CANCELLATION No 11 041 C (REVOCATION)

BioXS International B.V., Asterweg 19D12, 1031 HL Amsterdam, The Netherlands (applicant), represented by Kneppelhout & Korthals N.V., Boompjes 40, 3011 XB Rotterdam, The Netherlands (professional representative)

a g a i n s t

SMS Passcode A/S, Park Alle 350D2, 2605 Brøndby, Denmark (EUTM proprietor), represented by AKD N.V., Wilhelminakade 1, 3072 AP Rotterdam, The Netherlands (professional representative).

On 28/06/2017, the Cancellation Division takes the following

DECISION

1.        The application for revocation is upheld.

2.        The EUTM proprietor’s rights in respect of European Union trade mark No 5 713 425 are revoked in their entirety as from 17/06/2015.

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

REASONS

The applicant filed a request for revocation of European Union trade mark registration No 5 713 425 ‘sms passcode’ (word mark) (the EUTM). The request is directed against all the goods and services covered by the EUTM, namely:

Class 9:        Scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signalling, checking (supervision), life-saving and teaching apparatus and instruments; apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs; vending machines and mechanisms for coin-operated apparatus; cash registers, calculating machines; extinguishers.

Class 42:        Scientific and technological services and research and design relating thereto; industrial analysis and research services.

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

SUMMARY OF THE PARTIES’ ARGUMENTS

The applicant argues that, according to its research, the contested trade mark is not being used on the market for the goods and services for which it is still registered following a decision by the Cancellation Division, which cancelled the mark in relation to software in Class 9 and software-related services in Class 42. The applicant submitted a number of documents from the proprietor’s website to support its statements.

The proprietor submitted documents to prove the use of the mark and offers explanations in relation to them. It explains that the proprietor started selling its products in the Benelux countries in 2008 and the applicant was their first distributor. In January 2014, the distribution agreement was terminated because the applicant was not fulfilling its payment obligations. However, although this contractual relationship was terminated, the applicant continued to use the domain name ‘smspasscode.nl’; the proprietor had to start proceedings at the arbitration and mediation centre at the World Intellectual Property Organization (WIPO) in May 2015. Cancellation proceedings for the contested mark before OHIM (now the EUIPO) were started at that time. In August 2015, the applicant was ordered to transfer the domain name to the proprietor. In relation to the proceedings before OHIM the proprietor claims that the contested mark was cancelled in accordance with Article 52(1)(a) EUTM in conjunction with Article 7 EUTM, which is not relevant to the claim that the party is not using the remaining goods and services. The proprietor then goes on to explain the evidence submitted. These explanations and the documents submitted are evaluated below.

The applicant replies that the parties’ dispute before WIPO is not important for the present proceedings, least of all the transfer of the domain name from the applicant to the proprietor. However, the cancellation proceedings before OHIM (now the EUIPO) concluded with a decision cancelling the contested mark partially, on the basis that it was descriptive for a number of goods and services that, according to the applicant, were the only ones used by the proprietor on the market. The applicant goes on to make extensive observations in relation to the proof of use submitted by the proprietor, insisting that the use does not refer to the goods and services that are still at issue.

The EUTM proprietor reiterates that the previous invalidity action has no bearing on the goods and services for which the mark is still registered, replies to the applicant’s observations in relation to the lack of use and submits further documents to complete those submitted in the first round of observations.

In their final replies, the parties reiterate the arguments put forward in previous submissions.

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.

In the present case, the EUTM was registered on 08/04/2008. The revocation request was filed on 17/06/2015. Therefore, the EUTM had been registered for more than five years at the date of the filing of the request. The EUTM proprietor had to prove genuine use of the contested EUTM during the five-year period preceding the date of the revocation request, that is, from 17/06/2010 to 16/06/2015, inclusive, for the goods and services mentioned above.

On 29/09/2015, the EUTM proprietor submitted evidence as proof of use. Then, on 04/07/2016, after the expiry of the time limit, the proprietor submitted additional evidence.

Even though, according to Rule 40(5) EUTMIR, the EUTM proprietor has to submit proof of use within a time limit set by the Cancellation Division, this cannot be interpreted as preventing additional evidence from being taken into account where new factors emerge (12/12/2007, T-86/05, Corpo livre, EU:T:2007:379, § 50). The Office has to exercise the discretion conferred on it by Article 76(2) EUTMR (18/07/2013, C-621/11 P, Fishbone, EU:C:2013:484, § 30).

The factors to be evaluated when exercising this discretion are, first, whether the material that has been produced late is, on the face of it, likely to be relevant to the outcome of the proceedings and, second, whether the stage of the proceedings at which that late submission takes place, and the circumstances surrounding it, do not argue against these matters being taken into account (18/07/2013, C-621/11 P, Fishbone, EU:C:2013:484, § 33). The acceptance of additional belated evidence is unlikely where the EUTM proprietor or IR holder has abused the time limits set by knowingly employing delaying tactics or by demonstrating manifest negligence (18/07/2013, C-621/11 P, Fishbone, EU:C:2013:484, § 36).

In this regard, the Cancellation Division considers that the EUTM proprietor did submit relevant evidence within the time limit initially set by the Office and, therefore, the later evidence can be considered to be additional.

Consequently, the evidence to be taken into account is the following:

Evidence submitted on 29/09/2015

As the EUTM proprietor requested to keep certain commercial data contained in the evidence confidential vis-à-vis third parties, the Cancellation Division will describe the evidence only in the most general terms without divulging any such data.

The explanations of the proprietor and the evidence submitted are the following:

• The proprietor is a Danish company active within the field of IT solutions, and is a leading company worldwide in the field of technology related to multi-factor authentication, secure device provisioning and the password reset module service. Annex 1 contains a business extract from the proprietor.
• Multi-factor authentication is an authentication system that has been developed to keep business information safe and to provide secure access to IT systems during travel and work from home. Users can log in with a password and a passcode that they obtain through an SMS message. Information about this system is found in Annex 2.
• Through secure device provisioning, the proprietor allows users to have easy access to data on their new devices when and where they need it, without having to contact an IT department to approve their new device. Information about this system is found in Annex 3.
• The password reset module service was developed by the proprietor to allow users to change passwords directly from their mobile phones. This module is integrated in the login process, instantly notifies users when they forget their passwords and proactively sends out notifications when passwords are about to expire. More information about this product is contained in Annex 4.
• The proprietor also provides its users with webinars about the latest IT solutions, for example about ‘Best Practices for Securing Citrix Remote Access Against Hacker Intrusion’ and ‘How to Secure Remote Desktop Services on Windows Server’ (Annex 5).
• The proprietor has been offering the goods and services since August 2006 on its website, which has the domain name ‘smspasscode.com’ (Annex 6).
• In 2008, the proprietor started selling its products in the Benelux countries through a distributor relationship. In the Netherlands, the applicant was the first distributor. In January 2014 the distribution agreement between the parties was terminated because the applicant stopped fulfilling its payment obligations. Although the applicant did not have a legitimate interest in using the abovementioned domain name, it still continued to use it. After several attempts to settle this dispute out of court, the proprietor started proceedings at the Arbitration and Mediation Center of the World Intellectual Property Organization (WIPO) in May 2015. The applicant filed an application for revocation of the proprietor’s mark. The present proceedings are a counter-attack in an overall dispute between two parties concerning the right to the trade mark ‘SMS Passcode’. WIPO decided on 26/08/2015 that the applicant had to transfer the domain name to the proprietor. This decision of WIPO is attached to Annex 7. In parallel proceedings before the EUIPO, a competitor requested the revocation of the now contested mark due to registration in breach of Article 52(1)(a) EUTMR in conjunction with Article 7 EUTMR. The decision, now final, stated that the mark ‘sms passcode’ was descriptive in relation to data processing equipment and computers; software (for downloading/installation) to support one-off codes via (flash) SMS to EDB systems (Class 9) and design and development of computer hardware and computer software, including software that supports guaranteed access to IT systems via oneoff codes in SMS that are sent by the hosting centre (Class 42). The Cancellation Division, however, considered that the mark was not descriptive for the rest of the goods and services, which are now at issue. Annex 8 contains parts of the abovementioned decision.
• The proprietor offers different types of services to its customers:

• Multi-factor authentication is a service whereby the consumers are protected against hackers by means of obtaining a passcode not only by sms, but also by voice call, cloud keys and secure email (Annex 9). The proprietor has also developed a service that can authenticate its users via a ‘Token’, which is a method of authentication that does not send a message to the user (Annexes 10 and 11). Annex 12 contains a list of clients.
• Secure device provisioning provides a secure way for users to approve an ActiveSync device for getting access to their Exchange mailbox. Using two-factor authentication, a user can be identified and an IT consultant is no longer needed to make sure it is a quarantined device (Annex 13).
• Password reset module is a service to solve the problem of users who forget their passwords. The method of notification has been extended by using three new types of notification: a) lockout notification, b) password pre-expiration notification and c) password expiration notification (Annexes 14 and 16). The proprietor provides its users with a technical manual about its services (Annex 15).
• Self-service website is an optional service that consists of logging on to the website to inspect or maintain settings regarding the customer’s passcode user account. Intility (Annex 17) is one of the companies that use the proprietor’s website. Annex 18 contains additional information on this service.

• Annex 19 contains invoices.
• Annex 20 contains a price list.
• Annex 21 contains emails sent by the proprietor to its users regarding newly released versions of products and services.

According to the proprietor, its company provides apparatus for the recording, transmission or reproduction of sound or images, as it sends messages to its users’ mobile devices to a) authenticate users, b) alert users that passwords have (almost) expired and c) warn users of a possible hacker attack.

In relation to the services in Class 42, the proprietor submits a list in Annex 22 and offers an explanation about them. In Annex 21, the proprietor submits a number of emails sent to users to announce that a new technical manual is available.

Evidence submitted on 04/07/2016 (Annexes 23-29)

The proprietor states that it offers services that are acknowledged by the Office as ‘scientific and technological services’ in Class 42. To prove this point, it submits a brochure (Annex 23) with further information on the multi-factor authentication service, a white paper entitled ‘Modern threats drive demand for new generation multi-factor authentication’ (Annex 24), two copies of lectures given by its employees on the password reset module service (Annex 25), a practical white paper that it issued to its customers in 2013 (Annex 26) and a number of emails sent to customers in relation to updates offered by the proprietor (Annex 27). To prove that it provides information to its users not only in English, but also in German, for example, it submits Annex 28. Finally, Annex 29 contains several photographs of the proprietor attending exhibitions.

In order to examine, in a given case, whether use of the earlier 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).

The documents on file demonstrate that, as the applicant correctly points out, the proprietor offers mainly software services, namely authentication software for remote access. The services that the proprietor contends it offers are services that are ancillary to software development, essentially telecommunication services that fall within Class 38, and not Class 42, as the proprietor contends.

The proprietor contends that the documents prove the use of some services in Class 42, which it denominates ‘engineering’ (‘computer engineering’, ‘computer technology consultancy’, ‘engineering services relating to data processing’, to name but a few). However, even if these services were in Class 42 and there was some marginal use of them, as for the goods in Class 9, it is evident that, on the whole, the evidence does not provide sufficient indications for use to be proved, in particular for the time and extent of use to be proved. Some of the evidence is undated (Annexes 2, 3, 4, 5, 9, 14, 16), some documents do not show the mark or show the sign used as a company name (for example Annex 17), some do not refer to any good or service, and some do not relate directly to these proceedings or offer any relevant information, for example the two decisions found on file, one issued by WIPO, which orders the domain name ‘smspasscode.nl’ be transferred to the proprietor in the present proceedings (Annex 7) and the other issued by the then OHIM in relation to some of the goods and services for which the trade mark at issue was cancelled due to lack of distinctiveness (Annex 8). In relation to the extent of use, only a small number of documents were submitted: a printout from the Wayback Machine facility that, according to the proprietor, shows the number of times customers accessed the website with the domain name ‘smspasscode.com’ and made purchases; a number of invoices; and a price list (Annexes 6, 19 and 20, respectively). The first document proves only the number of times that consumers had access to the proprietor’s website, but there is no supporting evidence to show that this resulted in the sale of any goods or services and, if there was, which goods or services were involved. As for the invoices, there are only eight and they show a limited number of sales of ‘software assurance’ – which is obviously a software product – and CALs (Client Access Licenses) in relation to this software product. In addition, the price list refers to software-related products such as the ‘Password Reset Module’ and the abovementioned ‘software assurance’. Consequently, all the arguments of the proprietor in relation to the documents having proved the use of the mark for goods and services other than software and software-related services must be set aside.

Conclusion

It follows from the above that the EUTM proprietor has not proven genuine use of the contested EUTM for any of the goods and services for which it is registered. As a result, the application for revocation is wholly successful and the contested EUTM must be revoked in its entirety.

According to Article 55(1) EUTMR, the revocation will take effect from the date of the application for revocation, that is, as of 17/06/2015.

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

Liliya YORDANOVA

María Belén IBARRA DE DIEGO

Carmen SÁNCHEZ PALOMARES

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.