• Professional News
  • 08 October 2013

The European Court of Justice interprets "bad faith" under trademark law

In a landmark decision, the European Court of Justice has established that the concept of "bad faith" must be given a uniform interpretation throughout the EU. As a result, Denmark is not allowed to introduce stricter rules to determine whether an applicant is acting in bad faith in respect of a trademark used abroad.

A landmark decision by the European Court of Justice dismisses previous uncertainty about what it takes for a trademark application in Denmark to be rejected on the grounds of bad faith. The Court has ruled that the concept of "bad faith" under trademark law is a concept of European Union law that must be given a uniform interpretation in all Member States. The Court also established that any knowledge of a foreign trademark does not, in itself, mean that the applicant is acting in bad faith.

As a result, Denmark is not allowed to have more stringent rules to determine whether an application for registration of a trademark which is used abroad has been filed in bad faith.

The ruling will have an impact on opposition proceedings in Denmark, both future cases and cases suspended due to this case.

The case
The case was brought before the European Court of Justice by Denmark’s Supreme Court (Højesteret) in the proceedings Malaysia Dairy Industries Pte. Ltd. v. the Board of Appeal for Patents and Trademarks (Ankenævnet for Patenter og Varemærker).

Following an application for registration filed in 1995, Malaysia Dairy obtained the registration, in Denmark, of its plastic bottle as a trademark. Kabushiki Kaisha Yakult Honsha – called Yakult – opposed that registration, relying on the fact that, when filing its application for registration, Malaysia Dairy knew or should have known of the existence of an identical mark previously registered in Malaysia by Yakult. Yakult argued that Malaysia Dairy had filed its application for trademark registration in bad faith and claimed that Malaysia Dairy’s trademark should be cancelled under the bad faith provisions of the Danish Trademarks Act. Both the Board of Appeal for Patents and Trademarks and the Copenhagen Maritime and Commercial Court (Sø- og Handelsretten) found for Yakult.

Malaysia Dairy appealed against that judgment to the Supreme Court, which decided to stay the proceedings and to ask the European Court of Justice for a preliminary ruling.

Preliminary ruling
The first question referred for a preliminary ruling was whether the concept of "bad faith" is a concept of European Union law which must be given a uniform interpretation throughout the European Union. The other questions related to the interpretation of the concept of bad faith and whether Member States are allowed to introduce a specific protection of foreign marks, based on the fact that the applicant knew or should have known of the foreign mark.

Based on the principle of equality, the European Court of Justice ruled that the concept of bad faith in connection with the knowledge of existing trademarks must be given a uniform interpretation throughout the EU. Member States may not introduce a system of specific protection of foreign marks which differs from the practice followed in the European Union regarding assessment of bad faith.

Greater certainty about the legal position
The practice followed so far in Denmark, which made it possible to determine the existence of bad faith if the applicant knew or should have known of a trademark abroad is incompatible with EU law. It is necessary to take into consideration all the relevant factors specific to the particular case which pertained at the time of filing the application for registration. The fact that the applicant knows or should know that a third party is using a mark abroad at the time of filing his application which is liable to be confused with the mark whose registration has been applied for is not sufficient, in itself, to permit the conclusion that the applicant is acting in bad faith.

It is gratifying to see that the state of law established by the ruling conforms to the principle of territoriality in trademark law – meaning that, as a general rule, a trademark has effect only where it is protected. As a result, companies filing for trademark registration in Denmark now have a greater certainty about their legal position regarding trademarks registered abroad than provided by the practice followed so far in Denmark.    

Read the ruling here

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