New Kids on the Block make comeback before OHIM

European Union
In SM Productions Partnership v Wood (Case 2943C, December 4 2009), the Cancellation Division of the Office for Harmonization in the Internal Market has ordered the cancellation of the Community trademark (CTM) NEW KIDS ON THE BLOCK.
 
On November 4 2005 US company SM Productions Partnership applied for the registration of NEW KIDS ON THE BLOCK as a CTM in respect of goods in Classes 9 of the Nice Classification (including "apparatus for recording, transmission or reproduction of sound or images") and services in Class 41 (including "production of cine-films, video recordings, and of radio and television shows and programmes"). On June 11 2008 Daniel Wood, Donald Wahlberg, Jonathan Knight, Jordan Knight and Joseph McIntyre filed a request for a declaration of invalidity of the mark on the grounds, among others, that:
  • SM Productions had acted in bad faith when it applied for the registration of the CTM; and
  • the registration was obtained in the name of an agent and was in breach of an earlier unregistered right.
The five applicants are the original members of the boy band New Kids on the Block, which was formed in 1984 by Maurice Starr. The band signed an exclusive production agreement with Big Step Production, which was jointly owned by Starr (60%) and Richard Scott (40%). Big Step was in charge of the band's commercial affairs, and obtained protection for the band's name and logo through registration. Big Step terminated the contract when the band broke up in 1992. The recording and merchandising licences set up by Big Step were allowed to continue, with Scott as a perpetual receiver of future licence revenues. However, Big Step assigned to the individual band members all the rights in the band's name and logo, including copyright and trademark rights. SM Productions is a New York general partnership initially consisting of Scott and Denny Marte.
 
The Cancellation Division first noted that bad faith involves, but is not limited to, actual or constructive fraud, or a design to mislead or deceive another. It also pointed out that the mere fact that the CTM owner knew, at the time of filing the application, of the earlier use of the same sign by a third party did not suffice to constitute bad faith. It relied on the decision of the European Court of Justice in Chocoladefabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH(Case C-529/07) (for further details please see "ECJ rules on bad-faith CTM applications in chocolate bunny case").
 
In the case at hand, Scott was a shareholder of both Big Step and SM Productions. Although the band had been inactive for many years, Scott still received licence revenues. The trademark registrations previously obtained by Big Step with regard to the boy band had lapsed. However, the Cancellation Division found that SM Productions must have realized that there were still valid IP rights connected to the band’s name. Moreover, the applicants showed that, at the time of filing the CTM, the band's name still enjoyed a considerable degree of recognition and had a significant economic potential. The Cancellation Division concluded that the rights and value attached to the band's name were vested in the five original band members.
 
Having found that the CTM was invalid, the Cancellation Division held that it was not necessary to examine the other grounds of action.
 
The Cancellation Division arguably reached the right conclusion, in line with the provisions of the Community Trademark Regulation (207/2009) and EU case law. However, it is frustrating that the only possible remedy is the cancellation of the CTM, when a transfer of ownership to the applicant might be a more appropriate solution. Certain national provisions (eg, the French legislation) offer both alternatives, but require the initiation of a court action. 
 
Franck Soutoul and Jean-Philippe Bresson, INLEX IP EXPERTISE, Paris

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