THE BOARDS OF APPEAL
DECISION of the Fourth Board of Appeal of 9 December 2016
In Case R 576/2016-4
VMR Products, LLC 3050 Biscayne Blvd., 8th Floor Miami Florida 33137 United States of America Appellant / Cancellation applicant
represented by HGF Limited, 8th Floor, 140 London Wall, London EC2Y 5DN, United Kingdom
v
V2H ApS C/o V2 Tobacco A/S, Georg Jensens Vej 7 DK-8600 Silkeborg Denmark Respondent / EUTM Proprietor
represented by Njord Law Firm Advokatpartnerselskab, Pilestræde 58, DK-1112 Copenhagen K, Denmark
APPEAL relating to Cancellation Proceedings No 8546 C (European Union trade mark No 11 116 183)
THE FOURTH BOARD OF APPEAL
composed of D. Schennen (Chairman), L. Marijnissen (Rapporteur) and S. Martin (Member)
Registrar: H. Dijkema
gives the following
Language of the case: English
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Decision
Summary of the facts 1 On 13 August 2012, V2H ApS (‘EUTM proprietor’) applied for the figurative mark in black and white
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as a European Union trade mark (‘EUTM’) which was registered on 5 June 2013 for a broad range of goods and services in Classes 5, 30 and 34
. 2 On 18 October 2013, an application for a declaration of invalidity of this EUTM was filed by VMR Products, LLC (‘the cancellation applicant’) based on Article 52(1)(b), arguing that the applicant was acting in bad faith when it filed the application, and based on Article 53(1)(c) EUTMR. For the latter ground the cancellation applicant invoked the non-registered trade marks used in the course of trade in the UK
V2 and V2Cigs
for ‘electronic cigarettes and accessories thereof’.
3 The declaration for invalidity was directed against all the goods of the contested EUTM.
4 As regards the substantiation of the earlier rights invoked, the cancellation applicant stated that under the common law of the United Kingdom, there is an actionable tort of ‘passing off’. One of the three key ingredients necessary to found an action in passing off is misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff.
5 Moreover, it submitted evidence in support of its claimed use in the course of trade in the UK of the earlier marks invoked.
6 As regards the cancellation applicant’s bad faith claim under Article 52(1)(b) EUTMR, it argued that:
a) The EUTM proprietor’s interest is confined to the sale of ‘snus’ (a variant of snuff) in Sweden and ‘chewing tobacco’ in other EU Member States. As
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regards the sale of ‘snus’ it argues that this is banned from the EU apart from in Sweden. The proprietor acted in bad faith in filing a EUTM for a product which can only be sold in one Member State;
b) The contested goods extend beyond those in which the EUTM proprietor had an interest, i.e. ‘snus’ and ‘chewing tobacco’. Therefore, the EUTM proprietor tried to block the cancellation applicant from trading in the EU, rather than having a legitimate business desire to market and sell all the contested goods throughout the EU;
c) The contested mark was filed with the knowledge that the cancellation applicant’s mark ‘V2’ was already being used in the UK prior to the date of application;
d) The application and use of the contested mark are in potential breach of the UK Tobacco Advertising and Promotion (Brandsharing) Regulations 2004 of which Article 3 states that ‘the use by a person in connection with any non- tobacco product or service of any feature which is the same as, or is so similar as to be likely to be mistaken for, any feature which is connected with a tobacco product is prohibited if the purpose or effect of that use is to promote a tobacco product in the United Kingdom’;
e) The EUTM proprietor already applied to register the word mark ‘V2’ as a EUTM on 27 August 2009, No 8 512 345 for goods in Class 34. Consequently, there was no justification for filing the contested mark in 2012, other than to try to obtain fresh rights that would be enforceable, regardless of use, for a new five-year period from the date of registration.
7 By decision of 5 February 2016, the Cancellation Division rejected the application for declaration of invalidity in its entirety and ordered the cancellation applicant to bear the costs.
8 It reasoned that the EUTM proprietor’s bad faith in applying for the contested mark was not demonstrated by the cancellation applicant.
9 As regards the arguments raised by the cancellation applicant referred to above in paragraph 6 under a) and b) it reasoned that these were just based on supposition. The contested mark was registered for various goods and there was no reason to assume that there was no intention to use the mark for these goods during the five- year period following registration. When the five-year period elapses, proof of use may be requested. Until that point is reached, the proprietor is entitled to retain its registration.
10 As regards the cancellation applicant’s bad faith argument as referred to above in paragraph 6 under c), the Cancellation Division reasoned that the cancellation applicant did not prove that the proprietor was actually aware or should have been aware of the earlier marks invoked.
11 As regards the cancellation applicant’s bad faith argument as referred to above in paragraph 6 under d), the Cancellation Division reasoned that it was not equipped or authorised by law to interpret what amounts to a breach of advertising law in a Member State. Anyhow, it was not willing to remove the contested mark from the
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register on the hypothetical basis that the EUTM proprietor might use the mark in advertisements that potentially breach UK advertising laws.
12 As regards the cancellation applicant’s argument as referred to above in paragraph 6 under e) the Cancellation Division reasoned that this argument relied on the assumption that the proprietor would not use the mark for Class 34 goods. There was no way of knowing that. It found this argument as speculative as the arguments raised in paragraph 6 under a) and b).
13 The Cancellation Division rejected the cancellation request also on the grounds of 8(4) EUTMR and the UK tort of passing off as claimed by the cancellation applicant. Apart from a rudimentary and generic reference to the law of passing off, the applicant submitted little information concerning the application of the law to the present case. The applicant had not demonstrated what scope of protection would be granted to the claimed earlier rights nor under what conditions those rights might prohibit the use of the later mark in the UK. Moreover, it did not explain how the alleged earlier rights would be damaged by the registration and use of the contested mark. This failure alone made it impossible for the Cancellation Division to conclude that a hypothetical action undertaken by the cancellation applicant in the UK pursuant to the tort of passing off would succeed.
Submissions and arguments of the parties
14 On 24 March 2016, the cancellation applicant filed a notice of appeal, followed by a statement of grounds on 6 June 2016. It requests that the Board declare the contested mark invalid.
15 As regards Article 8(4) EUTMR, it submits a copy from chapter 18 of Kerly on Trade Marks and Trade Names entitled ‘The action for passing off’ and argues that there should be no doubt that this sets out adequate background on the applicable law. Moreover, it emphasises that the evidence it submitted proves that it has made significant use of the marks ‘V2’ and ‘V2Cigs’ throughout the UK for a period of 21 months prior to the date of application of the contested mark. The use proven is of sufficient volume and duration to have given rise to protectable goodwill under English law. There would be a clear misrepresentation taking into account the similar signs and goods and damage is inevitable where misrepresentation is established.
16 As to its bad faith claim it raised the same arguments referred to in paragraph 6 above. It emphasises that the EUTM proprietor never had any genuine commercial interest in the sale of the products covered by the contested mark with the exception of ‘snus’ (in Sweden only) and ‘chewing tobacco’.
17 The cancellation applicant explains that in the meantime it started revocation proceedings for non-use of the EUTM proprietor’s word mark ‘V2’ No 8 512 345 as referred to in paragraph 6 e) above, pending before the Office under No 10565. In response to these proceedings, the EUTM proprietor only filed evidence of use in relation to ‘snus’ and ‘chewing tobacco’. In seeking protection of a registration without any genuine intention of selling any of the products other than ‘snus’ and ‘chewing tobacco’, the EUTM proprietor knew or must have been known at the time of making the application, that it was acting in bad faith.
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18 It further emphasises that the nature of the contested mark is another factor relevant for determining the cancellation applicant’s bad faith. It argues that it is to be inferred that the mark ‘V2’ was chosen in bad faith as it is conceptually linked to forms of tobacco consumption by smoking as the shape that is formed by a smoker’s fingers when smoking is a ‘V’ shape while the tobacco products sold by the EUTM proprietor must be placed in the mouth where the nicotine is absorbed.
19 It also submits an email dated 28 June 2012 in which the cancellation applicant’s representative asks the EUTM proprietor’s representative whether V2 Tobacco would like to communicate with one of its clients with the goal of negotiating a licence to the V2 mark for non-tobacco, electronic cigarettes. This, in combination with the evidence of use of the earlier marks as it submitted at first instance would lead to the conclusion that the EUTM proprietor had no excuse for being unaware of the use of the earlier marks and would prove the bad faith of the filing of the contested mark afterwards.
20 In reply, the EUTM proprietor requests that the Board dismiss the appeal and order the cancellation applicant to bear the costs.
21 Insofar as the cancellation request was based on the grounds of Article 8(4) EUTMR it argues that, still, none of the elements necessary to demonstrate passing off have been established by the cancellation applicant.
22 As regards the cancellation applicant’s claim that the contested mark was filed in bad faith and its arguments referred to in paragraph 6 above under a) and b), the EUTM proprietor endorses the reasoning of the Cancellation Division and emphasises that there is no requirement that an applicant may only file for a narrow range of products that can be marketed. The claim that the mark was filed in bad faith because ‘portion snus’ is banned throughout the EU, except for Sweden, is without relevance, also because the proprietor sells loose snus and chewing tobacco which is legal in other Member States. As to the cancellation applicant’s argument referred to in paragraph 6 under c) and the additional evidence filed in this respect at the appeal, it argues that the EUTM proprietor had the EUTM ‘V2’ No 8 512 345 registered as from 2009, thus before receipt of the email in 2012 and before the date as from which the cancellation applicant has claimed use of the mark in the UK. The cancellation applicant has failed to prove any prior use. In fact it has not demonstrated any right at all, much less a right to prevent the use of the EUTM proprietor’s mark. As to the cancellation applicant’s argument referred to in paragraph 6 under d), it argues that the UK and EUTM registers are full of marks containing tobacco and non-tobacco products. As regards the last bad faith argument raised in the appeal it explains that it does not understand how the nature of the mark can prove bad faith.
23 It concludes its reply with the remark that the only purpose of this and the three other cancellation requests filed by the cancellation applicant (R506/2016-4, R575/2016-4 and R577/2016-4) is to delay the proceedings before the European Union trade mark Court in Denmark initiated by the EUTM proprietor against the cancellation applicant based on its European Union trade marks as contested in these four cancellation proceedings before the Office. The Danish court has stayed the proceedings and enjoined use by the cancellation applicant for the duration of the stay.
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Reasons
24 The appeal is not well founded. The cancellation request shall be rejected on the grounds of Article 52(1)(b) EUTMR and Article 53(1)(c) EUTMR in conjunction with Article 8(4) EUTMR.
Preliminary remark
25 The sign protected by the contested EUTM which is subject of this appeal is the following:
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26 This concerns a purely figurative sign, namely a black and white lining pattern forming the shape of what may be perceived as a leaf. Visually, the overall impression of this mark is completely different from the earlier non-registered word marks ‘V2’ and ‘V2Cigs’. As the contested mark will not be pronounced, an aural comparison is not possible and there is no conceptual similarity between the marks. The conflicting marks are dissimilar.
Article 53(1)(c) EUTMR in conjunction with Article 8(4) EUTMR
27 As the cancellation applicant indicated itself, see paragraph 4 above, one of the key ingredients for a successful passing off action is that there is a misrepresentation by the EUTM proprietor to the public leading or likely to lead the public to believe that the goods offered by it are the goods of the cancellation applicant.
28 As the conflicting marks are dissimilar, this condition is not fulfilled. Already for this reason the cancellation request on the grounds of Article 53(1)(c) EUTMR in conjunction with Article 8(4) EUTMR shall be rejected.
Article 52(1)(b) EUTMR – bad faith
29 A European Union trade mark shall be declared invalid on application to the Office where the applicant was acting in bad faith when it filed the application for the trade mark.
30 As observed by Advocate General Sharpston (opinion of 11/06/2009, C-529/07, Lindt Goldhase, EU:C:2009:361, § 36), the concept of bad faith referred to in Article 52(1)(b) EUTMR is not defined, delimited or even described in any way in the legislation. However, the Court of Justice provided some guidance as to how to interpret this concept in its judgment in the same case, as did the General Court in several cases (judgments of 01/02/2012, T-291/09, Pollo Tropical chicken on the grill, EU:T:2012:39; 14/02/2012, T-33/11, Bigab, EU:T:2012:77; and 13/12/2012, T- 136/11, Pelikan, EU:T:2012:689). In its preliminary ruling of 27/06/2013, C-320/12, Malaysia Dairy, EU:C:2013:435, the Court of Justice declared that the concept of bad faith is an autonomous concept of European Union law, which must be given a uniform interpretation in the European Union.
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31 One way to describe bad faith is a ‘conduct which departs from accepted principles of ethical behaviour or honest commercial and business practices’ (opinion of Advocate General Sharpston of 11/06/2009, C-529/07, Lindt Goldhase, EU:C:2009:361, § 60; similar decision of 01/04/2009, R 529/2008-4, FS (fig.), § 14).
32 Good faith is presumed until proof to the contrary is adduced and mere speculations are insufficient to establish bad faith. The cancellation applicant needs to prove that there was bad faith on the part of the EUTM proprietor at the time of filing the EUTM, for example that the EUTM proprietor has had the sign registered with no intention of using it, its sole objective being to prevent a third party from entering the market (judgment of 13/12/2012, T-136/11, Pelikan, EU:T:2012:689, §§ 48, 56, 57).
33 In order to ascertain whether the owner had been acting in bad faith at the time of filing the application, an overall assessment must be made in which all the relevant factors of the individual case must be taken into account. In the case at hand none of the factors raised by the cancellation applicant, alone or in combination, prove that this was the case.
34 In respect of the argument raised above in paragraph 6 under c), the cancellation applicant argues in detail that it used the similar signs ‘V2’ and ‘V2Cigs’ for ‘elec- tronic cigarettes and accessories thereof’ as from October 2010, i.e. prior to the date of application of the contested mark which was 13 August 2012 and that the EUTM proprietor knew or should have known that. Irrespective of whether or not this was proven by the cancellation applicant, the Board notes that this is not a relevant factor for establishing bad faith for the simple reason that the contested mark is dissimilar to the earlier signs. The alleged use of the earlier marks does not play any role in as- sessing whether or not the EUTM proprietor was acting in bad faith when the con- tested mark was filed.
35 Furthermore, all other arguments raised by the cancellation applicant in support of the claimed bad faith of the EUTM proprietor fail. None of these prove a dishon- est intention on its part.
36 As indicated in paragraph 6 above under a) and b) and further elaborated in the statement of grounds of appeal, the cancellation applicant argues that the EUTM proprietor acted in bad faith by registering the contested mark for a broader range of goods in Class 34 than those for which the mark was actually used, namely for ‘chewing tobacco’ and ‘snus’ (the latter only in Sweden and allegedly being banned by an EU directive from sale in the rest of the EU).
37 No bad faith can be seen in this behaviour which was perfectly legal and without any dishonest intention. Bad faith cannot be found on the basis of the length of the list of goods and services set out in the application for registration (judgment of 07/06/2011, T-507/08, 16PF, EU:T:2011:253, § 88). As a rule, it is legitimate for an undertaking to seek registration of a mark not only for the categories of goods and services that it markets at the time of filing the application but also for other categor- ies of goods and services that it intends to market in the future. (judgment of 14/02/2012, T-33/11, ‘Bigab, EU:T:2012:77, § 25; judgment of 07/06/2011, T-507/08, 16PF, EU:T:2011:253, § 88).
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38 The argument raised in paragraph 6 under d) above, namely that the use of the contested mark may be in potential breach of the UK Tobacco Advertising and Pro- motion (Brandsharing) Regulations 2004, is also a completely irrelevant factor for establishing bad faith. Apart from the fact that this is all hypothetical and speculat- ive, obviously, national tobacco regulations are not a ground for invalidity under the EUTMR.
39 The bad faith argument raised by the cancellation applicant as referred to in paragraph 6 under e) above, namely that the EUTM proprietor filed a repeated ap- plication for the same mark or essentially the same mark for goods in Class 34 in or- der to avoid the risk of total or partial revocation for non-use, was no longer dis- cussed by the parties in the appeal.
40 The Board notes that this argument would have failed anyhow. The contested mark and the EUTM for the word mark ‘V2’ No 8 512 345 are dissimilar for the same reasons as to why the cancellation applicant’s earlier marks and the contested mark are dissimilar. The contested mark is therefore not a repeated application for the same mark or essentially the same mark as argued by the cancellation applicant.
41 Also the additional bad faith argument referred to by the cancellation applicant at the appeal stage, namely that the mark ‘V2’ which is conceptually linked to forms of tobacco consumption by smoking – because this happens between two fingers – is actually used for the tobacco products which are not smoked but rather consumed in the mouth fails. This already because the contested mark is a purely figurative one as described in paragraph 26 above being completely different from the sign ‘V2’. Any- how, it cannot be seen how an argument like this could be relevant for the EUTM proprietor’s bad faith when it filed its application. In this respect it should also be noted that Article 52(1)(a) EUTMR was not invoked as a ground of cancellation.
42 To conclude, the cancellation applicant failed to prove that the EUTM proprietor was acting in bad faith when it filed the application for the contested mark. The can- cellation request on the grounds of Article 52(1)(b) EUTMR shall be rejected.
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Conclusion
43 The cancellation request must be rejected on both grounds and both earlier rights invoked. The appeal shall be dismissed.
Costs
44 Since the cancellation applicant (appellant) is the losing party within the mean- ing of Article 85(1) EUTMR, it must bear the costs incurred by the EUTM proprietor (respondent) in the appeal proceedings. The Cancellation Division correctly decided that the appellant shall bear the costs of the cancellation proceedings.
Fixing of costs
45 Pursuant to Article 85(6) EUTMR in conjunction with Rule 94(7)(d)(vi) and 94(7)(d)(iv) CTMIR, the Board of Appeal fixes the amount of the fees and costs to be paid by the appellant to the respondent at EUR 550 for the representation costs in the appeal proceedings and EUR 450 for the representation costs in the cancellation proceedings, in total EUR 1 000.
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Order
On these grounds,
THE BOARD
hereby:
1. Dismisses the appeal; 2. Orders the appellant to pay the costs incurred by the respondent in the
appeal proceedings; 3. Fixes the total amount of costs to be paid by the appellant to the respondent for the cancellation and appeal proceedings at EUR 1 000.
Signed
D. Schennen
Signed
L. Marijnissen
Signed
S. Martin
Registrar:
Signed
H. Dijkema
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