Board of Appeal rebuked for failing to provide adequate statement of reasons in MOSTOSTAL case

Par Richard Milchior, le 29 mars 2023

Article publié dans World Trademark Review

– The Board of Appeal found that Mostostal SA had acted in bad faith when filing the mark MOSTOSTAL
– The General Court annulled the decision, finding that the board had failed to fulfil its obligation to state reasons
– It was not possible to ascertain whether the board had taken account of all the factual circumstances relevant to the case

On 15 February 2023 the General Court issued its decision in Mostostal SA v European Union Intellectual Property Office (EUIPO) (Case T‑684/21). Mostostal SA sought the annulment of a decision of the Fifth Board of Appeal of the EUIPO of 30 July 2021.

Background

‘Mostostal’ is a combination of the Polish words ‘ most ’ (‘bridge’) and ‘stal’ (‘steel’), created at the end of the Second World War.A public entity named Mostostal was set up in 1945 in Krakow (Poland) with the task of rebuilding the bridges destroyedduring the war. The fi rst registration of MOSTOSTAL as a trademark with the Polish Patent Offi ce in Class 16 dates back to1964. In 1973 WLKS was set up in Siedlce (Poland) to produce steel and was a former member of Zrzeszenia Mostostal (‘theMostostal Association’). In 1993 WLKS became a private company called Mostostal Siedlce SA, which merged with PolimexCekop SA in 2004.

In 1984 the Mostostal Association applied for the Polish trademark MOSTOSTAL (a collective mark, one of the proprietors ofwhich was WLKS). After the fall of the Berlin Wall in 1989, the Mostostal Association was dissolved. The trademark expired in1994. Subsequently, one of the members of that association, Mostostal Projekt SA, applied for registration of two trademarks, afi gurative mark in Classes 2, 16, 37 and 42 and the word mark MOSTOSTAL in Classes 37 and 42 (‘the Polish trademarks’).

On 18 October 1996 Mostostal Projekt and 14 former members of the Mostostal Association signed a multilateral agreementgoverning the use of the Polish trademarks but, in 2003, Mostostal Projekt went into liquidation. In 2007 the Polish trademarkswere acquired by Mostostal Aluminium Sp Zoo (the applicant’s predecessor).

In 2010 the applicant fi led with the EUIPO the word sign MOSTOSTAL, which was registered on 20 May 2011. On 17 February2018 Polimex-Mostostal SA fi led an application for a declaration of invalidity of the mark, which was upheld.

The decision was appealed. The appeal was dismissed on the ground that Polimex-Mostostal had adduced evidence of badfaith on the part of the applicant at the time of fi ling the contested trademark.
The case went to the General Court, which examined only one plea of law.

Decision

In accordance with Article 94(1) of Regulation 2017/1001 and Article 41(2) of the Charter of Fundamental Rights of theEuropean Union, decisions of the EUIPO must state the reasons on which they are based in a clear and unequivocal manner,without it being necessary for that reasoning to go into all the relevant facts and points of law, since the question of whether the statement of reasons meets those requirements must nonetheless be assessed with regard not only to its wording, but alsoto its context and to all the legal rules governing the matter in question.

As regards the undefi ned concept of ‘bad faith’, it is apparent from the case law that the intention of a trademark applicant is asubjective factor which must, however, be determined objectively by the competent administrative or judicial authorities.Consequently, any claim of bad faith must be the subject of an overall assessment, taking into account all the factualcircumstances relevant to the particular case.
The Board of Appeal had examined two main factors in order to reach the conclusion that the applicant had acted in bad faith:
1. it assessed the legal protection of the earlier sign MOSTOSTAL; and
2. based on that examination, it analysed the actual knowledge of the use and legal protection of the earlier sign.

As regards to the legal protection of the sign MOSTOSTAL, the Board of Appeal had relied on the fi ndings of the CancellationDivision in order to examine the actual knowledge of the use and legal protection of that earlier sign, and then bad faith on thepart of the applicant. This means that the prior use and legal protection of the earlier sign, taken together, constituted a decisivefactor in the determination that there was bad faith on the part of the applicant. Therefore, it was necessary to examine whetherthe Board of Appeal had failed to fulfi l its obligation to state reasons.

The board’s decision was based on the fact that the members of the Mostostal Association had enjoyed legal protection as aresult of using Mostostal as a company name, as members of the Mostostal Association and as signatories to the multilateralagreement. Similarly, it was based on the premise that the former members of that association continued to enjoy legalprotection irrespective of the insolvency of Mostostal Projekt and the termination of the multilateral agreement, and continuedto use that earlier sign as a company name after the insolvency.

While the use of the earlier sign by the former members of the Mostostal Association was explained by the historical account,the fact remained that the reasons why the Board of Appeal considered that those former members continued to enjoy legalprotection following the acquisition of those marks were not disclosed by its decision in a clear and unequivocal manner.

In that regard, on the one hand, the Board of Appeal, in order to conclude that the earlier sign MOSTOSTAL enjoyed legalprotection, considered the use of that sign in the context of the multilateral agreement to be a relevant factor. On the otherhand, it held that the insolvency of that undertaking, and therefore the termination of that agreement, had no effect on the legalprotection in question, on the ground that it was independent of the formal ownership of those trademarks. Those fi ndings werecontradictory because legal protection in the form of a right of use could not be inferred from the agreement and, at the sametime, be regarded as independent of it. In that regard, the statement of reasons for a measure must be logical and contain nointernal inconsistency that would prevent a proper understanding of the reasons underlying the measure.

Further, the only element on which the Board of Appeal based the legal protection of the earlier sign favouring the formermembers of the Mostostal Association was the fact that they continued to use that sign as a company name after the applicantacquired the Polish trademarks without explaining on what legal basis it found that legal protection to exist.

It was not disputed that the earlier sign had been used as a company name and had a reputation, but it was disputed that theformer members of the Mostostal Association enjoyed an earlier right that had priority. The parties discussed the existence ofthe legal protection of the earlier sign favouring the former members of the Mostostal Association and offered differinginterpretations of Polish national law.

In such a case, the Board of Appeal was required to identify the legal or applicable rules, specify the rules on which it had reliedand how it had interpreted them in order to reach the conclusion that the earlier sign enjoyed such legal protection. Here, thecourt was unable to verify the accuracy of the board’s reasoning and to exercise its jurisdiction to review the legality of thedecision.

The determination of the legal rules conferring legal protection on the earlier sign in the form of a company name was a decisivefactor in ascertaining, fi rst, whether the applicant had knowledge thereof at the time of fi ling the contested trademark and,secondly, whether, when fi ling that trademark, the applicant was not, in fact, in possession of all the rights relating to the Polishtrademarks of which it was the proprietor, including the reputation of those marks. Thus, in the absence of a more preciseexplanation as to the legal basis for the legal protection of the earlier sign allegedly enjoyed by those former members, apartfrom the legal protection conferred by the multilateral agreement, it was not possible to ascertain whether the Board of Appealhad taken account of all the factual circumstances relevant to the particular case.

Accordingly, the court could not exercise its jurisdiction to review the legality of the board’s decision and the decision wasannulled.

This article first appeared on WTR Daily, part of World Trademark Review, in March 2023. For further information, please go to www.worldtrademarkreview.com.