The CJEU confirms that similarity of products/services is not essential in the analysis of bad faith

Monday, 11 of November of 2019

On September 12, the Fifth Chamber of the Court of Justice of the European Union (hereinafter CJEU) settled, through its judgment in Case C-104/18, "Koton", a matter widely debated in practice, namely, if, in order to confirm the existence of bad faith, the existence of similarity for goods/services is a sine qua non requirement.

The procedure from which the aforementioned judgment brings cause confronted Koton Magazacilik Tekstil Sanayi ve Ticaret AS (hereinafter, Koton) and Mr. Joaquín Nadal Esteban, as regards the invalidity action filed by the first against the registration of the Union trademark European number 009917436 “Stylo & Koton” of the second.

Such mark, KOTON claimed, covering the products listed below, would have been applied for in bad faith:

  • Class 25: clothing, footwear, headgear.
  • Class 35: advertising, business management, business administration, office work.
  • Class 39: transport, packaging and storage of goods, travel organization.

On the instance, the General Court, following the thesis proposed by the Board of Appeal of the EUIPO concluded that despite the similarity between the signs in conflict and the fact that the intervener knew the previous marks of the appellant, there could not be bad faith since there was neither identity nor similarity between the products or services.

Being the dispute raised in the aforementioned terms, and after the corresponding analysis, the CJEU understood that the invalidity ground in article 52.1 b) EUTMR applies when the evidences indicate that the owner of the questioned registration has not applied for the said mark with the objective of participating loyally in the market, but with the intention of undermining, through unfair practices, the interests of third parties, or with the intention of obtaining, an exclusive right for purposes other than those corresponding to the functions of the trademark , especially to its essential function of indication of origin.

Thus, if in a given case no risk of confusión existed at all, because of the lack of applicative similarity, this should not automatically lead to discarding of the existence of bad faith, since bad faith can be derived from many other factual circumstances (relationship between the parties, speculative purpose, etc.). Any other interpretation, the Court added, would derive in an excessively restrictive interpretation of the provision put forward by article 52, paragraph 1, letter b, EUTMR.)

In the opinion of the undersigned the judgment is as logical as celebrated. In plenty of situations trademarks applied for with incurring in an obvious bad faith have overcome an invalidity action thanks to the absence of similarity at the products/services level, leaving the legitimate owners in a position certainly vulnerable. The application of the doctrine confirmed by the CJEU will hopefully help to right those situations and confirm the existence of bad faith.