Bad faith against unregistered trademark

Similarity and a proven likelihood of confusion with an earlier mark preclude registration of the mark. For an unregistered earlier mark, proof of bad faith is also required. In such a case, the CJEU now ruled in “Outsource2india”.

The plaintiff Flatworld Solutions Pvt Ltd (India) marketed its outsourcing and subcontracting services in Germany with the wording “outsource2india“. It also cooperated with the intervener Outsource2India Ltd (Germany).

The dispute arose when the intervener applied for registration of the contested mark, the Union figurative mark outsource2india, at a time when it was established that the applicant was using that wording in its logo, in its unregistered mark and in its domain name.
The European Court (CJEU) has now ruled on whether that trade mark application was made in bad faith.

Similar trade mark admissible to earlier trade mark not registered

However, the mere use of an unregistered trade mark does not in principle preclude an application for a trade mark containing an identical or similar trade mark. The proprietor of an unregistered trade mark may take action against an application for an identical or similar trade mark only if he can prove that a trade mark application has been filed in bad faith.

Bad faith trademark application

A trade mark application filed in bad faith may be invoked on the basis of Article 52(1)(b) of Regulation No 207/2009. The prerequisite for this is, in principle, that the contested mark is similar to the earlier sign.

However, the concept of “bad faith” is not defined in the legal provisions. Therefore, in particular, all factors relevant to the individual case must be taken into account at the time of the possibly bad faith trade mark application.

Essential factors

Essential factors of a bad faith trademark application were already defined by the European Court of Justice (ECJ) in the Lindt & Sprüngli case (EU:C:2009:361) concerning gold-coloured chocolate bunnies in 2009:

the possible bad faith applicant’s knowledge of the earlier, similar sign of a third party;
the applicant’s intention to prevent that third party from continuing to use such a sign;
the nature of the mark applied for (where competitors have limited freedom of choice as to the shape and presentation of a product) ;
and the degree of legal protection of the two marks, both the earlier mark and the potentially bad faith mark

The following additional factors must also be taken into account:

the origin of the contested sign and its use since its inception;
the intention of the proprietor of the earlier mark;
the business logic underlying the application for registration of the sign as an EU trade mark;
and the chronology of the events preceding the filing of the application;

Chronology of events

In particular, the applicant Flatworld Solutions Pvt Ltd submits that the chronology was not sufficiently taken into account by the Board of Appeal in its decision (‘the contested decision’) that the trade mark application was not filed in bad faith. Therefore, e-mail correspondence between the applicant and the intervener was at the centre of the proceedings at the time when the trade mark application was filed.

The intervener had contacted the applicant on 4 November 2006 in order to propose cooperation in the European Union, in particular in Germany. The plaintiff consented as non-exclusive cooperation and provided the plaintiff’s logos, website and marketing material.

Only a few weeks later, by e-mail of 13 December 2006 to the applicant, the intervener informed the applicant that it had registered its undertaking under the name Outsource2India Ltd. In the following correspondence, the intervener made a declaration of intent to rename its company and trade mark. By e-mail of 19 March 2007, the applicant confirmed to the intervener that it could reformulate the letter of intent by referring to its new name.

The applicant was therefore entitled to expect that the intervener would actually change the name of its company, the CJEU held. Since the intervener had itself notified the applicant of its intention to change its name, the applicant was not required to make any specific request or invitation to the intervener to change its name.

By the last e-mail of 25 May 2007, the applicant informed the intervener that the similarities between its two marks were deliberately too great. One month later, the intervener filed an application for registration of the contested mark.

Use of ‘Outsource2india’ in bad faith

It must therefore be concluded that, by continuing to use and highlight the word ‘outsource2india’, both in the name of its trade mark and in the name of its company, the intervener is promoting its own interests in the application for registration of the contested mark, was stated by CJEU.

That is all the more clear since the intervener itself had established contact with the applicant and thus with the use of the word ‘Outsource2india’. In addition, the intervener filed an application for registration of the contested mark shortly after the end of its pre-contractual relationship with the applicant. All those factors showed its bad faith, the CJEU ruled and annulled the contested decision of the Board of Appeal.