DECISION

of the Fourth Board of Appeal

of 23 March 2021

In case R 679/2020-4

Edvin Pejovič
Izvidniška cesta 27 SI-6276 Pobegi Slovenia	Cancellation Applicant / Appellant

represented by Odvetniška Družba Čeferin O.P., D.O.O., Taborska cesta 13, SI‑1290 Grosuplje, Slovenia

v

ETA živilska industrija, d.o.o.
Kajuhova pot 4 SI-1241 Kamnik Slovenia	EUTM Proprietor / Defendant

represented by Law Firm Sibinčič Križanec L.F. LTD., Dalmatinova ulica 2, SI‑1000 Ljubljana, Slovenia

APPEAL relating to Cancellation Proceedings No 26 907 C (European Union trade mark registration No 15 297 302)

The FOURTH Board of Appeal

composed of D. Schennen (Chairman), L. Marijnissen (Rapporteur) and C. Bartos (Member)

Registrar: H. Dijkema

gives the following

Decision

Summary of the facts

1. By an application filed on 4 April 2016 and registered on 20 July 2016, Šampionka d.o.o. (‘Šampionka’) obtained registration of the word mark

RENŠKI HRAM

as a European Union trade mark (‘the contested EUTM’) for the following goods:

Class 30 - Vinegar.

2. On 3 April 2018, a transfer of ownership of the above EUTM was recorded from Šampionka to ETA živilska industrija, d.o.o. (‘the EUTM proprietor’).

3. On 21 August 2018, Edvin Pejovič (‘the cancellation applicant’) filed an application for a declaration of invalidity of the contested EUTM for the above goods.

4. The application for a declaration of invalidity was based on Article 59(1)(b) EUTMR as well as on Article 60(1)(a) EUTMR, in conjunction with Article 8(1)(a) and (b) EUTMR and the following marks:

1. Slovenian trade mark No 9 771 713 for the figurative mark

registered on 26 June 1998 and renewed for the following goods:

Class 29 - Meat, fish, poultry and game; meat extracts; preserved, frozen, dried and cooked fruits and vegetables; jellies, jams, compotes; eggs, milk and dairy products; edible oils and fats;

Class 30 - Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flours and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder; salt, mustard; vinegar, sauces (condiments); spices; ice for refreshment;

Class 31 - Agricultural, horticultural and forestry products and grains, not included in other classes; live animals; fresh fruits and vegetables; seeds, natural plants and flowers; foodstuffs for animals, malt;

Class 32 - Beer; mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices; syrups and other preparations for making beverages;

in the name of Beohemija d.o.o., Serbia.

2. International registration (‘IR’) No 1 030 962 designating the European Union (‘EU’) for the figurative mark

registered on 11 January 2010 and renewed for the following goods:

Class 29 - Meat, fish, poultry and game; meat extracts; preserved, frozen, dried and cooked fruits and vegetables; jellies, jams, compotes; eggs, milk and dairy products; edible oils and fats;

Class 30 - Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flours and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder; salt, mustard; vinegar, sauces (condiments); spices; ice for refreshment;

Class 31 - Agricultural, horticultural and forestry products and grains, not included in other classes; live animals; fresh fruits and vegetables; seeds, natural plants and flowers; foodstuffs for animals, malt;

Class 32 - Beer; mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices; syrups and other preparations for making beverages;

in the name of Stečajna masa Beohemija d.o.o. - v stečaju, Serbia.

5. As regards Article 60(1)(a) EUTMR, the cancellation applicant argued, in sum, that he had a lien on the abovementioned two trade marks (referred to hereinafter as ‘the pledged trade marks’) and that this allowed him to file the application for a declaration of invalidity on this ground against the contested EUTM for which there was a likelihood of confusion.

6. More in detail: The cancellation applicant’s right to invoke this relative ground would be based on writs by the County Court of Koper, Slovenia, of 29 September 2011, concerning an enforcement procedure against the cancellation applicant’s debtor, Beohemija (now Stečajna masa Beohemija d.o.o. - u stečaju, in English Bankruptcy Estate Beohemija Ltd.) for the recovery of a debt amounting to EUR 2 million and of 9 May 2013 and 13 April 2016, according to which the enforcement procedure continued with the seizure of, amongst others, the pledged trade marks. Therefore, the cancellation applicant had been granted a lien on the Slovenian trade mark, see paragraph 4, letter a), as from 9 May 2013, and on the IR designating the EU, see paragraph 4, letter b), as from 13 April 2016.

7. He further explained that his claim, subject to the aforementioned enforcement procedure, was based on a contract of 12 June 2008 for the transfer of the cancellation applicant’s shares in the company Pejo Šampionka d.o.o., Slovenia, referred to as ‘Pejo Šampionka’, to Boehemija. According to that contract the cancellation applicant agreed to transfer 100 % of his shares in the company Pejo Šampionka to Beohemija for the total amount of EUR 6 million, of which EUR 2 million together with interest had not been paid by Beohemija.

8. By judgement of 16 April 2018, which became final on 6 June 2018 and enforceable in Slovenia, the Commercial Court of Beograd, Serbia, confirmed the cancellation applicant’s monetary claim for EUR 2 million against Beohemija, as well as the right to a separate repayment of the debt in the bankruptcy proceedings of Beohemija through, amongst others, the value of the pledged trade marks.

9. According to the cancellation applicant, Beohemija, which was obliged to maintain the value of the pledged trade marks, had not taken any action to protect them by opposing the registration of the contested EUTM, which was an act of devastation of the property guaranteeing the underlying debt of Beohemija and which granted a legal standing to the cancellation applicant to file an application for a declaration of invalidity. By decision of 23 January 2018, No III Ips 14/2017, the Supreme Court of the Republic of Slovenia adopted this same position with regard to the registration of another national trade mark by Šampionka, whereby the cancellation applicant had a pledge on identical trade marks.

10. This entitled him to prevent or to prohibit the devastation of the property guaranteeing the underlying debt of Beohemija, including the pledged trade marks. Since the registration of an identical trade mark by the predecessor-in-title of the EUTM proprietor for the same goods substantially decreased the value of the pledged trade marks and made them unappealing to potential buyers, this provided him legal standing in the present cancellation proceedings insofar as the relative grounds for invalidity were concerned.

11. As to the bad faith claim under Article 59(1)(b) EUTMR, the cancellation applicant argued, in sum, that the applicant of the contested EUTM, Šampionka, knew, at the time of filing the contested EUTM, of the existence of the pledged trade marks in the name of Beohemija and that these marks were subject to the aforementioned liens. In fact, the bad faith claim was based on the connection between Šampionka and Boehemija, both of them belonging to the same economic group of companies.

12. More in detail: In 2008, after the sale of Pejo Šampionka to Beohemija, Pejo Šampionka, which was the previous proprietor of the pledged Slovenian trade mark, transferred that mark to Beohemija. On 15 February 2009, Šampionka and Beohemija concluded a contract based on which Beohemija allowed Šampionka to manufacture and sell products under its trade marks, including the trade mark ‘Renški Hram’. These companies decided to register the contested EUTM with the aim of preventing the enforcement of the cancellation applicant’s claim against Beohemija in the abovementioned enforcement procedure and thus to defraud the cancellation applicant as a creditor. Beohemija took no actions to oppose the registration of the contested EUTM and even transferred the IR designating the EU (see paragraph 4, letter b)) to Šampionka without the cancellation applicant’s consent.

13. The subsequent transfer of the contested EUTM from Šampionka to the EUTM proprietor also indicated that the EUTM proprietor would effectively market the contested EUTM, thereby decreasing the value of the pledged trade marks.

14. The cancellation applicant filed ample evidence, summarised in the contested decision (pages 4 to 6), in support of his submissions.

15. In its reply filed on 30 April 2019, the EUTM proprietor argued that the application for a declaration of invalidity was inadmissible insofar as it was based on the relative ground of Article 60(1)(a) EUTMR: The cancellation applicant was neither the owner of the pledged trade marks nor a licensee and, consequently, not authorised to file an application for a declaration of invalidity.

16. It further argued that the application for a declaration of invalidity based on the absolute grounds of Article 59(1)(b) EUTMR was unfounded.

17. On the basis of a business transfer agreement of 14 February 2018 with Šampionka, the EUTM proprietor became the proprietor both of the pledged trade marks as well as the contested EUTM. The EUTM proprietor purchased the contested EUTM and the pledged trade marks from Šampionka in good faith relying on the agreement as regards the transfer of intellectual property rights between Beohemija and Šampionka of 14 May 2012 and Annex 1 thereto, which furthermore entitled Šampionka to register and protect these trade marks in other countries. Therefore, Beohemija as the owner of the pledged trade marks at that time had given its consent to Šampionka to apply for the registration of the contested EUTM.

18. The cancellation applicant had no legal interest in filing an application for a declaration of invalidity against the contested EUTM, since his right to be repaid from the sum received from the sale of the pledged trade marks would remain intact, regardless of the outcome of the present proceedings; the contested EUTM could not lead to a deterioration of the cancellation applicant’s economic situation, since the EUTM proprietor and its predecessor-in-title continued to market the pledged trade marks and maintained their market value.

19. The EUTM proprietor requested that the Office invite Šampionka to join the proceedings as intervening party stating arguments and present evidence in support of its position. In any event, none of the arguments and evidence presented by the cancellation applicant could be subsumed to the notion of bad faith, since the alleged acts and omissions of Šampionka related only to the execution of contracts and the enforcement of claims, in respect of which the EUIPO had no competence to decide.

20. The EUTM proprietor submitted ample evidence in support of the above observations and, finally, requested that the cancellation applicant submit proof of use of the pledged trade marks.

21. In his reply filed on 10 July 2019, the cancellation applicant reiterated his previous submissions. He added that after WIPO, the Slovenian Intellectual Property Office had also rejected the transfer of ownership of the pledged trade marks from Beohemija to Šampionka. Šampionka, through its insolvency administrator, was made aware of the fact that Beohemija had withdrawn from the agreement on the transfer of intellectual property rights between Šampionka and Beohemija of 14 May 2012 and Annex 1 thereto. Therefore, the pledged trade marks had never been transferred to Šampionka and the cancellation applicant had already initiated legal actions in that regard.

22. He further claimed that the EUTM proprietor should have presented its business transfer agreement of 14 February 2018 with Šampionka and requested that the Office invite the EUTM proprietor to do so.

23. In support of his observations, the cancellation applicant submitted further decisions of national courts as summarised in the contested decision, page 8.

24. By decision of 17 March 2020 (‘the contested decision’), the Cancellation Division rejected the application for a declaration of invalidity in its entirety and ordered the cancellation applicant to bear the costs. After having summarised the arguments of the parties and the evidence submitted in line with paragraphs 5 to 23 above, the Cancellation Division reasoned as follows:

Preliminary remarks

• The EUTM proprietor has requested that the Office invite ‘the companies Šampionka and KMPS’ to join the cancellation proceedings as intervening parties, while the cancellation applicant requested that the Office call upon the EUTM proprietor to submit an agreement with Šampionka as evidence in the present proceedings. Neither of these actions are deemed necessary in order to take a decision in the case.

• The EUTM proprietor’s request for proof of use of the pledged trade marks is inadmissible pursuant to Article 10(1) EUTMDR, since it had not been submitted by way of a separate document as required by Article 10(1) EUTMDR. Moreover, in view of the findings below, it is irrelevant.

Relative grounds for invalidity – Article 60(1)(b) EUTMR

• From the evidence submitted by the cancellation applicant it can be seen that he was not the proprietor of the pledged trade marks invoked. Neither did he prove or claim to be a licensee. While it may be the case that, according to national law, a pledgee has the right to prevent the devastation of an intellectual property right that was subject to a lien, and while there may be ways to exercise this right, it cannot be exercised on the basis of Article 60(1)(a) EUTMR in conjunction with Article 8(1) EUTMR, since Article 63(1)(b) in conjunction with Article 46(1)(a) EUTMR, does not provide for a pledgee to file an application for a declaration of invalidity on these grounds. The list of persons entitled to file such an application under the EUTMR is exhaustive, i.e. limited to the proprietor of the earlier right and authorised licensees, and does not foresee any exceptions.

Absolute grounds for invalidity – Article 59(1)(b) EUTMR

• As regards the absolute ground of invalidity under Article 59(1)(b) EUTMR, the cancellation applicant does not need to show an interest in bringing proceedings.

• The cancellation applicant has expressed that he has no doubt that the EUTM proprietor will effectively market the contested EUTM. Moreover, given the apparent consent of the proprietor of the pledged trade marks with regard to the application and registration of the contested EUTM, it cannot be concluded that the (former) EUTM proprietor’s intention was to engage unfairly in competition under trade mark law, for example, by way of the misappropriation of the rights of a competitor. The application for the registration of the contested EUTM appears to follow commercial logic, in particular, taking account of the cancellation applicant’s allegation that there was a link between the EUTM proprietor and the proprietor of the pledged trade marks. The cancellation applicant has not put forward any arguments or evidence that would suggest otherwise.

• The registration of the contested EUTM is not equivalent to a transfer of ownership of the pledged trade marks which had been pledged by the cancellation applicant. In principle, it is the EUTM proprietor’s right to file an application for such a registration which, moreover, as set out above, appears to be in line with normal business strategy. The fact that it may potentially affect the cancellation applicant’s pledge is, in itself, not sufficient for a finding of bad faith under Article 59(1)(b) EUTMR. The cancellation applicant did not put forward sufficient facts and evidence to substantiate his claim that the value of the pledged trade marks has actually decreased by the filing and registration of the contested EUTM.

• In the European Union trade mark system, good faith is presumed until proof to the contrary is adduced. The cancellation applicant failed to put forward sufficient facts, objective indications and evidence that would allow for a positive finding of bad faith without having to resort to assumptions and suppositions.

• As regards the cancellation applicant’s argument that bad faith might be applicable when the parties involved have, or have had, any kind of relationship, such as (pre-/post-) contractual relationships, this only applies to actions between the parties involved in such a relationship, giving rise to mutual obligations and a duty of fair play in relation to the legitimate interests and expectations of the other party. In other words, it can only be an indicator of bad faith with regard to actions taken by one of those parties to the detriment of the other, for example, with a view to the misappropriation of the rights of that other party. It cannot, however, be interpreted as an indicator of bad faith vis-à-vis a third party, which does not form part of that relationship.

Submissions and arguments of the parties

25. On 8 April 2020, the cancellation applicant filed an appeal against the contested decision, followed by his statement of grounds on 23 April 2020. He requests that the Board annul the contested decision, uphold the application for a declaration of invalidity and declare the contested EUTM invalid in its entirety. He further requests that the Board order the EUTM proprietor to bear the costs of the proceedings. His arguments can be summarised as follows:

Relative grounds for invalidity – Article 60(1)(b) EUTMR

• According to Article 63(1) in conjunction with Article 46(1) EUTMR the cancellation applicant has a valid legal interest to file an application for a declaration of invalidity based on relative grounds as a pledgee of the pledged trade marks. It is essential that for the duration of a lien the creditor has the same legal protection as the property owner. The value of the pledged trade marks has substantially decreased after the registration of the contested EUTM. The existence of the contested EUTM influences the will and readiness of potential buyers of the pledged trade marks.

Absolute grounds for invalidity – Article 59(1)(b) EUTMR

• The contested EUTM has been applied for by Šampionka with the knowledge and the intent that the registration would be detrimental to the cancellation applicant’s rights and with the aim to exploit the distinctive character and repute of an earlier identical trade mark. The fact that Šampionka was well aware of the existence of the pledged trade marks as well as of the fact that the cancellation applicant as pledgee had a right to be repaid from their value, clearly shows that Šampionka acted in bad faith when filing the application for registration of the contested EUTM.

• The application for registration of a trade mark identical to the pledged trade marks which are subject to a lien, cannot be perceived as a fair and honest action, nor is it a normal business strategy. The essence of a lien is to ensure at least the partial repayment of the debt to the creditor, which can only be achieved by maintaining the value of the property. The pledgee has to be granted a chance to contest any attempts of undermining the value of the pledged trade marks otherwise the pledge would become a hollow right.

• The fact that Beohemija remained passive in the protection of the pledged trade marks and did not oppose the registration of the contested EUTM further proves the connection between Šampionka and Beohemija and of the bad faith of the applicant of the contested EUTM.

• Šampionka was, at the time of the application for registration of the contested EUTM, aware of the lien. The application for registration of the contested EUTM has been filed with the purpose to create an association with the pledged trade marks and to decrease their value.

26. On 2 July 2020, in its observations in reply the EUTM proprietor requests that the Board confirm the contested decision and order the cancellation applicant to bear the costs of the proceedings. Its arguments can be summarised as follows:

Relative grounds for invalidity – Article 60(1)(b) EUTMR

• The EUTMR clearly provides that only proprietors of earlier trade marks and licensees authorised by the proprietors may initiate cancellation proceedings based on relative grounds.

Absolute grounds for invalidity – Article 59(1)(b) EUTMR

• Beohemija and Šampionka concluded an agreement on the transfer of intellectual property rights of 14 May 2012, on the basis of which Beohemija sold to Šampionka, amongst others, the trade marks ‘Renški Hram’ belonging to Beohemija and further allowed Šampionka to register and protect certain signs as trade marks, including ‘Renški Hram’, in any country of its choice.

• Based on the agreement, Šampionka became the exclusive legitimate holder and user of the ‘Renški Hram’ brand in Slovenia. The vinegar products ‘Renški Hram’ were available in every food store, market and supermarket in Slovenia, which is evident from the excerpts from promotional catalogues from 2013, 2014 and 2016, included in the observations.

• In 2015, Šampionka changed the entire appearance of the balsamic vinegars ‘Renški Hram’. The contested EUTM was filed by Šampionka as a normal business strategy intended to protect a successful brand in the EU.

• In 2018, Šampionka sold a comprehensive part of its business to the EUTM proprietor under the business transfer agreement of 14 February 2018. It follows that Šampionka could not have acted in bad faith when applying for the contested EUTM because it was the only entity that used the sign ‘Renški Hram’ since 2012, the contested EUTM has been applied for in accordance with Article 2 of the transfer agreement of 14 May 2012 and it was obviously applied for in respect of Šampionka’s main business.

• The transfer agreement of 14 May 2012 was concluded before the cancellation applicant obtained a lien on the pledged trade marks, which in itself excludes bad faith. In any event, the contested EUTM was registered in line with the EUTM proprietor’s commercial strategy to protect the ‘Renški Hram’ brand in the EU.

• It was only natural that Beohemija did not oppose the registration of the contested EUTM because it was applied for in accordance with the transfer agreement of 14 May 2012. The cancellation applicant failed to prove that the contested EUTM was applied for with the intention to prevent the successful repayment of the debt or to undermine the cancellation applicant’s rights and interests. He also failed to prove that the registration of the contested EUTM caused any harm to the pledged trade marks, such as decreasing their value.

Reasons

27. The appeal is not well founded.

Relative grounds for invalidity – Article 60 (1) EUTMR

28. Pursuant to Article 16(1)(b) EUTMDR in conjunction with Article 7(2) EUTMDR, in case of application for a declaration of invalidity under Article 60(1)(a) EUTMR in conjunction with Article 8(1)(a) and (b) EUTMR, the cancellation applicant must prove the existence, validity and scope of protection of the earlier mark(s) and its locus standi, i.e. its entitlement to file the application for a declaration of invalidity.

29. Article 63(1)(b) EUTMR lays down that an application for a declaration of invalidity based on relative grounds, according to Article 60(1) EUTMR in conjunction with Article 8(1) EUTMR, may only be filed by the persons mentioned in Article 46(1)(a) EUTMR, namely by the proprietors of earlier trade marks referred to in Article 8(2) EUTMR as well as licensees authorised by the proprietors of those trade marks.

30. Therefore, the cancellation applicant had to demonstrate that he was either the proprietor of the pledged trade marks, or a licensee authorised by the proprietor.

31. The arguments and evidence submitted by the cancellation applicant do not prove that he is the proprietor of the trade marks relied on, actually, they show that he is not. Neither did he prove or claim to be a licensee.

32. Instead, the cancellation applicant claims that he is entitled to file an application for a declaration of invalidity on the grounds of Article 60(1)(a) EUTMR since he has a lien on the pledged trade marks. In this respect he referred to a decision of the Supreme Court of the Republic of Slovenia, see paragraph 9 above.

33. As correctly held by the Cancellation Division, this decision concerned the interpretation of national legislation based on Article 4 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, in which it was laid down that Member States shall recognise as persons entitled to seek application of the measures, procedures and remedies referred to in this chapter, inter alia, ‘all other persons authorised to use those rights, in particular licensees, in so far as permitted by and in accordance with the provisions of the applicable law.’ Directive 2004/48/EC is addressed to the Member States, who are required to implement it into national law. Therefore, any rights foreseen by Directive 2004/48/EC can only arise and would have to be granted under national law.

34. The relevant European Regulation here, in particular Article 63(1)(b) EUTMR in conjunction with Article 46(1)(a) EUTMR, provides an exhaustive list of persons entitled to file an application for a declaration of invalidity pursuant to Article 60(1)(a) EUTMR in conjunction with Article 8(1) EUTMR, be it the EUTM proprietor or an authorised licensee; exceptions are not foreseen.

35. In sum, the cancellation applicant did not have locus standi to file an application for a declaration of invalidity based on Article 60(1)(a) EUTMR. The Cancellation Division correctly rejected the application for a declaration of invalidity on this relative ground as being unfounded.

Absolute ground for invalidity – Article 59(1)(b) EUTMR

36. In respect of the application for a declaration of invalidity based on Article 59(1)(b) EUTMR, bad faith, the cancellation applicant does not need to demonstrate an interest in bringing proceedings (25/02/2010, C-408/08 P, Color Edition, EU:C:2010:92, § 37-40). This is because, while relative grounds for invalidity protect the interests of proprietors of certain earlier rights, the absolute grounds for invalidity aim to protect the general interest (30/05/2013, T-396/11, Ultrafilter International, EU:T:2013:284, § 17-18).

37. According to Article 59(1)(b) EUTMR, an EUTM shall be declared invalid if the EUTM proprietor was acting in bad faith when filing the application for the trade mark. As observed by Advocate General Sharpston (opinion of 12/03/2009, C‑529/07, Lindt Goldhase, EU:C:2009:148, § 36), the concept of bad faith referred to in Article 59(1)(b) EUTMR is not defined, delimited or even described in any way in the legislation. However, the Court of Justice provided some guidance on how to interpret this concept in its judgment in the same case, as did the General Court in several cases.

38. The ‘SkyKick’ judgment stated that ‘in accordance with its usual meaning in everyday language, the concept of “bad faith” presupposes the presence of a dishonest state of mind or intention’. The Court of Justice added that Article 59(1)(b) EUTMR applies when ‘it is apparent from relevant and consistent indicia that the proprietor of a trade mark has filed the application for registration of that mark not with the aim of engaging fairly in competition but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark, in particular the essential function of indicating origin recalled in the previous paragraph of the present judgment’ (29/01/2020, C-371/18, SkyKick, EU:C:2020:45, § 74-75).

39. The intention of an applicant for a trade mark is a subjective factor which must be determined in the light of the objective circumstances of the case (23/05/2019, T‑3/18 & T-4/18, Ann Taylor, EU:T:2019:357, § 35). In order to find out whether the owner had been acting in bad faith at the time of filing the application, an overall assessment must be made in which all the relevant factors of the individual case must be taken into account (27/06/2013, C-320/12, Malaysia Dairy, EU:C:2013:435, § 37). Account may also be taken of the commercial logic underlying the filing of the application for registration of the sign as an EUTM (14/02/2012, T‑33/11, Bigab, EU:T:2012:77, § 21), and the chronology of events leading to that filing (03/06/2010, C‑569/08, Internetportal, EU:C:2010:311, § 52).

40. It is for the cancellation applicant to submit the facts that prove bad faith. Also facts adduced by the EUTM proprietor are to be taken into consideration as it is best placed to provide information and evidence on its intentions at the time of applying for registration (23/05/2019, T-3/18 & T-4/18, Ann Taylor, EU:T:2019:357, § 37). If the evidence raises doubts on the assessment of bad faith, the uncertainty has to be resolved to the benefit of the EUTM proprietor, as in the European Union trade mark system, good faith is presumed until proof to the contrary is adduced (13/12/2012, T-136/11, Pelikan, EU:T:2012:689, § 57; 23/05/2019, T-3/18 & T-4/18, Ann Taylor, EU:T:2019:357, § 34; 14/02/2019, T‑796/17, Mouldpro, EU:T:2019:88, § 84).

41. The relevant point in time for determining whether there was bad faith on the part of the EUTM proprietor is the time of filing the application for registration for the contested EUTM, namely 4 April 2016. In case of the posterior transfer of the contested EUTM, the assessment will take into account the intentions of the predecessor-in-title of the EUTM proprietor, not the ones of the current owner (by analogy, 29/06/2017, T‑343/14, Cipriani, EU:T:2017:458, § 44).

Relevant facts

42. Essentially, the relevant facts relied on by the parties are as follows:

• 26 June 1998: Registration of the pledged Slovenian trade mark, see paragraph 4, letter a) above.

• 12 June 2008: The cancellation applicant sold 100 % of his shares in the company Pejo Šampionka to Beohemija for the total amount of EUR 6 million, of which EUR 2 million had not been paid by Beohemija. As a result, the cancellation applicant has a monetary claim for EUR 2 million against Beohemija.

• 2008: Pejo Šampionka transferred the Slovenian trade mark under paragraph 4, letter a) above to Beohemija.

• 15 February 2009: Beohemija and Šampionka concluded a contract based on which Beohemija allowed Šampionka to manufacture and sell products under its trade marks, including the trade mark ‘Renški Hram’.

• 11 January 2010: Registration of the pledged international registration referred to in paragraph 4 under letter b) above by Beohemija.

• 2011: An enforcement procedure was initiated by the cancellation applicant against Beohemija for the recovery of its monetary claim for EUR 2 million (see above, second indent).

• 14 May 2012: Agreement on the transfer of intellectual property rights and Annex 1 thereto concerning the transfer of all pledged trade marks from Beohemija to Šampionka, on the basis of which Beohemija agreed and allowed Šampionka to register and protect these trade marks in other countries of its choice. According to the cancellation applicant, the Slovenian Intellectual Property Office and WIPO had rejected the transfer of ownership of the pledged trade marks which is confirmed by the extracts from these offices as they appear in the evidence on file; according to these extracts the pledged trade marks are indeed in the ownership of Beohemija and its bankruptcy estate.

• 9 May 2013 and 13 April 2016: Seizure and lien granted on the pledged trade marks in favour of the cancellation applicant in the aforementioned enforcement procedure (see above, sixth indent).

• 4 April 2016: Filing of the contested EUTM by Šampionka.

• 14 February 2018: Business transfer agreement between Šampionka and the EUTM proprietor, on the basis of which the latter became the proprietor both of the pledged trade marks and of the contested EUTM.

• 3 April 2018: Recordal by the EUIPO of the transfer of the contested EUTM from Šampionka to the EUTM proprietor.

43. The bad faith claim of the cancellation applicant is based on its monetary claim against Beohemija secured by a lien on the pledged trade marks and on the connection between Šampionka (the predecessor-in-title of the EUTM proprietor), on the one hand, and Boehemija (the pledgor of the pledged trade marks), on the other hand, both of them related and belonging to the same economic group of companies. The essence of his claim is that Šampionka, knew, at the time of filing the contested EUTM, of the existence of the pledged trade marks, and that these pledged trade marks were subject to a lien in favour of the cancellation applicant.

44. The cancellation applicant argues that the contested EUTM was filed in order to counterbalance the effect of the lien on the pledged trade marks and, consequently, to prevent the enforcement of the cancellation applicant’s monetary claim against Beohemija and thus to defraud the cancellation applicant as a creditor in the aforementioned lien.

45. The cancellation applicant further argues that the fact that the contested EUTM has been registered substantially decreased the value of the pledged trade marks as it makes them unappealing to potential buyers.

Bad faith assessment

46. The cancellation applicant has a monetary claim against Beohemija and, as security for the enforcement of this claim, a lien (a right in rem) on the pledged trade marks. By law, this right in rem secures the repayment of the debt of the proprietor of the pledged trade marks (i.e. the debtor Beohemija) in such a way that, where the proprietor cannot repay the debt, the creditor (i.e. the cancellation applicant) may receive repayment of the debt by, for example, selling these pledged trade marks. The responsibility for the preservation of the debtor’s property, including of the pledged trade marks, remains with the proprietor of that property.

47. According to the evidence on file, the pledged trade marks are in the ownership of Beohemija and its bankruptcy estate. The execution of the cancellation applicant’s right in rem on these trade marks may compensate for the monetary claim from the cancellation applicant against Beohemija (or its bankruptcy estate). Clearly, this monetary claim does not exist between the cancellation applicant and the EUTM proprietor or its predecessor.

48. There is no evidence indicating that, and it cannot be seen how, the filing of the contested EUTM affected the preservation of the pledged trade marks, the former and the latter being completely different rights. The cancellation applicant as a holder of a right in rem has no legal ground to prohibit the application for registration of an EUTM which is identical or similar to other trade marks that serve to secure his debt. The mere fact that the cancellation applicant has rights in rem over the pledged trade marks is not sufficient for a finding of bad faith on the part of the applicant of the contested EUTM.

49. The lack of filing an opposition or any other action against the contested EUTM by Beohemija as the proprietor of the pledged trade marks obviously cannot qualify as bad faith of the EUTM proprietor or its predecessor either.

50. It cannot be concluded that the predecessor-in-title of the EUTM proprietor, Šampionka, or the EUTM proprietor had dishonest intentions towards the cancellation applicant. Irrespective of whether or not Šampionka knew at the time of filing the contested EUTM about the lien on the pledged trade marks, and irrespective of its exact relationship with the proprietor of these trade marks, there is no evidence that Šampionka did aim to prevent the enforcement of the cancellation applicant’s monetary claim against Beohemija and thus to defraud the cancellation applicant as a creditor.

51. Likewise, it cannot be seen how the filing of the contested EUTM by the predecessor-in-title of the EUTM proprietor decreased, or could decrease, the value of the pledged trade marks; none of the evidence on file points in that direction. The cancellation applicant failed to prove that the use of the contested EUTM on the market effectively decreased the value of the pledged trade marks or that the contested EUTM negatively influenced the will and readiness of potential buyers of the pledged trade marks, let alone that these have affected the right in rem of the cancellation applicant.

52. Instead, it seems that the contested EUTM was filed for normal business purposes, in particular taking into account that Šampionka, with Beohemija’s consent, engaged in commercial activities and indeed offered vinegars under the trade mark ‘Renški Hram’ on the Slovenian market, a fact which is not in dispute between the parties. The cancellation applicant has expressed that he has no doubt that the EUTM proprietor will effectively market the contested EUTM as well. It is also fully in line with this logic that Beohemija did not object to the registration of the contested EUTM, a later different right which in fact as additional protection of the national ‘Renški Hram’ trade mark right could only increase its value.

53. The cancellation applicant’s reference to the relationship with his debtor Beohemija, i.e. the proprietor of the pledged trade marks, and the connection between the proprietor of the pledged trade marks and the proprietor and its predecessor-in-title of the contested EUTM does not prove bad faith in the case at hand. Indeed, the existence of a direct or indirect relationship between the parties (i.e. the cancellation applicant and the proprietor of the contested EUTM, or its predecessor) prior to the filing of the contested EUTM could be an indicator of bad faith, but the evidence on file does not show that such a relationship exists, in fact the cancellation applicant has not raised any argument in this respect.

54. In sum, the cancellation applicant did not prove that, and the Board cannot see how, the pledgor-pledgee relationship between him and the proprietor of the pledged trade marks justifies the bad faith claim against the EUTM proprietor and its predecessor-in-title. More in particular, it has not been proven that the contested EUTM was filed not with the aim of engaging fairly in competition, but with the intention of undermining, in a manner inconsistent with honest practices, the interest of a third party, or with the intention of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark.

55. It follows that the application for a declaration of invalidity is rejected as unfounded also on the grounds of Article 59(1)(b) EUTMR.

Conclusion

56. The application for a declaration of invalidity is rejected on both of the grounds invoked and the appeal shall be dismissed.

Costs

57. Pursuant to Article 109(1) EUTMR, the cancellation applicant (appellant), as the losing party, must bear the costs of the cancellation and appeal proceedings.

58. In accordance with Article 109(1) and (7) EUTMR and Article 18 (1)(c)(ii) and (iii) EUTMIR, these are fixed in favour of the EUTM proprietor (defendant) at EUR 450 for professional representation in the cancellation proceedings and EUR 550 for professional representation in the appeal proceedings.

Order

On those grounds,

THE BOARD

hereby:

1. Dismisses the appeal;

2. Orders the appellant to bear the costs of the cancellation and appeal proceedings, which are fixed at EUR 1 000.

Signed D. Schennen

Signed L. Marijnissen

Signed C. Bartos

Registrar: Signed p.o. P. Nafz