Playing in bad faith? Hasbro’s ‘Monopoly’ no longer evergreen

The General Court has upheld the decision of the EUIPO Board of Appeal (‘BOA’) in the case of Hasbro, Inc. v EUIPO (T-663/19), that Hasbro acted in bad faith in its re-filing (or so called “evergreening”) of trade mark applications for the mark MONOPOLY, on the basis that one of the motivations for Hasbro’s re-filing was to avoid having to file evidence of use in the context of opposition proceedings.

Background

Hasbro is the owner of several EU trade mark registrations of the word MONOPOLY, the earliest of which dates back to 1998. Kreativni Događaji d.o.o. (‘Kreativni’), a Croatian board game company and makers of the board game "DRINKOPOLY", applied to cancel one of Hasbro's later filings – a 2010 registration of MONOPOLY - on the basis that the mark was invalid due to Hasbro acting in bad faith when it filed the application. Kreativni argued that in filing an application for identical goods and services as covered in one if its earlier registrations, Hasbro was seeking to circumvent the obligation to show genuine use of its mark and improperly extend the 5 year grace period.

The EUIPO's Cancellation Division initially rejected the cancellation request altogether. Kreativni subsequently appealed the decision to the BOA who, following a rare oral hearing, held that Hasbro had acted in bad faith when filing the 2010 registration for goods and services identical to those covered by its earlier registrations. Consequently, the BOA partially invalidated Hasbro’s 2010 registration in respect of those identical goods and services.

What is bad faith?

The concept of bad faith, referred to in Article 59(1) of the EU Trade Mark Regulation, leans heavily on case law for its interpretation. Bad faith is described in Lindt (C-529/07), Ann Taylor (T-3/18) and LUCEO (T-82/14) as “conduct which departs from accepted principles of ethical behaviour or honest commercial and business practices”. Recent judgements in Koton (C-104/18P) and SkyKick (C-371/18) have provided an updated standard, requiring “objective, relevant and consistent indicia demonstrating that at the time of filing the application, the trade mark applicant had the intention of either:

1. undermining, in a manner inconsistent with honest practices, the interests of third parties; or
2. obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark.”

In the context of trade mark invalidity proceedings for bad faith, this means an invalidity applicant would have to demonstrate that, at the at the time of filing, the applicant had a dishonest intention to abuse the trade mark system, for example to block competitors from entering the market.

The General Court’s decision

On appeal, the General Court upheld the BOA’s decision to partially invalidate Hasbro’s 2010 registration, finding that Hasbro had indeed acted in bad faith in re-filing its earlier applications.

In reaching its decision the Court stressed that the mere existence of a re-filed mark alone will not amount to bad faith – as repeat filings are not prohibited after all – but that a re-filing done with the intention of circumventing the consequences of non-use would surpass the threshold of bad faith. A key factor in the Court’s estimation here seems to have been oral evidence provided to the BOA by Hasbro’s in-house counsel, who had explained that one of the motivations for the re-filings was “to reduce the cost of providing evidence and attending hearings”. This admission appears to have been central to the Court’s findings of bad faith.

The Court also confirmed the BOA’s view that it doesn’t matter how many different ‘good reasons’ Hasbro gave during the proceedings to justify its re-filing, as all other reasons were tainted by the intention to get around the proof of use rules.

Implications and key take-aways

Shift in burden of proving bad faith:

In its judgment the Court initially stressed that the burden of proof to demonstrate bad faith rests on the invalidity applicant and that “the good faith of the trade mark applicant is presumed until proven otherwise”. However, in the following paragraph, the Court noted that the trade mark owner is best placed to provide the EUIPO with information on their intention at time of filing. So, while the burden of proving bad faith has not formally shifted – there appears to be a greater onus on the proprietor to explain their intention at the time of filing. This will likely focus the minds of many brand owners and encourage them to document and record their intentions at time of filing, not least given personnel changes within organisations may well mean that the in-house lawyer who approved the re-filing may not be the same in-house lawyer called upon to furnish evidence of the brand owner’s intention many years previously at the relevant filing date.

Attendance at oral hearings:

Given that oral evidence provided by Hasbro appears to have been the hook upon which its defence failed, it may be unlikely that we see many more in-house counsel attending to give evidence before the EUIPO. While there may be a risk that negative inferences could be drawn from non-attendance, in light of the uncertainty around the presumption of good faith, the risk of appearing is potentially much greater.

Emboldening bad faith attacks:

It is possible that this decision will embolden parties to raise more bad faith attacks, particularly as a counter attack to an opposition. Non-use revocations have been deployed for some time as a tactic in disputes. It is now conceivable that parties will look at a rival’s overall portfolio and attempt to apply pressure by picking off re-filings on the basis of bad faith.

What does it mean for the UK?

The UK employs a different approach to bad faith. In the UK, bad faith can be used as a basis for opposition, not just invalidity; and both hearings in trade mark proceedings and witness evidence are common place. This is the first bad faith decision post-Brexit, so we will be watching with interest to see the extent to which the UK registry and/or UK courts deal with evergreening issues going forwards and whether they take the opportunity to diverge, now that they are no longer bound by EU case law.

Is this game over for Hasbro?

General Court decisions can be further appealed to the CJEU. However, recent changes in procedural rules for appeals have seen a sharp decline in the number of trade mark cases making it to the EU’s highest trade mark court. At the time of writing, it is unclear whether a further appeal has been lodged or whether the CJEU will be willing to consider the case.

Article co-authored by Matthew Wells.