- Extending the protection of a national trademark by registering it as an EU trademark is part of a company's standard business strategy
- The fact that a party acts dishonestly in one context does not necessarily mean that the party acts in bad faith in a different case
- The Chinese characters in question are perceived as abstract symbols with no meaning or as decorative elements that refer to China or Asia
In the judgment in Guangzhou Wanglaoji Grand Health Co., Ltd. v. EUIPO ( Joined Cases T-121/24 to T-127/24 and T-129/24), the General Court reiterated the relevant factors for assessing bad faith at the time of filing an application. A separate judgment in the Case T-128/24 (involving the same parties to the proceedings) addressed the additional issue of the re-filing of the trademark.
Background
The contested applications were EU trademarks consisting of three Chinese characters, “王老吉,” and a Latin transcription of the sign’s Mandarin pronunciation (“Wang Lao Ji”).
The contested applications were filed in 2009, 2010, and 2014 and related to goods and services in classes 5, 29, 30, 32, 33, and 35. These applications were owned by the intervening party, Multi Access Ltd.
On July 10, 2018, the plaintiff, Guangzhou Wanglaoji Grand Health Co., Ltd., filed applications for a declaration of invalidity of the contested trademarks with respect to all goods and services for which they were protected. The ground for invalidity invoked was that set forth in Article 52(1)(b) of Regulation 207/2009 (now Article 59(1)(b) of Regulation 2017/1001).
The EUIPO Invalidity Division dismissed the requests for invalidation, finding that the intervening party’s bad faith at the time of filing the contested trademarks had not been proven.
On February 8, 2023, the petitioner filed appeals against the decisions issued by the Cancellation Division. The Board of Appeals dismissed the appeals, concluding as follows:
- The applicant and the intervenor had a complex and long-standing relationship. The intervenor knew that the contested trademarks were being marketed and used in China by the applicant prior to the filing date of the registration applications.
- At the very least, in 2002, the plaintiff’s group of companies should have known that the intervening party’s companies were using trademarks in Europe consisting of the three Chinese characters in question.
- There was nothing to suggest that the market separation between the applicant and the intervenor in 1913 would have prevented the latter from lawfully registering and using the disputed trademarks in the European Union.
- Given that the intervening party and its companies had informed the plaintiff’s companies, through license agreements signed in 1995 and 2002, that they were using trademarks consisting of the three Chinese characters abroad (including Europe), such transparency could not be reconciled with the assertion that the intervening party had acted in bad faith with the aim of unduly taking advantage of the plaintiff’s reputation.
- The intervening party’s intent at the time of registration of the contested trademarks was part of a normal business strategy, since it was the legitimate owner of trademarks consisting of the three Chinese characters in Hong Kong, and it had not been shown that it had been prevented from extending its rights to other jurisdictions.
Judgments
With regard to the allegations of bad faith on the part of the applicant at the time the applications were filed, the General Court upheld the Board of Appeal’s decision and dismissed the action, finding that the trademark owner’s fraudulent intent in filing the applications had not been proven.
The parties had signed a joint-use agreement in 1913, under which both held rights to the same trademark consisting of the three Chinese characters. Therefore, the Court held that both were historically legitimate owners of trademarks consisting of those three Chinese characters in third countries. Since that agreement made no reference to the European Union, in the context of the examination of the registration of that trademark in the European Union, the“first-to-file”principle must be applied.
The principle of priority based on registration is qualified by Article 52(1)(b) of Regulation 207/2009, pursuant to which a European Union trademark must be declared invalid, upon request to the EUIPO, when the applicant acted in bad faith at the time of filing the application. Since the intervener was the owner of national rights in two EU Member States (France and the United Kingdom, prior to Brexit) and it could not be demonstrated that the intervening party’s predecessors were not entitled to apply for trademark registration outside Hong Kong (such as those filed in France and the United Kingdom in 1992), the Court agreed with the EUIPO Board of Appeal in finding that extending the protection of a national trademark by registering it as a European Union trademark is part of a company’s normal business strategy.
The Court noted that the European Union trademark system is an autonomous system and did not take into account the decisions issued by national authorities in third countries (such as China and the Philippines), in which the intervening party was found guilty of bribery, misleading advertising, unfair competition, and bad faith in filing another trademark application (distinct from the trademarks at issue in this case). The Court held that the fact that the party had acted dishonestly in a different context did not necessarily mean that it was automatically acting in bad faith when filing the applications for registration of the contested trademarks in the European Union.
These conclusions were consistent with those reached in the judgments handed down in the joined cases T-121/24 through T-127/24 and T-129/24, as well as in Case T-128/24. The latter was dealt with separately due to an additional ground of appeal concerning the re-filing of trademarks.
In that case, the intervening party had filed an application for registration of a European Union trademark in Classes 5, 30, and 35 that was nearly identical to an earlier European Union trademark. It was filed six days before the grace period for the prior trademark expired and differed from it only in insignificant visual elements. The intervener argued that the prior trademark depicted the three Chinese characters in poor quality and that the new application was intended to modernize that mark.
The Court held that there is nothing in European Union trademark law that prohibits the refiling of an application for registration. Therefore, the mere fact of refiling the application cannot, in and of itself, establish bad faith at the time of filing.
While it is true that, according to case law, a trademark consisting entirely of letters protects the term specified in the application and not the specific graphic or stylistic elements present in that mark, and that the representation of a word mark is not generally of such a nature as to alter its distinctive character, in the present case the appellant had not demonstrated that a significant portion of the relevant public in the European Union was aware of the meaning of the three Chinese characters.
Consequently, the Court found that the relevant public would perceive the signs as devoid of any meaning, as abstract signs, or as signs consisting of decorative elements referring to China or Asia. Thus, the intervener’s attempt to register the disputed trademark in a higher-quality format—which constitutes a modernization of the earlier trademark—was justified by customary business practices. Consequently, the allegation of “repeated conduct” as an indicator of bad faith was rejected.
Concluding Remarks
These rulings highlight the importance of the evidence submitted in support of an application to declare a European Union trademark invalid. The Court reaffirmed the autonomy of the EU trademark system and the non-binding nature of decisions issued by courts and intellectual property offices in third countries. It also emphasized the need to demonstrate the applicant’s bad faith by providing solid and well-founded evidence, rather than relying on mere assumptions or allegations.
The Court also provided valuable guidance regarding practices considered part of a legitimate business strategy, defining the scope of what it considers to be a “modernization” of an already registered trademark when such registrations are in a language that is not an official language of the European Union; consumers’ perception of such trademarks, will be characterized by the belief that they are meaningless terms, abstract signs, or mere decorative elements referring to China or Asia.
Sara Navarro, Senior Associate in the Trademark Practice Group at Elzaburu.