Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE GENERAL COURT (Fifth Chamber)

19 October 2022 (*)

(EU trade mark – Invalidity proceedings – European Union figurative mark Lío – Absolute ground for invalidity – Bad faith – Article 52(1)(b) of Regulation (EC) No 207/2009 (now Article 59(1)(b) of Regulation (EU) 2017/1001))

In Case T‑467/21,

DBM Videovertrieb GmbH, established in Wesel (Germany), represented by J. Fusbahn and D. Dawirs, lawyers,

applicant,

v

European Union Intellectual Property Office (EUIPO), represented by N. Lamsters and E. Markakis, acting as Agents,

defendant,

the other party to the proceedings before the Board of Appeal of EUIPO, intervener before the General Court, being

Nube, SL, established in Ibiza (Spain), represented by J. Gracia Albero and R. Ahijón Lana, lawyers,

THE GENERAL COURT (Fifth Chamber),

Composed, at the time of the deliberations, of D. Spielmann, President, R. Mastroianni and I. Gâlea (Rapporteur), Judges,

Registrar: E. Coulon,

having regard to the written part of the procedure,

having regard to the fact that no request for a hearing was submitted by the parties within three weeks after service of notification of the close of the written part of the procedure, and having decided to rule on the action without an oral part of the procedure, pursuant to Article 106(3) of the Rules of Procedure of the General Court,

gives the following

Judgment

1        By its action under Article 263 TFEU, the applicant, DBM Videovertrieb GmbH, seeks annulment of the decision of the Fifth Board of Appeal of the European Union Intellectual Property Office (EUIPO) of 2 June 2021 (Case R 1220/2020‑5) (‘the contested decision’).

 Background to the dispute

2        In 2011, the intervener, Nube, SL, founded the Lío club in Ibiza. It includes a restaurant, a cabaret and a nightclub.

3        In 2015, the applicant’s managing director, Mr Dino Baumberger, travelled as a tourist to Ibiza. On 3 June 2015, following that stay, the applicant filed an application for registration of an EU trade mark with EUIPO in respect of a figurative sign for goods and services in Classes 21, 24, 25, 34, 40 and 42 of the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended. On 8 September 2015, the intervener filed a notice of opposition to registration of that mark. On 12 August 2016, the opposition was rejected by the Opposition Division. On 15 November 2016, that mark was registered under number 14194872 (‘mark No 14194872’). That mark was the subject of invalidity proceedings which gave rise, on appeal, to a decision of the Fifth Board of Appeal of EUIPO of 2 June 2021 (Case R 1221/2020‑5), at issue in Case T‑466/21.

4        On 28 November 2016, EUIPO was notified of the applicant’s transfer of mark No 14194872 to Mr Baumberger. On 13 December 2016, the latter sent a sales offer for that mark to an agent of the intervener for EUR 1.5 million.

5        In February 2017, the Spanish press referred to the involvement of a new investor within the group, holding, inter alia, the Lío club. On 12 June 2017, a second sales offer for mark No 14194872 was sent to that new investor for an amount of EUR 3.5 million. That offer stated that the applicant’s managing director became aware of the Lío club during a stay in Ibiza in 2015, that he had a dog named Lio and that he wished to purchase a cap or a T-shirt bearing that name. In addition, it stated that the first merchandising items were already on sale in Ibiza and were being well received.

6        On 20 September 2017, the applicant submitted a further application for registration of an EU trade mark with EUIPO. Registration as a mark was sought for the figurative sign reproduced below, identical to that constituting mark No 14194872:

7        The goods and services in respect of which registration was sought are in Classes 9, 14, 16, 18, 20, 26 and 35 and correspond, for each of those classes, to the following description:

–        Class 9: ‘Covers for smartphones’;

–        Class 14: ‘Gemstones, pearls and precious metals, and imitations thereof’;

–        Class 16: ‘Decoration and art materials and media’;

–        Class 18: ‘Luggage, bags, wallets and other carriers’;

–        Class 20: ‘Statues, figurines, works of art and ornaments and decorations, made of materials such as wood, wax, plaster or plastic, included in the class’;

–        Class 26: ‘Accessories for apparel, sewing articles and decorative textile articles’;

–        Class 35: ‘Publicity columns preparation’.

8        On 8 January 2018, that mark was registered under number 17225939.

9        On 22 January 2018, a third sales offer relating to both that mark and mark No 14194872 was made for an amount of EUR 1.5 million.

10      On 26 July 2018, the intervener filed an application with EUIPO for a declaration of invalidity of the contested mark referred to in paragraph 6 above, based on, first, Article 59(1)(b) of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (OJ 2017 L 154, p. 1), secondly, Article 60(1)(a) of that regulation, read in conjunction with Article 8(5) thereof, and, thirdly, Article 60(2)(c) of that regulation.

11      The intervener relied, inter alia, on the following earlier rights:

–        the EU figurative mark applied for on 14 March 2011 and registered on 28 August 2012 under number 9806324 for services in Classes 41 and 43, reproduced below:

–        the EU figurative mark applied for on 31 July 2014 and registered on 3 March 2017 under number 13130364 for services in Classes 41 and 43, reproduced below:

–        the Spanish figurative mark filed on 14 March 2011 and registered on 8 July 2011 under reference M2974171 for services in Classes 41 and 43, reproduced below:

12      On 28 April 2020, the Cancellation Division upheld the application for a declaration of invalidity of the contested mark on the basis of Article 59(1)(b) of Regulation 2017/1001.

13      On 15 June 2020, the applicant filed a notice of appeal before EUIPO against the decision of the Cancellation Division.

14      By the contested decision, the Fifth Board of Appeal of EUIPO dismissed the appeal on the basis of six factors. In the first place, the Board of Appeal found that the contested mark was virtually identical to the intervener’s Lío sign. In the second place, it found that the applicant was fully aware of the intervener’s commercial activity at the time when it applied for registration of that mark. In the third place, it considered that the applicant had neither shown a proper and economically viable use of the contested mark nor an activity observing an honest commercial logic and, in the fourth place, that the applicant’s attempts to sell mark No 14194872 and the contested mark to the intervener appeared to be at odds with ethical and honest commercial practices due to the aspects of undue pressure which they contained. In the fifth place, it stated that there was no comprehensible connection between the contested mark, the applicant and its company. Lastly, in the sixth place, it considered that the applicant’s explanations were not free from contradictions, in particular as regards the allegedly famous dog of its managing director and the book about that dog. The Board of Appeal concluded that the applicant had applied for registration of the contested mark with the intention of taking unfair advantage of the reputation of the Lío club. Thus, the Board of Appeal found that the real purpose was to free-ride on the intervener’s reputation and take advantage of that reputation, in particular by selling the contested mark and mark No 14194872 to it for a disproportionate price.

 Forms of order sought

15      The applicant claims that the Court should:

–        annul the contested decision;

–        annul the decision of the Cancellation Division;

–        reject the application for a declaration of invalidity and maintain the registration of the contested mark;

–        order EUIPO and the intervener to pay the costs.

16      EUIPO contends that the Court should:

–        dismiss the action;

–        order the applicant to pay the costs.

17      The intervener contends that the Court should:

–        dismiss the action;

–        order the applicant to pay the costs, including those incurred in the proceedings before the Cancellation Division and the Board of Appeal.

 Law

18      Account being taken of the date on which the application for registration of the contested mark was filed, namely 20 September 2017, which is decisive for the purposes of identifying the applicable substantive law, the facts of the case are governed by the substantive provisions of Council Regulation (EC) No 207/2009 of 26 February 2009 on the EU trade mark (OJ 2009 L 78, p. 1) as amended (see, to that effect, order of 5 October 2004, Alcon v OHIM, C‑192/03 P, EU:C:2004:587, paragraphs 39 and 40, and judgment of 23 April 2020, Gugler France v Gugler and EUIPO, C‑736/18 P, not published, EU:C:2020:308, paragraph 3 and the case-law cited).

19      Accordingly, in the present case, so far as concerns the substantive rules, the references made to Article 59(1)(b) of Regulation 2017/1001 by the Board of Appeal in the contested decision and by the parties in their written pleadings should be understood as referring to Article 52(1)(b) of Regulation No 207/2009, the terms of which are identical.

20      In support of its action, the applicant relies on a single plea in law, alleging infringement of Article 52(1)(b) of Regulation No 207/2009, in which it disputes the Board of Appeal’s assessment of the six factors on which the finding of bad faith was based when filing the contested mark.

21      EUIPO and the intervener dispute the applicant’s arguments.

22      It should be noted, first of all, that the EU trade mark registration system is based on the ‘first-to-file’ principle, laid down in Article 8(2) of Regulation No 207/2009 (now Article 8(2) of Regulation 2017/1001). Under that principle, a sign may be registered as an EU trade mark only in so far as this is not precluded by an earlier mark, whether an EU trade mark, a trade mark registered in a Member State or by the Benelux Office for Intellectual Property, a trade mark registered under international arrangements which have effect in a Member State or a trade mark registered under international arrangements which have effect within the European Union. In contrast, without prejudice to the possible application of Article 8(4) of Regulation No 207/2009 (now Article 8(4) of Regulation 2017/1001), the mere use by a third party of a non-registered mark does not preclude an identical or similar mark from being registered as an EU trade mark for identical or similar goods or services (see judgment of 12 May 2021, Tornado Boats International v EUIPO – Haygreen (TORNADO), T‑167/20, not published, EU:T:2021:257, paragraph 43 and the case-law cited).

23      The application of that principle is qualified by, inter alia, Article 52(1)(b) of Regulation No 207/2009, under which an EU trade mark must be declared invalid on application to EUIPO or on the basis of a counterclaim in infringement proceedings where the applicant was acting in bad faith when he filed the application for registration of that mark.

24      Where a concept set out in Regulation No 207/2009 is not defined by that regulation, its meaning and scope must be determined by considering its usual meaning in everyday language, whilst also taking into account the context in which it occurs and the objectives pursued by that regulation. That applies to the concept of ‘bad faith’ referred to in Article 52(1)(b) of Regulation No 207/2009, in the absence of any definition of that concept by the EU legislature (see, to that effect, judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraphs 43 and 44 and the case-law cited).

25      In that connection, the Court of Justice has held that in addition to the fact that, in accordance with its usual meaning in everyday language, the concept of ‘bad faith’ presupposes the presence of a dishonest state of mind or intention, regard must be had, for the purpose of interpreting that concept, to the specific context of trade mark law, which is that of the course of trade. In that regard, the EU rules on trade marks are aimed, in particular, at contributing to the system of undistorted competition in the European Union, in which each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trade marks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin (judgment of 29 January 2020, Sky and Others, C‑371/18, EU:C:2020:45, paragraph 74).

26      Accordingly, the absolute ground for invalidity referred to in Article 52(1)(b) of Regulation No 207/2009 applies where it is apparent from relevant and consistent indicia that the proprietor of an EU trade mark has filed the application for registration of that mark, not with the aim of engaging fairly in competition but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, 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 recalled in paragraph 25 above (see, to that effect, judgment of 29 January 2020, Sky and Others, C‑371/18, EU:C:2020:45, paragraph 75 and the case-law cited).

27      The intention of an applicant for a trade mark is a subjective factor which must, however, be determined objectively by the competent administrative or judicial authorities. Consequently, any claim of bad faith must be the subject of an overall assessment, taking into account all the factual circumstances relevant to the particular case, at the time of filing the application for registration. It is only in that manner that a claim of bad faith can be assessed objectively (see, to that effect, judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraph 47 and the case-law cited).

28      Therefore, the concept of bad faith thus relates to a subjective motivation on the part of the trade mark applicant, namely a dishonest intention or other sinister motive. It involves conduct which departs from accepted principles of ethical behaviour or honest commercial and business practices (judgment of 7 July 2016, Copernicus – Trademarks v EUIPO – Maquet (LUCEO), T‑82/14, EU:T:2016:396, paragraph 28).

29      Moreover, in the case of an application for a declaration of invalidity based on Article 52(1)(b) of Regulation No 207/2009, there is no requirement whatsoever that the applicant for that declaration be the proprietor of an earlier mark for identical or similar goods or services (judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraph 53).

30      It should be added that, in cases where it transpires that, at the time of the application for the contested mark, a third party was using, in at least one Member State, a sign identical with, or similar to, that mark, the existence of a likelihood of confusion on the part of the public need not necessarily be established in order for Article 52(1)(b) of Regulation No 207/2009 to apply (judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraph 54). However, where such a risk is established, it is necessary to examine, in the context of the overall assessment of the relevant circumstances of the particular case, whether the applicant for the contested mark had knowledge of this, although that factor is only one relevant factor among others to be taken into consideration. Accordingly, other factual circumstances may, depending on the circumstances, constitute relevant and consistent indicia establishing the bad faith of the applicant (see, to that effect, judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraphs 55 and 56).

31      In the context of the overall analysis undertaken pursuant to Article 52(1)(b) of Regulation No 207/2009, account may also be taken of the origin of the contested sign and its use since its creation, the commercial logic underlying the filing of the application for registration of the sign as an EU trade mark, and the chronology of events leading up to that filing (see judgments of 26 February 2015, Pangyrus v OHIM – RSVP Design (COLOURBLIND), T‑257/11, not published, EU:T:2015:115, paragraph 68 and the case-law cited, and of 14 May 2019, Moreira v EUIPO – Da Silva Santos Júnior (NEYMAR), T‑795/17, not published, EU:T:2019:329, paragraph 20 and the case-law cited). Similarly, the existence of commercial relations between the parties may also provide indicia for the assessment of bad faith (see judgment of 12 May 2021, TORNADO, T‑167/20, not published, EU:T:2021:257, paragraph 51 and the case-law cited).

32      In addition, it is for the applicant for a declaration of invalidity who intends to rely on Article 52(1)(b) of Regulation No 207/2009 to prove the circumstances which make it possible to conclude that an application for registration of an EU trade mark was filed in bad faith, the good faith of the trade mark applicant being presumed until proven otherwise (see judgment of 21 April 2021, Hasbro v EUIPO – Kreativni Dogadaji (MONOPOLY), T‑663/19, EU:T:2021:211, paragraph 42 and the case-law cited.)

33      Where EUIPO finds that the objective circumstances of the particular case which were relied on by the applicant for a declaration of invalidity may lead to the rebuttal of the presumption of good faith which the proprietor of the mark at issue enjoys when he or she files the application for registration of that mark, it is for the proprietor of that mark to provide plausible explanations regarding the objectives and commercial logic pursued by the application for registration of that mark (judgments of 23 May 2019, Holzer y Cia v EUIPO – Annco (ANN TAYLOR and AT ANN TAYLOR), T‑3/18 and T‑4/18, EU:T:2019:357, paragraph 36, and of 21 April 2021, MONOPOLY, T‑663/19, EU:T:2021:211, paragraph 43).

34      It is in the light of the foregoing considerations that it is necessary to examine the applicant’s arguments seeking to challenge the lawfulness of the contested decision in so far as the Board of Appeal came to the conclusions that, following the analysis of the six factors which it considered relevant, taken as a whole, the applicant for registration had acted in bad faith when filing the application for registration of the contested mark.

 The first factor concerning the ‘virtually identical’ signs at issue

35      The applicant submits that the fact that the signs concerned are virtually identical does not necessarily mean that there was bad faith. Since the scope of protection of a mark is defined by each applicant for registration, account must be taken of the fact that the goods and services covered by the intervener’s marks are different from the goods and services covered by the contested mark, as was confirmed by a German court. In addition, the applicant made sure that there was no similar mark having similar protection. Since there is no likelihood of confusion, no evidence of a dishonest or sinister attitude or an assumption of bad faith can arise from the fact that the signs at issue are virtually identical.

36      EUIPO and the intervener dispute the applicant’s arguments.

37      The Board of Appeal found that the contested mark constituted a faithful reproduction of the graphic style used by the intervener since 2011 and also protected by its earlier marks. Accordingly, it found that the contested mark was almost identical to the Lío signs used by the intervener, in particular those reproduced below:

38      In the first place, it must be stated that the applicant does not dispute that the signs at issue are virtually identical. The applicant merely claims that, since the goods and services covered by the contested mark are different from the services marketed by the intervener, there is no likelihood of confusion, with the result that no evidence of a dishonest or sinister attitude on its part can arise from that factor.

39      In that regard, it should be noted that, in accordance with the case-law cited in paragraphs 29 and 30 above, there is no requirement that the intervener be the proprietor of an earlier mark for identical or similar goods or services and the existence of a likelihood of confusion on the part of the public need not necessarily be established in order for Article 52(1)(b) of Regulation No 207/2009 to apply.

40      Consequently, the argument that the difference between the goods and services at issue and the absence of any likelihood of confusion precludes a finding of bad faith on the part of the applicant must be rejected, and that conclusion cannot be affected by the decision of a German court confirming that the goods and services at issue are different, as also relied on by the applicant.

41      In the second place, it should be borne in mind that it follows from the case-law cited in paragraph 27 above that the existence of bad faith on the part of the applicant, within the meaning of Article 52(1)(b) of Regulation No 207/2009, must be subject to an overall assessment, taking into account all factors relevant to the present case.

42      Therefore, although it is true that the finding that the signs at issue are almost identical does not in itself permit the conclusion that there was bad faith, it is a relevant factor to be taken into account in the overall assessment of the existence of that sign.

 The second factor concerning the fact that the value of the intervener’s commercial activities and the attractiveness of the Lío club were known at the time of the application for registration of the contested mark

43      The applicant submits that the Board of Appeal’s determination that it had been able to assess the financial value and significance of the Lío sign for the intervener and its attractiveness to the public cannot serve as a basis for establishing bad faith. It is of the view that the intervener knew that, in order to protect goods additional to those falling within its activities, extended protection was necessary for them. However, it deliberately chose not to enter the market for those products. Accordingly, the applicant is not capable of hindering the intervener’s activities, since they fall within a different commercial sector. Furthermore, if a sign is registered as an EU trade mark for a specific product or service, the filing of an application for registration of a sign which is virtually identical for a different product or service cannot constitute bad faith. The intervener therefore changed its mind as to the use of the Lío sign after becoming aware of the contested mark and of mark No 14194872.

44      EUIPO and the intervener dispute the applicant’s arguments.

45      The Board of Appeal found that the applicant was fully aware of the intervener’s commercial activity at the time when it applied for registration of the contested mark. In addition, although the Board of Appeal stated that the existence of a reputation was not mandatory in order to conclude that there was bad faith, it nevertheless stated that, in the light of the installations of the Lío club belonging to the intervener, the clientele that frequented the club, the price and quality of the events that took place there, the applicant was surely aware of the financial importance of the commercial activity of that club. Furthermore, news items from various countries would suggest that the Lío club enjoyed an enhanced degree of fame. Lastly, the fact that the involvement of an investment entity in that club was covered by the press and that a sales offer was sent directly to that entity, and not to the intervener, asking for twice the price stated in the initial sales offer, would suggest that the applicant was aware of the commercial value of the Lío club and could assess the financial worth and importance of the Lío sign for the intervener and its appeal to the public.

46      In the first place, it must be stated that the applicant knew the Lío sign used by the intervener for its Lío club in Ibiza before the filing of the application for registration of the contested mark and even before the filing of mark No 14194872. That is apparent from a number of details in the file. The applicant admitted that fact by stating that its managing director had become aware of the Lío club during a stay on Ibiza in 2015, that he had wanted on that occasion to purchase a cap or a T-shirt with that name because it was also the name of his dog, and that, since he had not found anything, on his return to Germany, he had registered trade mark No 14194872. In addition, the applicant concedes that the graphics chosen to constitute the contested mark were inspired by a sign seen in Ibiza. The applicant maintains that it even verified that there was no likelihood of confusion between the contested mark and the signs used by the intervener. Furthermore, it states that the fact that the intervener carried out activities connected with nightclub services was known at the time when the application for the contested mark was filed. It is apparent from the foregoing that the applicant was aware of the intervener’s activities and the Lío sign at the time when the application for registration of the contested mark was filed, namely on 20 September 2017, which it does not dispute. Accordingly, the applicant could certainly not have been unaware of the significance of those commercial activities, in particular in respect of the price of events organised in the intervener’s club, celebrities from various sectors who frequented it, its installations, and the numerous press clippings published in various countries regarding the club.

47      In the second place, the applicant merely reiterates that it was not capable of hindering the intervener’s activities, since the intervener had registered its trade marks for different services and was active in a separate commercial sector. Therefore, the fact that the signs are almost identical cannot constitute evidence of bad faith, since the goods and services were different. However, the applicant fails to take account of the fact that, as is apparent from paragraph 39 above, the finding of bad faith is not based on the premiss of a likelihood of confusion existing on the part of the public.

48      In that regard, it should also be noted that there is a certain connection between the goods covered by the contested mark and the intervener’s commercial activity, since those goods may constitute promotional items and take part in a commercial expansion strategy in relation to the intervener’s club.

49      It follows from all of the foregoing that the Board of Appeal did not make an error of assessment in finding that the applicant was fully aware of the intervener’s commercial activity when filing the application for registration of the contested mark and had been able to assess the financial worth and significance of the sign at issue for the intervener. Accordingly, that factor is a relevant factor to be taken into account in the overall assessment of the existence of bad faith.

 The third and fourth factors concerning, in essence, the lack of honest commercial logic and existence of undue pressure stemming from the sales offers

50      The applicant disputes, first of all, that its three sales offers relating to trade mark No 14194872 and, subsequently, also to the contested mark, were unsolicited. According to the applicant, the fact that the intervener began filing a notice of opposition against mark No 14194872 by referring to all the goods and services covered by that mark showed that the intervener wanted to hold that mark. Following registration of that mark, the applicant assumed that the danger of a dispute would continue to exist, as was confirmed, inter alia, by the present application for a declaration of invalidity. Accordingly, those sales offers were merely a reaction to the intervener’s opposition and did not give rise to a presumption of any dishonest intention or undue pressure, but resulted from a need for clarity on the part of the applicant. Next, as regards the high price proposed, it was intended to attract attention and to initiate a negotiation, but without a serious intention to sell. Finally, the applicant notes, it is for the intervener to prove bad faith at the time of filing the application for registration of the contested mark. In the present case, the applicant produced documents showing a first product range, in connection with the goods and services covered by the registration of that mark, and dispels any suspicion of bad faith.

51      EUIPO and the intervener dispute the applicant’s arguments.

52      The Board of Appeal found that the applicant had not shown either an economically viable use of the contested mark or a commercial activity respecting honest commercial logic. The only proof of use of that mark concerns a website and a product catalogue displaying only 12 items. In addition, one month after the registration of mark No 14194872, a first sales offer was sent to the intervener. In the absence of a reply, a second offer was submitted for twice the initial price, stating that the products were already on sale in Ibiza and that a marketing campaign was about to commence. Finally, a third offer was received after the registration of the contested mark, asking the initial price again. The Board of Appeal found that those unsolicited sales offers constituted the only evidence of a viable commercial activity, whereas, if the goods had actually been well received, the applicant could have produced evidence of commercial activity in that regard. Furthermore, those attempts to sell those marks contain aspects of undue pressure. Accordingly, after the applicant had ensured that the sign had a monopoly in respect of certain goods and services not directly protected by the intervener’s trade marks, the intervener was contacted in order to request a disproportionate amount from it for the transfer of that right by indicating a period of validity of one month and pointing out that a refusal would lead to the commercialisation of that monopoly. Moreover, a second, higher, offer was sent to a new investor, stressing the consequences of a refusal. Therefore, the Board of Appeal found that the applicant’s claim that the three unsolicited sales offers expressed an unwillingness to sell the marks concerned lacked credibility and that it had not been established that the intervener was aware of, inter alia, the existence of mark No 14194872 prior to the first sales offer.

53      As a preliminary point, it should be noted that, as the contested mark was filed, according to the applicant’s own statements, in order to ‘add’ goods in additional classes to mark No 14194872, the Board of Appeal – rightly – found that any intention on the part of the applicant at the time of filing mark No 14194872 could also be taken into account as regards the contested mark. Moreover, that aspect is not disputed by the applicant, who refers to the two marks interchangeably and rarely distinguishes them.

54      In the first place, it should first of all be noted that the intervener filed a notice of opposition to registration of mark No 14194872 on 8 September 2015. Consequently, the Board of Appeal’s statement that it had not been established that the intervener was aware of the existence of that mark when the intervener received the first sales offer on 13 December 2016 is incorrect. However, the fact remains that the intervener had not in any way sought the sales offer submitted to it for that mark as well as the domain name of the applicant’s website. It is true, as the intervener concedes, that that opposition could have justified an approach seeking to explore the possibility of settling the dispute amicably. However, it should be noted that contact with the intervener was not established with the intervener until 13 December 2016 by that first sales offer, that is to say, being approximately one month after obtaining registration of mark No 14194872 on 15 November 2016, and therefore after securing an exclusive right in a sign that was almost identical to that of the intervener. Moreover, that first offer, which concerned an amount of EUR 1.5 million, stated that its period of validity was limited to one month and that sales would commence at the beginning of summer 2017.

55      Next, it should be noted that on 12 June 2017, as is apparent from paragraph 5 above, the applicant, by its second sales offer, also unsolicited, directly contacted a new investor within the group owning the Lío club, whose involvement had been covered by the press. More than twice the amount of the first offer, namely EUR 3.5 million, was requested for mark No 14194872, without putting forward any economic reason to justify that increase. In addition, it made clear that the first merchandising items were on sale in Ibiza and were being very well received. Furthermore, it was stated that a marketing campaign was about to begin, but that previously an offer had been submitted to the intervener. Moreover, in making clear the need for a quick response, reference was made to the prospect of incorporating the rights relating to that mark within the parent company owning the Lío club. Finally, after receiving a cease-and-desist letter concerning the contested mark and mark No 14194872, on 22 January 2018, the applicant made a third sales offer, relating to both those marks, for an amount reduced to EUR 1.5 million. On that occasion, the applicant denied any accusation of bad faith without developing arguments or explaining the changes in the amounts requested between the first and second sales offers.

56      In that regard, it should be noted that, as the Board of Appeal stated, the various sales offers could have consisted of a viable commercial activity since marks may in principle be used as goods and form the subject of commercial transactions. However, the combination, first, of sales offers at very high prices, secondly, of an unexplained increase in the price offered for the second offer, even if it was consistent with the media coverage of the involvement of a new investor, thirdly, the indication of the short duration of those offers, and, fourthly, the reference to the fact that sales of merchandising items had begun and that those sales were well received in Ibiza, specifically where the intervener and its Lío club were established, are such as to constitute aspects of undue pressure which are at odds with an ethical and honest commercial practice, as stated by the Board of Appeal.

57      That finding cannot be called into question by the applicant’s argument that the high price of the sales offers reflected the absence of a serious intention to sell. It should be noted that, initially, that price had been explained by the value which the contested mark had for it and also by the fact that it was intended to attract attention and to initiate a negotiation. Furthermore, the assertion that there was no serious intention to sell seems unlikely in view of the repeated and unsolicited nature of those sales offers of mark No 14194872 and the contested mark, which, moreover, form part of a common context, as is apparent from paragraph 53 above, of the unexplained variation in the price sought and the fact that the applicant would have derived a substantial profit if those offers had been accepted.

58      In the second place, as regards the applicant’s argument concerning the burden of proving bad faith on the part of the applicant for registration of the contested mark, it is appropriate to examine it below, in the context of the overall analysis of the factors considered relevant.

59      At this stage, suffice it to note that, faced with indications capable of casting doubt on the honest nature of the intention underlying the filing of the contested mark, the applicant was neither able to refute that evidence nor demonstrate the existence of a commercial logic underlying the filing of the contested mark other than that aimed at selling it to the intervener at a particularly high price. It should be noted that the mere use of a website from May 2018 and the reliance on a single catalogue produced by the applicant itself and presenting only 12 items were not capable of providing plausible explanations relating to the objectives and commercial logic pursued.

60      Therefore, without requiring proof of genuine use of the contested mark, as claimed by the applicant, the Board of Appeal was right to find, first, that the applicant had not demonstrated that the application for registration of the contested mark reflected honest commercial practice and, secondly, that the attempts to sell to the intervener contained aspects of undue pressure that appeared at odds with an ethical and honest commercial practice.

 The fifth factor concerning the absence of a comprehensible connection between the contested mark, the applicant and its company

61      The applicant disputes the fifth factor set out in the contested decision and submits that there is nothing to suggest that the additional commercial activities of a trade mark applicant should reflect its bad faith. Furthermore, the mere fact of being the proprietor of the contested mark constitutes a sufficient connection between that mark and the applicant. Moreover, the lack of use by the applicant of the mark in its commercial activities is not evidence of bad faith, since new business plans could explain why the registration of that mark was sought. Furthermore, the lack of use of the contested mark during the grace period, during which it may not be used, does not indicate that the applicant will not use it at a later stage. Finally, the applicant claims that it reduced its activities pending clarification of the legal situation.

62      EUIPO and the intervener dispute the applicant’s arguments.

63      The Board of Appeal found that there was no comprehensible connection between the contested mark and the applicant. Its objects are real estate and the production of photo magazines and videos. The applicant exercised its commercial activities for more than 30 years without using the contested mark. Moreover, the book on the allegedly famous dog, Lio, was published in March 2015. If the applicant had wanted to produce fashion articles inspired by that name, it could have done so by using any sign other than that used by the intervener.

64      It should first of all be borne in mind that, as is apparent from paragraph 27 above, the existence of bad faith must be subject to an overall assessment, taking into account all factors relevant to the circumstances of the case.

65      In the present case, the Board of Appeal merely noted that the applicant’s activities were in the real estate sector and the production of photo magazines and videos, activities which had no connection with the contested mark and had been carried out without ever giving rise to the use of a sign similar to that constituting the contested mark. However, clearly, in the context of its reasoning, that is not a decisive factor in establishing bad faith. In addition, it is necessary to assess that element in the light of all the other relevant factors taken into account by the Board of Appeal. In that regard, that fifth factor, concerning the absence of a connection between the applicant’s activities and the contested mark, is additional to the factors set out in paragraphs 42, 49 and 60 above.

66      Moreover, as regards the applicant’s argument that it reduced its activities pending clarification of the legal situation and reliance on the existence of the five-year grace period under Article 15(1) of Regulation No 207/2009 (now Article 18(1) of Regulation 2017/1001), it should be noted, first, that those factors were taken into account by the Board of Appeal and, secondly, that no honest commercial strategy justifying the filing of the application for the contested mark was disclosed, which merely confirms the absence of a connection between that mark and the applicant’s activity.

67      Accordingly, the Board of Appeal did not make an error of assessment in finding that, having regard to the absence of a connection between the applicant’s activities and the contested mark, if the applicant’s only intention had been to create a line of clothing and accessories inspired by the name of the dog called Lio, any stylisation of the term ‘lio’ other than that corresponding to the sign used by the intervener, or at least a sufficiently different stylisation of that term, would have served that purpose.

 The sixth factor concerning the existence of contradictions in the applicant’s conduct

68      The applicant submits that, contrary to what the Board of Appeal found, its explanations were not contradictory. Accordingly, a statement regarding the main distribution areas of the goods covered by the contested mark, which were located in Germany, Austria and Switzerland, should not be interpreted as contradicting a statement indicating Ibiza as being the first place of sale of the merchandising goods covered by that mark, since the mark was not to be used during the grace period. Moreover, according to the applicant, such information on first use in Ibiza and the main distribution areas in other countries is not contradictory. Furthermore, the Board of Appeal did not consider the evidence concerning the relationship between the applicant and the managing director’s dog.

69      EUIPO and the intervener dispute the applicant’s arguments.

70      The Board of Appeal found that the applicant’s explanations were not free from contradictions. Accordingly, the applicant stated that its main distribution area was Germany, Austria and Switzerland and that no nightclub in Ibiza was intended, whereas it had announced that the first merchandising goods were sold in Ibiza. Furthermore, it initially stated that mark No 14194872 had been registered because its managing director had been unable to purchase a cap with the sign Lío for his dog, pursuant to which a fashion line was to be created inspired by the name of the dog. Furthermore, the book on that dog had already been published in March 2015, but it was only after the applicant’s managing director’s journey to Ibiza that the application for registration of mark No 14194872 was filed.

71      In the first place, it should be noted that, on 12 June 2017, in the second sales offer, the applicant stated, first, that it had decided to apply for registration of mark No 14194872 following a stay by its managing director in Ibiza and, secondly, that the first merchandising articles were sold at the best shops of that island and were very well received. However, in a letter received by EUIPO on 3 September 2018, concerning mark No 14194872 and the contested mark, it was stated by the applicant that the main distribution area was in Germany, Austria and Switzerland and that no Ibiza nightclub was affected. That last statement and in particular the denial of any connection with Ibiza, contradicts the first statement. Moreover, the reasons underlying that change have not been provided by the applicant. Moreover, one of the few elements that it has submitted regarding the contested mark establishes a connection with Ibiza, as is apparent from the domain name of the website lio-designs.com/de/lioibiza. In addition, it acknowledged that it drew inspiration from the sign seen by its managing director during a stay on that island and the latter also refers to the intervener’s club among its favourites on the social network Facebook. Accordingly, in view of the short period between those statements, rendering such a radical change in commercial strategy unlikely, the Board of Appeal did not make an error of assessment in finding that those statements were not free from contradictions.

72      In the second place, as regards the argument regarding the failure to take into consideration the evidence produced concerning the relationship between the applicant’s managing director and his dog, it should be noted that the applicant explained that the registration of mark No 14194872 had been triggered by the fact that, on holiday in Ibiza, its managing director, with a dog called Lio, was unable to purchase a cap bearing the sign Lio. On his return to Germany, the decision was taken to register that mark. In that regard, it must be held that it certainly cannot be inferred with certainty from those statements, as the Board of Appeal did, that that offer was intended for that dog. However, the fact remains that the Board of Appeal took into consideration the fact that the applicant, in its observations of 3 May 2019, had stated that the dog had belonged to a figure-skating champion, that the dog had appeared on television, that it was known in Germany, the Czech Republic and Austria and that it had also been the subject of a book. It is appropriate to emphasise the evolving and convoluted nature of those statements. The applicant accepted that the application for registration of mark No 14194872 had been filed after its managing director had become aware of the intervener’s club in Ibiza and it was around those explanations that the first statements regarding the reasons for that filing were formed, although no reference to the book or the renown of that dog was presented. Furthermore, as the Board of Appeal rightly pointed out, if the applicant had really wanted to create a line of clothing inspired by the name of that dog, it could have done so by using any sign other than that used by the intervener.

73      Accordingly, the Board of Appeal did not make an error of assessment in finding that the applicant’s explanations were not free from contradictions.

 Overall analysis of the relevant factors

74      The applicant submits that it has not been established beyond reasonable doubt that it had dishonest and harmful intentions when filing the application for the contested mark. Moreover, such intentions cannot be established with certainty from an external point of view. Consequently, it must be held that it merely wished to form a new fashion mark and that the sign Lío was chosen because of the daily presence of the dog of its managing director. The graphic elements were inspired by the sign seen in Ibiza and the applicant took care to check that there was no likelihood of confusion with the intervener’s marks.

75      EUIPO and the intervener dispute the applicant’s arguments.

76      The Board of Appeal found that, taking account of the six factors which it considered relevant, the applicant intended to unduly profit from the Lío club’s reputation as operated by the intervener when the applicant applied for registration of the contested mark, in particular by selling that mark and mark No 14194872 to the intervener for a disproportionate price.

77      It is apparent from paragraphs 26 to 28 above that account must be taken of the applicant’s intention at the time of filing the application for registration, namely 20 September 2017, and that that intention is a subjective factor which must be ascertained by reference to the objective circumstances of the particular case.

78      In that regard, the applicant cannot reasonably claim that its intention may not be established with certainty from an external point of view. Admittedly, this is a subjective reason, but that can be inferred from conduct that departs from principles recognised as being those related to ethical behaviour. Any other interpretation of Article 52(1)(b) of Regulation No 207/2009 would make it impossible to establish the existence of bad faith within the meaning of that provision.

79      Furthermore, as the applicant submits and as is apparent from paragraph 32 above, it was for the intervener to set out the facts enabling the finding that the applicant acted in bad faith when filing the application for registration of the contested mark. In the present case, it must be held that various factors capable of establishing that bad faith were indeed adduced by the intervener.

80      It is apparent from the overall analysis of the six factors on which the Board of Appeal relied that the applicant knew the intervener’s club and the sign used by the intervener, on the day on which the contested mark was filed, and that the activity of that club was publicised, which was also frequented by numerous celebrities. Furthermore, it is common ground that the sign constituting the contested mark and that used by the intervener were almost identical. In addition, the content of the various sales offers made it possible to make clear the applicant’s intention at the time of filing the application for registration of the contested mark and to identify aspects of undue pressure, in particular due to the unsolicited and repeated nature of those offers, the high prices charged, the unexplained increase in the sale price of mark No 14194872 on the involvement of a new investor in the intervener’s activities, the reference to short periods of validity of the offers and items already on sale experiencing success, specifically in Ibiza, where the intervener is established. Finally, evidence of a commercial activity consistent with honest commercial logic has not been adduced.

81      In the light of the foregoing, the use of the same stylisation for the signs at issue cannot be attributed to chance, since the applicant has, moreover, accepted that the sign constituting the contested mark was inspired by the sign used by the intervener in its activities. Therefore, there are relevant and convergent factors enabling the conclusion that the intention of the applicant seeking registration of the contested mark at the time of filing of that application was to create a connection on the part of the public between the goods and services covered by that mark and the well-known club belonging to the intervener in order for the applicant to then monetise that mark (see, to that effect and by analogy, judgment of 28 April 2021, France Agro v EUIPO – Chafay (Choumicha Saveurs), T‑311/20, not published, EU:T:2021:219, paragraph 33).

82      Accordingly, the Board of Appeal was able to deduce from the particular circumstances of the case that, by applying for registration of the contested trade mark, the commercial logic of the applicant seeking registration was to ‘free-ride’ on the intervener’s club’s reputation and take advantage of that reputation (see, to that effect, judgment of 14 May 2019, NEYMAR, T‑795/17, not published, EU:T:2019:329, paragraph 51), in particular by selling the contested mark to the intervener for a significant amount.

83      Therefore, the Board of Appeal did not err in finding that bad faith within the meaning of Article 52(1)(b) of Regulation No 207/2009 had been determined.

84      Consequently, the action must be dismissed in its entirety, without it being necessary to rule on the admissibility of the claims contained in the applicant’s second and third heads of claim.

 Costs

85      Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.

86      Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the forms of order sought by EUIPO and the intervener.

87      The intervener has also claimed that the applicant should be ordered to pay the costs incurred by the intervener in the administrative proceedings before EUIPO. In that regard, it suffices to note that, since this judgment dismisses the action brought against the contested decision, paragraph 2 of the operative part of that judgment continues to govern the costs incurred in the course of the opposition procedure and in the appeal proceedings before EUIPO (see, to that effect, judgment of 19 October 2017, Aldi v EUIPO – Sky (SKYLITe), T‑736/15, not published, EU:T:2017:729, paragraph 131).

On those grounds,

THE GENERAL COURT (Fifth Chamber)

hereby:

1.      Dismisses the action;

2.      Orders DBM Videovertrieb GmbH to pay the costs.

Delivered in open court in Luxembourg on 19 October 2022.

*      Language of the case: English.

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