Trademark in bad faith: abuse distributor’s position

Article 19, paragraph 2 of the Italian Industrial Property Code provides that:

“who filed the application in bad faith cannot get a registration for a trademark”.

There are be many examples; among them, typical example of an application in bad faith is the filing of a trademark with the sole purpose of hindering a competitor on the market, as well as the trademark filing made by those who, being aware of the advertising carried out by an undertaking to launch a new brand and having had the opportunity to see the mark, file the trademark application before the undertaking.

Another case that can be included in the ban in question is given by the filing of a brand which is well known abroad but not in their own Country, usually made in order to forestall trademark holder and taking unfair advantage from such action, such as trying to get the maximum gain from the assignment of the mark.
Another typical hypothesis of filing in bad faith is when trademark registered in the name of the agent or representative of a person who is the proprietor of that trademark, without the proprietors’ authorization.

Trademark in bad faith filed by a distributor: an italian case

Let’s take into consideration the judgment of the Court of Appeal of Bologna of August 30, 2013, enrolled under number 52 of the general role of the year 2009, which upheld the judgment of the Court of First Instance which stated the invalidity of a trademark because of in bad faith according to such article.

The matter arises from the request of an Indian company to declare the invalidity of an Italian Trademark registration (hereinafter, trademark “XY”) filed by an Italian company, as filed in bad faith.

The Indian company, active in the field of manufacturing and marketing of polyester films, used for many years in India trademark “XY”. The product line distinguished by such mark had been distributed in Europe by the Italian company for over ten years. After the interruption of the business relationship between the two companies, the Italian company filed in its name the Italian trademark application XY. The Indian company took legal action in order to obtain the nullity of the Italian trademark registration “XY” on the assumption that Italian company filed such mark in bad faith and abused of the information acquired during their long business relationship.

The action filed by the Indian company was accepted both in the first than in the second instance.
The bad faith has been verified considering many reasons, including:

• The Italian company was a distributor of the product XY in Europe for many years and commercialized such product in Italy. In this regard, the Court of Bologna states that

“the fact that the Italian company entered for many years the product XY in the Italian market makes us sure of its bad faith when applying for trademark registration in its own name…because in this way the Italian company was fully aware to damage the Indian company, which used the mark in Italy, bringing the usual consumers, who knew the product, to believe that another company was entitled to use the mark. This was particularly serious for the abuse of their previous relationship, including the knowledge of Italian costumers of the Indian company”;

• There was a significant business relationship between the two companies and it is not important that such relationship was not formalized in a distribution or agent agreement.

The Court of Appeal of Bologna, therefore, confirmed the judgment of the Court of First Instance and found that

“this is, without uncertainty, a case of trademark registration in bad faith according to the Article 19, second paragraph of the Italian Industrial Property Code”.

Trademark in bad faith filed by a distributor in eu case-law

There are three cases ruled by EU Regulation 2017/1001:

• “prohibition of the use of an EU trademark registered in the name of an agent or representative” (article 13)
  “Where an EU trademark is registered in the name of the agent or representative of a person who is the proprietor of that mark, without the proprietor’s authorization, the latter shall be entitled to oppose the use of his mark by his agent or representative if he has not authorized such use, unless the agent of representative justifies his action”
• “Transfer of a trademark registered in the name of an agent” (article 21)
  “Where an EU trademark is registered in the name of the agent or representative of a person who is the proprietor of that trademark, without the proprietor’s authorization, the latter shall be entitled to demand the assignment of the EU trademark in his favour unless such agent or representative justifies his action”

The EU Regulation provides the following possibility for the trademark owner:

• “Relative grounds for refusal” (article 8, paragraph 3)
  “Upon opposition by the proprietor of the trademark, a trademark shall not be registered where an agent or representative of the proprietor of the trademark applies for registration thereof in his own name without the proprietor’s consent, unless the agent or representative justifies his action”

It is important to highlight that, according to the EUIPO Trademark Practive Guidelines (part C, section 3: unauthorized filing by agents of the trademark proprietor) “the terms agent and representative should be interpreted broadly to cover all kinds of relationships based on any business arrangement (governed by written or oral contract) where one party is representing the interests of another, regardless the nomen juris of the contractual relationship between the principal-proprietor and the EUTM applicant”.