Abuse of law and process in trade mark cancellation proceedings – EUIPO Board decision develops conditions established in ‘Sandra Pabst’ case

EU

In a recent decision (case R 904/2021-1), the Board of Appeal of the EU Intellectual Property Office (EUIPO) confirmed the findings of the EUIPO Cancellation Division that, although the revocation applicant filed 68 non-use revocation actions against EU marks belonging to the same proprietor between 2015 and 2019, the conditions established in the ‘Sandra Pabst’ case were not met. As a result, the Board decided that the revocation applicant’s conduct did not constitute an abuse of law. 

Sandra Pabst case

In its 2020 decision in the 'Sandra Pabst' case (R 2445/2017-G), the Grand Board, which is composed of senior members of the EUIPO Board of Appeal whose rulings are binding on all decision-making instances of the EUIPO, took a strong stand against the abusive practices of Michael Gleissner (known in the IP circles as the “infamous trade mark troll”) and his companies.  

The case concerned a revocation action that Fashion TV Brand Holdings (Fashion TV), a Gleissner-related company, brought against the ‘Sandra Pabst’ EU mark, owned by CBM Creative Brands Marken (CBM). The revocation applicant, Fashion TV, claimed that the mark had not been put to genuine use within the meaning of Article 58(1)(a) of the EU Trade Mark Regulation (EUTMR). 

In its decision, the Grand Board confirmed that the revocation request was brought before the Office with an improper and illegitimate ulterior purpose and thus constituted an abuse of rights and process.

In its preliminary remarks, the Grand Board qualified the notion of abuse of process as a “general procedural objection of a preliminary nature”, which prevents discussion of the merits of the case (i.e. assessment of genuine use of the mark).

In its assessment, the Grand Board considered the following:

  1. The simultaneous and massive attack on CBM’s trade marks, consisting of 37 different revocation requests filed by Fashion TV and associated companies;

  2. The retaliatory nature of the revocation requests (CBM revealed that another Gleissner-related entity had previously tried to purchase two of those 37 trade marks and that Fashion TV later offered to withdraw the revocations in exchange for the transfers of said marks);

  3. The artificial nature of the company that filed the revocation request, established only days before the revocation request was filed, holding a virtual address and having no actual business activity other than acting as a revocation applicant;

  4. The great number of revocation actions filed before the EUIPO and the national offices; and

  5. The excessive number of trade mark applications, company name registrations and domain names filed by Gleissner-related companies around the world with no apparent legitimate business interests behind them.

Based on the above, the Grand Board ruled that Fashion TV’s revocation action was filed with a “fraudulent end" aimed at obtaining undue advantage and constituted an abuse of rights and process. 

Background

The present case concerned a non-use revocation action brought by Dieter A. Hang against a EUTM registration ‘Formula 1’ (fig.) owned by Formula One Licensing B.V. (Formula One), in relation to some of the goods and services covered in classes 14, 16, 25, 28, 30, 41 and 42, pursuant to Article 58(1)(a) EUTMR.

EUIPO Board image article

There was a history of legal dispute between the parties that concerned the ‘Formula 1’ brand of Formula One, which has been invoked against Hang’s use and registration of variations of ‘Formula 1’, including its translation into German ‘Formel 1’. The parties met for the first time in connection with the registration of two trade marks in Germany in 1998 and then again before the EUIPO in 2010. Hang even filed criminal charges against Formula One and its representatives, which were dismissed by the competent public prosecutor’s office. In 2015, shortly after losing in cancellation proceedings initiated by Formula One, Hang filed ten applications for revocation of EUTMs owned by Formula One. In 2018, Hang attacked another 60 EUTMs owned by Formula One in four waves. Two further EUTMs were attacked in 2019.

In response to Dieter Hang’s present non-use revocation action, Formula One initially submitted evidence to prove genuine use of its ‘Formula 1’ (fig.) mark in relation to the attacked goods and services. Subsequently, Formula One further submitted that Hang’s application for revocation was filed in abuse of law and process since it was filed as a personal “vendetta” and not to safeguard the general interests protected under Article 58 EUTMR. Upon request of Formula One, the EUIPO Cancellation Division later suspended the present proceedings pending the final outcome of the ‘Sandra Pabst’ case. 

Once the Grand Board decision in ‘Sandra Pabst’ became final, the Cancellation Division resumed the present proceedings and issued its decision, which partly revoked Formula One’s EUTM in relation to all the attacked goods and services, except for “commemorative coins” in class 14. The Cancellation Division held that the facts of the present proceedings were different from those that led to the ‘Sandra Pabst’ decision. On this basis, the Cancellation Division dismissed Formula One’s claim that Hang’s application for revocation constituted an “abuse of rights or process”. 

Formula One appealed the decision, however, only for the Cancellation Division’s findings regarding Formula One’s claim of abuse of law and process. In its appeal, Formula One did not submit any arguments regarding the Cancellation Division’s assessment of the evidence concerning proof of genuine use of its ‘Formula 1’ (fig.) mark. Hang did not submit any reply. 

Board’s decision

The Board confirmed the Cancellation Division’s findings that Hang’s revocation request did not constitute an abuse of law (and process), and on this basis dismissed Formula One’s appeal. 

The Board held that (i) filing a high number of applications for revocation against trade marks belonging to the same proprietor does not necessarily lead to an abuse of law; and (ii) each case needs to be assessed on its own merits. 

The Board found that the facts in the present case differ “quite importantly” from those in ‘Sandra Pabst’, preventing it from serving as a precedent. In the Board’s view, the conditions established in ‘Sandra Pabst’ are not met.  

The Board considered whether each of the five conditions established in ‘Sandra Pabst’ were also fulfilled in the present case, as set out in turn below. However, the Board noted that in ‘Sandra Pabst’ the Grand Board “did not state whether an abuse of law can only exist if all five conditions are fulfilled or whether other reasons could also lead to the conclusion that an application for revocation was filed in abuse of law.” 

1. The number of revocation requests against the same EUTM proprietor

The Board held that, although Hang filed 68 different applications for revocation, and therefore, more than the total 37 applications for revocation filed in the ‘Sandra Pabst’ case, this alone cannot prove abuse of law. The Board noted the following differences between the two cases:

  1. Unlike the ‘Sandra Pabst’ case, all trade marks attacked by Hang have “common patterns”, as they either contain or consist of the element ‘F1’ or ‘Formula 1’ or the element ‘Grand Prix’ (in English or translated into other EU languages).

  2. Formula One and its subsidiaries hold currently more than 100 EUTMs. According to the Board, a large trade mark portfolio necessarily runs a “higher risk” of being faced with revocation requests, in particular when the portfolio contains variations of one and the same trade mark. The Board added that the older the trade marks are, the longer the list of goods and services protected by these marks, the higher this risk will be. 

  3. Hang’s applications for revocation were not filed at the same time, but in several waves (in 2015, 2018 and 2019). 

  4. Hang did not always file an application for revocation against all goods and services, but filed it only for specific goods and services (in the Board’s view, this implies that Hang carried out preliminary investigations before filing the revocation requests). The Board noted that, also in the present case, Hang’s request was directed against specific goods and services, and his request was successful for the vast majority of the goods and services attacked. 

  5. 53 of these 68 revocation actions lost their purpose after Formula One surrendered EUTMs that were attacked either in total or for the goods and services that were attacked. 

  6. Several of the EUTMs surrendered by Formula One (e.g. ‘FORMULA 1 GRAN PREMIO DI ROMA’) appear to be no longer in use. 

  7. Formula One did not claim that Hang filed an application for revocation against its “core business”, namely the organisation of a series of car races under the trade mark ‘F1’ or ‘Formula 1’. According to the Board, this proves that Hang pursued the “legitimate interests” of the revocation proceedings, which is to ensure that the Register is not “cluttered by dormant trade marks”. This fact alone “excludes the possibility of an abuse of law”.  

2. The retaliatory nature of the revocation request

The Board held that it is an “objective and legitimate means of defence” for Hang to file applications for revocation to “(re-)obtain what he considers as his rights”, particularly considering that Hang apparently believed and probably still believes that he owned legitimate rights in his German trade marks, which were successfully cancelled by Formula One. According to the Board, Hang is allowed to defend his interests, whether successfully or not.

The Board also noted that conflicts in the business area “may and often translate into multiple lawsuits”. It also stressed again that Hang filed only an application for revocation “in so far as he believed that these EUTMs were not genuinely used”, and that the vast majority of the EUTMs under attack were surrendered by Formula One. The Board also pointed out that Hang’s present revocation request was only rejected for “commemorative coins” in class 14. 

3. The virtual nature of the company which filed the revocation request, as well as of numerous similar companies controlled by the same person(s)

While Formula One did not address this point in its submissions, the Board noted that Hang initiated the present proceedings (as well as the other 67 related proceedings) without trying to hide his role behind the revocation applications. 

4. The number of revocation requests in total, with the EUIPO and other offices

While Formula One did not address this point in its submissions, the Board noted that, unlike the ‘Sandra Pabst’ case (where it was established that Gleissner-related companies filed, among others, more than 850 revocation requests before the EUIPO), Hang did not file any other revocation request before any national IP Office and did not attack any other party than Formula One and its affiliates.  

5. The excessive number of trade mark applications, company name registrations and domain names

The Board noted that Formula One addressed this point partly in its submissions by referring to (i) a company that was owned or controlled by Hang but was liquidated; (ii) an internet address that was currently not used; and (iii) three withdrawn EUTM applications and six cancelled German registrations. These, however, are low numbers compared to the ‘Sandra Pabst’ case where it was established that more than 1100 company names, 2500 trade mark applications and 5300 domain names were linked to the revocation applicant. 

Based on the above, the Board concluded that Hang’s present revocation request, as well as his other 67 related actions, were not filed as an abuse of law, but as a “legitimate means of defence and in the public interest”, as expressed in recital 24 EUTMR. 

Comment

This is an interesting case because it further develops the conditions established in the Grand Board’s decision in ‘Sandra Pabst’, which was an important milestone in the on-going battle against trade mark system abuse.

In particular, the Board’s decision in the present case (subject to Formula One’s possible appeal before the General Court) confirms that those conditions must be examined and strictly applied. In fact, a rejection of an application for revocation as an abuse of law and/or process is an exception and, as such, must be construed narrowly. Moreover, a careful assessment of the specific circumstances of each case is required.

Therefore, a EUTM proprietor relying on “abuse of law and/or process” will be subject to a high burden of proof. The EUIPO will dismiss a non-use revocation action on such ground only where the EUTM proprietor provides a convincing line of arguments showing that the revocation applicant’s action was primarily driven by illegitimate objectives. 

Consequently, unless the circumstances of the case are “exceptional”, like in ‘Sandra Pabst’, a EUTM proprietor may find it difficult to demonstrate that the filing of a non-use revocation action (even if related to a high number of other similar actions filed by the same revocation applicant) constitutes an abuse of law and/or process. 

Notably, in the present decision the Board questioned whether the conclusions reached in ‘Sandra Pabst’ might have been overruled by the judgment of the General Court in ‘Leinfelder’ (T-577-19), where the Court held that it is “irrelevant when considering the admissibility of an application for revocation […], whether there has been an abuse of rights”. However, the Board noted that, given that the appeal was dismissed, it was not necessary to address that question in its decision. 

While the alleged “abuse of rights” in ‘Leinfelder’ (relating to a breach of contractual terms between the parties) arguably differs from Formula One’s claim of “abuse of law and rights” in the present case, it will be interesting to see if Formula One files an appeal before the General Court. If so, the Court could also respond to the question raised by the Board as to whether the conclusions reached in ‘Sandra Pabst’ still apply or were already overruled by the Court’s subsequent judgment in ‘Leinfelder’.  

For more information on this decision please contact Paolo Andreottola and Alicja Zalewska-Orabona of the CMS IP Team.