CANCELLATION No 10 518 C (INVALIDITY)
Endevr Inc., 1224 South River Rd., Suite B100, 84790 St. George, Utah, United States of America (applicant), represented by Georg Pintz & Partners LLC, Csepreghy utca 2, 1085 Budapest, Hungary (professional representative)
a g a i n s t
Heger Reinhard, Anemonenstr. 31, 85591 Vaterstetten, Germany (EUTM proprietor), represented by KLAKA, Depstr. 4, 81679, Munich, Germany (professional representative).
1. The application for a declaration of invalidity is upheld.
2. European Union trade mark No 12 154 605 is declared invalid in its entirety.
3. The EUTM proprietor bears the costs, fixed at EUR 1 150.
On 03/03/2015, the applicant filed an application for a declaration of invalidity against European Union trade mark No 12 154 605 ‘ENDEVR’ (‘the contested EUTM’) (word mark), filed on 19/09/2013 and registered on 12/02/2014.
The request is directed against all the goods covered by the EUTM, namely:
Class 5: Adhesive tapes, bandages or strips for medical purposes; bracelets for medical purposes.
Class 14: Jewellery, in particular for the sport and fitness sector; wristbands, in particular for the sport and fitness sector; jewellery in the form of adhesive tapes, bandages or strips in various colours and shapes for applying to the body, in particular for the sport and fitness sector; jewellery in the form of stickers for the body.
The applicant invoked Article 52(1)(b) EUTMR, namely that the contested EUTM was filed in bad faith. The request is also based on Article 53(1)(b) EUTMR in conjunction with Article 8(3) EUTMR.
The Cancellation Division will first examine the applicant’s request pursuant to Article 52(1)(b) EUTMR.
SUMMARY OF THE PARTIES’ ARGUMENTS
The applicant’s first submission
In its introduction of the case, the applicant argues that its company is a well-known producer and retailer of tapes, bandages and bracelets for medical and sporting purposes. The company was founded in the United States under the name ‘Lifestrength’ in 2010 and changed its name to ‘Endevr’ on 01/06/2013. The applicant adds that the EUTM proprietor and his wife, Silke Anders, are the co-owners of the firm Endevr GmbH, the applicant’s distributor in the German market, which had previously operated under the name Lifestrength GmbH.
In respect of the claim of bad faith, the applicant submits the following facts and arguments:
The company Lifestrength Inc. has been selling products under the signs ‘PureStrength’, ‘MyID’ and ‘StrengthTape’ through EU distributors (such as the companies Able 2, Remeaa, Midi, Bort and Stader) since 2011.
In September 2012, Silke Anders contacted Lifestrength Inc. to offer her services as a “German Distributor”. In January 2013 she started purchasing small quantities of the applicant’s products.
In May 2013 the EUTM proprietor and his wife set up Lifestrength GmbH. However, they informed the applicant only through an e-mail dated 12/07/2013 in which Ms Anders maintained that in this way “Lifestrength will be more popular in Europe”.
In June 2013 Lifestrength Inc. changed its name into Endevr Inc. After that, the EUTM proprietor and her wife changed the name of the company Lifestrength GmbH to Endevr GmbH.
In an e-mail of 13/09/2013, Ms Anders informed the applicant on the costs related to a EUTM application, stating that “due to our agreement Endevr US will have to be the owner and also pay for it”. On 18/09/2012, Ms Anders wrote that “I just want to make sure that ENDEVR is protected as a name for you”. The next day, her husband applied for the EUTM on his own name.
The CEO of the applicant was informed toward the end of 2013 that a trademark for the name ‘ENDEVR’ was filed. Around that period Ms Anders requested the applicant the reimbursement for the costs related to the change of name of her company (from Lifestrength GmbH to Endevr GmbH) and to the EUTM filing.
At that time the applicant had assumed that Ms Anders was managing the trademark registration on behalf of the applicant and that the mark would have been registered in the name of the applicant itself.
The history between the parties illustrate that the German distributor never had any original ideas regarding the brand strategy. This clearly shows that the EUTM proprietor (as co-owner of the company Endevr GmbH) applied for the EUTM as a local distributor and his main intention was to secure the national market of the applicant’s products for himself.
The sign ‘ENDEVR’ was introduced to the public by the applicant back in the spring 2013 in connection with medical and sport bracelets through social media platforms and contacts of the applicant. The EUTM proprietor had knowledge that the EUTM was related to the applicant and his aim was to gain exclusive rights on the sign and prevent the applicant from using its own brand in the EU.
In support of its observations, the applicant filed the following evidence:
Annex 1: Extracts from the company register providing details of the applicant’s company Endevr Inc., originally registered as Lifestrength LLC on 16/11/2010.
Annex 2: A printout providing details of the change of name of the applicant from Lifestrength LLC to Endevr LLC on 01/06/2013.
Annexes 3 and 4: Extracts in German providing details of the company Endevr GmbH (previously known as Lifestrength GmbH). From the translation in English furnished by the applicant, it appears, inter alia, that Reinhard Heger (the EUTM proprietor) and Silke Anders are the company’s executive directors.
Annex 5: Copy of e-mails between Silke Anders and employees of Lifestrength Inc.:
dated between 24/09/2012 and 26/04/2013: showing Ms Anders’ interest in selling the applicant’s products within the German market and the beginning of the parties’ partnership . In all the correspondence the e-mail address and the signature of Ms Sanders are followed by the denomination ‘Praxis Quality’. There is no reference to the contested EUTM.
dated 08/10/2013 in which Ms Sanders (whose signature is now followed by the denomination ‘Endevr GmbH’) requests the applicant to become “master distributor”.
Annex 6: Copy of an exchange of e-mails dated 25/11/2013 between Ms Anders and the applicant’s employees concerning the provision of a certificate of authorization to Endevr GmbH to distribute the applicant’s products under the signs ‘Pure Strength’, ‘MYID Band’ and ‘Strength Tape’ in Europe. No reference is made to the filing of the contested EUTM.
Annex 7: Copy of an exchange of correspondence between Ms Anders and the applicant’s employees dated between 06/11/2013 and 10/01/2014 regarding the shipment of products packaging, website’s issues and marketing material. No reference is made to the filing of the contested EUTM.
Annex 8: Copies of e-mails dated 23/12/2013 and 07/01/2014 between Ms Anders, the EUTM proprietor and applicant’s employees regarding Christmas wishes. No reference is made to the filing of the contested EUTM.
Annex 9: Copy of an e-mail dated 12/07/2013 by Ms Anders informing the applicant that “We changed the company name, so that LIFESTRENGTH will be more popular in Europe”.
Annex 10: Copy of an undated document signed by Steve Schone, on behalf of the applicant, and Silke Anders, on behalf of Endevr GmbH, featuring the terms and conditions of the agreement between Endevr LLC - referred to as “manufacturer” - and Endevr GmbH - referred to as “general wholesale partner”.
The document reports that the applicant “licenses to Endevr GmbH the non-exclusive right to use the Trademarks”. In addition, it is stated that:
“[…] Endevr GmbH specifically acknowledges Endevr’s ownership of all the Trademarks and recognizes and affirms that: i) Endevr GmbH rights under, and activities pursuant to, this agreement shall not create in Endevr GmbH any right, title or interest in any Trademark; and ii) all use of the Trademarks by Endevr GmbH, and any goodwill arising from such use, shall inure solely to the benefit of Endevr LLC […].
[…]Nothing herein shall give Endevr GmbH any interest in any Trademark, nor shall Endevr GmbH ever claim that its use of any Trademark has created any rights, title or interest in Endevr GmbH […]”.
Annex 11: Copy of an e-mail dated 21/08/2013 from Ms Anders containing two attachments and having as subject ‘Customer Protection Agreement’. According to the applicant, the attachment refers to the above mentioned document listed as Annex 10.
Annex 12: Copy of an e-mail dated 16/08/2013 from Ms Anders stating that she “changed the duration of the contract to 3 years”.
Annex 13: Copy of an e-mail dated 13/09/2013 sent by Ms Anders to Mike Nielsen having as subject ‘Quotation for a EUTM’ and stating that “due to our agreement Endevr US will have to be owner and also pay for it”.
Annex 14: Copy of the registration certificate of the contested EUTM.
Annex 15: Copy of an e-mail dated 14/01/2014 from Ms Anders regarding products orders. No reference is made to the filing of the contested EUTM.
Annex 16: Copy of the certificate of US trade mark No 85 257 516 ‘LIFESTREGTH’ filed on 03/02/2011 by Lifestrength LLC. The current mark status is “abandoned” (on 19/11/2012).
Annex 17: Copy of the certificate of the applicant’s US trade mark No 4 353 974 ‘STRENGTHTAPE’, filed on 29/10/2012 and registered on 18/06/2013.
Annex 18: Copy of the certificate of German trade mark No 302 013 002 524 ‘LIFE STREGTH’ filed on 16/04/2013 and registered on 22/07/2013 by Silke Anders.
Annex 19: Copy of the certificate of German trade mark No 3 020 130 025 261 ‘STRENGTHTAPE’, filed on 29/10/2012 by Silke Anders. The mark failed to be registered for being descriptive of goods in Classes 5 and 14.
Annex 20: Whois details containing information on the domain name ‘endevr.de’.
Annex 21: Copy of an e-mail dated 19/01/2015 from Ms Anders to Mr Steve Schone, having as subject ‘STRENGTHTAPE’. The annex contains a further e-mail dated 11/02/2015 sent by Ms Anders concerning issues on the partnership with the applicant. No reference is made to the filing of the contested EUTM.
The EUTM proprietor’s response
As background information, the EUTM proprietor states that he and his wife, Ms Silke Anders, are the co-owners of the company Endevr GmbH, a small-sized family business that was founded in order to sell the applicant’s products under the name ‘PureStrength’, ‘MyID’, and Strengthtape’ within the European market. According to the EUTM proprietor, the applicant was aware of the fact that his company was named Endevr GmbH. In this regard, the EUTM proprietor maintains that the applicant agreed to pay for the costs of the change of name by granting a discount of USD 1 on every product Endevr GmbH purchased from the applicant in January 2014.
In response to the applicant’s claim of bad faith, the EUTM proprietor states as follows:
In 2013 the parties agreed that the mark could be filed in the name of the EUTM proprietor. Therefore, the applicant was totally aware of filing of the contested registration.
On 31/12/2012 the parties signed a “dealer agreement”. Despite being signed in August 2013 the “distribution agreement” had never entered into force, since it was supposed to enter into force “starting from the first shipment of Strengthtape German version”, which, however, never occurred. Consequently, Endevr GmbH was not the exclusive distributor of the applicant’s products (which were also distributed by other undertakings).
Since the “distribution agreement” did not become valid, the “dealer agreement” of 31/12/2012 is the benchmark of the business relationship between the parties. The “dealer agreement” established no obligations between the parties. Between the parties there existed only a partnership for selling the applicant’s goods in Europe. Endevr GmbH did not act on behalf of the applicant and had to purchase its products in compliance with an ordinary seller-customer relationship.
At the time of filing of the contested registration, the applicant had no registered rights on the sign at issue. As far as the EUTM proprietor is aware, the applicant filed an application for registration of the sign ‘ENDEVR’ in the US in December 2014. Moreover, it is not proven that at the time of filing of the contested mark the applicant was a well-known producer of medical and sports products. Indeed, the company name Endevr Inc. has existed only since June 2013. Furthermore, the applicant’s evidence contains no indication relating to the use of the mark ‘ENDEVR’ either in the US or in the EU.
In August and September 2013, Ms Anders wrote to the applicant suggesting the filing of the contested EUTM. On 18/09/2013, the applicant’s CEO sent an e-mail to Ms Anders asking about the possible advantages of an EU registration. On the same day, in her reply, Ms Anders stated: “…I just advice you to protect the name in Europe – that’s all. I did the same thing months ago with the name LIFESTRENGTH – but it is worthless now. I just want to make sure that ENDEVR is protected in Europe as a name for you – that’s all. I started it already, because also for me the risk is too high – building up a business without a name protection is fairly risky in my view”. Accordingly, Ms Anders’ intention was to provide the applicant with a protection in the EU and to protect her own business.
In October 2013, the parties had a meeting in St. Georg, Utah, where they discussed how to proceed for the protection of the trade mark ‘ENDEVR’ in the EU. Therefore, at that time the applicant was aware of the EUTM. From the correspondence between the parties, it is clear that the applicant refused to accept the ownership of the mark due to the fees. During the meeting, the EUTM proprietor and Ms Anders pointed out that, if the applicant did not want to pay for the filing, they would be the owner of the mark. As a consequence, it appears that the applicant agreed to the application for the sign.
Due to the lack of interest in being the owner of the contested mark, the applicant allowed the proprietor to maintain the registration of the contested mark. On 18/04/2014, during a telephone conference between Steve Schone and the EUTM proprietor, the former accepted the registration of the mark.
Bearing in mind that the parties already signed a distribution agreement in August 2013, at the moment of filing the contested EUTM, it was clear that the parties decided to increase their cooperation and, thus, the proprietor had no reason to interfere with the applicant’s business. On the contrary, the filing of the contested registration was aimed at acquiring protection against third parties which could have filed the mark and blocked the distribution of the relevant products in the EU.
In support of its observations, the EUTM proprietor provided the following evidence:
Exhibit 1: Copy of an e-mail dated 20/08/2013 sent by Silke Anders to Mike (an applicant’s employee) informing on the costs for filing a EUTM application for the mark ‘ENDEVR’.
Exhibit 2: Details of the domain name ‘endevr.ch’ registered on 03/08/2013 in the name of the Swiss company Endevr GmbH. The document was filed in order to show that the applicant had other partners sharing the company name ‘ENDEVR’.
Exhibit 3: Copy of the “Dealer Agreement” dated 31/12/2013 signed by Steve Schone, on behalf of Lifestrength L.L.C., and Silke Anders, on behalf of Praxis Quality. The agreement concerns the conditions for the sale of the applicant’s products. It contains no reference to the EUTM.
Exhibit 4: Affidavit of 19/08/2015 signed by the EUTM proprietor and Silke Anders stating, inter alia, the following:
In August 2013 Ms Anders undersigned the distribution agreement with the applicant in order to become a distributor in the EU market. However this agreement had no effect since the condition of the shipment of the product “Strengthtape German version” never took place.
In August 2013, they suggested the applicant to file an application for the contested mark since it was too risky to operate the business without a trade mark protection. The applicant should have been the owner of the registration. In October 2013 during a meeting at the applicant’s headquarters in St. George, Steve Schone said that his company did not want to become the owner of the EUTM because of the costs relating to the registration.
On 18/04/2014, the EUTM proprietor had a conversation with Mr Schone, who accepted that the EUTM proprietor was the owner of the EUTM. Mr Schone suggested that the applicant should pay a licence fee to the EUTM proprietor in case other EU dealers wanted to market the applicant’s products in the EU.
Exhibit 5: Copy of an exchange correspondence via Skype dated 19/08/2013 between Mike Niel and Ms Anders regarding the costs for the filing of a EUTM application.
Exhibit 6: Copy of an exchange of e-mails dated 13/09/2013 between Ms Anders and Mike Niel (already listed above as Annex 13).
Exhibit 7: Copy of an e-mail dated 18/09/2013 sent by Mr Schone to Ms Anders in which he states that he had spoken with his attorney about the possibility to set up a European Corporation and protect the mark ‘ENDEVR’ in the EU.
Exhibit 8: Copy of the reply e-mail dated 18/09/2013 sent by Ms Anders to Mr Schone clarifying that she was not suggesting to set up an EU corporation but only to file a EUTM application for the mark ‘ENDEVR’. She added that “I started it already, because also for me the risk is to (sic) high”. Finally she concluded “I started it and it will take around 6 months. We will have to talk about the costs of the lifestrength name change and the protection of the name for Europe when I will be in Utah – so don’t worry”
Exhibit 9: Extracts dated 24/10/2013 showing, according to the EUTM proprietor, the agenda of the business meeting between the parties, which included “Patent/name protection”. The document contains no reference to the filing of the contested EUTM.
Exhibit 10: Copy of an undated Skype conversation between Mike Nielsen and Silke Anders in which Mr Nielsen says that he liked the “idea of a licensing feee (sic)”. The extract contains no reference to the contested EUTM.
Exhibit 11: Copy of an e-mail dated 14/01/2014 from Ms Anders to Brent West and Mike Nielsen having as subject “Invoicing/my Lifestrength to ENDEVR name change credit”. The e-mail contains no reference to the filing of the contested EUTM.
Exhibit 12: Copy of an e-mail dated 11/02/2015 from Mr Nielsen to Ms Anders regarding the sale of PureStrength bracelets. At the end of the e-mail, Mr Nielsen writes that “We would like to hear some insights for you or Richard as how to move forward with the trademark. Your input is appreciated”.
The applicant’s reply
In its reply, the applicant reiterates its previous arguments and adds the following:
The evidence shows that the applicant has used mark ‘ENDEVR’ in connection with medical and sport bracelets and bandages since summer 2013. Also the sign has been used as e-mail address and as a logo at the signature of e-mail letters before the filing of the contested registration.
Until September 2013 Ms Anders used the e-mail address ‘praxisquality.de’. Praxis Quality is the name of the company previously owned by the EUTM proprietor and his wife.
The EUTM proprietor (along with Silke Anders and Endevr GmbH) had been clearly in the position of a “distributor” since the beginning of 2013. He and his company had a written authorisation to represent the best interests of the applicant and its products in Europe (Annex 6). The existence of the partnership agreement is confirmed by the EUTM proprietor himself.
Contrary to the EUTM proprietor’s allegations, the applicant did not give its consent for the filing of the EUTM. Nor did the applicant know that the mark was filed in the name of Mr. Heger.
During the meeting held on 24/10/2013 the parties had no discussion regarding the EUTM. In any case, the meeting took place after the filing of the EUTM, so nothing said there would be understood as ‘clear consent in advance’.
According to case-law, a relevant factor for a find of bad faith may be a request for financial compensation made by the EUTM proprietor to the invalidity applicant if there is evidence that the EUTM proprietor knew of the existence of the earlier identical or confusingly similar sign and expected to receive a proposal for financial compensation from the invalidity applicant. Silke Anders and Mr. Heger have indeed made requests for financial compensations.
From a letter sent by the legal representative of the EUTM proprietor to the applicant’s legal representative on 22/05/2015, it appears that the requested amount (which has in the meantime increased to EUR 258,191 as summarised on the last page of the last annex of the letter) is not reasonable, especially the amount requested for the domain names (EUR 120,000).
The EUTM proprietor filed the EUTM while distributing the applicant’s goods in Europe. If that were indeed compliant with the general code of ethics in this economic sector, the manufacturers would be continuously exposed to their local dealers and they would not be able to enter any new market without securing trademark protection first. It would not be reasonable to expect such conduct from foreign importers; it is not consistent with commercial logic.
In support of its observations, the applicant filed the following evidence:
Annex 22: Extracts form the website www.praxisquality.de providing general information of the company Praxis Quality owned by the EUTM proprietor and his wife.
Annex 23: Extracts from ‘YouTube’ featuring a video published on 25/06/2013 and entitled “Endevr Products - LifeStrength, MyID, & StrengthTape” counting 318 views.
Annex 24: Copies of 3 invoices issued by Endevr LLC to the US company Stander Inc. between 11/06/2016 and 13/08/2013. The annex also contains copy of two invoices issued by Stander Inc. to a Dutch client on 02/10/2013 and on 12/08/2013.
Annex 25: Extracts from the applicant’s Facebook page dated August and September 2013 showing the following sign:
Annex 26: Copy of an invoice issued by the applicant to a German client on 14/09/2013 featuring the following sign:
Annex 27: Copy of e-mails dated September 2013 between Ms Anders and the applicant’s employees regarding domain matters and orders of the applicant’s products.
Annex 28: Copy of e-mails dated between July and September 2013 between employees of the applicant, the US company Stander and the German company Bort GmbH regarding packing for ‘STRENGTHTAPE’ products in which it is also featured the writing “Produkt des ENDEVR”.
Annex 29: Letter sent by the representatives of the EUTM proprietor to those of the applicant on 22/05/2015. In the letter, the EUTM proprietor’s representatives contest the applicant’s allegations on the proprietor’s bad faith and propose, inter alia, to assign or cancel the EUTM in front of a compensation for the costs for the EUTM registration (including legal costs and domain registrations) for the amount of EUR 7,771.57. The request also includes compensations for legal costs related to other matters (for a total amount around EUR 243,000).
Annex 30: Copy of an e-mail dated 25/06/2015 in which an employee of Bort GmbH informed the applicant that legal representatives of Endevr GmbH sent a letter requesting payment of over EUR 250 000 “in return for the transfer of the various domains as well as trademarks”.
Annex 31: Copy of the registration certificate of the EUTM No 13 410 981, filed on 29/10/2014 and registered on 11/03/2015 by Silke Anders, for the figurative sign ‘MyID’.
Annex 32: Copy of the US trade mark application No 86 479 575 ‘ENDEVR’ filed on 12/12/2014 by the applicant, which claimed first use in commerce of the mark dating back 31/08/2013.
The EUTM proprietor’s rejoinder
After an initial extension of the time limit, the EUTM proprietor submits his rejoinder reiterating his previous allegations and contesting the applicant’s arguments as follows:
A legitimate interest in filing the EUTM application is reasonable with respect to the fact that the applicant refused to protect the mark in the EU, whilst the EUTM proprietor and his company had to face the risk that third parties could take advantage of the absence of such legal protection. As a matter of fact, the applicant’s business policy was neither to protect the sign in the EU nor to secure the related domain names.
The company name ‘ENDEVR’ was registered only in 2013. Therefore, it is obvious that the name ‘ENDEVR’ was not known to a wider public (only to some dealers) at the time of filing of the contested mark.
Regarding the request for financial compensation in connection with the EUTM, it is correct that the applicant granted a discount of USD 1 on every product Endevr GmbH purchased by the applicant (total amount USD 8,500). However, this credit has nothing to do with the filing of the EUTM, but only with costs related to the change of company name from Lifestrength GmbH to Endevr GmbH.
In support of its observations, the EUTM proprietor submitted the following evidence:
Exhibit 13: Copy of an e-mail dated 24/07/2013 from Ms Anders requesting the applicant information on the delivery of the German version of the ‘STRENGTHTAPE’ products. No reference is made to the contested EUTM.
Exhibit 14: Copy of two e-mails dated 12/12/2013 and 20/02/2014 from Ms Anders regarding issues related to ‘STRENGTHTAPE’ and ‘ST’ products. No reference is made to the contested EUTM.
Exhibit 15: Copy of flight tickets on the name of the EUTM proprietor showing that he flew to Los Angeles on 22/10/2013 and came back to Munich on 01/11/2013.
ABSOLUTE GROUNDS FOR INVALIDITY – ARTICLE 52(1)(b) EUTMR
Article 52(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).
As a general rule, good faith on the part of the EUTM proprietor is presumed until the opposite is proven and the burden of proof for that rests on the invalidity applicant. The problem with applying burden-of-proof rules is that it gives an unfair advantage to the party that is first to file in situations where both parties have been commercially connected with the same trade mark. Therefore, the burden of proof ought not to be so strenuous that the applicant is forced to overcome a significant disadvantage from the very start.
The date of filing of the contested EUTM was 19/09/2013. Therefore, the applicant for invalidity must prove that the EUTM proprietor acted in bad faith on this date.
Finally, in the context of the overall analysis undertaken pursuant to Article 52(1)(b) EUTMR, account may be taken of the commercial logic underlying the filing of the application for registration of that sign as a European Union trade mark (14/02/2012, T-33/11, Bigab, EU:T:2012:77, § 21) as well as of the chronology of the events which surrounded the filing (03/06/2010, C‑569/08, Internetportal, EU:C:2010:311, § 52).
Assessment of bad faith
In the present case, bad faith is claimed from the fact that, at the time of filing of the contested mark:
The EUTM proprietor filed a EUTM application for a mark that is identical to the applicant’s company name and covers goods that are identical or similar to those marketed by the applicant through local distributors in the EU.
The EUTM proprietor and his wife were co-owners of a German undertaking, which had a business partnership with the applicant in order to sell its products within the German market.
Due to the parties’ partnership, the EUTM proprietor had knowledge that the EUTM was related to the applicant and his aim was to gain exclusive rights on the sign and prevent the applicant from using its own brand in the EU.
The e-mail correspondence submitted shows that on 24/09/2012 Ms Silke Anders (the EUTM proprietor’s wife) contacted the applicant with the intention of entering into a business relationship. At that time the parties were operating under the company names ‘Lifestrength’ (the applicant) and ‘Praxis Quality’ (the company originally co-owned by the EUTM proprietor and his wife).
The negotiation between the parties led to the signature of two agreements in December 2012 (“Dealer Agreement” - Exhibit 3) and in August 2013 (“Distribution Agreement” or “Customer Protection Agreement” - Annex 10). Although the document listed as Annex 10 is undated, it is undisputed that the “Distribution Agreement” was signed in August 2013.
On 01/06/2013 the applicant changed its company name to ‘Endevr’ (Annex 2).
In August 2013 Ms Anders informed the applicant’s employees about the costs related to the filing of a EUTM application (Exhibits 1 and 5). In September 2013 Ms Anders suggested the applicant to file a EUTM application for the mark ‘ENDEVR’ on the applicant’s name (Annex 13; Exhibits 6, 7 and 8).
On 19/09/2013 the EUTM proprietor filed the mark in his name.
The EUTM proprietor argues that since the applicant did not show any interest in protecting the mark, he finally filed the EUTM in order to protect both parties’ business. He further explains that his purpose was to transfer the mark to the applicant, but when the latter refused to reimburse the former for the application fees, it was clear that the applicant was not interested in the contested mark and essentially accepted its registration in the name of the EUTM proprietor.
However, the EUTM proprietor’s allegation that the applicant refused to become the owner of the EUTM is not corroborated by any evidence. In fact, the EUTM proprietor refers to “telephone conference” and to conversations held during the meeting in St. George (Utah), but none of evidence on file suggests that the applicant agreed on the EUTM filing.
If anything, from the applicant’s statements it is clear that at no point did it authorise third parties (including the EUTM proprietor) to register a mark consisting of its company name. To such extent, the filing of the contested EUTM took place only a month after Ms Anders sent her fist e-mail to the applicant suggesting to protect the sign in the EU and few weeks after the “Distribution Agreement” was signed. Accordingly, it cannot be excluded that at the time of filing of the contested mark the applicant had a legitimate interest to register this trade mark so as to acquire an EU protection on his company name.
In its submissions, the EUTM proprietor claims that at the time of filing of the contested mark, the applicant held no registered rights to ‘ENDEVR’ marks. He further adds that the applicant has not demonstrated any prior use of the mark either in the US or in the EU.
However, in bad faith applications, the applicant does not need to have a registered right; it is sufficient that the applicant has a legitimate right to a sign.
By covering “any name, trademark, trade name, design, logo, slogan, label, title or insignia now or hereafter owned, adopted or used (even descriptively) by Endevr LLC”, it is clear that the applicant’s company name ‘Endevr’ falls within the “Distribution Agreement” between the parties.
Even assuming that the “Distribution Agreement” signed by the applicant and the EUTM proprietor’s wife, whose validity is contested by the EUTM proprietor himself, never entered into force because the German version of the product called ‘Strengthtape’ was not shipped to the EUTM proprietor, as noted above, the agreement was signed only few weeks before the filing of the contested EUTM. In addition, the applicant has managed to prove that, at that time, the EUTM proprietor’s company was already operating as a distributor of the applicant’s products.
In view of this relationship, the EUTM proprietor had a duty of fair play and loyalty towards the applicant. The latter in turn had legitimate expectations and objectives that the contested mark would have been filed in the name of the rightful owner, namely the applicant. Thus, the proprietor did not act ethically and the registration of the contested mark deprived the applicant from its legitimate right to its company name ‘ENDEVR’. By filing and registering the contested mark, the EUTM proprietor has effectively put an obstacle in the way of the rightful owner of the sign, which is the applicant.
Also, when stating that his first intention was to file the EUTM on the name of the applicant or that he applied for the mark on its behalf, the EUTM proprietor confirms that the sign ‘ENDEVR’ was seen by both parties as belonging to the applicant.
In the present case, therefore, it is evident to the Cancellation Division that the legitimate owner of the sign ‘ENDEVR’ was the applicant.
Moreover, the applicant’s evidence shows that preliminary activities related to the mark were launched on social networks (Annexes 23 and 25) and that the mark was already affixed on packaging distributed by the German company Bolt GmbH (Annex 28) and on an invoice issued to a German client (Annex 26). By contrast, at the date of filing of the contested registration, the EUTM proprietor had never acquired any autonomous right and was even under a specific duty to refrain from using the sign and to observe fair play vis-à-vis its partner.
According to the case-law, there is bad faith when the EUTM proprietor intends through registration to lay its hands on the trade mark of a third party with whom it had contractual or pre-contractual relations or any kind of relationship where good faith applies and imposes on the EUTM proprietor the 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). Bad faith may apply both when the application was made in order to misuse the EUTM system or in order to misappropriate the rights of others (13/11/2007, R 336/2007-2 - ‘Claire Fisher/Claire Fisher’, § 20).
Even though the EUTM proprietor states that its purpose was to protect both parties’ business, the filing of the contested EUTM had the effect of placing the sign ‘ENDEVR’ into his control in the EU territory. According to the case-law, a EUTM proprietor can act in bad faith within the meaning of Article 52(1)(b) EUTMR even though it believes that it is morally and legally entitled to act as it has done (04/06/2009, R 916/2004, ‘Gerson’, § 53).
Taking into account the business relationship between the EUTM proprietor’s company and the applicant, it is reasonable to conclude that the EUTM proprietor was aware, or ought to have been aware, that the ‘ENDEVR’ sign is a valuable piece of intellectual property to the applicant and that the registration of the contested EUTM in his name for the goods in question would strip the applicant of its rights in the EU territory.
The above-mentioned facts, namely that the applicant had a significant and justified legal and commercial interest in the sign ‘ENDEVR’ and that the EUTM proprietor was aware of that interest in the field of medical products, imposed a duty of fair play on the EUTM proprietor and towards the applicant. Duty of fair play can be understood as honest commercial practices and accepted business ethics, in contrast to dishonest commercial behaviour (11/06/2009, C‑529/07, Lindt Goldhase, EU:C:2009:361, § 23).
In the light of the above principles and of the facts proved by the applicant, the EUTM proprietor’s actions constitute a breach of the duty of fair play, thus deviating from the legitimate functions of a trade mark.
The Cancellation Division therefore concludes that the invalidity applicant has succeeded in proving its allegation that the EUTM proprietor was acting in bad faith when he filed the contested EUTM.
Since the request has succeeded fully on the basis of Article 52(1)(b) EUTMR, the Cancellation Division will not examine the other grounds raised by the applicant.
In the light of the above, the Cancellation Division concludes that the application is totally successful and the European Union trade mark should be declared invalid for all the contested goods. When bad faith of the EUTM owner is established, the whole EUTM is declared invalid. The General Court confirmed this approach and stated that a positive finding of bad faith at the time of filing of the contested EUTM could only lead to the invalidity of the EUTM in its entirety (11/07/2013, T‑321/10, Gruppo Salini, EU:T:2013:372, § 48).
According to Article 85(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, he must bear the cancellation fee as well as the costs incurred by the applicant in the course of these proceedings.
According to Rule 94(3) and (6) EUTMIR and Rule 94(7)(d)(iii) 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
According to Article 59 EUTMR, any party adversely affected by this decision has a right to appeal against this decision. According to Article 60 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.
The amount determined in the fixation of the costs may only be reviewed by a decision of the Cancellation Division on request. According to Rule 94(4) EUTMIR, such a request must be filed within one month from the date of notification of this fixation of costs and shall be deemed to be filed only when the review fee of EUR 100 (Annex I A(33) EUTMR) has been paid.