CANCELLATION No 10 833 C (INVALIDITY)

Third Estate LLC DBA Dope Couture, 454 N. Fairfax Ave., Los Angeles California 90036, United States of America (applicant), represented by Mark & Clerk LLP, Fletcher House, Heatley Road, The Oxford Science Park, Oxford OX4 4GE, United Kingdom (professional representative).

a g a i n s t

Axcez Trading AB, Box 4021, 461 04 Trollhättan, Sweden (EUTM proprietor), represented by Zacco Sweden AB, Valhallavägen 117, 114 85 Stockholm, Sweden (professional representative).

On 06/07/2017, the Cancellation Division takes the following

DECISION

1.        The application for a declaration of invalidity is rejected in its entirety.

2.        The applicant bears the costs, fixed at EUR 450.

REASONS

The applicant filed an application for a declaration of invalidity against all the goods and services of European Union trade mark No 11 333 895  (filed on 09/11/2012 and registered on 13/05/2012), namely goods and services in Classes 9, 25, 28, 35 and 41. The application is based on non-registered trade marks ‘DOPE’, and  used in every Member State of the EU. The applicant invoked Article 53(1)(c) EUTMR in conjunction with Article 8(4) EUTMR and Article 52(1)(b) EUTMR.

SUMMARY OF THE PARTIES’ ARGUMENTS

The applicant argues that it has used the mark ‘DOPE’ in relation to clothing, footwear and headgear at least since 2008 throughout the EU. It had acquired goodwill in the USA by trading on a scale sufficient to successfully found a passing off action against the EUTM proprietor. The EUTM proprietor was founded after the applicant began trading with the earlier rights. Therefore, the EUTM proprietor must have known about the applicant’s mark. It claims that it is clear from the EUTM proprietor’s website that it tried to wholly appropriate the applicant’s name, trade on the reputation of this name and applied for the mark in bad faith. Moreover, it contends that the contested goods and services are identical or similar to the goods for which the earlier marks were used, that the marks are highly similar and that there is a likelihood of confusion between them. It provides evidence of use of the earlier rights, which, according to the applicant, was of more than mere local significance. It refers to evidence filed in cancellation proceedings No 9 621 C against another trade mark of the EUTM proprietor and it requests this evidence to be taken into account.

The EUTM proprietor explains the history of the company and provides documents and explanations as to how the contested mark has been used. It points out that majority of the evidence provided by the applicant does not show the use of the earlier marks before the filing date of the contested mark. It claims that it had no knowledge of the applicant’s mark at the time of filing for the contested mark and that the applicant did not provide any proof thereof. The application was filed at the time when already several Swedish and EUTM applications were pending and the application for the contested EUTM was a natural expansion of the protection.

The applicant provides additional evidence of use of the earlier rights and specific argumentation as regards the protection of non-registered trade marks in the states in which the marks were allegedly used as well as excerpts from the law of these states. It explains how the documents submitted so far are relevant to show use and reputation of the applicant’s marks. It particularly elaborates on the conditions on passing off.

The EUTM proprietor analyses in detail the documents submitted by the applicant and maintains that they do not prove the use of more than mere local significance of the earlier marks. It also contends that the specific requirements in each Member States are not fulfilled.

NON-REGISTERED MARK OR ANOTHER SIGN USED IN THE COURSE OF TRADE (Article 8(4) EUTMR in conjunction with Article 53(1)(c) EUTMR)

Pursuant to Article 53(1)(c) EUTMR a European Union trade mark shall, on request to the Office, be declared invalid where there is an earlier right as referred to in Article 8(4) EUTMR and the conditions set out in that paragraph are fulfilled.

According to Article 8(4) EUTMR, upon opposition by the proprietor of a non-registered trade mark or of another sign used in the course of trade of more than mere local significance, the trade mark applied for shall not be registered where and to the extent that, pursuant to the European Union legislation or the law of the Member State governing that sign:

(a)        rights to that sign were acquired prior to the date of application for registration of the European Union trade mark, or the date of the priority claimed for the application for registration of the European Union trade mark;

(b)        that sign confers on its proprietor the right to prohibit the use of a subsequent trade mark.

Therefore, the grounds of refusal of Article 8(4) EUTMR are subject to the following requirements:

• the earlier sign must have been used in the course of trade of more than local significance;

• pursuant to the law governing it, prior to the filing of the contested trade mark, the opponent acquired rights to the sign on which the opposition is based, including the right to prohibit the use of a subsequent trade mark;

• the conditions under which the use of a subsequent trade mark may be prohibited are fulfilled in respect of the contested trade mark.

These conditions are cumulative. Therefore, where a sign does not satisfy one of those conditions, the application for declaration of invalidity based on a non-registered trade mark or other signs used in the course of trade within the meaning of Article 8(4) EUTMR cannot succeed.

1. Prior use in the course of trade of more than mere local significance

The condition requiring use in the course of trade is a fundamental requirement, without which the sign in question cannot enjoy any protection against the registration of a European Union trade mark, irrespective of the requirements to be met under national law in order to acquire exclusive rights. This requirement of Article 8(4) EUTMR is subject to EU law standards and must be assessed accordingly, regardless of the fact that national legislation may not require actual use in the case of some specific earlier rights.

Furthermore, such use must indicate that the sign in question is of more than mere local significance. The rationale of this provision is to restrict the number of conflicts between signs by preventing an earlier sign which is not sufficiently important or significant from challenging either the registration or the validity of a European Union trade mark.

The applicant based the application on non-registered trade marks ‘DOPE’, and  used in the course of trade in all the Member States of the EU in relation to clothing, footwear; headgear; jewellery; skateboard decks. 

The applicant submitted the following documents to prove the use of the earlier marks (the documents submitted in the parallel proceedings No 9 621 C are also taken into account as requested by the applicant):

Documents submitted in both proceedings:

• Declaration of Matte Fields, owner and Chief Executive Officer of the applicant, in which it is stated that the applicant is a US based company with its principal business in Los Angeles, California. It sells its products (high-end street wear, jewellery and accessories) through an online store and a physical store located in Los Angeles since 2007. The continuous use and promotion of the brand has led to an international recognition of the mark which is demonstrated, inter alia, by the fact that a number of celebrities wear DOPE fashion. Dope has developed extensive common law rights in the EU, including Sweden and the United Kingdom. It has spent approximately USD 17 000 in connection with advertising in Europe since November 2012. A table with total revenues from April 2009 to October 2013 is provided for each EU Member State (see below), a list of invoices dated from 2011 to 2013 to countries all over the world and one invoice to Sweden dated on 29/08/2012 for 72 articles of clothing.

• Photographs allegedly appearing in press showing different people wearing ‘DOPE’ clothing or headgear; dates and sources are written below the photographs, all dates postdate the date of filing of the contested mark (09/11/2012).

• Several emails from December 2012 and beginning of 2013 including links to websites  – one of them showing people wearing clothing and headgear with the mark ‘FUCK HUMBLE’ (from January 2013), which is apparently a collaboration between Dope Couture and King Chip.

Documents submitted in proceedings No 9 621 C:

• Invoices dated between 2009 and 2012 and some payment information from 2008 and 2009:

One invoice was presented for the following countries: Austria, Belgium, Bulgaria, Denmark, Estonia, Spain, Finland, Greece, Ireland, Luxembourg and Poland, each one for sale of one or a few (maximum six) items of clothing.

Two invoices were presented for Germany (63 items sold in total), the United Kingdom (two items), Italy (15 items) and Portugal (74 items).

Three invoices were submitted for sales of less than hundred articles in total to the Netherlands and four invoices for sales of approximately 100 articles to clients in France.

Information of five payments made from the United Kingdom (for 7 articles of clothing), two payments from France (3 articles) and one from Denmark (two articles), all made in 2008.

• Catalogues containing ‘DOPE’ clothing and headgear products – lines of 2008, 2009 and 2012, prices in USD.

• Copies of press articles or blogs: An article from www.mirror.co.uk about Dizzee Rascal, who went to a club and smoked marihuana; the person’s photograph accompanies the article where he is wearing ‘DOPE’ hat (a copy of the article with visible date was submitted in the present proceedings with the date shown 25/11/2012); an article from www.xxlmag.com from 2012 containing an interview with Dope Couture Founder – he only speaks about using the mark in the USA; three blogs from 2008 and two from 2012 showing ‘DOPE’ clothing or people wearing ‘DOPE’ clothing.

• Pictures of celebrities (such as Justin Bieber, lady Gaga, Eminem etc.) wearing ‘DOPE’ clothing and number of followers these celebrities have on Twitter.

• The applicant’s Facebook page and number of fans from the EU (the most fans are from Germany – 27 346) and numbers of likes.

• Numbers of visitors of the applicant’s website (in 2014 and 2015).

• Applicant’s website using the internet archive service ‘wayback machine’ showing the mark in relation to clothing, from 2008.

• Traffic data from Twitter for the last three months of 2013.

Rights falling under Article 8(4) EUTMR may only be invoked if their use is of more than mere local significance. The proprietors of rights the use of which is of mere local significance retain their exclusive rights under the applicable national law pursuant to Article 111 EUTMR.  The question whether the use of a non-registered sign is of more than mere local significance will be answered by applying a uniform European standard (18/04/2013, T-506/11 & T-507/11, Peek & Cloppenburg, EU:T:2013:197, § 19, 47-48).

The General Court held that the significance of a sign used to identify specific business activities must be established in relation to the identifying function of that sign. That consideration means that account must be taken, firstly, of the geographical dimension of the sign’s significance, that is to say of the territory in which it is used to identify its proprietor’s economic activity, as is apparent from a textual interpretation of Article 8(4) EUTMR. Account must be taken, secondly, of the economic dimension of the sign’s significance, which is assessed in view of the length of time for which it has fulfilled its function in the course of trade and the degree to which it has been used, of the group of addressees among which the sign in question has become known as a distinctive element, namely consumers, competitors or even suppliers, or even of the exposure given to the sign, for example, through advertising or on the internet (24/03/2009, T-318/06 – T-321/06, General Optica, EU:T:2009:77, § 36-37 and 30/09/2010, T-534/08, Granuflex, EU:T:2010:417, § 19).

Therefore, the criterion of ‘more than mere local significance’ is more than just a geographical examination. The economic impact of the use of the sign must also be evaluated. Consideration must be given, and the evidence must relate, to these elements:

a) the intensity of use (sales made under the sign)

b) the length of use

c) the spread of the goods (location of the customers)

d) the advertising under the sign and the media used for that advertising, including the distribution of the advertising.

The applicant invoked the earlier non-registered marks in relation to every Member State of the European Union. Therefore, it must prove that the marks were used in more than a mere local significance in each of those Member States.

Already in the declaration of Matte Fields which includes the table with revenues for each of the Member States and the list of invoices it is clear that no sales whatsoever were made in some of the countries and in others, the sales volumes are negligible. The table shows alleged sales revenues for nearly four years including most of 2013, that is, a period postdating the filing date of the contested mark. For most of the states, the revenues were a few thousand US dollars or even less during the four years. These low sales are not accompanied by some other forms of use such as advertisement. The applicant claims that it has spent approximately USD 17 000 in connection with advertising in Europe since November 2012; this sum is very small overall, not country-specific and includes a period from November 2012 to July 2014, out of which only a few days are before the filing of the contested mark. Therefore, the sum in fact spent for advertising before the filing of the contested mark in each country is not known. In any case, the overall sum spent is essentially negligible.

For the vast majority of the Member States, the sales claimed in the table are very low, there is no specification of how these sales spread in terms of territory of those states and time, the actual invoices submitted do not even reach the sums given in the table and there is no evidence of advertising or any other supporting activities related to the marks.

The only Member States in which, according to the presented table, the sales of articles under the contested mark reach volumes that are worth further considerations are France, Germany and the United Kingdom. However, it must be noted that both the table and the list of invoices included in the declaration originate from the applicant (the declaration is made by the applicant’s owner and CEO) and as such, their probative value is limited. Statements coming from the sphere of the owner of the earlier mark (drawn up by the interested parties themselves or their employees) are generally given less weight than independent evidence. This is because the perception of the party involved in the dispute may be more or less affected by personal interests in the matter (decision of 11/01/2011, R 0490/2010-4, BOTODERM, § 34). The final outcome depends on the overall assessment of the evidence in each individual case. In general, further material is necessary for establishing evidence of use, since such statements have to be considered as having less probative value than physical evidence (labels, packaging, etc.) or evidence originating from independent sources. Therefore, the probative strength of the further material submitted is very important. An assessment should be made of whether the content of the affidavit is sufficiently supported by the further material (or vice versa).

The documents in support of the declaration are the physical invoices, catalogues and extracts from the internet. As regards France and Germany, there are a few invoices and payments showing sales of around 100 items in France and 60 in Germany. Other evidence that could relate to those territories is the social media references, specifically the numbers of fans of the applicant’s Facebook page by country. The data appears to be from 2014, which, considering the fast development of events on Facebook, says essentially nothing about the situation in November 2012. In any case, the number of fans from France and Germany is less than 30 000, which could hardly serve as a proof of a significant use of the mark in the markets of such size. There are no other documents showing any use in those territories as all the other evidence is in English and shows no connection to either Germany or France. Consequently, the evidence supporting the declaration is far from corroborating the statements made there.

As far as the United Kingdom is concerned, the applicant submitted two invoices from 2012 and five payment documents from 2008 showing sales of nine items in total. The remaining documents are in English but references to the UK territory are very scarce. The prices in the catalogues are in US dollars and addresses are in the USA. The Internet extracts may be from British media but do not specifically refer to the presence of the mark on the UK market. The article in The Daily Mirror is about a person caught smoking marihuana and the only reference to the mark is that this person is wearing a ‘DOPE’ cap on the photograph accompanying the article. The other article is an interview where the applicant’s founder talks about its business in the USA. The blogs do not contain perceptible references to the UK territory. The fact that some people, mostly American celebrities, connected with music or specifically rap, can be seen on the internet wearing clothing labelled with the earlier mark, cannot be considered use of the mark in the course of trade in the United Kingdom, no matter how many Twitter followers these people may have. Moreover, these ‘celebrity references’ are mostly undated or postdate the filing date of the contested mark. The social media references either give information about the period after the filing of the contested mark or are very inconclusive. For example, the number of fans of the applicant’s Facebook page, from what can be seen in the document, in 2014, was little over 6 000. This, in a country populated by 64 millions of people, could even serve as a proof of very low significance of the mark on this market.

Considering all that was said above, while there are indications that there was some marginal use of the marks in several Member States of the EU, the evidence is not sufficient to prove that the marks were used in the course of trade of more than a local significance in either of the Member States invoked by the applicant. As regards France, Germany and the United Kingdom, the information given by the applicant’s CEO was not corroborated by any more objective or independent evidence and for the rest of the Member States, even the data provided by the applicant’s CEO show negligible sales volumes and the low sales volumes are not compensated by long term or regular use or advertising.

Since the applicant failed to prove that its non-registered trade marks were used in the course of trade of more than mere local significance in any of the relevant territories, one of the necessary requirements of Article 8(4) EUTMR is not met, and the application for declaration of invalidity must be rejected insofar as it was based on Article 53(1)(c) EUTMR in conjunction with Article 8(4) EUTMR.

BAD FAITH – ARTICLE 52(1)(b) EUTMR

General principles

Article 52(1)(b) EUTMR provides that a European Union trade mark will be declared invalid where the applicant was acting in bad faith when it filed the application for the trade mark.

There is no precise legal definition of the term ‘bad faith’, which is open to various interpretations. Bad faith is a subjective state based on the applicant’s intentions when filing a European Union trade mark. As a general rule, intentions on their own are not subject to legal consequences. For a finding of bad faith there must be, first, some action by the EUTM proprietor which clearly reflects a dishonest intention and, second, an objective standard against which such action can be measured and subsequently qualified as constituting bad faith. There is bad faith when the conduct of the applicant for a European Union trade mark departs from accepted principles of ethical behaviour or honest commercial and business practices, which can be identified by assessing the objective facts of each case against the standards (Opinion of Advocate General Sharpston of 12/03/2009, C-529/07, Lindt Goldhase, § 60).

Whether a EUTM proprietor acted in bad faith when filing a trade mark application must be the subject of an overall assessment, taking into account all the factors relevant to the particular case (11/06/2009, C-529/07, Lindt Goldhase, EU:C:2009:361, § 37).

The burden of proof of the existence of bad faith lies with the invalidity applicant; good faith is presumed until the opposite is proven.

Assessment of bad faith

The Case-law shows four cumulative factors to be particularly relevant for the existence of bad faith:

• Identity/confusing similarity of the signs,
• EUTM proprietor’s knowledge of the use of an identical or confusingly similar sign,
• dishonest intention on the part of the EUTM proprietor,
• degree of legal protection enjoyed by both signs.

The applicant did not provide any evidence indicating that the EUTM proprietor knew about the applicant’s marks at the time of filing of the application of the contested mark. It limits itself to a claim that since the EUTM proprietor was founded some three years after the applicant started to use its mark, it must have known about it. Although it is possible in some specific cases to only assume the knowledge of the EUTM proprietor, the present case is not such a case. The applicant did not prove that its mark had a reputation at the time of filing to such an extent that it would be possible to assume the EUTM proprietor’s knowledge of it. As seen above, it did not even prove that it marks were used in either of the European countries in more than mere local significance. The EUTM proprietor is based in Sweden and (as illustrated by the documents provided by it) the majority of its business takes place in Sweden. The only document related to Sweden submitted by the applicant is one invoice for less than a hundred products. To claim that based on such a use of the mark in that territory, it should be supposed that the EUTM proprietor knew about the mark, is far removed from reality. The possibility that the EUTM applicant learned about the mark ‘DOPE’ on the internet remains a hypothetical possibility and nothing more, in particular when the evidence of presence of the mark on the internet before the time of filing of the contested mark is very scarce.

The burden of proof is on the applicant. The applicant failed to show any relationship between the two parties or any other indication that the EUTM proprietor knew about the mark. It also failed to back up with any serious evidence its assertion that it is reasonable to assume the EUTM proprietor’s knowledge of the mark. Since there is no proof that the EUTM proprietor knew about the applicant’s mark, it cannot be concluded that it filed the application for the contested mark in bad faith.

As the bad faith of the EUTM proprietor at the time of filing of the contested mark was not shown, the application for declaration of invalidity must be rejected insofar as it was based on the ground of Article 52(1)(b) EUTMR.

COSTS

According to Article 85(1) EUTMR, the losing party in cancellation proceedings must bear the fees and costs incurred by the other party.

Since the applicant is the losing party, it must bear the costs incurred by the EUTM proprietor in the course of these proceedings.

According to Rule 94(3) EUTMIR and Rule 94(7)(d)(iv) EUTMIR, the costs to be paid to the EUTM proprietor are the representation costs, which are to be fixed on the basis of the maximum rate set therein.

The Cancellation Division

Pierluigi M. VILLANI

Michaela SIMANDLOVA

María Belén IBARRA DE DIEGO

According to Article 59 EUTMR, any party adversely affected by this decision has a right to appeal against this decision. According to Article 60 EUTMR, notice of appeal must be filed in writing at the Office within two months of the date of notification of this decision. It must be filed in the language of the proceedings in which the decision subject to appeal was taken. Furthermore, a written statement of the grounds of appeal must be filed within four months of the same date. The notice of appeal will be deemed to be filed only when the appeal fee of EUR 720 has been paid.

The amount determined in the fixation of the costs may only be reviewed by a decision of the Cancellation Division on request. According to Rule 94(4) EUTMIR, such a request must be filed within one month from the date of notification of this fixation of costs and shall be deemed to be filed only when the review fee of EUR 100 (Annex I A(33) EUTMR) has been paid.