CANCELLATION No 12 579 C (INVALIDITY)

Avoca Motor Products Limited, Unit 1, Parkway 4, Longbridge Road, Trafford Park, Manchester M17 1SN, United Kingdom and Eternity FZ-LLC, P.O. Box 35102, Al Jazeera Al-Hamra, Ras Al Khaimah, United Arab Emirates (applicants), represented by Dentons Ukmea LLP, One Fleet Place, London  EC4M 7RA, United Kingdom (professional representative)

a g a i n s t

Fateh Holdings Limited, M/S Bdo Chartered Accountants & Advisors, Al Futtaim Tower, Al Maktoum Road, Deira, P.O. BOX 1961, Dubai, United Arab Emirates (EUTM proprietor),

On 18/09/2017 the Cancellation Division takes the following

DECISION

1.        The application for a declaration of invalidity is upheld.

2.        European Union trade mark No 12 757 373 is declared invalid in its entirety.

3.        The EUTM proprietor bears the costs, fixed at EUR 1 150.

REASONS

The applicants filed an application for a declaration of invalidity against European Union trade mark No 12 757 373 Ecomax (word mark) (the EUTM). The request is directed against all the goods covered by the EUTM, namely:  

Class 12        Wheels, tyres and continuous tracks; Tyres; Vehicles tyres; Remoulded tyres; Retreaded tyres; Tubular tyres; Automobile tyres; Tyres for automobiles; Automobile tires [tyres]; Tyres for vehicle wheels; Tyres for land vehicles; Pneumatic tires [tyres]; Vehicle wheel tires [tyres]; Tyres for motorcycles; Tyres for trucks; Tyres for buses; Wheel tyres (Vehicle -).

The applicants invoked primarily Article 52(1)(b) EUTMR, namely that the EUTM was filed in bad faith.

Additionally, the applicants claimed that according to Article 53(1)(a) in conjunction with Article 8(2)(c) EUTMR, the contested EUTM should be invalidated, since it is identical or similar to the well-known mark Ecomax used by the applicants. Furthermore, according to Article 53(1)(c) in conjunction with Article 8(4) EUTMR, the applicants, as the proprietors of the earlier unregistered trade mark Ecomax used in the course of trade of more than mere local significance, have the right to prohibit the use of the EUTM in respect of all the goods applied for.

SUMMARY OF THE PARTIES’ ARGUMENTS

First arguments of the applicants:

• They are members of an international group of companies, Al Dobowi, a global company trading in the automotive tyre industry which supplies tyre and battery products under a number of brands. They have marketed and/or supplied automotive tyres across the European Union since at least 2012 under the tyre pattern name, Ecomax. Their annual turnover within the European Union relating to Ecomax tyres exceeded EUR 6.9 million in each of the years 2013-2014 and 2014-2015. The applicants’ products under the name Ecomax are very well known.
• Fateh Holdings Limited (Fateh), the EUTM proprietor, applied in bad faith for the EUTM in the knowledge of the applicants’ earlier rights in the name Ecomax, with the sole intention of using the EUTM in bad faith, to disrupt the business of the applicants.
• In September 2015, the applicants were made aware that a company called Zenises Europe Limited (Zenises), purportedly a licensee of Fateh, had written to various customers, advisors and bankers of the applicants’ group to inform them that Zenises intended to issue proceedings in Germany seeking an injunction preventing the applicants from continuing to use various brands which the applicants have traded under for many years, and in which the applicants’ enjoy earlier rights. Fateh was relying on EUTM registrations for such brands. Prior to this date, the applicants had no knowledge either of the existence of Fateh, or that it had registered trade marks in respect of the applicants’ brands.
• Upon investigating Fateh, the applicants learned that it also filed applications for a number of other EUTMs relating to brands in which the applicants hold prior rights. Those applications are also the subject of invalidity proceedings based on substantially identical grounds and have been filed by the applicants.
• Fateh is owned and controlled by Mr Harjeev Singh Kandhari (hereinafter Mr HSK), who is a minority shareholder in the Al Dobowi group and has been engaged in an acrimonious dispute with the majority shareholders since summer 2013 (several months before the EUTM application was filed). At the time, Mr HSK (through his company Fateh) applied for the EUTM, he was Head of Finance of the Al Dobowi group and was in charge of running the European business of the group, with responsibility for the day-to-day management of the European business. His responsibilities included registration of trade marks for the applicants, and he had, on previous occasions, applied for the registration of European Union trade marks on behalf of group companies. In consequence of his position, he had detailed and specific knowledge of the applicants’ prior rights in Ecomax.
• The EUTM is identical to the applicants’ Ecomax sign, and has been applied for in respect of goods which are identical or similar to the goods to which the applicants use their sign. There is a likelihood of confusion between the signs.
• Mr HSK had, by virtue of his position within the applicants’ business, direct knowledge of the applicants’ usage of earlier rights in Ecomax. Mr HSK’s responsibilities as Head of Finance of the Al Dobowi group were wide-ranging: the day-to-day running of all aspects of the European tyre business, including brand development, financial management, appointment of personnel and coordination of appearances at industry events. In particular, HSK:
• was at this time a director of Eternity FZ LLC (Eternity), one of the applicants in the present proceedings). Eternity is the corporate entity under which the applicants’ Infinity business is organised – and under which a large number of Ecomax branded tyres are sold; and
• took responsibility for managing a UK subsidiary of the Al Dobowi Group – Avoca Motor Products Limited (Avoca), the other applicant in the present proceedings). This entity employed the majority of the Al Dobowi group’s European salesforce and acted as the invoicing hub for a significant percentage of Al Dobowi’s European tyre sales originating through Eternity.
• It is beyond doubt that Mr HSK and Fateh’s intention in registering the EUTM was to prevent the applicants from continuing to use Ecomax. The EUTM application was secretly made in the name of a third party entity which did not (and does not) form part of the Al Dobowi Group, and Fateh has recently declared an intention to sue the applicants for trade mark infringement in relation to Ecomax.
• Neither Mr HSK nor Fateh informed the applicants of any intention to register the EUTM before making the application, nor was this done during the application process or on registration of the EUTM.
• Mr HSK’s position in the Al Dobowi group was such that he was generally responsible for registering trade marks for the group’s brands. In pursuance of this responsibility, he instructed the UK-based law firm Aughton Ainsworth to register three EUTMs for “Infinity” and “Eternity” between 2008 and 2011 (see Annex 5). Each of these applications was made in the name of Tricolor Group Limited (hereinafter Tricolor). Tricolor is a subsidiary of the Al Dobowi Group and was, at this time, used to hold intellectual property rights on behalf of the applicants. Any trade mark application for brands used by the Al Dobowi Group should have been made by Mr HSK, in the name of Tricolor.
• At the time of the EUTM application (03/04/2014), Mr HSK was in dispute with the majority shareholders of the Al Dobowi business as to the extent of his future role within the group. At that point in time, discussions were ongoing and the parties had not reached agreement as to the terms of any settlement. Mr HSK was still in post and continued to perform his duties as a senior individual within the group.
• The only reasonable inference which can be drawn from Mr HSK’s decision to covertly register the EUTM in the name of Fateh (rather than Tricolor, or an alternative bona fide Al Dobowi subsidiary) is that he intended to deprive the applicants of their rights to the Ecomax sign.
• Mr HSK’s actions in registering the EUTM in the name of a third party company, controlled by him personally, are a clear breach of his duties as a manager of the European Al Dobowi business, and director of Eternity. It appears that Mr HSK was making preparations to leave the Al Dobowi group, and believed the EUTM registration to be useful ammunition against the group he had exited.
• Fateh’s intention (manifested in litigious threat) in registering the EUTM was to prevent the applicants from using their pre-existing Ecomax sign.
• The nature of this correspondence, and in particular, HSK’s actions in circulating it to a very wide range of recipients, including not only the applicants’ customers, but also their auditors, banks, and other business associates, is indicative of Mr HSK’s intention to use the EUTM to commercially damage the applicants’ business – rather than to simply assert purported intellectual property rights. HSK did not include the applicants themselves in the list of 52 recipients to the letter. As of the date of this application (20 weeks after the date of the letter), no papers relating to his infringement action have been served on the applicants, nor have they received any further indication that HSK or Zenises Europe Limited intend to serve any such claim. The applicants are not aware as of the date of this application as to whether the proceedings have actually been issued.
• No genuine commercial usage of the EUTM was made by Fateh or Mr HSK whatsoever. Fateh has only used the EUTM to make litigious threats.
• On or around the date of the EUTM application (and in the months preceding and following), Fateh also applied for a number of other EUTMs relating to brands in which the applicants also hold prior rights (Ecosis No 12 350 732, Greenmax No 13 004 874, Eterniti No 12 764 023, Eterniti No 12 440 954 and Ecosis No 12 763 819).
• in October 2014, Mr HSK attempted in bad faith to transfer a key internet domain name operated by the applicants’ group company Al Dobowi FZE (www.aldobowi.com). Al Dobowi FZE successfully challenged this transfer in a WIPO UDRP hearing, in which the panel held (see Annex 6, para. 6(C)) that:

• “[Mr HSK] targeted [Al Dobowi FZE] when it transferred the key account details for the Domain Names into his own name, and then used his control over the Domain Names in bad faith to disrupt the business operations of [Al Dobowi FZE] and the Al Dobowi group companies”.

First set of evidence (annexes) filed by the applicants:

1. Judgment of 11/06/2009 in case C-529/07 Lindt Goldhase, EU:C:2009:361.
2. Brochures titled ‘Infinity powered by Al Dobowi’ dated in 2012 describing its presence in exhibitions and the characteristics of ‘ecosis’, ‘ecomax’ tyres; press release about the launch of the new generation of Ecomax and Ecosis tyres in 2012.
3. Emails dated between 21/11/2013 and 23/11/2013 between Andy Williamson of law firm Aughton Ainsworth and Mr HSK in which Mr HSK requests the former to register a list of Eternity and Infinity pattern names in the name of Fateh for goods in Class 12 for UK and Europe. These pattern names are: ECOVIBE, ECOGREEN, ECOPEAK, ECOSADE, ECOLOGY, ECOZEN, ECOSIOECOGRIP, ECOPIONEER, ECOSNOW, ECOSNOW SUV, ECOMAX, ECOSIS, ENVIRO, ECOVANTAGE and GENYSIS or GENESYS.
4. Letter dated 29/09/2015 signed by Mr HSK on behalf of the German company Zenises in which it informs Daly Tyres, an Irish company and applicants’ client, that Zenises has filed legal proceedings against Eternity Fz LLC in Germany and that a number of other companies in the Al Dobowi group have in the recent past been subject to an adverse judgment against them for trade mark and copyright infringement. Attached to this letter there is a statement dated 18/09/2015 written by the German lawyers of Zenises regarding the litigation initiated in Germany by Zenises. In this letter it is specified that Zenises is the licensee of the EUTMs Ecosis and Ecomax registered by Fateh and that they filed, on behalf of Zenises, proceedings against Eternity for infringement of the above two trade marks seeking an injunction to prevent Eternity from selling, importing or distributing any tyre products featuring Ecosis and Ecomax (emphasis added).
5. EUIPO search for Tricolor’s trade marks: the results show two trade marks Eternity, and one Infinity.
6. Administrative panel decision in case No D 2014-1964 involving Al Dobowi FZE versus Mr HSK regarding the domain names aldobowi.com and aldobowigroup.com in which WIPO decided to transfer the respective domain names back to their truthful owner, Al Dobowi FZE, because Mr HSK acted in bad faith when transferred them in his own name.
7. and 8.        A series of export invoices (around 22) dated between 2013-2015 for different types of tyres, amongst them Ecomax tyres, having in their heading the name and address of Avoca Motor Products Ltd. or Eternity Fz LLC and the destination being different companies from France, Netherlands, Portugal, Ireland, Poland, Greece, Hungary, Latvia and the United Kingdom. In general the invoices show sales of Ecomax tyres ranging from several thousands to almost USD 30 000 per invoice. Articles from ‘atyrepress’ – the website for tyre and wheel professionals, moderntyredealer.com, reifenpresse.de, of the applicants’ attendance at trade shows promoting the Ecomax tyres: Brityrex International 2012 in the UK, Reifen Essen Motor Show 2012 in Germany, Pneu Expo 2013 in France, Motortec Automechanika Iberica 2013 in Spain, Autopromotec 2013 in Italy and Reifen Essen Motor Show 2014 in Germany. Texts such as “two infinity car tires had been recently introduced, the “Ecomax” and “Ecosis” […]” (reifenpresse.de 2013), “[…] joining the recent performance geared passenger car tyre lines, the Ecomax and the Ecosis, (…) were displayed at Pneu Expo in Lyon and Madrid’s Motortec Automechanika Ibérica […]” (atyrepress 2013), “[…] it’s been a lot of hard work and investment to develop these three brand new tyre programmes and, in addition to Ecomax, this means that our partners now have a completely new Infinity passenger type range with superior results across all performance criteria […]” Atyrepress 2013), “[…] after the company (Infinity) has recently introduced the tires Ecomax and Ecosis […]” (reifenpresse.de 2014).

9. Two invoices dated between in February and November 2013 issued by Al Dobowi group for infinity Ecosis/Ecomax catalogues for EUR 158.64 and press release for Ecomax&Ecosis Editorial for EUR 2012.85 – both for a Spanish client.
10. Certificate of registration for the contested EUTM.
11. A table with the sales made in 2013-2015 by country (France, Germany, Greece, Hungary, Ireland, Italy, Latvia, the Netherland, Poland, Portugal, Slovenia, Spain, the United Kingdom) for the Ecomax tyres. The total amount is over EUR 18 million for these countries.
12. Documents for substantiation of the claim under Article 53(1)(c) in conjunction with Article 8(4) EUTMR (applicable laws for some countries invoked as relevant territory which, if needed,  will be detailed further in the decision).

First arguments of the EUTM proprietor:

• The invalidity application is inadmissible on all grounds as it does not comply with Rule 37 EUTMR.
• There is no evidence of bad faith.
• The invalidity application based on Article 53(1) in conjunction with Articles 8(2)(c) and 8(4) EUTMR is not substantiated.
• The applicant has no registered or non-registered marks bearing the name Ecomax.
• A 25% of the Group Al Dobowi Investments Limited (who owns the applicants) is held by Mr HSK. However, there has never been an obligation on Mr HSK to register trade marks in the name of the Group, the applicants or Tricolor and the applicants did not prove such assertions. They were mainly European sales agents for various tyre manufacturers, such as Chinese Shandong Linglong Tyre Co.
• The applicants claimed – without adducing any evidence – that their annual turnover within the European Union relating to Ecomax tyres exceeded EUR 6.9 million in each of the years 2013 and 2014. This turnover is not at all significant in comparison to the total amount of tyres sold within Europe in 2014 by European manufacturers, 263 Mio. (according to European Tyre & Rubber Manufacturers’ Association (ETMRA) and even less compared to 326 million tyres according to the sales data published by the industry source Europool. Bearing in mind the average tyre price of 55 euros, the corresponding EU total turnover amounts to almost 18 billion EUR. Against this background, the importance of the applicants’ alleged turnover is minimal and significantly below the annual turnover of its competitors.
• Although the applicants claim they have been using the sign since 2012 they didn’t register it as trade mark anywhere, nor there is evidence of the extensive use, goodwill or reputation in this sign. The applicants merely acted as sales agents of Chinese manufacturer Shandong Linglong Tyre Co and sold Infinity tyres.
• The idea to register and use the Ecomax mark was Mr’s HSK and not the applicants. He created the brand as well as other brands (like Ecosis). No evidence was adduced to support this claim.
• The proprietor obtained the trade mark with the honest intention to use it in the future in the European tyre business and the five-year grace period is still running. The EUTM proprietor concluded a licence agreement with Zenises Europe Ltd. in July 2015, concerning the EUTM and other trade marks. On their webpage, the trade mark Ecomax is listed together with other trade marks in the section ‘Our Tyre Brands’ since currently, the company is preparing its campaign for the launch of new series of brand tyres under the contested EUTM.
• The website www.ecomaxtyres.com will be used for promotional purposes. This webpage has already been registered and forwards the Internet user to the Zenises’ official Internet presence.
• Zenises Europe Ltd. has been allowed to use a number of other proprietor’s trade marks, among them the contested EUTM as well as EUTM No 12 763 819 “Ecosis”. Due to an infringement of these two trade marks by one of the applicants, Zenises Europe Ltd. initiated trade mark infringement proceedings on the merits before the Regional Court of Frankfurt in late summer 2015.
• As regards the evidence submitted by the applicants: the invoices show that the applicants have only 10 customers in Europe, they do not refer all to the contested mark but also to other signs and some are dated after the filing date of the contested mark; annex 8 and part of annex 9 do not refer to the applicants but to the Al Dobowi Group; the sums for marketing in annex 9 are insignificant; and the credibility of annex 11 is questionable.
• The invalidity request is inadmissible. According to Rule 37 EUTMIR, to the extent the applicants invoked relative grounds for a declaration of invalidity under Article 53(1) in conjunction with Article 8(2)(c) EUTMR as well as Article 8(4) EUTMR, the request for a declaration of invalidity is to be rejected as inadmissible because necessary facts, evidence and arguments have not been provided in relation to the use of the mark in the European Union, that is, in France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Netherlands, Poland, Portugal and the UK. The applicants solely quoted provisions of national legislation or case-law of the above-mentioned countries without presenting, as required, any facts, evidence and arguments in support.
• The above conclusion applies also for the applicants’ claim that the earlier mark is well known and also for the absolute grounds for a declaration of invalidity under Article 52(1)(b) EUTMR (bad faith of the EUTM proprietor), since the evidence filed is irrelevant.
• The invalidity request is also not well founded because the earlier rights are not substantiated and because of lack of evidence on bad faith. The applicants’ evidence does not qualify to identify the alleged trade mark owner: Avoca Motors Ltd., Eternity FZ LLC., Al Dobowi Group or Tricolor Group Limited.
• The applicants have never used ‘Ecomax’ as a trade mark. They sold ‘Infinity tyres’ and the ‘Ecomax’ sign is used in a descriptive way.
• The evidence filed is showing that the applicants have a single client in each of the following member states: France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Netherlands, Poland and Portugal. Furthermore, the exposure in four trade shows does not qualify as significant exposure.
• The applicants have not provided evidence leading to the conclusion that they have become proprietors of the sign Ecomax prior to the application date of the contested mark. Nor did they present proof of the provisions according to which the alleged acquired trade mark protection confer its owner the right to prohibit the use of the subsequent mark. Quoting sections from national law does not substitute facts and arguments regarding the acquisition and the scope of protection of the alleged earlier right invoked.
• The applicants have not proven how and when they have acquired unregistered trade marks in France, Germany. Greece. Hungary, Ireland, Italy, Latvia. Netherlands, Poland, Portugal, Spain and in the United Kingdom. Germany, for instance, does not accept the principle of prior use of non-registered trade mark signs.
• As regards the invoked well known mark, the applicants do not produce any particular evidence supporting the recognition of the trade mark as being well-known in any particular country.
• The claim of bad faith remains unsubstantiated. Mr. HSK developed the idea to use the contested sign as a EUTM and had every right to allow that the registration is in the name of the proprietor. The sign is about to be used as a brand designation for tyres for sale through Zenises.

• The applicants did not prove that the proprietor Fateh Holdings Limited (and not Mr. HSK) acted in bad faith. The alleged knowledge of Mr HSK is not sufficient for the conclusion that he has acted in bad faith at the time when he filed the application.
• The applicants’ claim they have been using the sign Ecomax since 2012. However, they have never sought a registration for a European Union trade mark “Ecomax”. They do not own a trade mark on which the proprietor in the present constellation is trying to lay hands on.
• According to settled case-law, it is not an indication of bath faith if a proprietor, upon successfully registering a trade mark, sends a letter of formal notice to the third parties informing them about his registered rights or even requesting cease of the registered sign. There was no contractual obligation between the applicants and Mr. HSK according to which he should have filed the trade mark Ecomax in the name of the applicants. Neither was the application of the contested EUTM based on any confidential information belonging to the applicants.

Documents attached to the EUTM proprietor’s submissions:

1. Extract from European Tyre & Rubber Manufacturers’ Association (ETMRA) showing that 263 Mio. tyres were sold in the European Union in 2014.
2. Extract from Zenises’ website (in German) and a copy of a (German) licensing agreement with the proprietor signed on 07/07/2015, not translated into English.
3. Excerpts from the Zenises’ website in German in which the term Ecomax appears in a list under the title “our tyre brands” (Undsere Reifen) and a screenshot with the following image:  

Second set of arguments and evidence sent by the applicants

Around the same date the proprietor sent the above submissions, the applicants filed the provisions of national law in the UK and Ireland (scope of protection and acquisition of rights) and explained that the conditions of national law (goodwill, misrepresentation, damage and scope of protection) are fulfilled. The applicants also filed the provisions of the German and Italian national law and the evidence below:

• A copy of the decision in case Reckitt & Colman products Ltd v Borden [1990] R.P.C 341, Hl, which sets out the usual test applied in English law as to the acquisition of the right to rely upon the tort of passing off.
• Wikipedia extract about Delticom AG (Germany) and extract from corporate.marangoni.com (Italy) regarding the tyre distribution in Italy (two of the applicants’ clients).
• A copy of the case Jacob Fruitfield Food Group Ltd v United Bircuits (UK) LTD. [2007] IEHC 368, which states that the English case mentioned above applies in Ireland.

Third set of arguments and evidence sent by the applicants:

In their final reply to the former submissions of the EUTM proprietor, the applicants reiterate their previous arguments and counteract the EUTM proprietor’s claims. Amongst others, the applicants note that the proprietor attempted to construct an appearance of use of the EUTM. The licence agreement with Zenises Europe LTD is not a good evidence of a substantial licensing business since Zenises Europe LTD is owned by Zenises Limited the director of which is the same Mr HSK. The following annexes were attached:

C1        Copy of a licence for trading dated on 26/08/2010, renewed on 26/08/2014 and valid until 25/08/2015. The names appearing on this document are Kandvest Partners Limited and Emerald Head Investments Limited as partners names, Eternity FZ-LLC (one of the applicants) as Trade name and Mr HSK as manager.

Copy of a memorandum of association for Eternity FZ-LLC. The first line states ‘Management of the Company’: 1) the Partners have appointed Mr HSK, Indian national as CEO of the company with the effect from the date of registration of the company. The rest of the paragraphs indicate the responsibilities and the powers of the CEO.

C2        Extract from http://chd3.companieshouse.gov.uk about the company Zenises Limited where Mr HSK appears as Director appointed on 13/05/2014.

C3        Extract from whois.domaintools.com about the domain name www.EcomaxTyres.com registered by Mr HSK on 19/04/2016, two months after the invalidity application was filed.

C4        Extract of the Federal Commercial Companies Law (Article 108) the applicable law at the filing date, according to which, as CEO of the applicant’s company Eternity, Mr HSK was prohibited to participate in any business competing with the business of the company which he directed or to carry out trade activities for his own account, or of others.

C5, 6        Extracts from the UK Companies Act 2006 setting out the duties of directors under English law (duty to promote the success of the company and duty to avoid conflict of interests).

C7        Document which shows that Mr HSK was one of the directors of Tricolor Group Limited (appointed in 2010), the company selected by the Group Al Dobowi to hold their intellectual rights.

C8 and 9         EUIPO search with examples of sub-brands registered by competitor companies (Pirelli and Goodyear) in the field of tyres.

C10-11        Pictures depicting tyres bearing the denominations Infinity and Ecomax on a label and only Ecomax imprinted on the tyre as such   

C12        Approximately 51 additional invoices from the applicants to various UK, Irish, Italian and German clients proving the sale of Ecomax tyres in 2013 and 2014 before the filing date of the EUTM (03/04/2014) and short after this date. The amounts range between several thousands USD until over 53 thousands USD only taking into account the sales for the ECOMAX tyres.  

C13        Printout from Bond International’s website www.bondint.co.uk, having as title ‘Bond-the UK’s leading tyre wholesaler’, one of the applicants’ clients.

C14        letter of appointment as General Manager of AVOCA for Mr Jorge Crespo dated 2012.

C 15        table with clients and sales in Germany for 2013 and 2014 for Ecomax tyres

C16        brochures, articles and printouts about Infinity and Ecomax tyres.

C 17        invoices for marketing expenses in 2012-2013, some for Ecomax leaflets, translations and some for Infinity.

Second and final set of evidence and arguments filed by the EUTM proprietor

The EUTM proprietor also reiterated its previous arguments regarding the declaration of invalidity’s inadmissibility and the lack of proof of the applicants’ ownership on the term ECOMAX. Further, the proprietor focuses on the relative grounds for invalidity and especially on the provisions of Article 8(4) EUTMR as regards the UK and Ireland, reasoning that the applicants cannot rely on the common law of passing off in these countries. Moreover, there is no sufficient evidence that the sign Ecomax has been used in course of trade in all the remaining countries (and in particular Italy and Germany) where the applicants rely on assumed earlier rights and there is no local significance. Finally, there is no evidence which could lead to the conclusion that the sign Ecomax has been extensively used by the applicants and that this accrued significant goodwill and commercial reputation in the sign. As regards the bad faith claim, the proprietor reiterates its previous arguments (focusing on the fact that Mr HSK was the creator of the sign Ecomax) and quotes a series of decisions of the First Board of Appeal of the EUIPO in cases R1246-1249/2005-1 of 23/05/2007 in which the Board concluded that there is no bad faith of an applicant, who created a trade mark and was convinced that it was in its right to register it. The proprietor attached a correspondence dated 21/04/2014 between Mr HSK and his father Surender Singh Kandhari, chairman at El Dobowi Group, in which Mr HSK states that he created a brand ‘Eternity’ used for tyres and his father confirms that the “family will not compete with you in selling tyres in Europe” and “we have no intention of continuing to sell Eternity tyres in Europe”.

On 16/03/2017, the applicants notified the Office that a decision has been rendered by the German Patent and Trade Mark Office (the DPMA) in the invalidity proceedings regarding the German trade mark registrations ECOSIS No 30 2015 052 821 and ECOMAX No 30 2015 052 819 involving Eternity (the applicant in the present case and also the applicant for invalidity before the German Office), against the EUTM proprietor, Fateh. The DPMA decided that the respective trade marks were filed in bad faith by Fateh. The decision in German and a translation in English were attached.

Despite the extension granted by the Office to the EUTM proprietor to reply to the last documents filed by the applicants, the EUTM proprietor did not made any comments within the deadline set by the Office.

On 03/08/2017 the Cancellation Division notified the parties that the adversarial procedure was closed and the Office will rule on the application on the basis of the evidence before it.

ADMISSIBILITY

The EUTM proprietor claimed that the declaration of invalidity under Article 52(1)(b) EUTMR is inadmissible. According to Rule 37 EUTMIR the application based on absolute grounds has to contain an indication of the facts, evidence and arguments presented in support of those grounds. In the EUTM proprietor’s opinion the annexes provided in support of the invalidity application are irrelevant.

The Cancellation Division disagrees. The applicants filed an invalidity application which does comply with the Rule 37 EUTMIR and the facts, evidence and arguments in support of this declaration are not considered to be irrelevant for the reasons set further in the present decision. Therefore, the declaration of invalidity, at least as regards the claim of bad faith, is admissible.

ABSOLUTE GROUNDS FOR INVALIDITY – 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, EU:C:2009:361, § 60).).

Whether an 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 applicants; good faith is presumed until the opposite is proven.

Assessment of bad faith

The applicants claim that Mr HSK, the EUTM proprietor’s (Fateh) manager, who was also director/CEO and manager of the applicants’ companies (Eternity and Avoca) and a 25% shareholder of the applicants’ owner (Al Dobowi Group), filed the EUTM application knowing that the applicants were using, since at least 2012, the sign Ecomax on identical or similar goods, tyres, at least in the United Kingdom, Ireland, Germany and Italy. According to the applicants, the intention in registering the EUTM was to prevent the applicants from continuing to use Ecomax. Any trade mark application for brands used by the Al Dobowi Group should have been made by Mr HSK in the name of Tricolor, as occurred with other trade marks belonging to this group, Eternity and Infinity.

The EUTM proprietor claims that Mr HSK is in fact the creator of the EUTM and filed for its registration with the intention to use it on the market. It claims that the applicants did not prove the ownership as regards the sign Ecomax, that in fact they were distributing the respective goods manufactured by a Chinese company, Linglong under the brand Infinity, and the proof is that the invoices submitted by the applicants contain in the ‘Brands’ field the term Infinity, whereas the term Ecomax appears in the description of the goods.  

One situation which may give rise to bad faith is when a commercial entity has obtained some degree of legal protection by virtue of the use of a sign on the market, which a competitor subsequently registers with the intention of competing unfairly with the original user of the sign.

In such instances, the Court of Justice of the European Union (11/06/2009, C-529/07, Lindt Goldhase, EU:C:2009:361, § 48 and 53) has stated that the following factors in particular should be taken into consideration:

1. the fact that the EUTM proprietor knows or must know that a third party is using an identical or similar sign for an identical or similar product capable of being confused with the contested EUTM;

2. the applicant’s intention of preventing that third party from continuing to use such a sign;

3. the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is sought; and

4. whether the EUTM proprietor in filing the contested EUTM was in pursuit of a legitimate objective.

The above mentioned are only examples drawn from a number of factors which can be taken into account in order to determine whether or not the applicant was acting in bad faith when filing the application; account may also be taken of other factors (14/02/2012, T 33/11, Bigab, EU:T:2012:77, § 20-21 and 21/03/2012, T 227/09, FS, EU:T:2012:138, § 36).

Bad faith might be applicable when the parties involved have or have had any kind of relationship, such as (pre-/post-) contractual relationships, giving rise to mutual obligations and a duty of fair play in relation to the legitimate interests and expectations of the other party (13/11/2007, R 336/2007-2, CLAIRE FISHER / CLAIRE FISHER, § 24).

There is bad faith when the EUTM proprietor intends through registration to lay its hands on the trade mark of a third party with whom it had contractual or pre-contractual relations or any kind of relationship where good faith applies and imposes on the EUTM proprietor the duty of fair play in relation to the legitimate interests and expectations of the other party (13/11/2007, R 336/2007 2, CLAIRE FISHER / CLAIRE FISHER, § 24).

The essential question is, therefore, whether the relationship between the parties created a close enough link to suggest that it is fair to expect the EUTM proprietor not to file an identical EUTM application independently without giving the invalidity applicant prior information and sufficient time to take action against the contested EUTM (13/12/2004, R 582/2003 4, EAST SIDE MARIO’S, § 23).

Secondly, if a duty of fair play exists, it must be established whether or not the EUTM proprietor’s actions constitute a breach of a duty of fair play, thereby having been made in bad faith.

The Court decided that an indication of bad faith may be present where a shareholder seeks to make use of the trade mark of a company in which it holds shares (21/04/2010, R 219/2009-1, GRUPPO SALINI / SALINI, § 73).

The above case law applies to the case at hand.

The evidence adduced by the applicants (especially the invoices) demonstrates that they used the sign Ecomax in the UK, Italy Germany and Ireland by commercialising tyres bearing this trade mark since at least October 2012 (whereas the EUTM was filed on 03/04/2014). Contrary to the EUTM proprietor’s assertions, the quantities of tyres sold to different customers in these countries are quite important and this is an indication that the applicants did indeed acquire goodwill in the UK and Ireland and proved trading activities in Germany and Italy which resulted in acquiring prestige and gaining customers. The fact that they were mere distributors of the respective goods does not change this conclusion.

The EUTM proprietor claimed that in fact the tyres’ trade mark was Infinity and because Ecomax appears in the invoices in the column describing the goods together with other specifications, this is an indication that it was not used as a trade mark. The Cancellation Division disagrees. The goods appear listed in the invoices as for example ‘225/45 R17 XL ECOMAX 94W – TL IN’ and the only specification that changes in the description are the numbers or codes before and after Ecomax. Although in the invoices it is indicated that these are ‘Commodity Infinity Brand Tyres’ the Cancellation Division considers that Infinity is in fact a sort of a house mark under which the sub-brand Ecomax is used. This is also supported by the pictures depicting a tyre on which the sign Ecomax is stamped or on which the label applied mentions both marks Infinity and Ecomax and the brochures under point 2 in the first set of evidence filed by the applicants. Furthermore, the emails described at point 3 in the first set of evidence filed by the applicants show that Mr HSK referred to, amongst others, ECOMAX as a “pattern name for Infinity”.

It is clear that at the time of the EUTM’s filing the EUTM proprietor’s director, Mr HSK, was also managing the applicants’ companies and shared 25% of their owner, the Al Dobowi Group. As it is evident from the WIPO decision in case D29014-1964 (annex 6 – the applicants’ first set of evidence) in respect of the domain name ‘aldobowi.com’, Mr HSK “was removed as a director and manager” of the Group in September 2014, therefore approximately five months after the EUTM filing date.

Al Dobowi Group holds its EU trade marks under the name of another company they own, Tricolor. Mr HSK’s e-mails (described above under point 3 from the applicants’ first set of evidence) originate from his Office’s address belonging to Al Dobowi Group’s e-mail account and are sent to a lawyer of the law firm, which also act as representatives for the Tricolor’s trade marks. The first request is to receive from these lawyers the patterns names for Eternity and Infinity and, upon receiving these lists, he requested the registration of the respective signs “for me in Fateh in class 12” after a prior search for their availability. The sign Ecomax appears in these e-mails. The applicants’ point is that all these trade marks (including Ecomax) should have been filed in the name of the company Tricolor (as also the marks Eternity and Infinity are) and that this is an indirect proof of Mr HSK dishonest intentions.

The EUTM proprietor claims that there was no contractual obligation between the applicants and Mr. HSK according to which he should have filed the trade mark Ecomax in the name of the applicants. However the Cancellation Division considers that Mr HSK’s actions, taking into account his position in the Al Dobowi Group and the applicants’ companies, constituted a breach of a duty of fair play.

Although the EUTM proprietor claims that the creator of all these trade marks (including Ecomax) was Mr HSK, there is no evidence in this sense and this claim is even challenged by Mr HSK’s e-mails. It seems odd that as the creator of all the patterns in the name of Eternity and Infinity, Mr HSK is suddenly unaware of these names and requests the lawyers of the Al Dobowi Group for the lists with all the pattern names for these two signs to be registered in the name of a third company (Fateh) not belonging to the Al Dobowi Group, and, on top of everything, of which he is also a director.

The proprietor claimed also that the EUTM was filed with the intention to be used and that the mark is still under the five years grace period. However, licensing the EUTM to a company also owned by the licensor and the advertisement on this licensee’s website of the upcoming Ecomax brand cannot be accepted as proper evidence for the intention to use the mark. The proprietor states that Zenises, ‘the holder of a licence in the contested trade mark entered into negotiations with tyre manufacturers’ and announced on their homepage that they will be soon selling ‘Ecomax’ tyres. However, the documents relating to this licence (described under points 2 and 3 from the first set of evidence of the EUTM proprietor) were not translated into English and the date of the announcement ‘Ecomax coming soon’ cannot be determined as the print screen does not reflect the date it was taken.

It is true that the Cancellation Division has no evidence that the decision rendered by the DPMA invalidating the EUTM proprietor’s German mark ECOMAX No 30 2015 052 819 on the ground that it was filed in bad faith became final and, that in principle, the Office is not bound by findings of the national offices and courts. It is, nevertheless, significant that the DPMA had the same doubts about the EUTM proprietor’s evidence and arguments and reached the same conclusion about the bad faith of the EUTM proprietor when filing a national trade mark identical to the contested EUTM, as the Cancellation Division will in the present case. The Cancellation Division notes that the circumstances in the German case and the reasoning of the German Office as regards the verdict of EUTM proprietor’s bad faith are highly similar to the case at issue. In taking its decision, the DPMA also took into consideration the business relationship of the EUTM proprietor with the applicant in that case (Eternity), the EUTM proprietor’s knowledge (due to its position in the management) of one of the applicants’ use of the Ecomax sign and the WIPO’s decision regarding the transfer of the domain name aldobowi.com in bad faith, mentioned in the present decision as well.

The Cancellation Division particularly notes the reasoning of DPMA in page 7 of the translated decision “it is possible that Mr K actually developed the trade mark idea and significantly contributed to it. In such case, however, he failed to secure corresponding rights or to such extent failed to plead any. As a fundamental rule, it is neither ordinary nor foreseen that an executive employee of a company registers a trade mark used by the company in his own name. Rather, he must act as a trustee of the shareholders and must, in all matters affecting the interests of the company, account for their well-being and may not have his own interests or the advantage of others in mind”. The Cancellation Division concurs in all the aspects with this reasoning which also applies at the present case.

The conclusion to be drawn is that the EUTM proprietor knowingly registered a sign which was identical (at least as regards the word element) to the one the applicants used in the course of trade, being aware of that use. The EUTM proprietor’s filing intentions were not in pursuit of legitimate objectives. As concluded above it was not the first user of the mark on the market, it did not prove that Mr HSK created the sign as claimed and, although claimed, the intention to use the mark appeared most probably in the vicinity of the present application for invalidity.

As the Court stated, demonstrating bad faith implies proving that, at the time of filing, the EUTM proprietor was aware that it was causing harm to the invalidity applicant and that this harm was a consequence of its reproachable conduct from a moral or commercial view (21/04/2010, R 219/2009-1, GRUPPO SALINI / SALINI, § 66). This applies also to the case at hand. Taking into account the business relationship between the EUTM proprietor’s and the applicants, it is reasonable to conclude that the EUTM proprietor was aware, or ought to have been aware, that the sign is a valuable piece of intellectual property to the applicants and that the registration of the contested EUTM in his company’s name for the goods in question would strip the applicants of their rights in the EU territory.

In the Cancellation Division’s view, the evidence and arguments referred to above bear out, without reasonable doubt, that the EUTM proprietor’s manager, when filing the mark, misappropriated the sign ‘Ecomax’ and abused his contractual position in respect of the applicants.

Taking all of the above into account, the Cancellation Division concludes that the evidence and arguments submitted by the applicants are sufficient to prove that the EUTM proprietor acted in bad faith by registering the contested EUTM, and that the EUTM proprietor’s actions, through its director, constitute a breach of a duty of fair play, thereby having been made in bad faith. Therefore, the request for invalidity should be upheld.

Conclusion

In the light of the above, the Cancellation Division concludes that the application is totally successful and the European Union trade mark should be declared invalid for all the contested goods.

Since the application is totally successful on the basis of Article 52(1)(b) EUTMR there is no need to assess the other claims or grounds on which the application is based.

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

According to Rule 94(3) and (6) EUTMIR and Rule 94(7)(d)(iii) EUTMIR, the costs to be paid to the applicant are the cancellation fee and the representation costs, which are to be fixed on the basis of the maximum rate set therein.

The Cancellation Division

Vanessa PAGE

Ioana MOISESCU

Pierluigi M. VILLANI

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.