When harmonising E.U. regulations, an extensive range of interpretations are tacitly accepted when new concepts arise. This is particularly true when the lawmakers find it difficult to define the boundaries of the term in question, given the plethora of situations it encompasses. Moreover, including these terms in our legal system is not an easy taskand their onset in a technical sphere is difficult to contend with.
Three years have passed since the Portuguese Industrial Property Code (I.P. Code) was amended to implement the E.U. Trademarks Directive (Directive (E.U.) 2015/2436, of 16 December, 2015. One of the most relevant amendments made to the I.P. Code was the inclusion in the list of grounds for refusal of a trademark application, those cases in which “it is recognised that the trademark application was filed in bad faith” (article 231(6) of the Portuguese I.P. Code). The Portuguese lawmakers have taken advantage of the prerogative in article 4(2) of the Trademarks Directive, according to which any Member State may include in its legislation that a trademark application may be refused if it is made in bad faith.
Portugal has always been keen to provide the owners of trademarks with tools to act against third parties who file trademark applications in an abusive manner or merely to take advantage of the principle of “first to file”. In fact, before this last revision of the I.P. Code, Portugal allowed opponents to oppose a trademark application in cases where it was established that the applicant was only filing that application to carry out unfair competition practices. However, Portugal has now also put the necessary mechanism in place to prevent the registration of trademark applications filed in bad faith.
When the last amendment to the Portuguese code was under discussion, some argued against including bad faith as a ground to oppose a trademark application. They held that this would open a can of works and that countless oppositions would be filed by entities who were not owners of prior trademark rights but who sought to delay their competitors from filing new trade mark applications.
Three years have passed since the new I.P. Code entered into force and the number of oppositions that are filed on the basis of bad faith are few and far between. This could simply be because the opponents are unaware of this alternative “way out”. However, we believe that most entities make fair and non-abusive use of the trademark system.
The concept behind a trademark filed in “bad faith” has not been specified by the I.P. Code, as occurred in the EUTM Regulation, which included bad faith in the list of situations that can lead to the invalidation of a trademark registration. Therefore, the assessment of the effectiveness of this amendment to the I.P. Code will ultimately be scrutinised by the Courts and the Trademark Office in light of whether the ruling is for or against the trademark application.
We, therefore, welcome and applaud the emergence of a specialised section in the Lisbon IP Court, in case 232/21.8YHLSB. The case involved an appeal filed by the Brazilian company Marilan Alimentos, S.A., owner of the trademarks PIT STOP for “crackers” (in class 30):
against the Portuguese company Officetotal – Foods Brands, Lda., which had filed a trademark application covering the exact same type of goods, and with the following sign:
In this ruling, the Lisbon IP Court clarified a nebulous area by stating that “bad faith” should be interpreted in accordance with rulings by the E.U. Courts, along the exact same lines as the CJEU ruling in case C-371/18. In the words of the I.P. Court, “(…) the CJEU has already had to reiterate that [bad faith] is an independent concept of E.U. law and that, given the need for consistent application of national and E.U. trademark regimes, it must be interpreted in the same way”. The court went on to make a direct reference to cases C-529/07 (Lindt) and T-795/17 (Neymar) clarifying that: “…The purpose of typifying bad-faith as grounds for refusing registration is, therefore, to prevent trademark registrations that are abusive or contrary to honest attitudes in industrial and commercial matters.”
Subsequently, diligently following the guidelines that emanate from E.U. case-law, the Lisbon IP Court has outlined some of the factors that should be taken into account to prevent the registration of trademark applications that are the result of an abusive use of the trademark registration system or which are contrary to fair and honest practices. The court ruled that “…it is therefore necessary to take into consideration all the relevant factors involved in the specific case existing at the time the trademark application was filed and in particular:
– knowledge of the existence of the prior trademark: “the fact that the applicant knows or ought to know that a third party is using, at least in one Member State, an identical or similar sign for an identical or similar product or service which is liable to cause confusion with the sign for which registration is sought”
– the application is filed with the intention of blocking a competitor’s use of a trademark: “the applicant’s intention is to prevent that third party from continuing to use such a sign and the degree of legal protection enjoyed by the third party’s sign and the sign for which registration is sought”
– the origin of the sign at issue and its use since its creation: “the commercial logic underlying the filing of the application for registration of the sign as a trade mark, and the chronology of events which characterised the filing”
– the filing of that T.M. application departs from the ethical and fair principles which are followed by other companies of the same field of activity: “the concept of not acting in good faith concerns a subjective motivation of the person filing a trade mark application, that is to say, a dishonest intention or other motive causing damage, which presupposes conduct departing from the principles recognised as those which must form part of ethical conduct or of honest attitudes in industrial or commercial matters.”
This ruling by the Lisbon IP Court leaves little room to question whether there should be a more local interpretation of the legal concept of “bad faith” and we trust this will influence the pace of the decisions that are obtained, not only by the Courts, but also by the Trademark Office.
We believe that the Portuguese lawmakers have acted appropriately in opening the possibility of preventing the registration of trademarks that are not a result of a fair and lawful use of a trademark, and that trademark owners are now granted all the tools to better protect their portfolio.
It will be interesting to see whether the national experience of countries like Portugal – who have made the choice to add this ground for refusal of trademark applications while implementing the EU Trademarks’ Directive – will have an impact on the EU lawmakers that have not included it in relation to European trademark applications and have only included it in the grounds for invalidity of trademark registrations.