An EU trademark can be canceled if it has been applied for without a legitimate economic purpose. In a recent case, the European General Court (EGC) assumes that the registration was merely intended to exert pressure on other companies in order to potentially receive payments.

The background to the case was the cancellation of a trademark by the European Union Intellectual Property Office (EUIPO) at the request of a wholesaler. The wholesaler used the protected name for the sale of vehicle rims.

The business model behind the application gave rise to doubts at the EGC: The Austrian application from 2010 was the last in a chain, where the applications had been repeated every six months since 2007 and then rejected by the Austrian Patent Office due to non-payment of fees. Use of the name in the course of trade was not apparent to either the authorities or courts. It was also remarkable that all of the companies involved, between which the trademark rights were transferred several times, could ultimately be traced back to one person.

In 2016, the Regional Court of Cologne ruled in this case that it was no longer permitted to claim that the wholesaler had committed a trademark infringement against commercial customers. Previously, a company from the trademark applicant's network had filed a claim against the wholesale retailer for injunctive relief and recognition of liability for damages. The Regional Court assumed that the invocation of the earlier property right was an abuse of rights. The EUIPO gave similar reasons for the cancellation in 2019.

The EGC (judgment of 17.01.2024 - T 650/22) has now explained in detail why it considers this decision by the European authority to be correct. According to Art. 59 para. 1 lit. B of the EU Trade Mark Regulation as amended, an application is invalid if the applicant is acting in "bad faith", i.e. if, according to the European judges, he is pursuing unfair objectives in the course of trade.

In the present case, it was assumed that the successive trademark applications had been made in order to obtain a blocking position with regards to other users. It found that Mr. A., or the companies associated with him, artificially extended the priority period by six months in each case by filing successive national trademark applications before it expired. During this period, they were able to claim the priority of the EU trade mark based on the last link in this chain of applications. Such a strategy, which is not free of echoes of the legal concept of "abuse of rights", is characterized by the fact that, on the one hand, the objective of Union law regulation is not achieved despite formal fulfilment of the conditions under Union law and, on the other hand, there is an intention to obtain an unfair advantage provided for under Union law by arbitrarily creating the corresponding conditions in the first place.