuing to use a sign. The Board took care to state that where the proprietor of an EUTM files a repeat application for the same trade mark in order to avoid the consequences entailed by total or partial revocation of earlier marks for non-use, such conduct would be indicative of the proprietor acting in bad faith.

In conducting an analysis of Hasbro's intention when it filed the contested MONOPOLY mark, the Board made particular reference to a concession made by a Hasbro representative at the oral hearing that "being able to rely upon one registration without the need to prove use" provided a benefit to Hasbro. This statement, coupled with the fact that the earlier MONOPOLY mark registrations were renewed and relied upon in opposition proceedings, led to the Board to conclude that Hasbro's strategic intention was to circumvent the obligation to prove genuine use of the mark. The Board considered this an 'abuse of law'. Consequently, the Board invalidated the registration for all goods and services identical or similar to those covered by the earlier MONOPOLY marks, founded on a finding of bad faith.

Comment

It has been common practice in the past for some trade mark owners to re-file their trade marks in order to secure another five year grace period for that new mark. It is therefore interesting that the Second Board of the EUIPO has concluded that the re-filing of the MONOPOLY mark was made in bad faith because it included goods and services already covered in the previous registrations.

It is likely that this case will be appealed to the General Court. It also bears some similarity to the Sky v SkyKick case (C-371/18), where the CJEU is dealing with whether it constitutes bad faith simply to apply to register a trade mark without any intention to use it in relation to the specified goods or services.

Importantly, the CJEU in Sky v Skykick is also to decide on the consequences of a finding of bad faith: namely, whether the mark should be invalidated as a whole or just in relation to the goods and services for which there is no intention to use (as found in the MONOPOLY case). Interestingly, the Advocate General in the Koton case (C-104/18) recently opined that in such circumstances, the whole mark should be invalidated because bad faith as a ground of invalidity stems from the circumstances in which the mark is applied for (and not from an inherent defect in the mark itself). If the CJEU agrees with her, this could have huge consequences on how trade marks are filed in the EU (and the scope of the goods and services listed in future trade mark applications).

Should there be an appeal in the MONOPOLY case, it will be interesting to see how the Court's jurisprudence on bad faith trade mark registrations develops both in the present case and in light of the Sky v SkyKick case. Many IP lawyers are eagerly awaiting the Advocate General's advice on 5 September when his opinion is due in the Sky v SkyKick case.

With the UK scheduled to leave the EU on 31 October 2019, many trade mark proprietors whose EUTMs have only been put to genuine use in the UK may actively be considering EUTM re-filings in order to take advantage of an additional grace period to commence use of their EUTMs in one or more of the remaining Member States. The final outcomes of these proceedings could have significant ramifications for any businesses contemplating such strategies, and as such, they should be monitored closely.

With thanks to Charlie Carman, co-author of the blog.

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