CANCELLATION No 6229 C (REVOCATION)

Edina Hazi, Jász utca 44, 1035 Budapest, Hungary (applicant), represented by Stumpf Patentanwälte PartGmbB, Alte Weinsteige 73, 70597 Stuttgart, Germany (professional representative)

a g a i n s t

Acedes Holdings, LLC, Main Street, P.O.Box 556, Charlestown, Nevis, Saint Kitts and Nevis (EUTM proprietor), represented by Hepworth Browne Limited, 15 St Paul's Street, Leeds LS1 2JG, United Kingdom (professional representative)

On 27/09/2017, the Cancellation Division takes the following

DECISION

1.        The application for revocation is partially upheld.

2.        The EUTM proprietor’s rights in respect of European Union trade mark No 497 180 are revoked as from 24/01/2012 for part of the contested goods, namely:

Class 12: Parts and fittings for cars.        

Class 25: Articles of clothing; footwear; headgear (as per the decision of 22/01/2014).

Class 28: Games, toys and playthings; toy cars and scale model vehicles.

3.         The European Union trade mark remains registered for all the remaining goods, namely:

Class 12:        Cars.

4.        Each party bears its own costs.

REASONS

The applicant filed a request for revocation of European Union trade mark registration No 497 180 ‘AC’ (word mark) (the EUTM). The request is directed against all the goods covered by the EUTM, namely

Class 12: Cars, and parts and fittings for cars.        

Class 25: Articles of clothing; footwear; headgear.        

Class 28: Games, toys and playthings; toy cars and scale model vehicles.

The applicant invoked Article 51(1)(a) EUTMR.

On 22/01/2014 the Cancellation Division rendered a decision which resulted in the revocation in their entirety of the proprietor’s rights in respect of the EUTM as from 24/01/2012, on the grounds that the evidence submitted by the EUTM proprietor was insufficient to prove that the EUTM was genuinely used. In particular, it was found that, even if the evidence submitted satisfied the requirements concerning the time, place and nature of use, it was not sufficient to establish the extent of use of the contested EUTM. In addition, the decision rejected as unfounded the EUTM proprietor’s claims regarding proper reasons for non-use.

The decision of 22/01/2014 was appealed and the Board of Appeal decided in case R 813/2014-2. The Board’s decision partially annulled the contested decision of the Cancellation Division and remitted the case back to it for further prosecution insofar as the following goods are concerned:

Class 12: Cars, and parts and fittings for cars.                

Class 28: Games, toys and playthings; toy cars and scale model vehicles.

The Board agreed with the findings of the decision of 22/01/2014, in particular as regards the insufficient indications on the extent of use and the lack of proper reasons for non-use. However, in exercising its discretionary power under Article 76(2) EUMTR, it decided to take into account the additional evidence of use submitted by the EUTM proprietor for the first time on appeal (and related to the goods in Classes 12 and 28). It then instructed the Cancellation Division to re-examine the case taking into account this additional evidence, which will be listed below.

The contested decision was confirmed for the goods in Class 25, for which it has already become final.

On 12/04/2017, the Cancellation Division reopened the adversarial part of the proceedings to give the parties the opportunity to submit observations on the additional evidence.

SUMMARY OF THE PARTIES’ ARGUMENTS

The applicant argues that the additional evidence submitted by the EUTM proprietor before the Board of Appeal is still insufficient to show genuine use, since it does not show that more sales were carried out in the market during the relevant period. In particular, and as regards goods in Class 12, it claims that it only shows marketing efforts made by the EUTM proprietor, and adds that the cars at issue are not the original AC branded cars but replicas (filing some additional documents in this respect). As regards the goods in Class 28, the applicant points out that the witness statement that is submitted is from the founder and major shareholder of the EUTM proprietor, and not from an independent party, and that the submitted e-mail correspondence with video game manufacturers only shows some preparatory work.

The EUTM proprietor responds by emphasizing that it makes and sells original AC cars, and not replicas, and that the evidence provided to the Board of Appeal does document actual sales. It also submits some more evidence in this respect.  

On 31/08/2017, once the adversarial part was again closed, the EUTM proprietor filed further observations and evidence.

GROUNDS FOR THE DECISION

According to Article 51(1)(a) EUTMR, the rights of the proprietor of the European Union trade mark will be revoked on application to the Office, if, within a continuous period of five years, the trade mark has not been put to genuine use in the Union for the goods or services for which it is registered, and there are no proper reasons for non-use.

Genuine use of a trade mark exists where the mark is used in accordance with its essential function, which is to guarantee the identity of the origin of the goods or services for which it is registered, in order to create or preserve an outlet for those goods or services. Genuine use requires actual use on the market of the registered goods and services and does not include token use for the sole purpose of preserving the rights conferred by the mark, nor use which is solely internal (11/03/2003, C-40/01, Minimax, EU:C:2003:145, in particular § 35-37 and 43).

When assessing whether use of the trade mark is genuine, regard must be had to all the facts and circumstances relevant to establishing whether commercial exploitation of the mark is real, particularly whether such use is viewed as warranted in the economic sector concerned to maintain or create a market share for the goods or services protected by the mark (11/03/2003, C-40/01, Minimax, EU:C:2003:145, § 38). However, the purpose of the provision requiring that the earlier mark must have been genuinely used ‘is not to assess commercial success or to review the economic strategy of an undertaking, nor is it intended to restrict trade-mark protection to the case where large-scale commercial use has been made of the marks’ (08/07/2004, T-203/02, Vitafruit, EU:T:2004:225, § 38).

According to Rule 40(5) EUTMIR in conjunction with Rule 22(3) EUTMIR, the indications and evidence for the furnishing of proof of use must consist of indications concerning the place, time, extent and nature of use of the contested trade mark for the goods and services for which it is registered.

In revocation proceedings based on the grounds of non-use, the burden of proof lies with the EUTM proprietor as the applicant cannot be expected to prove a negative fact, namely that the mark has not been used during a continuous period of five years. Therefore, it is the EUTM proprietor who must prove genuine use within the European Union, or submit proper reasons for non-use.

As explained in the decision of 22/01/2014, in the present case the relevant period during which genuine use has to be proved is from 24/01/2007 to 23/01/2012 inclusive.

As regards the relevant goods, as previously explained, the re-examination of the present case only concerns the goods for which the EUTM is registered in Classes 12 and 28.

The new evidence of use filed before the Board of Appeal, and which should be taken into account, together with the evidence previously submitted by the EUTM proprietor, is the following:

1	Spreadsheet summarising sales of goods under the trade marks
2	Steve Gray	Second Witness Statement and exhibits: Exhibit 15 Letter from Bambrook Sinclair Exhibit 16 Extract from AC owners group chat Exhibit 7 Screen Shot Nostalgia r website
3	Jurgen Mohr	Second Witness Statement and exhibits: Exhibit 15 distributorship agreement Exhibit 16 Contract with ZIL Exhibit 17 spreadsheet showing payments deliveries  and approvals Exhibit 18 invoices to distributors Exhibit  19 invoices  for powder coating Exhibit 20 Photographs of cars which have been delivered and are under construction Exhibit 21 Brochure- single vehicle approval Exhibit 22 registration certificates
4	Theo Ehrhardt	Witness statements and exhibits: Exhibit 1 Company registration Exhibit 2 Press coverage and video links Exhibit 3 Orders and delivery  notes Exhibit 4 Photos of shows
5	Alan Lubinsky	Witness statement and exhibits: Exhibit 9 Certificate of incumbency Exhibit 10 Screenshots Norev and emails Exhibit 11 Screen shots and correspondence Sony, Microsoft and Atari Exhibit 12 Registration cert relating to car invoice sent to OHIM April 2012 Exhibit 13 UK government brochure RE individual vehicle authorisation
6	Riorden Welby	Witness statement and exhibits: Exhibit 1 Photograph of AC cars at Mr. Welby's private workshop Exhibit 2 Photographs of red mk III and yellow mk III cars under construction at Brooklands Motor Co and finalised, as well as the car still under construction Exhibit 3 Article Practical Classics
7	Peter Barwick	Witness statement and exhibits: Exhibit l Photographs of cars under construction at Brooklands Exhibit 2 Photograph of Brochure promoting  Brooklands and Vevey trophy Exhibit 3 Copy bank statements

In addition, on 10/03/2017 and 13/03/2017 the EUTM proprietor filed yet more additional evidence, consisting of a series of documents to prove that the cars to be manufactured by the EUTM proprietor are “original” ones (RB01-RB04), a “bundle of papers” with details about the sales and registrations of several cars already mentioned in previous documents (RB05), a UK government document about the approval process of the new vehicles (RB06) and a press release about nine cars that the EUTM proprietor is currently producing (RB07). Finally, on 31/08/2017, once the adversarial part had again been closed, the EUTM proprietor submitted additional documents consisting of a letter from the EUTM proprietor’s lawyers confirming that the EUTM proprietor had acquired all intellectual property from AC Cars Limited, as well as of extracts of the agreement containing the assignment and of its annex.

Using its discretionary power under Article 76(2) EUTMR, the Cancellation Division will not admit the additional evidence mentioned in the previous paragraph, mainly due to the stage of proceedings in which it was filed. The EUTM proprietor has already filed extensive evidence of use in repeated occasions, both before the Cancellation Division and before the Board of Appeal, and there seems to be no good reason to justify why, more than five years after the end of the period specified in accordance with Rule 40(2) EUTMIR, the EUTM proprietor should still be allowed to file more belated evidence of use. In addition, it is also noted that this additional evidence does not seem to be prima facie likely to alter the outcome of the present decision.

Preliminary remark

The parties have discussed and filed some evidence on the question of whether the cars at issue are “original AC cars” or “replicas”. The relevance of this question to the present proceedings seems to be that, according to the applicant, if they are considered to be “replicas”, it can no longer be held that they are luxury cars. The Cancellation Division will not examine this question since it fails to see its relevance to the present proceedings. The goods for which the EUTM is registered in Class 12 and for which genuine use needs to be proved, are cars, and parts and fittings for cars and not “luxury cars”. In any event, whether the cars in question can be considered to belong to the luxury market segment or not will usually be determined by the price at which they are sold, and not by the fact of being the “original” ones or ”replicas”.

Assessment of genuine use – factors

In the decision of 22/01/2014 it was already found that the evidence submitted before the Cancellation Division contained sufficient indications about time, place and nature of use. Consequently, and in order to avoid unnecessary repetitions, the present decision will focus exclusively on the question of whether the EUTM proprietor has managed to prove a sufficient extent of use.

Extent of use

Concerning extent of use, it is settled case-law that account must be taken, in particular, of the commercial volume of the overall use, as well as of the length of the period during which the mark was used and the frequency of use (e.g. 08/07/2004, T-334/01, Hipoviton, EU:T:2004:223, § 35).

The Court has held that ‘[u]se of the mark need not … always be quantitatively significant for it to be deemed genuine, as that depends on the characteristics of the goods or service concerned on the corresponding market’ (11/03/2003, C-40/01, Minimax, EU:C:2003:145, § 39).

Use of the mark must relate to goods or services already marketed or about to be marketed and for which preparations by the undertaking to secure customers are under way. Mere preparation to use the mark — such as the printing of labels, producing of containers, etc. — is internal use and, therefore, not use in the course of trade for the present purposes (11/03/2003, C-40/01, Minimax, EU:C:2003:145, § 37).

The decision of 22/01/2014 concluded, after careful examination of the extensive evidence that was submitted by the EUTM proprietor, that it had failed to prove at least some extent of use of the contested mark in the sense required by the case-law that is use which is not internal or token or sporadic.

 

However, the additional evidence of use filed by the EUTM proprietor before the Board of Appeal has managed to dispel the doubts that remained in this respect.

 

The EUTM proprietor has filed a spreadsheet giving details about orders for 23 cars bearing the EUTM, with names of customers, dates of order, dates of payment dates of delivery and, for four of them, date and place of registration, and most of the information on this spreadsheet is corroborated by the documents attached to the witness statements.  Even if the amount of sales within the relevant period remains minimal, it has now become clear that, despite the difficulties the EUTM proprietor may face for obtaining the European homologation, cars carrying the EUTM have actually being sold to final customers and registered within the EU. The second witness statement of Mr. Jurgen Mohr and the statements from independent distributors and clients, such as Mr. Erhardt, Mr. Gray or Mr. Welry, together with the attached exhibits (invoices, registration papers), corroborate the information on the spreadsheet.

The applicant has argued that the additional invoices and copies of registration papers showing actual sales in the market postdate the relevant time period. However, it should be reminded that evidence referring to use outside the relevant period is disregarded unless it contains conclusive indirect proof that the mark must have been genuinely used during the relevant period as well. Events subsequent to the relevant period may make it possible to confirm or assess more accurately the extent to which the earlier mark was used during the relevant period and the EUTM proprietor’s real intentions at the time (27/01/2004, C 259/02, Laboratoire de la mer, EU:C:2004:50).

In the present case, the evidence of sales postdating the relevant period does allow the Cancellation Division to assess more accurately the extent of use during the relevant period. As a result of this evidence, it cannot anymore be held that the EUTM proprietor “did not prove that it would be capable of [selling cars on the market] in the future” (decision of 22/01/2014). On the contrary, it should now be concluded that the preparatory activities carried out during the relevant period did indeed relate to some goods (cars) which were about to be marketed.

Taking then into account the extensive preparatory activities to secure customers for the cars about to be marketed, together with the few sales which actually were completed within the relevant period, it should be concluded that the evidence as a whole does contain sufficient indications about the extent of use, taking also into account that the price of the models being sold (regardless of whether they are considered originals or replicas) is quite considerable.

However, there is no evidence of use of the EUTM for the rest of the goods for which the EUTM is registered in Class 12, namely parts and fittings of cars. The fact that the sales invoices for cars mention certain parts of fittings added to the cars being sold (presumably as optional accessories) is not enough in this respect, since there is no evidence that the parts in question are marketed under the AC mark, nor any other indication that the EUTM proprietor is trying to create a market outlet for these goods.  

As regards the goods in Class 28, the decision of 22/01/2014 stated that the evidence filed before the Cancellation Division only consisted of licence agreements and did not show any commercial transaction which would serve to prove extent of use.

The additional evidence does not change this finding, since it still fails to show any commercial transaction in connection with the goods in question. The screenshots from two websites indicate that some toy AC cars were being offered for sale in 2014, but do not prove that they were actually sold. As regards the email correspondence with Sony, Microsoft and Atari, it should also be noted that it concerns video games software in Class 9 and not any of the goods for which the trade mark is registered in Class 28, and in any event it does not prove any actual sales on the market.

Consequently, it should be concluded that the additional evidence submitted before the Board of Appeal does contain sufficient indications about the extent of use, but only for part of the goods for which the EUTM is registered, namely for cars in Class 12.

Overall assessment

In order to examine, in a given case, whether use of the mark is genuine, an overall assessment must be made taking account of all the relevant factors in the particular case. That assessment implies a certain interdependence between the factors taken into account. Thus, a low volume of goods marketed under that trade mark may be compensated for by high intensity of use or a certain constancy regarding the time of use of that trade mark or vice versa (08/07/2004, T-334/01, Hipoviton, EU:T:2004:223, § 36).

In the present case, the low volume of cars marketed under the contested EUTM during the relevant period is compensated by the extensive preparatory activities carried out by the EUTM proprietor during the same period, which resulted in a higher number of subsequent sales. Taking also into account the characteristics of the specific market at issue, it is concluded that the EUTM proprietor has managed to prove genuine use for cars in Class 12.

However, the additional evidence filed before the Board of Appeal, even when examined in conjunction with the previous evidence, does not contain sufficient indications about the use of the EUTM for the rest of the goods for which it is registered in Class 12, nor for any of the goods for which it is registered in Class 28.

Reasons for non-use

In accordance with Article 51(1)(a) EUTMR, the EUTM proprietor may either prove genuine use of the contested European Union trade mark or prove that there are justifiable reasons for non-use. These reasons cover circumstances arising independently of the EUTM proprietor’s will which prevent use of the contested European Union trade mark.

In the present case, the EUTM proprietor gave some reasons for non-use regarding  cars, which were already examined in the decision of 22/01/2014 and which do not need to be re-examined (since the EUTM proprietor has finally managed to prove genuine use for these goods). As regards the remaining goods in Classes 12 and 28, the EUTM proprietor did not provide any reasons for non-use.

Conclusion

It follows from the above that the EUTM proprietor has not proven genuine use of the EUTM for the following goods, for which it must, therefore, be revoked:

Class 12: Parts and fittings for cars.        

Class 28: Games, toys and playthings; toy cars and scale model vehicles.

In addition, the EUTM had already been revoked in the present proceedings for articles of clothing; footwear; headgear in Class 25 by the decision of 22/01/2014, which was confirmed by the Board of Appeal insofar as these goods were concerned and has in the meantime become final.

The EUTM proprietor has proven genuine use for the remaining contested goods cars; therefore, the application is not successful in this respect.

According to Article 55(1) EUTMR, the revocation will take effect from the date of the application for revocation, that is, as of 24/01/2012.

COSTS

According to Article 85(1) EUTMR, the losing party in cancellation proceedings must bear the fees and costs incurred by the other party. According to Article 85(2) EUTMR, where each party succeeds on some heads and fails on others, or if reasons of equity so dictate, the Cancellation Division will decide a different apportionment of costs.

Since the cancellation is successful only for part of the contested goods, both parties have succeeded on some heads and failed on others. Consequently, each party has to bear its own costs.

The Cancellation Division

Carmen SÁNCHEZ PALOMARES

José Antonio GARRIDO OTAOLA

Elisa ZAERA CUADRADO

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.