Hasbro, the publisher of the famous MONOPOLY board game, has had one its re-filed EU trade marks partially invalidated on the grounds of bad faith on the basis that it constituted ‘evergreening’.

The rather nebulous concept of ‘bad faith’ is not defined in applicable EU trade mark legislation and is therefore something of a hot topic following a recent line of cases that have sought to develop the doctrine. It intends to prevent abuse of the trade mark system.

This case focussed on the practice of ‘evergreening’, which is the re-filing of a trade mark so as to continue to benefit from successive 5 year ‘grace’ periods during which the registration is not subject to challenge on the grounds of non-use.

Background

Cancellation Division

Kreativni Događaji, a Croation board game company, filed an EU designation for a DRINKOPOLY logo for various games in Class 28.

Hasbro opposed that application based on its rights in MONOPOLY, including one EU registration that was filed in 2010 and registered in 2011. At the relevant date, this registration (which is one of many that Hasbro owns for MONOPOLY in the EU, some of which date back to 1996) was within the 5 year ‘grace period’ which meant that Kreativni Događaji could not therefore (i) request proof of genuine in the context of the opposition and/or (ii) file a retaliatory cancellation action based on non-use.

However, Kreativni Događaji filed a retaliatory invalidity action against the 2011 registration on the grounds that it was filed in ‘bad faith’. It argued that in applying for that mark, Hasbro’s purpose had been to improperly and artificially extend the grace period applicable to its MONOPOLY mark, so as to avoid having to show use for its older registrations when taking action against conflicting trade mark applications with the ‘-opoly’ suffix. In defence, Hasbro argued it filed the 2011 application to cover an expanded range of products to reflect developments in its business and, even if use had been required to be proven in relation to goods and services also covered by its earlier MONOPOLY registrations, it would have no problem doing so.

The EUIPO initially sided with Hasbro with the Cancellation Division holding that the evidence filed by Kreativni Događaji, primarily register extracts showing the filing pattern and unilateral statements made by Hasbro, was not sufficient to discharge its burden to prove bad faith and, therefore, rejected the invalidity challenge.

Board of Appeal

Kreativni Događaji appealed and unusually the Board of Appeal held an oral hearing to better understand the circumstances and commercial logic behind Hasbro’s filing strategy.

The Board of Appeal held that the objective circumstances of a case, based on evidence and arguments put forward by the party seeking to challenge the registration, may lead to the rebuttal of the presumption that the proprietor is acting in good faith. If so, it is then for the trade mark proprietor to provide a plausible explanation of its objectives and commercial logic underpinning the reasons for the application for that mark.

In the present case, Hasbro’s evidence cited several drivers behind its filing strategy, including but not limited to seeking to protect new product offerings (such as from physical board games to computer software games), licensing opportunities, filling gaps in its portfolio arising from audits, and updating its specifications in light of changing practice. However, it accepted that its decision to also include the same goods and services as the older registrations in the process of making later filings to address these issues – which it noted was common practice in the industry – was made in the knowledge that this gave rise to the additional benefit of reducing the administrative burden, such as being able to rely upon a single registration in licenses and disputes and, importantly, not having to prove use in inter-partes dispute.

The Board of Appeal compared the re-filed MONOPOLY registration to Hasbro’s older portfolio of registrations and found that the marks were identical and covered some ‘new’ goods and services, as well as some goods and services that were already protected by earlier registrations. It concluded that the 2011 MONOPOLY filing was legitimate to the extent that the registration covered new goods and services as it followed a clear and acceptable commercial logic to reflect new products or services of interest to Hasbro.

However, it was clearly concerned by evergreening via the ‘back door’ and the risk of trade mark proprietors disguising a re-filed application for the purposes of circumventing the use requirement following the end of a 5 year grace period by the mere addition of goods or services to those already covered by an earlier registration. The Board of Appeal held that, to the extent the re-filed registration including goods and services covered by existing MONOLPOLY registrations, it had been applied for in bad faith because Hasbro’s intention at the point of filing was, at least partially, to circumvent the ‘use’ provisions that applied in respect of its existing portfolio of MONOPOLY marks that were more than 5 years old. The argument that the inclusion of the same goods and services was to reduce the administrative burden was given short shrift on the basis that none of the older registrations had been surrendered or allowed to lapse through non-renewal and, in fact, had already been relied upon in proceedings. Nor was it convinced by the statement that Hasbro’s approach to its re-filing was common practice in the industry, noting that this could not make the practice legal or acceptable, particularly if it had not been tested and approved by the courts. Accordingly, the Board of Appeal upheld the invalidity application in respect of those aspects of the 2011 registration that were found to have been applied for in ‘bad faith’.

General Court Decision

Hasbro appealed the decision to the General Court.

The General Court described Hasbro’s evidence on the intention behind the repeat filing as being “inter alia, by its own admission, that of not having to prove use of the contested mark, thus extending, with regard to the earlier marks, the five-year grace period”. Based on this evidence, it concluded concluding that Hasbro’s filing strategy, which at least in part sought to circumvent the rule relating to proof of use, was inconsistent with the objectives of the trade mark system, but also “calls to mind a case of an abuse of law”. Accordingly, the General Court upheld the Board of Appeal’s decision that the registration was applied for in bad faith (and therefore invalid) in respect of those goods and services covered by Hasbro’s earlier MONOPOLY registrations.

Key points

A number of key points arise from the General Court decision which are of interest to brand-owners.

• The General Court appears to be trying to send a clear message that any repeat filings for identical marks for identical goods/services will, on the face of it, constitute bad faith. However, the risk is arguably limited by the partial nature of the invalidity decision, which only applied to the duplicate goods and services and did not therefore invalidate the entirety of the contested mark (which is consistent with the CJEU’s approach in the SKYKICK case)
• Whilst the burden of initial proof has not shifted per se (that is, the EUTM owner is presumed to be acting good faith and it is for the Cancellation Applicant to prove bad faith), it appears that it will be relatively easily to rebut the presumption of validity in ‘evergreening’ cases based on evidence of the trade mark owner’s filing pattern alone.
• The treatment of Hasbro’s evidence by both the General Court and the Board of Appeal was very black and white, and the admission that a perceived benefit (even if not the sole motivation) of the approach to its refiling strategy was to avoid the need to prove use in proceedings essentially proved fatal. The fact that Hasbro also pointed to various other objectives, such as avoiding the ’fracturing’ of portfolios was of no assistance.
• Caution should therefore be exercised when including the same goods and services in repeat filings, particularly if older registrations are not voluntarily surrendered. To the extent such goods and services are included, it would be sensible to document what the rationale for doing so was, despite the guidance of the General Court in this case.
• This decision provides some comfort to those on the receiving end of a complaint by the proprietor that has demonstrably not used its mark for an extended period of time. However, it could well lead to a greater burden on trade mark proprietors seeking to enforce their rights, given older marks may well be subject to a requirement to prove use when they are deployed and newer marks for the same goods/services may be vulnerable to attack based on bad faith.

(T-663/19 Hasbro, Inc. v EUIPO EU:T:2021:211 (21 April 2021) — to read the judgment in full, click here).