CJEU Declares the Criteria to be Considered in Determination of Bad Faith


In its judgement of 12 September 2019, the European Union Court of Justice (“CJEU”) held that the applicant was acting in bad faith when he filed the application for the trademark taking the earlier business relationship between the applicant and the opponent and ruled how the conditions sought for bad faith should be examined.

In the judgment C-104/18 P, which was handed down by the CJEU on 12.09.2019, it was declared which criteria should be taken into consideration for the purposes of finding the existence of bad faith on the part of the intervener.

Koton Mağazacılık Tekstil Sanayi ve Ticaret A.Ş. (“KOTON A.Ş.”) which is proprietor of “KOTON” trademarks registered as a European Union trademark became aware of  trademark application, which was filed on 25 April 2011 by Joaquín Nadal Esteban (“N. Esteban”) in respect of goods and services in Classes 25, 35 and 39, and filed a notice of opposition against the referred trademark application, relying on the earlier  trademark for the goods and services in Classes 25, 35 and  trademark for the goods and services in Classes 18, 25 and 35 on the grounds that likelihood of confusion existed and the applicant had acted in bad faith. As a ground for its opposition based on the intervener’s bad faith, KOTON A.Ş. also referred to the earlier business relationship between N. Esteban and the company, and alleged that the intervener could not have been uninformed of  KOTON A.Ş. and earlier KOTON trademarks. The opposition by KOTON A.Ş. was found justified by the European Union Intellectual Property Office (“EUIPO”) in respect of goods and services in classes 25, 35 but it was ruled that the intervener’s bad faith had not been established. Upon dismissal of the appeals field by KOTON A.Ş. before EUIPO, the “STYLO & KOTON + Device” mark applied for in the name of N. Estaban was registered for the services in Class 39.

Upon the appeal filed by KOTON A.Ş. seeking the setting aside of the judgment which was partially in the appellant’s favour; the General Court dismissed the objections grounded on bad faith and after assessing the parties’ claims, the Court ruled that the earlier business relationship between the parties would not show that the applicant had a dishonest intention because the earlier trademarks of KOTON A.Ş. were not registered for the services in Class 39 which were covered by the application and there could be no bad faith in absence of such similarity.

By application lodged by KOTON A.Ş. before the CJEU, the Court assessed the parties’ claims and pleas and made explanations about how the conditions sought for bad faith should be interpreted, and finally decided for acceptance of the application lodged by KOTON A.Ş.

The Court stated that the relevant factual circumstances as they appeared at the time of application should firstly be considered while assessing the claim of bad faith and underlined that the intervener had sought registration of the sign “STYLO & KOTON + Device” not only for the services in Class 39 but also for the goods and services in Classes 25 and 35, which corresponded to those in respect of which the appellant had registered its earlier trademarks. Additionally, the CJEU emphasized that the earlier business relationship between the parties which had been terminated by KOTON A.Ş. should also be taken into account considering that the stylized word “KOTON” was fully comprised in the disputed application. Finally, the CJEU established that the General Court did not examined whether N. Esteban’s application for the subject matter stylised mark for the goods and services in Classes 25, 35 and 39, had a commercial logic in the light of the intervener’s activities.

In the light of these evaluations; the CJEU annulled the decision rendered by the General Court based on the principle that “The intention of an applicant for a trademark is a subjective factor which must, however, be determined objectively by the competent administrative or judicial authorities” and decided for acceptance of the appeal lodged by KOTON A.Ş.

Referred decision is in harmony with the spirit of Article 6/9 of the Industrial Property Code No. 6769 (“IP Code”) which provides that “Trademark applications filed in bad faith shall be refused upon opposition”. This is because; the IP Code No. 6769 does not contain any regulation providing that identity or similarity between goods or services shall be sought in case the existence of bad faith is established. Similarly, the decision and dispute in question underline the importance of that companies operating in foreign countries should register their trademarks in these countries of operation and the agreements signed with persons or entities with whom they have business relationship, should be prepared in a sound and comprehensive manner.

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