CANCELLATION No 13 317 C (INVALIDITY)

Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd., 45 Sha Mian North Street, Guangzhou, Guangdong, People’s Republic of China (applicant), represented by Office Kirkpatrick N.V./S.A., Avenue Wolferslaan, 32, 1310 La Hulpe – Terhulpen, Belgium (professional representative)

a g a i n s t

Multi Access Limited, Palm Grove House, PO Box 438, Road Town, Tortola, British Virgin Islands (EUTM proprietor), represented by Grünecker Patent- und Rechtsanwälte PartG mbB, Leopoldstr. 4, 80802 Munich, Germany (professional representative).

On 31/08/2018, the Cancellation Division takes the following

DECISION

1. The application for a declaration of invalidity is upheld.

2. European Union trade mark No 13 497 102 is declared invalid in its entirety.

3. The EUTM proprietor bears the costs, fixed at EUR 1 080.

PRELIMINARY REMARK

As from 01/10/2017, Regulation (EC) No 207/2009 and Regulation (EC) No 2868/95 have been repealed and replaced by Regulation (EU) 2017/1001 (codification), Delegated Regulation (EU) 2017/1430 and Implementing Regulation (EU) 2017/1431, subject to certain transitional provisions. Further, as from 14/05/2018, Delegated Regulation (EU) 2017/1430 and Implementing Regulation (EU) 2017/1431 have been codified and repealed by Delegated Regulation (EU) 2018/625 and Implementing Regulation (EU) 2018/626. All the references in this decision to the EUTMR, EUTMDR and EUTMIR should be understood as references to the Regulations currently in force, except where expressly indicated otherwise.

REASONS

The applicant filed an application for a declaration of invalidity against European Union trade mark No 13 497 102 ‘WONG LO KAT’ (word mark) (the EUTM). The request is directed against all the goods covered by the EUTM, namely the goods in Classes 5, 30 and 32. The applicant invoked Article 59(1)(b) EUTMR.

SUMMARY OF THE PARTIES’ ARGUMENTS

The applicant argues that the contested EUTM was filed in bad faith as it was a repeat filing of the same trade mark as the EUTM proprietor already owned, namely registration No 8 293 755 WONG LO KAT (word mark). It argues that the EUTM proprietor filed the contested EUTM merely to circumvent the obligation of use of the earlier EUTM and to avoid the consequences entailed by total or partial revocation of the earlier mark for non-use. Moreover, it claims that it was Ms Wang Jianyi, one of the shareholders of the EUTM proprietor that gave instructions to file the contested EUTM despite the fact that she had previously been a legal representative for a company Guangzhou Wanglaoji Pharmaceutical Co., Ltd. which was established by the applicant. The applicant argues that Ms Wang Jianyi registered the EUTM after having left the applicant. The applicant also claims that the EUTM proprietor brought opposition proceedings against the applicant’s Benelux application and used as a basis of this opposition the contested EUTM but not its earlier EUTM which would have been subject to use. The applicant also brings to the Office’s attention that it has brought revocation proceedings against the EUTM proprietor’s earlier EUTM No 8 293 755. The applicant argues that Ms Wang Jianyi was a shareholder of the applicant and therefore, had contractual or pre-contractual relations with the applicant and as such was well aware that the applicant had legitimate interest in the term ‘WONG LO KAT’ in relation to the goods at issue and that the filing of the EUTM was done in bad faith and with a dishonest intention. Therefore, it requests the invalidity to be upheld and that the EUTM be invalidated in its entirety.

In support of its observations, the applicant filed the following evidence:

• Exhibits 1-4: Business reports concerning the applicant company and its relationship with Guangzhou Pharmaceutical Holdings Limited and also the relationship with Ms Wang Jianyi to the applicant.

• Exhibit 5: Trade mark licensing agreement and supplementary agreement on the licensing of trade mark in Chinese and with a translation into English.

• Exhibit 6: Notifications from the Trade Mark Review and Adjudication Board of the State Administration for Industry and Commerce in China regarding oppositions filed against two Chinese trade mark applications WANG LAO JI by a shareholder of the applicant.

The EUTM proprietor argues that it has not acted in bad faith and that the EUTM was filed for in good faith. It states that it historically has the ownership of the mark and also argues that the applicant lacks the capacity to bring the present application. The EUTM proprietor denies that the contested EUTM was a repeat filing and to counter this argument of the applicant it submits evidence to prove the use of the earlier mark. The EUTM proprietor states that the contested EUTM was filed before the expiry of the grace period of the earlier EUTM and before the filing of any actions against the earlier mark. Therefore, the EUTM proprietor argues that as it used its earlier EUTM within the five year period and filed the contested EUTM before the expiry of the grace period there can be no bad faith on its part. It relies on the decision of 21/03/2007, 1 344 C in this respect. It submits that the alleged extensive use made of the earlier EUTM shows that there was no need for a repeat filing as it was already using its earlier mark. The EUTM proprietor provides a history of the brand dating back to the nineteenth century and a genealogy which it states proves that it has the rights to the brand. The EUTM proprietor denies any dishonest activity on its part and provides evidence of agreements, sales, export and distribution of its products to back up this argument. It contests the evidence submitted by the applicant and argues that it merely proves the use of the mark by the EUTM proprietor and contests all of the arguments of the applicant also.

In support of its observations, the EUTM proprietor filed the following evidence:

Attachment 1

Affidavit of Ms. Wong Kin Yee (or ‘Wong Jiang Yi’, as referred to by the EUTM proprietor), director of Wong Lo Kat (Enterprises) Limited with the following Annexes:

• Annex 1: Family tree diagram of Mr. Wong Chak Bong.

• Annex 2: License Agreement between Wong Lo Kat (International) Limited and

Hung To (Holdings) Company Limited of 30/01/1996.

• Annex 3: Assignment Agreement between Wong Lo Kat (International) Ltd. and

Wong Lo Kat Limited of 09/08/2004.

• Annex 4: Assignment Agreement between Wong Lo Kat Ltd. and Multi Access

Ltd. of 26/04/2005.

• Annex 5: Agreement of 24/06/2016 confirming license Agreement between Multi Access Ltd. and Wong Lo Kat (Enterprises) Limited on 01/06/2011.

• Annex 6-9: Invoices and orders dated between 2013 and 2016 for herbal tea products

• Annexes 10-13: Pictures of the packaging of Wong Lo Kat Herbal tea Extract, Instant Herbal Tea, Herbal Tea, Cane and Carrot Juice (instant) and the Honey Herbal (Instant).

Attachment 2

Affidavit of Mr. Chan Hung To, director of Multi Access Limited and Hung To (Holdings) Limited with the following Annexes:

• Annex 1: Assignment Agreement between Wong Lo Kat Ltd. and Multi Access

Ltd. of 26/04/2005.

• Annex 2: Agreement of 24/06/2016 confirming license Agreement between Multi Access Ltd. and Hung To (Holdings) Company Ltd. of 2005.

• Annex 3: Agreement of 24/04/2016 confirming license Agreement between Multi Access Ltd. and Wong Lo Kat (Enterprises) Limited on 01/06/2011.

• Annex 4: Memorandum of 24/06/2016 confirming sub-license Agreement between Hung To (Holdings) Company Ltd. and Guangdong Jiaduobao Drink & Food Co., Ltd. of 26/04/2005.

• Annex 5: Export quantities of WONG LO KAT canned herbal tea between 2009 and 2015, inter alia for Europe.

• Annexes 6-9 Invoices and shipping documents for the sales and shipping of WONG LO KAT branded herbal tea cans from 2010 to 2013 to Europe.

• Annex 10: Packaging pictures of Wong Lo Kat Canned Herbal Tea.

The applicant in its reply states that in the parallel revocation proceedings the evidence submitted by the EUTM proprietor to prove the use of the earlier EUTM is clearly insufficient to prove the use in relation to all of the goods for which it is registered. Therefore, the applicant claims that it is for this reason that the EUTM proprietor has filed the present EUTM to circumvent the use requirement of the earlier EUTM. Moreover, the applicant points out that in the parallel revocation proceedings 13 316 C that the EUTM proprietor has stated that it is only using the earlier EUTM in relation to some of the goods as the EUTM proprietor does not mention many of the goods for which the mark is registered or claims or proves that it is using the EUTM for these goods. The applicant repeats its previous arguments and insists that the contested EUTM in the present application was filed in bad faith and that the contested EUTM must be invalidated.

The EUTM proprietor in its rejoinder confirms and expands its previous arguments. It denies that the EUTM was a repeat filing or that it was filed in bad faith. Moreover, it argues that the applicant has failed to reach the burden of proof to prove that the EUTM proprietor filed the EUTM in bad faith and therefore, the application must fail. The EUTM proprietor also submits further evidence to prove the use of the earlier EUTM.

• Attachments 7-9: Wikipedia articles concerning traditional Chinese medicine, Chinese herbology and Chinese herb tea.

• Attachments 10-11: Letters from the Hong Kong Department of Health and the Hong Kong Medicine Dealers’ Guild.

• Attachments 12-14: Invoices relating to the sales of canned herbal teas billed for the years 2011-2013.

• Attachment 15: Table showing the numbers of cartons of canned herbal tea drinks exported to different EU countries in 2013.

• Attachments 16-19: Screenshots all extracted from archive.org for WaiYeeHong.com for 2013 and 2015, for Wingyipstore.co.uk for 2016 and for HiYou.eu for 2016.

• Attachment 20: Affidavit of Ms Wong, Director of Wong Lo Kat (Enterprises) dated 08/11/2017.

• Attachment 21: List of importers and distributors of its products in the EU.

• Attachment 22: A copy of the notice of opposition regarding the Benelux trade mark No 3 050 283 dated 29/12/2015.

ADMISSIBILITY

The EUTM proprietor argues that the applicant lacks the capacity to bring the present application. However, contrary to what the EUTM proprietor contends, Article 63(1)(a) EUTMR does not require the applicant to show an interest in bringing proceedings (25/02/2010, C‑408/08 P, Color Edition, EU:C:2010:92, § 36 et seq.).

According to Article 63(1)(a) EUTMR, any natural or legal person who under the terms of the law governing it has the capacity in its own name to sue and be sued can file a request for a declaration of invalidity based on Article 59(1)(b) EUTMR. Therefore, this argument must be rejected and the application is deemed to be admissible.

ABSOLUTE GROUNDS FOR INVALIDITY – ARTICLE 59(1)(b) EUTMR

General principles

Article 59(1)(b) EUTMR provides that a European Union trade mark will be declared invalid where the applicant was acting in bad faith when it filed the application for the trade mark.

There is no precise legal definition of the term ‘bad faith’, which is open to various interpretations. Bad faith is a subjective state based on the applicant’s intentions when filing a European Union trade mark. As a general rule, intentions on their own are not subject to legal consequences. For a finding of bad faith there must be, first, some action by the EUTM proprietor which clearly reflects a dishonest intention and, second, an objective standard against which such action can be measured and subsequently qualified as constituting bad faith. There is bad faith when the conduct of the applicant for a European Union trade mark departs from accepted principles of ethical behaviour or honest commercial and business practices, which can be identified by assessing the objective facts of each case against the standards (Opinion of Advocate General Sharpston of 12/03/2009, C‑529/07, Lindt Goldhase, EU:C:2009:361, § 60).

Whether an EUTM proprietor acted in bad faith when filing a trade mark application must be the subject of an overall assessment, taking into account all the factors relevant to the particular case (11/06/2009, C‑529/07, Lindt Goldhase, EU:C:2009:361, § 37).

The burden of proof of the existence of bad faith lies with the invalidity applicant; good faith is presumed until the opposite is proven.

Outline of the relevant facts

Both parties claim to be the rightful owner of the rights to the WONG LO KAT brand. The EUTM proprietor is the owner of the earlier EUTM No 8 293 755 for the identical word mark WONG LO KAT as the contested EUTM and also for identical goods. The applicant has also taken parallel revocation proceedings against the earlier EUTM of the EUTM proprietor for non-use. The applicant claims, inter alia, that the EUTM proprietor has filed the contested EUTM in bad faith to overcome the non-use of the earlier EUTM. Moreover, the applicant claims that in the parallel revocation proceedings No 11 316 C that the EUTM proprietor’s use does not show use for all of the goods of the earlier EUTM, and he claims that this is even acknowledged by the EUTM proprietor who does not even mention the goods for which no use has been submitted. The EUTM proprietor denies this argument and claims that it has shown extensive use and reputation of the earlier EUTM and as such the contested EUTM cannot be a repeat filing. Moreover, the EUTM proprietor argues that the contested EUTM was filed before the end of the grace period and as such it cannot be a bad faith filing. It relies on the decision of 21/03/2007, 1 344 C in this respect.

Assessment of bad faith

Repetitive conduct may be taken into account in order to assess bad faith (03/06/2010, C‑569/08, Internetportal, EU:C:2010:311, § 51; 13/12/2012, T‑136/11, Pelikan, EU:T:2012:689, § 29).

Repetitive conduct can be an indication of bad faith if it reveals an intention contrary to acceptable commercial behaviour, for example, the intention of circumventing the registration system.

Where the EUTM proprietor makes repeated applications for the same mark with the intention of avoiding the consequences of revocation for non-use of the earlier EUTM, whether wholly or in part, it is acting in bad faith (13/12/2012, T‑136/11, Pelikan, EU:T:2012:689, § 27).

An EUTM proprietor is highly likely to register an ‘up-dated’ version of a prior registered trade mark, not because its sole objective is to prevent a third party from entering the market but, for example, to meet evolving market requirements. This is completely normal business practice and is especially common for figurative logos which have a long lifespan (13/12/2012, T‑136/11, Pelikan, EU:T:2012:689, § 36).

In the present case the EUTM proprietor filed the contested EUTM on 25/11/2014. The contested EUTM is for the identical word mark WONG LO KAT as the earlier EUTM No 8 293 755 and it is also registered for identical goods. The earlier EUTM No 8 293 755 was filed on 12/05/2009 and registered on 01/12/2009. Therefore, the grace period for the earlier EUTM No 8 293 755 ended on 01/12/2014. As mentioned, the contested EUTM was filed on 25/11/2014 which was only six days prior to the expiry of the grace period of the earlier EUTM of the EUTM proprietor.

The Cancellation Division notes that the contested EUTM is registered for an identical mark and identical goods to that of the earlier mark. As such, an argument regarding the modernization of the mark cannot be considered in the present case. There is no additional element which has been added to the sign to modernise it, nor has the scope of goods been expanded to show an intention to move into a new business area. There is absolutely no business strategy for the repeat filing of this identical mark right before the end of the grace period as it adds nothing new to the EUTM proprietor’s rights.

The EUTM proprietor has submitted extensive evidence to prove the use of the earlier mark. The earlier EUTM is registered for the same goods as the contested EUTM in the present application, namely for the following goods:

Class 5: Chinese medicine and herbs; pharmaceutical and veterinary preparations; sanitary preparations for medical purposes; dietetic substances adapted for medical use, food for babies; plasters, materials for dressings; material for stopping teeth, dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides.

Class 30: Tea or herbal tea related products; coffee, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder salt, mustard; vinegar, sauces (condiments); spices; ice.

Class 32: Beverages; preparations for making beverages; beers; mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices syrups and other preparations for making beverages.

Firstly, it is noted that the EUTM proprietor is not under any obligation to prove the use of the contested EUTM in the present application. However, as the EUTM proprietor has argued this point and submitted evidence of use, the Cancellation Division will examine this point. The EUTM proprietor in its observations states that it is only using the earlier mark for a small number of the goods for which the EUTM is registered and claims to have proven use for these goods but does not mention the remaining goods nor does it submit any evidence to show use of the remaining goods. Following an in-depth examination of the evidence submitted in the parallel revocation proceedings 13 316 C, which involves the same parties and the same evidence of use for the contested EUTM as has been submitted in the present case, it is clear that the earlier EUTM is not being used for all of the goods for which it is registered. There is absolutely no evidence submitted for most of the goods for which the earlier EUTM is registered. In the proceedings 13 316 C the evidence submitted has been found to only show use in relation to the following goods:

Class 5: Chinese herbs.

Class 30: Tea and herbal tea related products.

Class 32: Herbal tea beverages; preparations for making beverages.

The same evidence has been submitted in the present case, and after an examination of all of the evidence on file in the present application, the Cancellation Division cannot come to a different finding than that in 13 316 C, or consider that the EUTM proprietor has shown use for any additional goods for which the EUTM is registered in this present case.

Therefore, from the evidence submitted it is clear that the earlier EUTM was not being put to use for all of the goods for which it is registered but only in relation to a limited number of those goods as outlined above. Moreover, only six days before the expiry of the grace period, the EUTM proprietor filed the contested EUTM for an identical word mark and for identical goods, and, as has been demonstrated from the evidence of us, it was being sought in regards to many goods for which no use was being made prior to this filing by the earlier EUTM. The filing of this identical mark for identical goods makes no business sense whatsoever as it does not provide the EUTM proprietor with any new or additional rights and the EUTM proprietor has not put forward any valid or legitimate reason as to why it necessitated this new filing for an identical mark.

Therefore, the Cancellation Division considers that the contested EUTM was filed for in bad faith to circumvent the obligation of use of the earlier EUTM and to maintain rights over the sign for goods for which the EUTM proprietor was clearly not using the sign. The EUTM proprietor has denied this but has not provided any legitimate explanation or reason for this second filing, which does not provide it with any additional rights to those already held. Moreover, the Cancellation Division notes that the EUTM proprietor has used this later mark, the contested EUTM, as a basis for an opposition against the applicant’s Benelux application. In that opposition the EUTM proprietor did not base the opposition on its earlier EUTM but only on the contested EUTM in the present application, as this mark is not subject to proof of use as it is still within the grace period. The fact that the EUTM proprietor is using this EUTM to attack other marks for a wider spectrum of goods than those for which it is using the EUTM also points towards bad faith and the necessity to circumvent the loss of rights due to lack of use of the earlier EUTM.

The EUTM proprietor relies on the decision of 21/03/2007, 1 344 C to argue that it has not filed the contested EUTM in bad faith.

However, the Office is not bound by its previous decisions as each case has to be dealt with separately and with regard to its particularities.

This practice has been fully supported by the Court, which stated that it is settled case-law that the legality of decisions is to be assessed purely by reference to the EUTMR, and not Office practice in earlier decisions (30/06/2004, T‑281/02, Mehr für Ihr Geld, EU:T:2004:198).

Even though previous decisions of the Office are not binding, their reasoning and outcome should still be duly considered when deciding upon a particular case.

While the Office does have a duty to exercise its powers in accordance with the general principles of European Union law, such as the principle of equal treatment and the principle of sound administration, the way in which these principles are applied must be consistent with respect to legality. It must also be emphasised that each case must be examined on its own individual merits. The outcome of any particular case will depend on specific criteria applicable to the facts of that particular case, including, for example, the parties’ assertions, arguments and submissions. Finally, a party in proceedings before the Office may not rely on, or use to its own advantage, a possible unlawful act committed for the benefit of some third party in order to secure an identical decision.

In view of the above, it follows that, even if the previous decisions submitted to the Cancellation Division are to some extent factually similar to the present case, the outcome may not be the same.

The decision in case 1 344 C can be distinguished from the present application in that in the said decision it concerned a case where the second filing had been done only a year after the first mark was filed and was therefore, done at the beginning of the grace period. In the present application the filing was done only six days prior to the end of the grace period. Therefore, the situation in both cases is not the same and an analogous finding cannot be applied in this present application.

The Cancellation Division also notes that in the judgment of 13/12/2012, T-136/11, Pelikan, EU:T:2012:689, § 33-34 it states that in cases where the EUTM proprietor owns more than one trade mark, the mere fact that the differences between the EUTM at issue and the previous EUTM registered by the same proprietor are so insignificant as not to be noticeable to the average consumer cannot establish by itself that the contested EUTM is a mere repeat application made in bad faith. Further on in the above cited Pelikan decision at paragraphs 50 and 51 it states that the fact that the application for registration of the contested EUTM is filed three months before expiry of the period of grace for the earlier EUTMs is not sufficient to counteract factors that show that the EUTM owner’s intention was to file a modernised trade mark covering an updated list of services. Again, the judgment in the Pelikan case may be distinguished from the present application. In the Pelikan case the sign had actually been modernized and there was a valid reason for the updating and filing of a new mark. In the present application, as mentioned above, the filing has been for an identical mark and identical goods for which no use had been made of many of the goods for which it was registered and no legitimate reasons were put forward by the EUTM proprietor as to why it would need to file this identical mark.

Therefore, the Cancellation Division considers that the filing of the contested EUTM right before the expiry of the grace period of the earlier EUTM, for an identical sign and identical goods, which provide no additional rights or modernization of an earlier mark, and for goods for which the EUTM proprietor was clearly not using the earlier mark, shows bad faith at the time of filing of the contested EUTM. This filing was done to circumvent the possibility of the EUTM proprietor losing the rights to the sign for goods for which the EUTM proprietor was not using the mark after the expiry of the grace period.

The General Court in its judgment of 11/07/2013, T-321/10, Gruppo Salini, EU:T:2013:372, § 48 stated that a positive finding of bad faith at the time of filing of the contested EUTM could only lead to the invalidity of the EUTM in its entirety. Therefore, the application must be upheld and the contested EUTM must be rejected in its entirety. As the application is successful in its entirety, the Cancellation Division will not examine the other arguments put forward by the applicant as to why there is bad faith, namely, that the EUTM proprietor had knowledge of the use of a similar mark for similar goods, as this examination will not affect the outcome of the present decision.

Conclusion

In the light of the above, the Cancellation Division concludes that the application is totally successful and the European Union trade mark should be declared invalid for all the contested goods.

COSTS

According to Article 109(1) EUTMR, the losing party in cancellation proceedings must bear the fees and costs incurred by the other party.

Since the EUTM proprietor is the losing party, it must bear the cancellation fee as well as the costs incurred by the applicant in the course of these proceedings.

According to Article 109(1) and (7) EUTMR and Article 18(1)(c)(ii) EUTMIR, the costs to be paid to the applicant are the cancellation fee and the representation costs, which are to be fixed on the basis of the maximum rate set therein.

The Cancellation Division

Elisa ZAERA CUADRADO

Nicole CLARKE

Michaela SIMANDLOVA

According to Article 67 EUTMR, any party adversely affected by this decision has a right to appeal against this decision. According to Article 68 EUTMR, notice of appeal must be filed in writing at the Office within two months of the date of notification of this decision. It must be filed in the language of the proceedings in which the decision subject to appeal was taken. Furthermore, a written statement of the grounds of appeal must be filed within four months of the same date. The notice of appeal will be deemed to be filed only when the appeal fee of EUR 720 has been paid.