CANCELLATION No 19974 C (INVALIDITY)

Nishio Cha Kyodo Kumiai, 2-3, Shimoyashiki Kamimachi,; Nishio-shi; Aichi 445-0894 Japan (applicant), represented by Liesegang & Partner mbB, Rechtsanwälte,
Kettenhofweg, 60325 Frankfurt am Main, Germany (professional representative)

a g a i n s t

Nanjing Smile Catering Management Co., Ltd.,
S-B2-7 Sunken Plaza, No. 133 Olympic Avenue, Jianye District
Nanjing, People’s Republic of China (EUTM proprietor), represented by José Izquierdo Faces, Iparraguirre, 42 - 3º izda, 48011, Bilbao (Vizcaya), Spain (professional representative).

On 13/08/2018, the Cancellation Division takes the following

DECISION

1. The application for a declaration of invalidity is rejected in its entirety.

2. The applicant bears the costs, fixed at EUR 450.

PRELIMINARY REMARK

As from 01/10/2017, Regulation (EC) No 207/2009 and Regulation (EC) No 2868/95 have been repealed and replaced by Regulation (EU) 2017/1001 (codification), Delegated Regulation (EU) 2017/1430 and Implementing Regulation (EU) 2017/1431, subject to certain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from 14/05/2018, Delegated Regulation (EU) 2017/1430 and Implementing Regulation (EU) 2017/1431 have been codified and repealed by Delegated Regulation (EU) 2018/625 and Implementing Regulation (EU) 2018/626.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

REASONS

The applicant filed an application for a declaration of invalidity against European Union trade mark No 16 730 103 (figurative mark) (the EUTM). The request is directed against all the goods and services covered by the EUTM, namely:

Class 30: Coffee; Tea; Tea-based beverages; Candy; Bread; Cakes; Ice cream; Pizzas; Condiments; Pastries.

Class 43: Café services; Canteen services; Cafeteria services; Hotel services; Mobile canteen for food supply; Teahouse services; Bar services; Providing food and drink in doughnut shops; Snack-bar services; Ice cream parlors.

The applicant invoked Article 59(1)(b) EUTMR.

SUMMARY OF THE PARTIES’ ARGUMENTS

The applicant argues that the EUTM was filed in order to prevent third parties from using the term NISHIO as a geographical indication for tea, tea related products and services. The applicant considers that, given the broad awareness of the term NISHIO, the EUTM proprietor knew at the time of filing of the EUTM that this term and the translation of the characters was a geographical indication.

In particular, the applicant argues that the EU Commission and the Japanese Government are currently negotiating the registration of ‘Nishio Matcha’ as a protected geographical indication (Official Journal of the EU C242/20, Enclosure LP1a). As indicated by the applicant, ‘Nishio Matcha’ has been registered as a geographical indication by the Japanese Government on 03/03/2017 based on the Japanese Geographical Indications Act (Enclosure LP1b). The applicant indicates that Japan made a request to the EU during the meeting with the EU held in April 2017 to protect ‘Nishio Matcha’ in the EU under the Japan-EU EPA. It considers therefore that the discussion started before the filing date of the contested EUTM (filed on 16/05/2017).

The applicant puts forward arguments concerning the perception of the sign by the relevant public in the European Union in relation to the goods for which it is registered. It submits that the tea from the Nishio region is also called Matcha tea, which is a fine powdered green tea. Nishio is one of the most famous Matcha producing regions in Japan (Enclosures LP2 and LP3). The applicant submits voluminous evidence to show that the relevant public in Germany, Austria, France and the UK puts emphasis on the geographical origin of green or matcha tea. In particular, it submits evidence of online shops and blogs in those countries that deal with tea or matcha tea and refer to Nishio as one of the leading growing areas of this kind of tea (Enclosures LP5 to LP57). The applicant also indicates why some of the contested goods can be produced using Matcha tea as an ingredient. It submits evidence of German, Austrian, French and British websites referring to tea-based beverages, candy, bread, cakes, ice-cream, pizzas, condiments and pastries made with matcha tea (Enclosures LP58 to LP152). Moreover, according to the applicant, the Chinese characters are the translation of the geographical indication Nishio. They will be perceived as such not only by the Japanese and Chinese speaking part of the public (the characters in Japanese are quasi identical) but also by the average consumer who would consider the characters as the translation of the word Nishio (Enclosures LP4, LP153 to LP155).

As regards the claim of bad faith, the applicant refers to the factors indicated in the judgment of 11/06/2009 C-529/07 Lindt Goldhase, ECLI:EU:C:2009:361 to assess bad faith: the applicant knows, or must know, that a third party is using, in at least one Member State, an identical or similar sign for an identical or similar product; the applicant’s intention to prevent that third party from continuing to use such a sign; and the degree of legal protection enjoyed by the third party’s sign, and by the registered sign. The applicant also quotes paragraphs 41 to 48 and 50 of the judgment referring to the lack of intention to use the trade mark and the restriction of the competitor’s freedom to choose the shape of a product or its presentation. The applicant admits that there are no conflicting trade marks on the Register, but argues that a trade mark that consists of a well-known geographical indication for tea and tea related goods, and its Japanese/Chinese translation, is not eligible for registration. Nevertheless, according to the applicant, the situation is comparable to the case-law quoted: since NISHIO is well known in the tea sector, the EUTM proprietor knows or at least must know that it is a geographical indication for tea or tea related products. Moreover, the contested EUTM will monopolise the geographical indication and, moreover, there is no indication that the proprietor of the EUTM has any intention of using it. The applicant considers that, to the extent that the contested EUTM consists exclusively of a geographical indication, the fact that the proprietor is acting in bad faith might more readily be established if the competitors who distribute tea or tea related products from NISHIO can only choose to indicate that geographical origin by using this sign. Finally, the applicant indicates that it has opposed the EUTM proprietor’s US trade mark applications No 87469063 and No 87469175 applied for in classes 30 and 43 but in those cases the proprietor did not reply (Enclosure LP156). According to the applicant, this shows that it does not have any intention to use the trade mark.

The applicant submitted a series of enclosures in support of its arguments, referred to above (Enclosures LP1 to LP156), which can be consulted in the corresponding file.

The EUTM proprietor did not submit observations in reply.

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

General principles

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

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

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

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

Outline of the relevant facts

As stipulated by Article 59(1)(b) EUTMR, the bad faith that is assessed is that of the EUTM proprietor when he filed the application for the trade mark. Therefore, the relevant point in time is the filing of the EUTM (16/05/2017).

In the present case, the applicant puts forward the following facts in support of its argument that the EUTM proprietor was acting in bad faith when it filed the EUTM:

• The sign describes NISHIO in Latin and Chinese characters, which is a famous region in Japan for the production of green tea. Nishio Matcha is protected as a geographical indication in Japan and the EU and Japan are currently negotiating its protection throughout the EU. The relevant public in the EU is aware of NISHIO as a Japanese region producing tea.

• The EUTM proprietor’s monopoly over the geographical indication would prevent third parties from legitimately using it.

• There are no indications of the EUTM proprietor’s intention to use the trade mark. Its intention was only to prevent third parties from indicating the geographical origin of their products.

Assessment of bad faith

The applicant’s main line of reasoning is that the EUTM proprietor intentionally registered a trade mark which is descriptive of the Japanese geographical indication NISHIO, with the aim of monopolising the term. According to the applicant, the EUTM proprietor should have known of this reputed geographical indication. The Cancellation Division admits that it is plausible that the EUTM proprietor must have known the existence of the Japanese geographical indication NISHIO considering its repute for green tea.

However, the fact that the contested EUTM may be descriptive is not in itself sufficient for a finding that at the time of filing the EUTM proprietor’s intentions were dishonest.

In other words, the fact that a link between the trade mark and the geographical indication may be established, in the sense that the trade mark is descriptive of the geographical indication, and that the registration of the trade mark may result in the monopolisation of the term is not sufficient to establish the bad faith of the EUTM proprietor when filing the contested EUTM. The applicant needs to further prove the dishonest intention on the part of the EUTM proprietor when filing the trade mark.

The Cancellation Division considers that the applicant has not proven such a dishonest intention on the part of the EUTM proprietor.

The applicant, as indicated above, has limited itself to refer to the descriptive nature of the EUTM and the alleged lack of intention of the proprietor to use it. Whilst it cannot be excluded that the contested EUTM, if found to be descriptive of the geographical origin of the goods and services, may have been registered contrary to the provisions of Article 7 EUTMR, this fact does not prove, on its own, the dishonest intention of the EUTM proprietor. The applicant should have argued in which sense the EUTM proprietor’s conduct departed from accepted principles of ethical behaviour or honest commercial and business practices when it filed the contested EUTM. For instance, by submitting evidence that the EUTM proprietor had shown its intention of preventing third parties from marketing goods/services under the descriptive mark by filing various infringement proceedings or by trade mark hoarding.

Finally, the applicant’s arguments regarding the alleged lack of intention to use of the sign have to be dismissed as valid proof of a dishonest intention on the part of the proprietor. There is nothing on the file or in the filing strategy of the EUTM proprietor which would support this assertion. Moreover, the owner of a registered trade mark must use that mark in a genuine manner but this obligation of use is not applicable immediately after the registration of the mark. It has a ‘grace period’ of five years during which it is not necessary to demonstrate use of the mark. As the contested EUTM was registered on 18/09/2017, it still benefits from such grace period.

Conclusion

In the light of the above, the Cancellation Division concludes that the application based on Article 59(1)(b) EUTMR should be rejected.

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

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

The Cancellation Division

José Antonio GARRIDO OTAOLA

Elisa ZAERA CUADRADO

Nicole CLARKE

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.