The assessment of bad faith in French trade mark proceedings

Recent case law has shown that bad faith is a continually evolving concept whose assessment can lead either to the cancellation or to the transfer of trade mark applications registered in bad faith.

In 2019, French courts notably cancelled important French trade marks such as ‘Vente-privee‘ and ‘Laguiole‘ on the basis of their applicant’s bad faith.

Besides cancellation, French law specificity is to allow the transfer of ownership of trade marks registered in bad faith from the applicant to the claimant, therefore allowing the claimant to benefit from the application’s date of filing rather than filing a new application that could face third parties’ prior rights.

The concept of bad faith

Bad faith is a general legal concept that is of course not specific to trade mark law.

Although the French IP code does not provide any definition of bad faith, it follows from settled case law that a trade mark is registered in bad faith ‘when it is registered with the intention of depriving others of a sign necessary to their activity’ (Cass Com, 25 Avril 2006, 04-15641).

The Court of Justice of the European Union provides that all the relevant factors specific to the case at issue must be taken into account when assessing bad faith, in particular the following criteria, which French courts apply:

  • ‘the fact that the applicant 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 sign for which registration is sought;
  • 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 sign for which registration is sought.’ (ECJ, 11 June 2009, C529/07)

The burden of proof is on the claimant alleging bad faith.

Procedural options arising from bad faith

Freedom of choice

Before French courts, a claimant may decide to bring either a trade mark cancellation action or a claim for ownership, even though it does not have any prior trade mark right.

While cancellation actions are based upon the general principle Fraus omnia corrumpit (‘fraud corrupts everything’), claims for ownership are based upon Article L.712-6 of the French IP code.

Said article provides that ‘If a registration has been requested either in fraud of the rights of a third party, or in violation of a legal or contractual obligation, the person who believes to have a right on the trade mark can claim its property in justice’, and that ‘unless the applicant is in bad faith, the claim for ownership shall lapse after five years from the publication of the application for registration.’

Claims for trade mark ownership, which are notably inspired by the patent system, are hybrid actions that both protect the trade mark right and sanction fraud.

Unlike French law, EU law does not provide any trade mark claim for ownership. Bad faith is considered as an absolute ground for invalidity, which means that EU trade mark cancellation actions may be brought before the European Union Intellectual Property Office or as a counterclaim in infringement proceedings (Article 59(1)(b) Regulation 2017/1001 on the EU trade mark). Hence, French courts reject claims for ownership concerning EU trade marks applications (TGI Paris, 13 January 2017, 15/16930).

Just as the assessment of bad faith is made on a case-by-case basis, the opportunity to launch a cancellation action or a claim for ownership depends on the circumstances.

Recent developments regarding cancellation actions

On 3 October 2019, the Paris Court of First Instance terminated a lengthy debate over the French word and design trade mark ‘vente-privee‘ registered by the French company, the online ‘private sale’ French leader, in trade mark proceedings initiated by its French competitor in 2016 (although other parts of the proceedings were initiated in 2012).

It is worth noting that the court ruled first that it acquired a distinctive character through use and therefore could not be cancelled on this ground. The Cour de cassation adopted the same ruling concerning a word trade mark ‘vente-privee‘ (Cass com, 6 December 2016, 15-19048).

The court cancelled the French word and design trade mark ‘vente-privee‘ in class 35 on the ground of bad faith. It stated that ‘the term vente privée (private sale) has always designated event sales, to a public of guests, of destocking unsold goods from old collections of major brands’. Hence, it stressed that Vente ‘cannot appropriate generic terms that must remain available to all economic actors in this sector and has no legitimacy to monopolise the terms vente-privée (private-sale), extremely close to vente privée (private sale), as a trade mark and to deprive its competitors of the use of these words, without creating a distortion of competition’. In particular, the director’s assertions during an interview were considered as supporting the company’s knowledge of the generic character of the term and its intention of appropriation (TGI Paris, 3 October 2019).

On 5 March 2019, the Paris Court of Appeal also cancelled several ‘Laguiole‘ trade marks and variants on the ground on bad faith, on the ground of the general principle Fraus omnia corrumpit and Article L.711-4 of the IP Code.

Laguiole is a French village and the name of famous knives.

The Court found that the applicant registered said trade marks in bad faith, with a strategy aimed at depriving the village of Laguiole and its citizens of the name Laguiole that alludes to its famous knives with a particular shape, therefore affecting the name itself and renown.

In particular, the court noted that the applicant filed several trade marks for activities identical or similar to the ones of the village, opposed to several trade mark registrations of the village itself, and manufactured its products away from the village including China (CA Paris, 5 March 2019, 17/04510).

Although the trade marks cancelled were not registered for cutlery products, this case is part of lengthy court proceedings, among which the ECJ ruled that the company Forge de Laguiole can oppose at an EU level the registration of Laguiole trade marks in the field of cutlery, but not in areas in which it does not carry on any activity (ECJ, 5 April 2017, C598/14 P).

Recent developments regarding claims for ownership

Trade mark claims for ownership are less common, as a result of the strict conditions pertaining to these actions, ie, necessity to show a legitimate right on the trade mark and the five-year limitation period.

Recent case law ordered the full transfer of trade marks to the claimants because of their applicant’s bad faith (CA Bordeaux, 26 March 2019, 17/03991; TGI Nanterre, 20 December 2018, 17/01027; Cass com, 7 March 2018, 16-16812).

The court notably ruled that the applicant knew the use of the sign for products in class 25, which was supported by the filing of a sign strictly identical to the claimant’s one, and that the applicant did not show a necessity to use the claimed sign for the purpose of its activity (TGI Nanterre, 20 December 2018, 17/01027).

As a general principle of civil law, when a transfer of ownership is ordered, all the profits and incomes related to the trade mark at issue must be returned to the claimant, the property of the trade mark itself being returned from the date of filing. In addition, all assignment or licence agreement pertaining to said trade mark shall in principle be cancelled.

Today, bad faith in trade mark law is still a topical matter with the recent adoption in France of Order No 2019-1169 of 13 November 2019 implementing the EU Directive 2015/2436 of 16 December 2015 to approximate the laws of the member states relating to trade marks.

The order notably provides bad faith as an absolute ground for invalidity (future Article L.711 2(11°) IP Code), therefore in line with what already exists for EU trade marks (Article 59(1)(b) Regulation 2017/1001 on the EU trade mark).

Article L.712-6 of the IP Code concerning trade mark claims for ownership remains unchanged.