A currency affair
The Court reaffirmed the factors that contribute to a finding of bad faith, explains Geoffrey Smith. T-132/16, PayPal, Inc v EUIPO and Hub Culture Ltd (VENMO), CJEU, 5th May 2017.
T-132/16, PayPal, Inc v EUIPO and Hub Culture Ltd (VENMO), CJEU, 5th May 2017.
Key points
- All relevant factors specific to the case must be considered to establish bad faith at the time of filing the application for registration of an EUTM
- An application made for an EUTM without any intention of use and the sole objective of preventing a third party from entering the market can contribute to a finding of bad faith
PayPal, Inc (the Applicant) claimed that the Board of Appeal (BoA) had erred in annulling a decision of the Cancellation Division. It made this claim on the ground that bad faith on the part of Hub Culture Ltd (the Intervener) had not been established at the time of filing the application for registration of the word mark VENMO relating to goods in classes 9 (software) and 36 (financial tokens). The General Court (GC) upheld the Applicant’s claim.
Starting point
In 2007, the Intervener established Ven, a virtual currency, and filed an application for the registration of the sign VEN as a US word mark for financial services. Two years later, Venmo, Inc was established (and subsequently acquired by the Applicant), providing online payment services in the US under the unregistered VENMO mark. In 2010, the Intervener registered venmoney.net and applied to register an EU trade mark (EUTM) for the word sign VENMO. Over the years, there had been a number of communications between the Intervener and Venmo regarding the use of VENMO.
The Cancellation Division declared that the mark was invalid on the basis of bad faith, based on the pre-contractual relationship between the parties and because the Intervener sought to register the mark as a defensive mark. The Cancellation Division’s decision was annulled by the BoA, which concluded that bad faith could not be established.
GC decision
The GC concluded that the BoA made a number of errors in reaching its decision and overturned the decision in favour of the Applicant. As with all bad faith cases, this decision is heavily fact-dependent and provides a good review of factors relevant to such cases. It should also be noted that, although there existed a pre-contractual relationship between the Applicant and the Intervener, considering this factor alone was insufficient to establish bad faith.
In analysing whether the Intervener acted in bad faith, the GC referred to the principles in Chocoladefabriken Lindt & Sprüngli and Malaysia Dairy Industries , which establish that all relevant factors specific to each case must be given consideration.
Bad faith factors
Examples of important factors include: (i) whether the applicant knows, or must have known, that a third party is using an identical or similar sign for identical or similar goods or services, giving rise to confusion; (ii) the intention to prevent the third party from continuing to use the sign; and (iii) the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is sought. Ultimately, however, the analysis must be made on a case-by-case basis.
In addition to the pre-contractual relationship between the parties, the facts indicated the Intervener’s intention to prevent Venmo from using the sign. With the exception of the domain name venmoney.net, use of the sign VEN MONEY had not been established by the Intervener, which used the domain name solely to redirect to other sites. The Intervener did not fully explore the potential commercial resolutions with the Applicant. It was highlighted that an application made for an EUTM without any intention of use and the sole objective of preventing a third party from entering the market can contribute to a finding of bad faith.
Geoffrey Smith is a Partner and Chartered Trade Mark Attorney based in the London office of HGF Ltd
Maherunesa Khandaker, a Solicitor in the London office of HGF Law LLP, co-authored this article.