CANCELLATION No C 43 492 (INVALIDITY) 

 

QX World Kft, Tinodi utca 1-3, A epulet, $ emelet, 93 ajto, 1095 Budapest, Hungary (applicant), represented by Oppenheim Ugyvedi Iroda, Karolyi u. 12., 1053 Budapest, Hungary (professional representative)

 

a g a i n s t

 

S.C. Scio International S.R.L, Str. Andrei Muresanu, No. 15, 417495 Sanmartin, judet Bihor, Romania  (EUTM proprietor), represented by Carmen - Augustina Neacsu, 12/3 Rozelor Street, 430293 Baia Mare, Maramures, Romania (professional representative).

On 30/04/2021, the Cancellation Division takes the following

 

 

DECISION

 

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

 

2.	European Union trade mark No 15 490 717 is declared invalid in its entirety.

  

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

 

REASONS

 

On 05/05/2020, the applicant filed a request for a declaration of invalidity against European Union trade mark No 15 490 717 ‘SCIO THETA’ (word mark) (the EUTM). The request is directed against all the goods and services covered by the EUTM, namely against all the goods and services in Classes 10, 35 and 42. The application is based on the ground of bad faith under Article 59(1)(b) EUTMR and also on the well-known mark as per Article 6bis of the Paris Convention in Austria, Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Germany, Greece, Hungary, Italy, the Netherlands, Portugal, Romania, Spain, Sweden and United Kingdom ‘SCIO’ for goods and services in Classes 10, 35 and 37 and as based on Article 60(1)(a) EUTMR in conjunction with Article 8(1)(b) EUTMR and 8(2)(c) EUTMR.

 

SUMMARY OF THE PARTIES’ ARGUMENTS

 

The case for the applicant

The applicant argues that the current EUTM proprietor who, at the time of filing, was controlled by a former employee of a company which was previously authorized to distribute biofeedback systems under the trade name SCIO, the rights to this sign now rest with the applicant. The proprietor of the contested trademark was another authorized distributor of biofeedback systems under the trade name SCIO (and later EDUCTOR), which contained IP rights that now belong to the applicant. The newest generation biofeedback system is known as EDUCTOR, while the previous generation is known as SCIO. The systems were created by Prof. William Charles Nelson (currently known as Desiré Dubounet), who has been active in this area since as early as 1970 and is responsible for the predecessors of SCIO being EPFX and QXCI systems. In 1992 Desiré Dubounet moved to Hungary and met Levante Ungváry, a software developer (who is now a shareholder and CEO of the applicant) who developed the software for Desiré Dubounet’s systems. In 1996 Desiré Dubounet as a major shareholder and CEO started a Hungarian company ‘MAITREYA Kft.’ After this Desiré Dubounet met Kornél Tókics (now CEO and having majority control of Mandelay Magyarorszag Kft, a company against which there are several legal proceedings outstanding between the parties). He worked for Desiré Dubounet as a financial advisor and soon became General Manager of Desiré Dubounet’s personal affairs and finances and helped with the company administration issues so Desiré Dubounet could focus on the research and development.

The SCIO system invented by Desiré Dubounet was an improved version of the QCXI system and the hardware was constructed and planned under Desiré Dubounet’s supervision by a Hungarian company PentaVox Kft. The software was developed and coded by Levente Ungváry also under the supervision of Desiré Dubounet. The SCIO trade name was created by Desiré Dubounet in 1985 and comes from the Latin word meaning ‘to know’ and it stood for knowing a better way to help others than traditional medicine and drugs and it also was an acronym for Scientific Consciousness Interface Operation. Desiré Dubounet retained all rights to the SCIO system including trade names, non-registered trade marks and software copyright (the SCIO IP) while PentaVox Kft retained the rights to the hardware structure, electrode construction, microprograms in the hardware, firmware and similar programs ensuring communication between the device and the environment (outer communication), (the SCIO know-how). The SCIO system was put on the market in 2003 and was manufactured by PentaVox Kft and distributed by the company Maitreya (directed and controlled by Desiré Dubounet) under a non-transferrable and non-sublicensable license granted by Desiré Dubounet, which would automatically terminate in the event that Desiré Dubounet loses majority control over Maitreya. For certain markets, Desiré Dubounet appointed one of the other companies (Eclosion Kft) as distributor. At a later stage, Desiré Dubounet licensed the company QX Bahamas Ltd (owned by Desiré Dubounet ‘s wife Ildikó) as the main distributor while Desiré Dubounet was the ultimate consultant and advisor of QX Bahamas Ltd. At the same time QX Bahamas was responsible for licensing the software, Maitreya sold the mere device to QX Bahamas and it was QX Bahamas that sold the complete system (hardware with software) to the end consumer as the license management agency of Desiré Dubounet.

The applicant states that Desiré Dubounet appointed Eclosion Kft. as distributor for certain markets and one of Eclosion Kft’s former employees was Mr Sirbu Cristian Petru (Mr Sirbu) who has been associated with the current EUTM proprietor since 2011 and whose employment with Eclosion Kft was terminated on 30/06/2008 by the former General Manager of Eclosion Kft. Desiré Dubounet. During the late 2000s, Eclosion Kft merged into Maitreya. By that time, Maitreya had financial difficulties so Desiré Dubounet decided to assign shares in Maitreya to a third party on 04/11/2011 and continue the SCIO business through a new, fragmented business model. Desiré Dubounet’s intention was to fully control the business but outsource the different activities to different companies. It claims that when Desiré Dubounet sold the shares of Maitreya the license ceased on that date. Also on the same date Kornél Tókics formed the new company Mandelay Magyarország Kft (Madelay Kft) and made himself CEO and also restarted Eclosion Kft as a new company. The applicant emphasize that Mandelay Kft was started as a new company and it was not in anyway connected to Maitreya and the non-transferrable license ceased when Desiré Dubounet lost majority control over the company so Maitreya did not, and could not, assign any license to Mandelay Kft. As Maitreya was only a distributor appointed by Desiré Dubounet, it could only assign the TÜV quality certification to Mandelay Kft. Desiré Dubounet decided to split the business structure of SCIO distribution but the software development was still carried out by Levente Ungváry but through the applicant QX World Kft. The applicant was started by Levente Ungváry and two individuals Zsolt Gerstenbrein and Andreea Taflan. The applicant entered into a service contract with QX Bahamas (fully advised and represented by Desiré Dubounet) in relation to software development. Hardware development was carried out by the manufacturer PentaVox Kft, while Mandelay Kft was appointed as a commercial agent and distributor of SCIO. The new business model (the QX Universe) was fully controlled, organized and supervised by Desiré Dubounet (partly through QX Bahamas).

The applicant then states that as from the beginning of the 2010’s Desiré Dubounet invented an improved biofeedback system which was named EDUCTOR which was a new generation of SCIO. The hardware for the EDUCTOR was planned and designed by PentaVox Kft in cooperation with the applicant under Desiré Dubounet ‘s close supervision, under the QX Service Contract and introduced publicly by Desiré Dubounet on 14/07/2012 at a seminar in Munich and Desiré Dubounet maintains all IP rights to same while PentaVox retains the hardware rights etc. EDUCTOR distribution was carried out by Mandelay Kft as a commercial agent.

The applicant argues that while it was clear for all concerned Parties that Desiré Dubounet is the sole holder of the SCIO IP (and the EDUCTOR IP), the cooperation of the QX Universe soon became cumbersome. A very complex process led to a deteriorating relationship between the applicant and Mandelay Kft, which process in its complexity is beyond the subject matter of the present application. Around 2014-2015, Desiré Dubounet was shocked to discover the betrayal from that the commercial agent, Mandelay Kft, who had been carrying out concealed and fraudulent business activities. Without Desiré Dubounet’s knowledge or approval, Mandelay Kft had filed trademark applications for the SCIO and EDUCTOR trademarks, although it claims that it was a common understanding between parties to the QX Universe that these marks are to be owned by Desiré Dubounet as was signed in the QX Universe Agreement to Cooperate. It claims that in this Agreement Mandelay Kft explicitly acknowledged that all rights related to SCIO and EDUCTOR biofeedback systems are solely and exclusively owned by Desiré Dubounet. The applicant claims that Mandelay Kft abused the trust of Desiré Dubounet after the agreement and sold SCIO and EDUCTOR products with unlicensed and unauthorized software and it created a new company Maitreya Consulting Kft to abuse marketing approvals that had previously been issued to Desiré Dubounet’s former company Maitreya. The parties then entered into another agreement the QX Universe Intellectual Property License Contract in 2017 and Mandelay Kft acknowledged that Desiré Dubounet is the owner of SCIO and EDUCTOR IP and a license belongs to QX Bahamas or another corporation of Desiré Dubounet choice.

The applicant argues that Mandelay Kft requested an authorization and license to create a new software based on the original developed by QX World but it was denied by Desiré Dubounet. Mandelay Kft produced a signed version but Desiré Dubounet denies signing it. After this the distribution agreement with Mandelay Kft was terminated in 2017 so they could no longer buy genuine SCIO and EDUCTOR devices from PentaVox Kft and all hardware rights were assigned to the applicant. For a short period of time Mandelay Kft bought genuine SCIO and EDUCTOR systems from the applicant. In 2017 Mandelay Kft put new SCIO and EDUCTOR systems on the market with software and hardware that were essentially the same as those in the genuine product but it was not manufactured by PentaVox Kft and the software was not sold or activated by the applicant. It argues that this shows that Mandelay Kft reverse-engineered either the hardware or software to infringe QX World’s rights and copyright and there are infringement proceedings pending before the Hungarian Courts. In December 2017 Desiré Dubounet assigned her rights regarding the SCIO and EDUCTOR marks and the software copyright to the applicant.

The applicant then provides information concerning the proprietor, that it was established in 2005 and distributed SCIO biofeedback systems from 2006 in Romania through a Distribution Agreement concluded with Eclosion Kft, an affiliate of Desiré Dubounet for an undefined period of time as from 2006 onwards and that the proprietor would be granted exclusivity in the distribution of SCIO systems in Romania granted by Pentavox Kft and QX Bahamas Ltd (run by Desiré Dubounet). It denies that any consent was given in that agreement for the proprietor to register a trade mark for SCIO, it was merely a distribution agreement. The proprietor’s name which includes ‘SCIO’ was done to establish and maintain a stable and long-term commercial relationship and for the distribution of SCIO devices and its related software. As such Desiré Dubounet did not oppose the use of SCIO within the proprietor’s company name. The applicant denies giving consent for the registration of the different EUTMs registered by the EUTM proprietor all containing the element SCIO with other elements. It claims that this was done in bad faith. This, it argues, is clear considering the origin and history of the SCIO mark and its longstanding use by Desiré Dubounet and the affiliate companies before the filing of the EUTM, the role of Mr Sirbu and his knowledge of the use of the SCIO mark by his former employer and the applicant’s intention at the time of filing the EUTM. Desiré Dubounet is the owner of the IP for these devices and the proprietor was merely a distributor without consent to file the EUTM. Mr Sirbu learned about the biofeedback medicine while working for an affiliate of Desiré Dubounet and recognized its business potential and knew of the prior rights to the sign owned by Desiré Dubounet. Mr Sirbu became an employee of the proprietor in 2011 and probably advised the proprietor to file the contested EUTM. However, it notes that the proprietor was already the distributor of an affiliate of Desiré Dubounet so it already had knowledge of the goods and sign. The applicant claims that by registering the sign the proprietor was to stop the business advantage of the applicant of expanding into the EU and also to exclude Desiré Dubounet and the affiliate companies from using the signs. Therefore, the applicant claims that the proprietor acted in bad faith.

The applicant also claims to be the owner of well-known marks which have been widely used in the course of trade for over 15 years in many countries. Desiré Dubounet and her affiliates have used the sign since 2002 and sold at least 10,000 pieces of SCIO and EDUCTOR systems between 2002 and 2012. These devices cost between EUR 2.500 and EUR 19,500 so these sales it claims are significant and it claims that the signs are well-known throughout countries all over the world, even before 2012. Therefore, these signs are well-known through their extensive use through Desiré Dubounet and the affiliate companies and distributors and protected under Article 6bis of the Paris Convention in Austria, Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Germany, Greece, Hungary, Italy, the Netherlands, Portugal, Romania, Spain, Sweden and the United Kingdom. It submits some evidence to show use of the well-known signs. It claims that it is clear from all of the evidence that Desiré Dubounet was the owner of this sign.

The applicant claims that at least the goods in Class 10 are identical or at least strongly similar to the earlier goods of the well-known mark. The applicant and the previous distributors having a license from Desiré Dubounet were marketing SCIO devices so that would also qualify as marketing medical apparatus, instruments and articles as well as marketing software which is the same as the contested services in Class 35. Moreover, the applicant and the previous distributors having a license from Desiré Dubounet have contributed to the design and development process of the computer software used in the SCIO devices which are the same as the contested services in Class 42. Therefore, the goods and services in conflict are either identical, strongly similar or heavily linked. The applicant claims that consumers will believe that the contested goods are authorized products belonging to the applicant and guaranteed by Desiré Dubounet. The contested sign is comprised of the applicant’s (through Desiré Dubounet and the affiliates) sign SCIO and THETA. The element SCIO is the first and dominant element and it coincides with the earlier mark. The additional element THETA is the eighth letter of the Greek alphabet, meaning 9 in Greek numerals and thus only suggests that the goods offered under the sign are another version of the SCIO goods. This element has a low level of distinctiveness with respect to the goods and services as its meaning is generally and widely known. As the signs coincide in the distinctive sign SCIO and only differ in a lowly distinctive element the overall impression is at least strongly similar. Therefore, it argues that there is a likelihood of confusion. The fact that the sign is made up of the two signs cannot negate this finding. It argues that for customers protection the goods of the contested sign should not be allowed on the market as the consumer will believe they are guaranteed by Desiré Dubounet and they may cause confusion or harm to Desiré Dubounet’s reputation. Therefore, the applicant requests the EUTM to be invalidated in its entirety.

In reply to the proprietor’s observations the applicant insists that it has sufficiently substantiated its case with pertinent evidence and that the EUTM should be entirely cancelled. The element SCIO is the dominant and essential element of the EUTM and it will be viewed as a spin-off of the applicant’s well-known trade marks. It states that in Annex 25 it submitted an Assignment Agreement in which Desiré Dubounet assigned all IP rights regarding the SCIO brand to the applicant. It claims that Annex 26 shows that the proprietor was only a simple distributor of QX Bahamas Ltd and PentaVox Kft and was not entitled to exercise IP rights under this agreement. The exclusivity contract attached by the proprietor as Exhibit 1 is irrelevant as it was concluded prior to the Distribution Agreement which means that the later replaced the former. The fact that PentaVox Kft was listed in this agreement is a clear indication in this regard. The applicant states that neither agreement allowed the proprietor to use the SCIO well-known trade mark in any manner above excessing commercial activity. It insists that the PentaVox Kft declaration in Annex 8 confirms that SCIO belonged to Desiré Dubounet and that PentaVox Kft was only part of the SCIO project as the hardware designer and manufacturer. It claims that the concept of SCIO devices was available in 1985 but it took nearly 20 years to get the goods on the market and through different versions. The applicant does not deny that SCIO was used by a number of companies but that this was always done with the consent of Desiré Dubounet but none of the companies had the right to register a trade mark for the sign.

The applicant argues that the company name of the proprietor is irrelevant with regard to the merits of the case as it was merely a distributor of the goods under the supervision of Desiré Dubounet. It claims that the proprietor refers to the exclusivity contract but yet claims the sign SCIO as its own when it was a commercial partner of Desiré Dubounet. The applicant insists that all rights to the sign lay with Desiré Dubounet and were transferred to the applicant in 2012 and the proprietor acted in bad faith. It repeats and expands many of its previous arguments and contests the proprietors arguments. The applicant commercializes the system invented by Desiré Dubounet under license and assignment as well as under the approval of Desiré Dubounet. It denies the relevance of the statements of Mandelay Kft. regarding the SCIO trade marks. The applicant points out that the proprietor admits and acknowledges that it proceeded to register the EUTM even though it was aware of the existence of other companies using the SCIO trade name. Therefore, the EUTM must be invalidated in its entirety.

The case for the EUTM proprietor

The EUTM proprietor contests the applicant’s arguments. It denies that the evidence submitted by the proprietor actually shows that the rights to the name SCIO lie with the applicant. It also goes through and refutes the other pieces of evidence. It denies that there are any IP clauses in some of the contracts and refutes the claims that some of the documents show that Desiré Dubounet retained rights to the sign. It claims that the applicant’s observations contain a story that is not confirmed by the evidence and which is not true. It claims that the applicant does not have rights to the sign and that other companies take over use thereof. Furthermore, it claims that the evidence refers to 2011 and later when the proprietor was established in 2005 and used the name SCIO from the start and promoted this name in the European market. It goes through each piece of evidence individually and refutes it and submits evidence to back up its arguments. It claims to have registered SCIO trade marks first. It denies the connection between Mr Nelson and QX World Ktf. Mr Nelson was an associate in Maitreya Kft but this company no longer exists. There is no clear document to show that SCIO was created by anyone prior to 2005 when the proprietor started to use the sign. There were many companies using the sign and the proprietor never tried to prohibit anyone from using it. Therefore, it argues that it filed the mark in good faith and the cancellation request must be rejected.

In reply to the applicant’s arguments, the EUTM proprietor contests the argument that the ‘commercial name’ of the proprietor is S.C. SCIO INTERNATIONAL S.R.L. is irrelevant to the invalidity. It argues that this commercial name is protected by the Paris Convention and it confers the company name rights to the sign that cannot be denied. It further claims that the observations filed by the applicant did not provide new facts or evidence and therefore it requests that a decision be taken in the present case.

In support of its observations the proprietor submits the following evidence:

 Exhibit 1 contains the Contract no .03 of 12/12/2005. This document does not have any lP clauses, it is a commercial document, but it shows the use of the name SCIO by Pentavox Kft. and Scio lnternational S.R.L. beginning in 2005.

 Exhibit 2 a translation of the Certificate issued by the Romanian National Commerce Register to show that SCIO lnternational S.R.L. was using the name SCIO for selling and producing different products since 2005.

 Exhibits 3-4 Certificates for the EUTM registrations No 10 683 531 SCIO INTERNATIONAL S.R.L and No 15 490 717 SCIO THETA.

 Exhibit 5 company data for QX WORLD KFT which was established on 03/05/2012 which was after the registration of the proprietor’s trade mark.

 Exhibit 6 copy of the Agreement of Sale and Purchase signed between Eclosion Kft and the proprietor on 01/06/2006 in which it states that the proprietor had been given exclusivity by Pentavox Kft Hungary and QX Bahamas and the right to commercialise inter alia SCIO serial and SCIO USB devices outside the countries where it had the exclusivity, both in the EU and non-EU countries.

 Exhibit 7: Declaration of Mr. Kornél Tokics in which he states that he was the Managing Director of Maitreya Kft and a high ranking official in the company Eclosion Kft. Eclosion Kft in 2010 merged into Maitreya Kft and in late 2011 Maitreya Kft changed owner and profile and the companies Mandelay Kft (of which he was the owner) and Mandelay spol. S.r.o. (in which he was CEO) were founded. On 30/12/2011 there was an agreement between the leaders of Maitreya Kft according to which all of the rights to the devices and the name SCIO and the application software rights associated therein were assigned to Mandelay Kft. There was cooperation between this company and Pentavox Kft. and they agreed that Mandelay Kft would own the SCIO and EDUCTOR brands and Pentavox Kft had authorization for direct sale of the devices but only with the consent of Mandalay Kft. Between 01/05/2004-30/05/2008 Mr Sirbu Cristian Petru was employed by Eclosion Kft and he worked with the SCIO devices and he also worked with Pentavox Kft. After the termination of his employment he returned to Romania and established the proprietor company and it still operates under his leadership. This Romanian company bought and sold SCIO devices. It did not understand at the time that the proprietor’s filing of the SCIO sign was against its interests and he was surprised when the proprietor later opposed his own company’s SCIO registration. The letter is dated 29/06/2017.

 Exhibit 8 Statement of the General Manager of Pentavox Kft dated 13/09/2017 which states that Maitreya Kft, the proprietor and Mandelay Kft were among companies that distributed SCIO devices from Pentavox Kft in the past. The know-how for the devices were transferred to QX WORLD in May 2017 and it continues to be a subcontractor of the system from QX WORLD. Any devices manufactured outside of QX WORLD(QXSUBSPACE are not original devices manufactured by Pentavox Kft.

 Exhibit 9: A document from an unknown source, although it would appear to be from the applicant’s arguments, showing that Mandelay Kft said that is was ‘ regrettable, they did not estimate the power of a trademark’.

 Exhibit 10 4 invoices to show the use of the name SCIO by the proprietor from 2009-2012.

RELATIVE GROUNDS FOR INVALIDITY - EARLIER WELL-KNOWN MARK – ARTICLE 8(2)(c) EUTMR IN CONJUNCTION WITH ARTICLE 8(1)(b) EUTMR AND ARTICLE 60(1)(a) EUTMR

In its application for invalidity the applicant claims to have a well-known mark in the sense of Article 6bis of the Paris Convention for the word mark ‘SCIO’ in Austria, Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Germany, Greece, Hungary, Italy, the Netherlands, Portugal, Romania, Spain, Sweden and the United Kingdom for:

Class 10: Medical apparatus.

Class 35: Marketing in respect of medical apparatus.

Class 37: Repair and maintenance in respect of medical apparatus.

According to Article 8(2)(c) EUTMR, for the purposes of Article 8(1) EUTMR ‘earlier trade marks’ means:

marks which, on the date of application for registration of the EU trade mark, or, where appropriate, of the priority claimed in respect of the application for registration of the EU trade mark, are well known in a Member State, in the sense in which the words ‘well known’ are used in Article 6bis of the Paris Convention.

Article 8(2)(c) EUTMR, in general, defines the earlier trade mark only ‘for the purposes of paragraph 1’ and, therefore, does not provide an independent relative ground for refusal.

Thus, the grounds for refusal are those provided by Article 8(1) EUTMR.

In order for Article 8(2)(c) EUTMR in conjunction with Article 8(1)(b) EUTMR to be applicable, the following has to be established:

a) the earlier mark was well-known in the relevant territory on the date when the contested EUTM application was filed and

b) because of identity with or similarity of the contested mark to the earlier well known mark and the identity or similarity of the goods or services covered by the trade marks, there exists a likelihood of confusion on the part of the public in the relevant territory.

In relation to the first criteria above, the earlier mark must have become well-known in the claimed territories which, in the present case, are Austria, Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Germany, Greece, Hungary, Italy, the Netherlands, Portugal, Romania, Spain, Sweden and the United Kingdom.

In support of its observations the applicant submits the following documents:

 Annex A.0 Certificate of Incorporation of QX World Kft.

 Annex A.1 Desiré Dubounet biography from IMDB biography confirming her identity as prof. William Charles Nelson.

 Annex A.2 Electro Physiological Feedback Xrroid – Wikipedia page providing an overview of Desiré Dubounet’s EPFX.

 Annex A.3 Affidavit of Desiré Dubounet confirming facts about the SCIO and EDUCTOR history.

 Annex A.4 Notarized Declaration of Levente Ungváry confirming facts about SCIO and EDUCTOR history.

 Annex A.5 Certificate of Incorporation of MAITREYA Kft. which it claims is controlled and managed by Desiré Dubounet.

 Annex A.6 Certificate of Incorporation of the Trademark proprietor and its parent company. Certificate of Incorporation of Mandelay Magyarország Kft. and Mandelay spol. s.r.o.

 Annex A.7 Certificate of Incorporation of PentaVox Kft..

 Annex A.8 PentaVox Declaration confirming facts about SCIO and EDUCTOR history.

 Annex A.9 Agreement between PentaVox and MAITREYA on manufacturing and distributing SCIO devices.

 Annex A.10 MAITREYA documents on SCIO distribution and SCIO quality certifications in the name of MAITREYA, shipping notes and receipts regarding SCIO devices sold by MAITREYA.

 Annex A.11 Certificate of Incorporation of Eclosion Kft. owned and managed by Desiré Dubounet.

 Annex A.12 Certificate of Incorporation of QX Bahamas Ltd. owned and managed by Desiré Dubounet’s wife.

 Annex A.13 MAITREYA’s accounting documents to show that MAITREYA’s main customer was QX Bahamas.

 Annex A.14 Extract from Romanian company database containing Company data confirming the involvement of Mr Sirbu.

 Annex A.15 Termination of employment contract of Mr Sirbu which confirms the previous employment of Mr Sirbu.

 Annex A.16 Certificate of Incorporation of the new company Eclosion Kft. controlled by Kornél Tókics.

 Annex A.17 Assignment agreement between MAITREYA and the Trademark Holder re: TÜV quality certificates.

 Annex A.18 Software development service contract agreement re: SCIO and EDUCTOR software, concluded by and between the Applicant and QX Bahamas.

 Annex A.19 EDUCTOR presentation Seminar program where Desiré Dubounet presented the EDUCTOR system.

 Annex A.20 EDUCTOR video license fee invoice issued by the Applicant to the Trademark Holder.

 Annex A.21 QX Universe Agreement to Cooperate (QXUAC) signed by (inter alia) Desiré Dubounet, the Applicant and Mandelay Kft., the agreement inter alia details Desiré Dubounet’s rights.

 Annex A.22 The QX Universe Intellectual Property License Contract (QXIPLC) and Agreement to Cooperate, signed by (inter alia) Desiré Dubounet, the Applicant and Mandelay Kft., which details Desiré Dubounet’s rights.

 Annex A.23 Unsigned and the applicant claims it is an untrue Authorization document signed by Mandelay Kft. and which it claims was fraudulently signed by an unknown person ‘on behalf of’ Desiré Dubounet.

 Annex A.24 E-mail correspondence and invoices to show the business relationship between the Applicant and Mandelay Kft.

 Annex A.25 Assignment Agreement concluded by and between the Applicant and Desiré Dubounet.

 Annex A.26 Distribution Agreement concluded by and between Eclosion Kft. and the proprietor of the Contested Trademark.

 Annex A.27 Trademark Certificate of SCIO INTERNATIONAL S.R.L

 Annex A.28 Trademark Certificate of SCIO CLASP32

 Annec A.29 Trademark Certificate of SCIO THETA

 Annex A.30 Statement of the Trademark Holder on the volume of sales regarding SCIO and EDUCTOR system.

 Annex A.31 Google search result list for the keyword SCIO biofeedback – all hits are from before 31/05/2012

 Annex A.32 Various invoices to show the sale of goods bearing the signs SCIO and EDUCTOR.

One of the requirements for a successful action under Article 8(2)(c) EUTMR is that the earlier marks must have become well-known in the claimed territories which, in the present case, are Austria, Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Germany, Greece, Hungary, Italy, the Netherlands, Portugal, Romania, Spain, Sweden and the United Kingdom.

Firstly it must be noted in relation to the claimed right in the United Kingdom that on 01/02/2020, the United Kingdom (UK) withdrew from the EU subject to a transition period until 31/12/2020. During this transition period EU law remained applicable in the UK. As from 01/01/2021, UK rights ceased ex-lege to be earlier rights protected ‘in a Member State’ for the purposes of proceedings based on relative grounds. The conditions for applying to a well-known mark under Article 6bis of the Paris Convention as based on Article 60(1)(a) EUTMR in conjunction with Article 8(1)(b) EUTMR, worded in the present tense, must also be fulfilled at the time of decision taking. It follows that the United Kingdom well-known mark SCIO no longer constitutes a valid basis of the application for invalidity.

The application must therefore be rejected as far as it is based on this earlier right.

In relation to the well-known marks in the other countries claimed the evidence submitted is not particularly clear when it comes to trying to decipher who actually holds the intellectual property rights to the sign SCIO. Although the applicant is QX WORLD Kft, most of the evidence refers to a Ms Desiré Dubounet. The applicant informs that the inventor of the original system was Prof. William Charles Nelson, who it claims is currently known as Desiré Dubounet. No official documents have been provided to demonstrate an official change of name. The applicant did submit under Annex A1 a Desiré Dubounet biography from IMDB biography which it claims proves her identity as prof. William Charles Nelson. However, there is no official legal change of name document or other official document to prove the identity without doubt. Moreover, the fact that prof. William Charles Nelson developed a scientific device which has had a lot of different names over the years to distinguish different models, among which one was SCIO, it does not automatically result in him (or Desiré Dubounet) also being the obvious owner of the rights to the trade mark ‘SCIO’. The evidence shows a very complicated chain of events and that different companies were working together to develop software, hardware, completed devices and also the distribution of same and also that there were disagreements and different companies set up who also claim to own the rights to the sign. All of the applicant’s evidence speaks about how Desiré Dubounet oversees all of the companies and owns all of the intellectual property rights, yet this is certainly not clear from the evidence. But even assuming that the evidence proves that Desiré Dubounet is prof. William Charles Nelson and that all intellectual property rights lay with Desiré Dubounet and that these were passed to the applicant, either way the applicant has still failed to prove that the sign was well-known in the above claimed countries as will be seen from what follows.

In relation to the well-known status of the mark the applicant claims that Desiré Dubounet and her affiliates have used the sign since 2002 and sold at least 10,000 pieces of SCIO and EDUCTOR systems between 2002 and 2012. It did not break down how many pieces of SCIO systems were sold exactly or if any devices are still being sold at the time of filing of the application for a declaration of invalidity or thereafter. These devices cost between EUR 2.500 and EUR 19.500 so it claims that these sales are significant and that the signs are well-known in countries all over the world, even before 2012. The invoices for the sales of these systems are found in Annex 32 and also partly in Annex 24 and show sales of one or two systems, in general, to the claimed countries, while larger numbers were sold to the US and South Africa etc. However, although the goods are relatively expensive the sales thereof are very minimal. There is no actual evidence on file to show that the relevant public in the relevant territories knew of the sign, to what extent, and certainly there is no evidence that the signs were well-known in said territories. The ‘Google’ search list cannot show that the signs were well-known in the relevant countries. The fact that the sign was used in the territories is not sufficient to prove the well-known status of the mark. For that the applicant would have to show a high extent of use and recognition among the relevant public. However, the evidence lacks in this respect. The sale of a small number of devices to each country cannot show that the mark was well-known.

According to Article 95(1) EUTMR, the Office will examine the facts of its own motion in proceedings before it. However, in proceedings relating to relative grounds for refusal of registration, the Office will restrict this examination to the facts, evidence and arguments submitted by the parties and the relief sought.

 

Consequently, the applicant has failed to prove that the earlier mark has gained a well-known status in any of the claimed countries.

 

As these are necessary conditions for a successful action under this ground then the application must fail as it is based on Article 60(1)(a) EUTMR in conjunction with Article 8(2)(c) EUTMR and as based on Article 8(1)(b) EUTMR.

 

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. 

 

Assessment of bad faith

One situation which may give rise to bad faith is when a commercial entity has obtained some degree of legal protection by virtue of the use of a sign on the market, which a competitor subsequently registers with the intention of competing unfairly with the original user of the sign. 

 

In such instances, the Court of Justice of the European Union (11/06/2009, C-529/07, Lindt Goldhase, EU:C:2009:361, § 48, 53) has stated that the following factors in particular should be taken into consideration: 

 

(a) the fact that the EUTM proprietor knows or must know that a third party is using an identical or similar sign for an identical or similar product capable of being confused with the contested EUTM; 

 

(b) the applicant’s intention of preventing that third party from continuing to use such a sign; 

 

(c) the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is sought; and 

 

(d) whether the EUTM proprietor in filing the contested EUTM was in pursuit of a legitimate objective. 

 

The abovementioned are only examples drawn from a number of factors which can be taken into account in order to determine whether or not the applicant was acting in bad faith when filing the application; account may also be taken of other factors (14/02/2012, T-33/11, Bigab, EU:T:2012:77, § 20-21; 21/03/2012, T-227/09, FS, EU:T:2012:138, § 36).

 

Bad faith might be applicable when the parties involved have or have had any kind of relationship, such as (pre-/post-) contractual relationships, giving rise to mutual obligations and a duty of fair play in relation to the legitimate interests and expectations of the other party (13/11/2007, R 336/2007-2, CLAIRE FISHER / CLAIRE FISHER, § 24).

As stated in case-law, the fact that the EUTM proprietor knows or must know that the invalidity applicant has been using an identical/similar sign for identical/similar goods for which a likelihood of confusion may arise is not sufficient for a finding of bad faith (11/06/2009, C-529/07, Lindt Goldhase, EU:C:2009:361, § 40). In order to determine whether there was bad faith, the EUTM proprietor’s intentions at the time of filing must also be taken into account.

 

The EUTM proprietor’s intentions may be an indication of bad faith if it becomes apparent that the EUTM proprietor did not file the contested EUTM in order to use it, but only to prevent a third party from entering the market (11/06/2009, C-529/07, Lindt Goldhase, EU:C:2009:361, § 44). 

 

An indication of bad faith may exist if the EUTM proprietor applies for a trade mark which is identical/similar to that of a third party for confusingly similar/identical goods and services and the earlier right is legally protected to some extent and the sole aim of the EUTM proprietor is to compete unfairly by taking advantage of the earlier sign (11/06/2009, C-529/07, Lindt Goldhase, EU:C:2009:361, § 46-47).

 

The essential question is, therefore, whether the relationship between the parties created a close enough link to suggest that it is fair to expect the EUTM proprietor not to file an identical EUTM application independently without giving the invalidity applicant prior information and sufficient time to take action against the contested EUTM (13/12/2004, R 582/2003-4, EAST SIDE MARIO’S, § 23). 

 

Secondly, if a duty of fair play exists, it must be established whether or not the EUTM proprietor’s actions constitute a breach of a duty of fair play, thereby having been made in bad faith.

The applicant has argued that it owns prior rights to the sign SCIO. The applicant also argued that the proprietor filed the sign in order to prevent the applicant from entering the market. As the Cancellation Division has stated in the previous section, the evidence submitted does not demonstrate that the applicant is the owner of prior trade mark rights to the SCIO sign. Reference is made to the previous points made in relation to the identity of Desiré Dubounet. Even if it were accepted that Prof William Charles Nelson invented the biofeedback system which has had a number of different names over the years referring to different models, one of which is SCIO and even if it is accepted that Desiré Dubounet is now the official name of Prof Nelson, there is no evidence to show that the applicant is the owner of earlier trade mark rights to the sign SCIO as claimed. The chain of companies involved is extremely complicated and most of the evidence does not show that Desiré Dubounet was in charge of these companies (although perhaps involved in some).

Indeed, in the Exhibit submitted by the proprietor containing the Declaration of Mr. Kornél Tokics, he states that he was the Managing Director of Maitreya Kft and a high ranking official in the company Eclosion Kft. In 2010 Eclosion Kft merged into Maitreya Kft. In late 2011 Maitreya Kft changed owner and profile, and the companies Mandelay Kft (of which he was the owner) and Mandelay spol. S.r.o. (in which he was CEO) were founded. On 30/12/2011 there was an agreement between the leaders of Maitreya Kft, according to which all of the rights to the devices and the name SCIO and the application software rights associated therein were assigned to Mandelay Kft. There was a cooperation between this company and Pentavox Kft. and they agreed that Mandelay Kft would own the SCIO and EDUCTOR brands, while Pentavox Kft had authorization for direct sale of the devices but only with the consent of Mandalay Kft.

Between 01/05/2004-30/05/2008 Mr Sirbu Cristian Petru was employed by Eclosion Kft, he worked with the SCIO devices and also with Pentavox Kft. After the termination of his employment, he returned to Romania where he established the proprietor company which still operates under his leadership. This Romanian company bought and sold SCIO devices. Mr Kornél did not understand at the time that the proprietor’s filing of the SCIO sign was against its interests and he was surprised when the proprietor later opposed his own company’s SCIO registration. The applicant opposes this chain of events and claims that the new companies founded were fraudulent and that no trade mark rights were passed to them.

The Agreement of Sale and Purchase signed between Eclosion Kft and the proprietor on 01/06/2006 shows that the proprietor had been given an exclusivity contract by Pentavox Kft Hungary and QX Bahamas and the right to commercialise inter alia SCIO serial and SCIO USB devices outside the countries where it had the exclusivity, both in the EU and non-EU countries. Therefore, from at least 2006 the QX companies were aware of the proprietor’s presence and name and that it was selling SCIO goods in the EU.

However, again, the documentation provided does not show that the applicant owns any earlier rights to the sign SCIO as claimed. There are later agreements in which Desiré Dubounet claims intellectual property rights to the sign but there is no clear chain of events leading to this agreement and they are dated after the filing date of the contested EUTM.

Mr Kornél argues that he was a high ranking official in Maitreya Kft and Eclosion Kft and that in 2010 the later company merged into Maitreya Kft. In late 2011 Maitreya Kft changed owner and profile and the companies Mandelay Kft (of which he was the owner) and Mandelay spol. S.r.o. (in which he was CEO) were founded and thus the rights to the sign would have fallen within the ambit of these companies. The applicant denies this and claims that the later Mandelay companies were fraudulent and that the rights to the sign did not pass to them.

To further complicate matters much of the evidence from the applicant refers to different signs like EDUCTOR which are not at issue in the present application. Moreover, it would appear that the original device which had different names throughout its evolution then changed from SCIO to EDUCTOR which was introduced by Desiré Dubounet in Munich in 2012. However, the use of said sign cannot serve to prove the ownership of a trade mark right in the sign SCIO.

As mentioned above, it cannot be determined that the applicant itself holds or ever held any trade mark rights to the sign SCIO and therefore, this argument is rejected.

However, from the evidence it would appear that the Mandelay companies are the owner of the SCIO mark. In the QX UNIVERSE Agreement to Cooperate dated in 2014, after the filing of the EUTM, on page 2 it states that Mandalay Kft of Hungary is the owner of trade marks for Eductor and SCIO. Moreover, there is a recognition in this agreement of the validity of this company by the applicant who is part of the QX group. This agreement claims that the intellectual property rights for the system and software lie with QX. This would appear to acknowledge that they held patent or design rights to the system and software, but this agreement also appears to acknowledge that Mandelay Kft holds the trade mark rights. Such circumstance would suggest that the applicant in that agreement recognized that the trade mark rights lie with Mandelay Kft and not with the applicant itself and also there is a recognition of the validity of Mandelay Kft which is attacked in the applicant’s observations.

If it is proven that the proprietor acted in bad faith at the time of filing of the EUTM then it is irrelevant whether the applicant held the earlier rights on the sign at issue. Indeed, in applications for invalidity based on absolute grounds, on account of the fact that absolute grounds for invalidity aim to protect the general interest, the applicant does not need to demonstrate an interest in bringing proceedings (08/07/2008, T-160/07, Color Edition, EU:T:2008:261, § 22-26, confirmed by 25/02/2010, C-408/08 P, Color Edition, EU:C:2010:92, § 37-40). Therefore, if the evidence can show that another party, namely, Mandelay Kft, held earlier rights and did not consent to the filing of the contested EUTM, a finding of bad faith can still be reached. In this respect, it must be recalled that Article 59(1)(b) EUTMR meets the general interest objective of preventing trade mark registrations that are abusive or contrary to honest commercial and business practices. These registrations are contrary to the principle that EU law cannot be extended to cover abusive practices on the part of a trader, which do not make it possible to attain the objective of the legislation in question (23/05/2019, T-3/18 & T-4/18, ANN TAYLOR / ANNTAYLOR et al., EU:T:2019:357, § 33).

The ground of bad faith applies where it is apparent from relevant and consistent indicia that the proprietor of an EUTM filed its application for registration not with the aim of engaging fairly in competition, but with the intention of undermining the interests of third parties, in a manner inconsistent with honest practices, 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 (12/09/2019, C-104/18 P, STYLO & KOTON (fig.), EU:C:2019:724, § 46)

As mentioned the evidence shows that Mandelay Kft held earlier rights to the sign SCIO and this will now be examined to determine whether the proprietor acted in bad faith.

In the present case the contested sign is ‘SCIO THETA’ which contains the earlier sign ‘SCIO’ as its first element, the part that consumers generally place more attention as signs are read from left to right. Moreover, ‘THETA’ is the eight letter of the Greek alphabet and also can refer, inter alia, to a type of brain wave. Although it may allude to the fact that the medical devices may affect the brain, it is still distinctive. The signs (the earlier owned by Mandelay Kft and the contested EUTM) share the distinctive element SCIO which has no exact meaning for the consumer in relation to any of the contested goods or services and is the initial element of the contested mark and clearly visually identifiable and playing an independent role in the sign. Moreover, from the evidence, the goods for which Mandelay Kft have used the SCIO sign are specific types of medical apparatus, namely electrophysiological biofeedback devices which overlap with the contested goods and are therefore considered to be identical. The contested design and development of medical software in Class 42 are similar to Mandelay’s goods as they have the same distribution channels and relevant public and they can be complementary. As far as the services in Class 35 of the contested mark are concerned marketing of medical apparatus, instruments and articles and medical software although these services are generally carried out by other types of advertising companies a certain relationship between the contested goods and services cannot be denied due to the content of the marketing. It is not necessary that all of the contested goods and services are similar, as there can be bad faith which results in the rejection of the EUTM in its entirety, even where some of the goods or services are dissimilar and in this case even the dissimilar services in Class 35 have a certain relationship with the earlier goods and services of Mandelay Kft.

The EUTM proprietor was aware of the earlier sign now held by Mandelay Kft (previously by its predecessors) prior to the filing of the EUTM, which can be seen from the evidence submitted and the EUTM proprietor’s owner’s prior employment in the sister company of Mandelay Kft in which ‘SCIO’ devices were also sold, and none of these assertions have been expressly denied by the EUTM proprietor. Although the EUTM proprietor had put ‘SCIO’ in its Romanian company name in 2005, it did so after having direct knowledge of Mandelay Kft (and its predecessors) rights to the sign. The mere fact that the EUTM proprietor has included the word ‘SCIO’ in its company name or that it filed other trade marks does not show good faith at the time of filing of the EUTM as claimed by the EUTM proprietor as even the original filing of its company name was done after it had knowledge of the earlier sign and in fact was the distributor of Mandelay Kft.

The fact that the proprietor had an exclusivity agreement to sell in Romania and could also market the goods in other countries does not mean that it was allowed to register trade marks in its own name when it was merely a distributor of Mandelay Kft or its predecessors. The agreement dated 12/12/2005 in Exhibit 6 of the proprietor’s evidence itself is rather clear when it included a clause stating it would not infringe the industrial property rights held by Pentavox. There was no transfer of intellectual property rights, including trade mark rights to the proprietor. It was merely allowed to sell the goods in a specified territory but not claim the trade mark for the entire EU. Moreover, this contract was for five years from 12/12/2005 which concluded prior to the filing of the EUTM and no evidence was submitted to prove that the agreement continued after this date. Therefore, this evidence does not show that the proprietor had a right to file a trade mark for the sign ‘SCIO THETA’ or that any express consent was given to do so. Moreover, there is a statement in Exhibit 7 in which Mr. Kornél Tokics states that later the proprietor opposed its company’s registrations of the SCIO sign to which it had prior rights and therefore, it prevented Mandelay Kft from entering the EU market.

As such, it would appear from the evidence submitted that the proprietor did not have the right to file the EUTM but did so even though it was aware of the earlier rights to the sign on the part of Mandelay Kft and its predecessors. Therefore, the proprietor filed the EUTM in bad faith. It is irrelevant that the applicant did not prove that it owned prior rights to the sign as any party can bring invalidity proceedings on the ground of bad faith. What must be evaluated is whether the proprietor acted in bad faith at the time of filing.

Conclusion

 

Therefore, the application for bad faith is entirely upheld under Article 59(1)(b) EUTMR.

 

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

 

Michaela SIMANDLOVA

Nicole CLARKE

Pierluigi M. VILLANI

 

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.