Bad faith and bad bunnies

In a reference from the Austrian Supreme Court, the European Court of Justice (ECJ) has ruled on the meaning of bad faith in Article 51(1)(b) of the Community Trade Mark Regulation (40/94/EEC). This Article provides that a Community trade mark (CTM) shall be declared invalid where the applicant was acting in bad faith when he filed the application for the trade mark.

Background

This reference to the ECJ by the Austrian Supreme Court emanated from the case of Chocoladefabriken Lindt & Sprungli AG v Franz Hauswirth GmbH. The facts of this case have already been examined in the article entitled “Watership down? Lindt defends chocolate bunny trade mark” in our December E-Bulletin available here. In brief, this case concerned a dispute over Lindt's Community Trade Mark (CTM) for a three dimensional chocolate bunny wrapped in gold-coloured foil with a bell and a red ribbon around its neck. Austrian chocolate maker Hauswirth has been making and selling chocolate bunnies since the 1960s. Lindt has been making and selling chocolate bunnies since the1950s and started marketing them in Austria in 1994. In 2001 Lindt acquired a CTM for the three dimensional chocolate bunny. Lindt subsequently took legal action against Hauswirth for trade mark infringement for making "confusingly similar" products to Lindt's chocolate bunny and tried to stop Hauswirth producing its chocolate bunnies. However, Hauswirth fought back claiming that, by entering the market and registering as a trade mark the shape that Hauswirth already sold, Lindt had acted in bad faith by registering the trade mark for the sole reason of blocking competitors’ products and therefore the trade mark should be declared invalid.

Questions Referred

The Austrian court referred questions to the ECJ to see if Lindt’s behaviour in registering the trade mark constituted bad faith.

The Austrian court asked the ECJ if Lindt was automatically to be regarded as acting in bad faith just because it knew when it applied to register the trade mark that Hauswirth already used a shape for its product which was so similar as to be capable of being confused with Lindt’s product and Lindt applied for the trade mark to be able to prevent Hauswirth from selling that product?

The court also asked if Lindt was automatically acting in bad faith if Lindt applied to register the trade mark with the intention of preventing a competitor from trading even if that competitor had acquired “valuable property rights” in the shape?

ECJ’s Ruling

The ECJ said that the fact that the applicant knew or must have known that a third party had been using an identical or confusingly similar sign for an identical or similar product was not sufficient in itself to conclude that the applicant was acting in bad faith. To determine whether the applicant was acting in bad faith, consideration must be given to the applicant’s intention at the time he filed the trade mark application. The ECJ said that there could be legitimate reasons for registration of the trade mark. However, an intention to prevent a third party from marketing a product could be regarded as bad faith in certain circumstances, for example, where the applicant applied for the trade mark with no intention to use it but only to prevent a third party from entering the market. Equally, where a third party has used a confusingly similar mark for a long time, which had acquired some degree of legal protection, that could be a factor in determining whether the applicant was acting in bad faith.

However, the ECJ considered that where the trade mark was for a three-dimensional mark consisting of the shape of a product, it might be easier to establish bad faith where a competitor’s freedom to choose the shape of a product and its presentation was restricted by technical or commercial factors, so that the trade mark owner was able to prevent his competitors from not merely using an identical or similar sign, but also from marketing comparable products.

In order to determine whether an applicant was acting in bad faith within the meaning of Article 51(1)(b) of the CTM Regulation, the ECJ held that a national court must look at the whole of a case and take account of all of the relevant factors specific to that particular case which pertained at the time of filing of the trade mark application, in particular:

• The fact that an applicant knows or must know that a third party is using, in at least one Member State, an identical or confusingly 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.
• The degree of legal protection enjoyed by the third party’s sign and the sign for which registration is sought.

Comment

This case is the first reference to the ECJ concerning the meaning of bad faith in the CTM Regulation or the EC Trade Marks Directive. The ECJ has largely followed the approach of Advocate General Sharpston, who said that the concept of bad faith is likely to be impossible to pin down. The test put forward by the ECJ is a broad and flexible test with emphasis on national courts considering each case on its own facts. However, it is clear from this ruling that the concept of bad faith is not limited to situations in which the applicant had no intention of using the trade mark.

03 July 2009

Challenge to patent validity folds in the face of limited disclosure

A recent decision of the UK Patent Court examined some interesting questions regarding a challenge to a patent on the basis of disclosure prior to the priority date of the patent.

The case in question was that of Folding Attic Stairs Limited (Attic) v The Loft Stairs Company Limited (Loft) and unsurprisingly surrounded the manufacture and sale of folding attic ladders.

Loft had been a customer of Attic over a period of time but following a dispute between the parties Loft began to manufacture loft stairs itself rather than purchasing them from Attic. Upon discovering this Attic decided to raise an action against Loft for infringement of Attic's patent.

The patent in question covered a key component of how folding stairs for loft access were constructed and in particular a folding mechanism.

There were two issues examined by the Court. The first related to the interpretation of certain phrases in the claims of the patent and the second concerned whether the invention had been disclosed to the public prior to the submission of the patent application.

It is the second of these issues that this article focuses upon. There was little debate to be had about whether the actions of Loft would constitute infringement of the patent if it were valid as Loft were making stairs to Attic's design. The issue to be considered was therefore whether the disclosure to the public would result in a successful challenge to the validity of the patent.

The Court heard that Attic had provided members of the public, including an Irish minister and a press photographer, access to its premises before the patent had been applied for. A prototype of the folding stairs protected by the patent was seen and photographed by these members of the public and a picture subsequently appeared in the press that showed the prototype in the background.

The question that the Court was required to answer therefore was whether this disclosure of the prototype prior to the date of submission of the patent application was sufficient to constitute a disclosure of the invention to the public.

Attic presented arguments that the prototype had not been made available in a public place and that it was only available to a very limited group of people, the minister and the photographer. It further argued that those people were not skilled in the art, had no interest in manufacturing folding stairs and did not have any particular interest in the folding mechanism covered by the patent.

Loft argued that despite the limited group of individuals and their apparent disinterest in the invention they were "free to examine the unit if so minded, they were free to impart to anyone in the world whatever recollection they had of it, and so its construction must be considered to have been made available to the public".

The Court held that it was clear law that if the prototype had been made available in a public place where anyone might have been able to examine it then the invention would have been made available to the public.

In the present case however, it agreed with the arguments put forward by Attic and held that the prototype had not been in a public place at all, had been disclosed to a limited group who were not skilled in the art and had no interest in the invention or in manufacturing folding stairs.

The Court commented that even if "some officious person had stopped them on the way out and asked them to describe the test unit, it was unlikely that they would have been able to describe the presence of an inner frame with side beams spaced from the sides of the ladder".

Having considered this and the other issues raised in the action, the Court therefore upheld the validity of the patent and that it had been infringed by Loft's product.

Despite the Court's view that a patent is not invalidated by the limited disclosure in this case, we still recommend restricting disclosure and using non-disclosure agreements.

03 July 2009

Battle of the Books

Two disputes involving high profile novels have recently brought copyright infringement to the fore in the international media.

The first involves the perennial schoolteachers' favourite, "The Catcher in the Rye". Its author, JD Salinger, is seeking an injunction in the US against the writer and distributor of a book which claims to be a sequel to the classic novel. The new book is entitled "60 Years Later: Coming through the Rye" by an author called "JD California" and is dedicated to JD Salinger. Whilst the original novel focussed on the troubles of a youthful Holden Caulfield, the protagonist in California's book is an elderly angst-ridden "Mr C".

Salinger is reported to have claimed the new book infringes his sole right to use the original's characters or to write a follow-up, which he has "decidedly chosen not to". It is outlined that the sequel is not a parody, or a critique of the original, which would be likely to exempt it from copyright infringement.

Meanwhile, Bloomsbury Publishing is subject to copyright proceedings raised by the estate of children's writer Adrian Jacobs over claims that J K Rowling "copied" Jacobs' work. The claim, raised in the High Court in London, seeks an injunction to prevent sales of Harry Potter and the Goblet of Fire and either damages or a share of profits.

It is argued that the plot of the Goblet of Fire, published in 2000, borrowed "substantial parts" from Jacobs' slightly less well known "The Adventures of Willy the Wizard-No 1 Livid Land", published 10 years before the first Potter book came out.

It is claimed that both novels feature protagonists who are wizards who win wizard contests. Other similarities referred to in the claim include the idea of wizards using trains.

Jacobs' estate and Salinger may encounter difficulties in demonstrating the requisite degree of copying. The essence of copyright law is that expression of an idea is protected, but not the idea itself. In the UK infringement of this type requires reproduction of a "substantial part" of the work in question. Therefore the central idea of a work must usually have been copied in virtually identical words for infringement to be established.

Had the Salinger case arisen in the UK, success may have been found in relying on the grounds of passing off, i.e. that the public would be deceived into thinking that the "sequel" was a product associated with Salinger. However, this may depend on how the product is presented to the public. A passing off action could however have encountered issues given the awareness of the public to tribute novels/parodies, particularly of classics.

Cases of this type can provide interesting examination of the distinction between an idea and its expression, and we will keep you updated as they progress.

03 July 2009

James Bond fails to keep Dr No captive

There was good news for international super villains across the world recently as one of their number, Dr No, saw the rights to his name released from the clutches of James Bond and awarded to a German media group.

This is the latest development in a long running battle over the rights to the name of Dr No, the eponymous villain from the first James Bond film, which has recently been the subject of a decision from the European Court of First Instance.

German media group, Mission Productions, has successfully won the right to apply for trade mark protection for the name across Europe following an eight-year battle.

Danjaq, the owners of the rights to the James Bond franchise had challenged the trade mark on the grounds that there was a risk of confusion because of the use of the terms "Dr No" and "Dr NO" in the James Bond films and related promotions.

The Court of First Instance did not agree with Danjaq however on the basis that the essential function of a trade mark was commercial recognition. It held that Danjaq's uses of the name were artistic rather than commercial.

The Court stated "Those signs affixed to the covers of the video cassettes or to the DVDs help to distinguish that film from other films in the James Bond series. Other signs, such as 007 or James Bond, indicate the commercial origin of the film. In those circumstances, the signs Dr No and Dr NO cannot be regarded as well known trade marks or non-registered trade marks that could be relied on in order to oppose the registration of a Community trade mark."

Danjaq previously opposed the application for this trade mark when the German company submitted its application to the European trade mark office. Danjaq were also unsuccessful on that occasion. In response to this initial failure Danjaq took steps to submit trade mark applications for all of the other titles in the James Bond series.

Danjaq has been successful in obtaining trade marks for a large number of the titles but it has also received challenges in respect of some of the most famous Bond titles: Casino Royale, Octopussy and Goldeneye. These applications are still pending and on the basis of the decision in respect of Dr No there may be further disappointment ahead for Danjaq.

03 July 2009