TARGET VENTURES case: Board of Appeal erred in in finding that application was not filed in bad faith 

Par Richard Milchior, le 17 décembre 2020

Article publié dans World Trademark Review

– The EUIPO rejecting an application for a declaration of invalidity of TARGET VENTURES, as it was not proven that the owner hadapplied for the mark in bad faith
– The General Court disagreed, 􀂦nding that the Board of Appeal had erred in interpreting Article 52(1)(b) of Regulation 207/2009
– The board should have taken into account the use of the mark outside of the European Union, as well as the chronology of events

On 28 October 2020 the General Court (Third Chamber) issued its decision in Target Ventures Group Ltd v European Union Intellectual Property Office (EUIPO) (Case T‑273/19).

Background

The intervener, Target Partners GmbH (Germany), is a venture capital fund that has owned the domain name ‘targetventures.com’ since 2002 andthe domain name ‘targetventures.de’ since 2009. However, the content of the websites registered under those domain names has only everreferred to Target Partners. Those sites were redirecting to the intervener’s official site, « www.targetpartners.de ».

The applicant, Target Ventures Group Ltd (British Virgin Islands), claimed to have been a venture capital fund since 2012 in Russia and since 2013on the EU market. Between December 2013 and December 2014, it provided 􀂦nancial and monetary services under that sign to 􀂦ve undertakingsin the European Union and acquired holdings in those undertakings on behalf of its own investors.

On November 2014 two partners of the applicant or of a third party operating as Target Ventures, as well as a representative of the intervener,attended a conference in the investment sector in London. On 13 November 2014 a representative of a start-up looking for investors sent twoemails to those three people jointly.

In January 2015 the intervener 􀂦led an application with the EUIPO for the word mark TARGET VENTURES (‘the contested mark’) for services inClasses 35 and 36; it was registered on 28 May 2015. In July 2015 the applicant sought a declaration of invalidity of the mark, which was rejectedon 25 May 2017 by the Cancellation Division of the EUIPO. By decision of 4 February 2019, the Second Board of Appeal of the EUIPO dismissedthe appeal since the applicant had not proved that the intervener was acting in bad faith when 􀂦ling its application for registration. The Board ofAppeal found that:

– it was not proved that the intervener knew of the services offered in the European Union by the applicant or a third party operating underthe mark TARGET VENTURES;
– the applicant had not shown the intervener’s presumed knowledge of its activities; and
– the use of the mark TARGET VENTURES in Europe by the applicant or a third party was not so extensive that the sign could beconsidered to be well known or recognised among the relevant public and competitors at the time when the contested mark was appliedfor.

In addition, due to the short duration of use of the sign TARGET VENTURES in Europe before January 2015, the applicant would have needed tohave proved a high intensity of use. Consequently, the application for a declaration of invalidity had to be rejected. The Board of Appeal statedthat the evidence submitted by the intervener showed that it had a legitimate business interest in having the mark registered. Consequently, itcould not be excluded that the intervener had 􀂦led the mark either because it wanted to expand its use of the mark or to « protect its clients from possible confusion ».

General Court decision

The appeal to the General Court was based mainly on Article 52(1)(b) of Regulation 207/2009, which provides that an EU trademark is to bedeclared invalid where the applicant was acting in bad faith when it 􀂦led the application for the mark.
In everyday language, the concept of ‘bad faith’ presupposes the presence of a dishonest state of mind or intention, but the concept must also beunderstood in the context of trademark law, which is that of the course of trade. The rules are aimed at contributing to the system of undistortedcompetition in the European Union, in which each undertaking must, in order to attract and retain customers through the quality of itsgoods/services, be able to have registered as trademarks signs which enable the consumer, without any possibility of confusion, to distinguishthose goods/services from those of others (see Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO (Case C‑104/18 P) and Sky (CaseC‑371/18).

The ground for invalidity applies where it is apparent that the proprietor of an EU trademark has applied for the mark with the intention ofundermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention of obtaining, without eventargeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trademark, in particular theessential function of indicating origin. Accordingly, it is not necessary for the proprietor of the contested mark to have had knowledge of a thirdparty’s use of the sign at issue.

Consequently, by finding that the lack of proof of actual or presumed knowledge of prior use of the sign at issue was suficient to reject theapplication for invalidity, the Board of Appeal erred in law in interpreting Article 52(1)(b) of Regulation 207/2009. Knowledge on the part of theproprietor of the contested mark of a third party’s prior use of that sign or the question of whether the proprietor ought to have had knowledge ofsuch prior use of the sign by a third party was only one relevant factor among others to be taken into consideration.

The court pointed out that the various factors identified by the case law are only examples; therefore, the fact that any one of those factors is not present does not necessarily preclude a finding that the applicant acted in bad faith. This means that factors other than those listed in Paragraph 53 of Lindt & Sprüngli (Case C‑529/07) can be taken into consideration.

A claim of bad faith must be the subject of an overall assessment, taking into account all the relevant factual circumstances. The registration of a trademark by an applicant without any intention of using it in connection with the goods/services covered by that registration may constitute badfaith, where there is no rationale for this application in the light of the aims referred to in Regulation 207/2009. Such bad faith may, however, beestablished only if there are objective, relevant and consistent indicia tending to show that, when the application for registration of the mark was filed, the applicant had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or ofobtaining, without even targeting a specigfic third party, an exclusive right for purposes other than those falling within the functions of a trademark.

Here, it was apparent that the intervener’s intention when filing the application was not to put it to a use falling within the functions of atrademark. It could not be excluded that the intervener wanted to protect its clients from possible confusion between the marks TARGETPARTNERS and TARGET VENTURES. The fact that the intervener registered a mark in order to prevent a likelihood of confusion with another markof which it was already the proprietor and/or to protect the element that is common to those marks, was extraneous to the functions of atrademark, in particular the essential function of indicating origin, and contributed more towards strengthening and protecting the intervener’s first mark, which was, both before and after the application for registration of the contested mark was filed, the only sign under which it offered itsservices. This was confirmed by the fact that the websites at « www.targetventures.de » and « www.targetventures.com » only provided a means of redirection to the intervener’s main website.

According to the intervener, by using a distinctive element – namely ‘target’ – in the domain names ‘targetventures.com’ and ‘targetventures.de’with an element descriptive of venture capital services – namely ‘ventures’ – and by providing a redirection to its main website, on which it offersits services under the mark TARGET PARTNERS, it intended to show to the interested public that those services were also offered by TargetPartners. It submitted that the reason for the registration of the contested mark was therefore to protect the mark TARGET used in the name ofthose websites.

Consequently, the intervener had filed that application not with the aim of engaging fairly in competition, but with the intention of obtaining,potentially without targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trademark, inparticular the essential function of indicating origin.
If the intention of the proprietor of the contested mark at the time of filing the application for registration was that of obtaining, without eventargeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trademark, an examination ofwhether that proprietor had prior knowledge of a third party’s use of the sign at issue was not a conditio sine qua non in order for it to be possibleto hold that that proprietor was acting in bad faith. This meant that an examination of the chronology of events was not needed. However, sincethe Board of Appeal took the view that proof of the intervener’s actual or presumed knowledge of the applicant’s use of the mark TARGETVENTURES was necessary, it should have taken into account all the factors relevant to the circumstances of the case, including the chronology of events.

The examination of whether the proprietor of the contested mark had prior knowledge of a third party’s use of that sign must not be confined tothe EU market and, by restricting its own examination in the context of its business activities within the European Union, the Board of Appealapplied that factor in an incomplete manner.
The board’s decision was thus annulled.

Comment

One can infer from this decision than 􀂦ling a mark as a defensive mark can lead to cancellation on the ground of bad faith.

This article first appeared on WTR Daily, part of World Trademark Review, in november 2020. For further information, please go to www.worldtrademarkreview.com.