New owner of CTM must accept direct liability for conduct of former proprietor

In Simca Europe Ltd v Office for Harmonisation in the Internal Market (OHIM) (Case T-327/12), the General Court has upheld a decision of the Board of Appeal of OHIM declaring the Community trademark (CTM) SIMCA invalid, finding that the former proprietor of the word mark SIMCA, registered for vehicles, had acted in bad faith when applying to register it.

In Simca Europe Ltd v Office for Harmonisation in the Internal Market (OHIM) (Case T-327/12), the General Court has upheld a decision of the Board of Appeal of OHIM declaring the Community trademark (CTM) SIMCA invalid, finding that the former proprietor of the word mark SIMCA, registered for vehicles, had acted in bad faith when applying to register it.

In 2007 Mr Joachim Wöhler applied to register the word sign SIMCA as a CTM for goods in Class 12 of the Nice Classification corresponding to "vehicles; apparatus for locomotion by land, air or water".

In 2008 GIE PSA Peugeot Citroën contested the validity of the CTM under Article 51(1)(b) of the Community Trademark Regulation (207/2009), claiming that it had been filed in bad faith. Peugeot alleged that, at the time of filing, Mr Wöhler's sole objective was to prevent the use of the name Simca in order to market the goods covered by the application for registration, even though Peugeot had prior rights over the name, including:

• its earlier international figurative mark SIMCA, protected since 1959 in a number of EU and non-EU countries; and
• its earlier French figurative mark SIMCA, protected since 1990. 

It was undisputed that motor vehicles covered by the SIMCA mark had been sold since the 1930s and Peugeot had taken over that mark in 1978. Although Peugeot ceased to market vehicles under the SIMCA mark at the end of the 1970s, the mark continued to enjoy a wide reputation. Mr Wöhler had worked for Peugeot for over 18 months, knew the history of the SIMCA mark and was aware of Peugeot's rights. He had assumed that they were liable to be annulled due to lack of genuine use.

In January 2011 the Cancellation Division of OHIM rejected the application for a declaration of invalidity of the CTM. Peugeot appealed. In April 2011 Simca Europe was entered in OHIM's register as the new proprietor of the mark. In April 2012 the First Board of Appeal overturned the Cancellation Division's decision. The Board found that Simca Europe, as the new proprietor, had to accept direct liability for the conduct of Mr Wöhler, as the initial applicant for that mark. 

The board acknowledged that the question of whether the applicant for registration of a trademark had been acting in bad faith had to be decided by conducting an overall assessment in which all the factors relevant to the particular case were taken into account, in particular:

• the fact that the applicant knew or should have known that a third party had been using, in at least one member state, an identical or similar product liable to be confused with the sign for which the registration was sought;
• the applicant's intention of preventing that third party from continuing to use such a sign; and
• the degree of legal protection enjoyed by the third party's sign and by the sign for which registration was sought.

However, these factors, as devised by the Court of Justice in Chocoladefabriken Lindt & Sprüngli (Case C-529/07), were not exhaustive. The fact that Mr Wöhler knew of the existence of the earlier marks and nevertheless filed a CTM application was evidence of his bad faith. The fact that he had assumed that those marks were liable to be declared invalid was irrelevant, since, at the time when the contested decision was adopted, he had not yet applied for revocation of the earlier French mark or the earlier international mark.

In the board's view, Mr Wöhler was seeking a known mark, in order to free-ride on the reputation of Peugeot's registered marks and to take advantage of the good reputation of those marks through the deliberate unlawful use of the SIMCA mark. The board concluded that such conduct had to constitute bad faith; the fact that Mr Wöhler had been marketing bicycles under the name Simca since December 2008 was irrelevant, as such marketing did not justify registration of the mark.

Simca Europe applied to the General Court to annul the board's decision, arguing that the board had erred in law in finding that Mr Wöhler had acted in bad faith when he had filed the CTM application for the word mark SIMCA. 

In the General Court's view, it was clear that the board had not based its finding that Mr Wöhler had acted in bad faith solely on the fact that Mr Wöhler had applied for registration of the mark even though he was aware of the existence of the earlier marks and without having acted beforehand to revoke them. 

The question of whether the applicant was acting in bad faith had to be subject of an overall assessment taking into account all relevant factors, including the undisputed "historical" use of marks containing the SIMCA sign by Peugeot, which took place before Mr Wöhler made use of that sign in the mark at issue, and the commercial logic underlying the filing of the application by Mr Wöhler for registration of the sign as a CTM. 

In its application to the court, Simca Europe stated that it was precisely the fact that the earlier marks had not been used for a long time that could be construed as "a reason that had encouraged [Mr Wöhler], who was aware of that fact, to file an application for a mark in order to use it for his own advantage". Accordingly, Simca Europe could not rely on the mere fact that the earlier marks were no longer used in order to rebut the finding that Mr Wöhler had been acting in bad faith at the time of registration. On the evidence, the court found that the registration of the sign at issue was deliberately sought in order to create an association with the earlier marks and to take advantage of their reputation on the motor vehicle market, even to compete with those earlier marks if they were re-used by Peugeot in the future. 

The court dismissed Simca Europe’s appeal, concluding that the real purpose of Mr Wöhler's CTM application was to free-ride on the reputation of Peugeot's registered marks and to take advantage of that reputation.

The judgment highlights that the criteria to assess whether an applicant is acting in bad faith are merely illustrative and that an assignee of a trademark has to accept direct liability for the conduct of a former owner.

Désirée Fields, McDermott Will & Emery UK LLP, London