MONOPOLY: Trade Mark Edition

Background

The EU trade mark registration system is based on the ‘first to file’ principle. With some exceptions, the superior right is awarded to the trade mark owner who obtains a registration rather the owner who uses the mark in commerce but does not register it. However, the system is open to abuse if owners clutter up the register with unused marks. Competitors are denied the full range of available brand names. To mitigate this, EU legislation allows a finite grace period of five years’ non-use of a registered trade mark after its entry on the register. If a mark is unused after that period there are consequences. One of these is that it becomes liable to a revocation action for non-use and could be struck from the register insofar as it has not been used on the registered goods and services and there are no proper reasons for non-use. It will also be disregarded as a basis of opposition before the EUIPO, meaning it cannot block later applications for the same or similar mark. In both these scenarios the registered owner is required to prove use of the mark.This requires an investment of time and cost.

As a result of the above, some trade mark owners have taken to re-applying periodically for the same mark in order to re-start the non-use clock by each fresh application. The resulting registration can be used in opposition proceedings for a period of five years without the owner having to prove use of it. Therefore, even if the mark is in fact being used on the registered goods and services, a new registration would, in theory, spare the owner the task of proving actual use in contentious proceedings. There is a time and cost saving here.

The Case

Hasbro already enjoyed the benefit of three EU trade registrations for the word MONOPOLY. The registrations were filed respectively in 1996, 1998 and 2010. It obtained a fourth registration for MONOPOLY in 2011 for goods and services in part identical to the previous registrations and in part for previously unregistered goods and services. A Croatian company applied to invalidate the 2011 registration on the ground that it was filed in bad faith. It claimed Hasbro had a dishonest intention when the application was filed because it was a repeat filing made with the intention of re-setting the non-use clock for the word mark MONOPOLY. The Cancellation Division at first instance disagreed. It held that there was no evidence of dishonest intention or unfair practice involving bad faith. An appeal was filed.

The Appeal Decision

This was a score draw. The Board of Appeal (‘BoA’) invalidated Hasbro’s MONOPOLY registration in part and allowed it to remain on the register in part. Most unusually, rather than relying on written submissions alone, the BoA ordered oral proceedings in this case. The issue of bad faith must be determined at the time of filing of the mark and the BoA said it wanted to better understand the particular circumstances underlying the filing strategy of Hasbro. Bad faith is not defined in EU legislation but may be inferred from the behaviour of the registered owner. This must take into account the accepted principles of honest commercial and business practice. At the oral hearing the registered owner mentioned that one of the reasons (among others) for the re-filing was to reduce administrative burden. She specifically referred to the benefit of being able to rely upon one registration without the need to prove use of it. She also indicated that this was a benefit considered by all brand owners across many different industries. It was the above admission which appears to have been key to the decision. The BoA noted that if a filing is motivated not only by the advantage of not having to prove use of the mark but for other reasons as well, this does not, in itself, make the strategy acceptable. Further, the fact that other brand owners may also make repeat filings does not, in itself, make the strategy legal and acceptable unless it has been tested and approved as such by the Courts.

The BoA concluded in a harsh manner: “Such conduct, which improperly and fraudulently extends the five-year grace period, is manifestly intended to circumvent the obligation to prove use of earlier marks and must be considered as an intention to distort and imbalance the European Union trade mark system as established by the EU legislators”.

The MONOPOLY registration was struck from the register insofar as it included goods and services already covered by earlier registrations. It was allowed to remain on the register insofar as it extended the goods and services because it could be inferred that these extensions were a natural commercial progression of the mark. A further appeal is underway.

Comment

There was always doubt that the practice of re-registering marks was acceptable under EU law. This decision very much underlines the risk trade mark owners take in re-filing in this way. Care is needed in long-term filing strategies. It was also interesting to note that the fact of a finding of bad faith in relation to some goods and services was not fatal to the entire registration.