'Everything and the kitchen sink' approach to trademark filing may lead to invalidation
The Swiss Federal Supreme Court has affirmed a decision of the Commercial Court of Zurich in which the latter had invalidated several YELLO marks on the grounds that the owner had essentially tried to "block" the use of the sign for all goods and services (4A_429/2011, 4A_435/2011, February 23 2012, recently published). Since this is a common practice among trademark owners, the decision may have far-reaching consequences.
Yello Strom GmbH is a German energy company which uses its YELLO mark for energy-related services (ie, the supply of electricity). It is not (yet) active in Switzerland, but has registered a number of YELLO marks claiming protection in Switzerland for a vast list of goods and services, most of which having nothing to do with its business model.
Sunrise AG, a Swiss telecom operator, has used the YALLO mark for telecommunication services (ie, pre-paid mobile phone services) since May 2005. It applied for the registration of its YALLO mark in September 2005, claiming protection for telecommunication services.
Yello Strom objected in writing to Sunrise's use of the YALLO mark, but never filed suit. However, Sunrise filed for the cancellation of the YELLO marks on the grounds of non-use (except by the music band Yello for music-related goods and services; this was undisputed and was not addressed). Sunrise argued that:
- Yello Strom had no real intention of using the marks for the majority of the products covered by the registration; and
- the YELLO marks were 'defensive marks' and, therefore, were null and void.
The Commercial Court agreed, and the Federal Supreme Court affirmed. If an applicant files for trademark protection outside of its core business area, and has no tangible plan to offer the goods and services claimed, then it can be inferred that the trademark owner merely seeks to prevent others from using the mark - which is not an interest that is worth protecting. The court pointed out that the invalidation of a mark affects the mark as a whole, and also applies to the products within the owner's core business area "if the trademark is not actually used for these products" (here, Yello Strom could not use its mark in Switzerland because of the regulatory environment, which is not favourable to private energy distributors). In cases involving 'defensive' marks, it is irrelevant whether the five-year grace period to start using the mark has expired (the owner is protected by the five-year grace period only if it has a genuine interest in using the mark).
Although the Supreme Court pointed out that the mark was not invalidated merely because the owner claimed protection for a large list of goods, in effect the decision is doing exactly that. This new approach is comparable to the US doctrine, whereby filing a trademark application with fraudulent intent will lead to the invalidation of the mark. Trademark owners who rely on the 'everything and the kitchen sink' approach to filing trademark applications should seriously reconsider their filing strategy in Switzerland.
Mark Schweizer, Meyerlustenberger, Zurich
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