Action for cancellation rejected due to failure to prove bad faith

The Metropolitan Court of Appeal has upheld a decision of the Metropolitan Court in which the latter had dismissed an action for the cancellation of the trademark VET-MED-LABOR.
The petitioner, US company IDEXX Laboratories Inc, is the owner of the Community trademarks (CTMs) VET-MED-LABOR (Registration 004293213) and VET-MED-LAB (Registration 004293221) for "services of a diagnostic laboratory" in Class 42 of the Nice Classification. Vet-Med-Labor Kft owns a Hungarian trademark registration for VET-MED-LABOR (Registration 182 976) for veterinary, blood bank and medical clinic services in Class 44.
IDEXX filed an action for the cancellation of the Hungarian mark on the grounds that it had been registered in bad faith under Section 3(1) of the Trademark Act (XI/1997). IDEXX argued that Vet-Med-Labor must have been aware of the fact that it was not entitled to register the mark, as IDEXX regularly organized conferences and training sessions in veterinary circles.
The Hungarian Patent Office refused to order the cancellation of the mark, holding that, based on the evidence before it, it could not be proven that Vet-Med-Labor had acted in bad faith when applying for the registration of its mark. IDEXX appealed, but the Metropolitan Court upheld the office's decision (Case 1Pk.21.604/2009/4, September 9 2009).
According to the court, IDEXX's request for the annulment of the decision was unfounded, as the office had not committed any violations of the procedural rules.
Further, the court emphasized that, when assessing whether an application has been filed in bad faith, the following factors must be taken into account:
  • whether the applicant was aware of the fact that the mark belonged to a third party; and
  • whether the applicant had fraudulent intentions when filing the application.
According to the court, the office had correctly considered the evidence before it. Moreover, the court stated that the evidence submitted by IDEXX did not prove that it had used its mark intensively in Hungary. The court further stated that the fact that the parties' device marks were different also pointed to a lack of bad faith.
Finally, the court decided not to rely on the decision of the European Court of Justice (ECJ) in Chocoladefabriken Lindt & Sprüngli AG (Case C-529/07) (for further details please see "ECJ rules on bad-faith CTM applications in chocolate bunny case") because:
  • the guidance given by the ECJ was not exhaustive; and
  • it could not be proven that Vet-Med-Labor intended to prevent others from using similar marks for similar services.
IDEXX appealed. The Metropolitan Court of Appeal found that, based on the facts of the case, the decision of the lower court complied with legal requirements. Consequently, the Court of Appeal reviewed the decision on the merits.
First, the Court of Appeal held that the position of the lower court with regard to the Lindt decision was justified. In this respect, the Court of Appeal pointed out that Lindt related to the cancellation of a CTM, while the present case involved a national trademark. The Court of Appeal stated that the arguments set forth in Lindt could serve as guidance in the present case, but could not be applied directly.
The Court of Appeal further held that, under Article 51(1)(b) of the Community Trademark Regulation (40/94), the national courts are obliged to take into consideration all the relevant facts of the case at the date of the application - namely:
  • whether the applicant knew or should have known that another party used an identical or similar mark in respect of identical or similar goods;
  • whether the applicant intended to prevent the other party from using the mark; and
  • the scope of protection afforded to the other party's mark.
Based on the facts of the case, the Court of Appeal concluded that, although Vet-Med-Labor could have been aware of the fact that IDEXX used the VET-MED-LABOR mark, it could not be proven that Vet-Med-Labor had fraudulent intentions when it applied for the registration of the mark.
Consequently, the Court of Appeal affirmed the decision of the first instance court and ordered IDEXX to pay Vet-Med-Labor's costs. No appeal lies against the Court of Appeal's decision.
Gabriella Sasvári, SBG & K Patent and Law Office, Budapest

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