Bad faith

Registration of

foreign marks.

5. June 2009

from

Clemens Pfitzer

Can you register a trademark in Germany even though you know that there is a corresponding trademark for the same goods or services in other countries? When does such an application become inadmissible, or when is such an applicant acting in bad faith? The Federal Court of Justice has commented on this.

What is it all about?

A trademark agency had registered the trademark “Ivadal” for pharmaceutical products, in particular medicinal products for human use, with the German Patent and Trademark Office. The application was made in order to resell or license the trademark.

This was opposed by the owner of the trademark “Ivadal” in Austria, who had already used the trademark for corresponding products prior to this application. In Germany, however, the medicine was offered under a different name, so that there was no trademark right in Germany. Nevertheless, the Austrian trademark owner assumed that the trademark agency had registered the trademark in bad faith and applied for it to be canceled.

Federal Patent Court denies claim for cancellation

The Federal Patent Court denied a corresponding claim for cancellation, as the fact that the trademark agency had systematically applied for trademarks that were used for pharmaceuticals abroad by the trademark owner or other pharmaceutical companies, which were marketed in Germany under a different name (so-called two-brand strategy), did not allow the conclusion to be drawn that the application was filed in bad faith.

It corresponds to the business activities of a trademark agency that it registers a large number of trademarks and proceeds systematically in doing so. Neither the business principle of applying for trademarks that are not protected in Germany and are used abroad by someone else, nor the time frame of the present and other applications would give reason to assume that the application was filed in bad faith as a blocking and obstructive trademark.

The Austrian trademark owner filed an appeal against this decision with the Federal Court of Justice.

Federal Court of Justice decision on bad faith

The Federal Court of Justice(decision of April 2, 2009 – I ZB 8/06) ruled in favor of the Austrian pharmaceutical company, as the application had been filed in bad faith.

Due to the principle of territoriality applicable in trademark law , which limits trademark rights to the respective country of registration, it is in principle legally unobjectionable if a sign is registered as a trademark in Germany in the knowledge that another party is using the same sign in a neighboring country as a trademark for the same or even identical goods.

However, such an application can appear to be in bad faith if there are other special circumstances that have a domestic connection. It is true that the Austrian company did not have a domestic vested interest in the designation “Ivadal”, as the sign had not been used in Germany. However, even without such a domestic vested right, the application for a trademark can be assessed as bad faith if the applicant wants to prevent the owner of a valuable foreign sign, who also wants to use it on the domestic market in the near future, from doing so by blocking the registration of the trademark applied for. In the present case, however, there was no such intention of use in Germany by the Austrian company.

However, an application can also be made in bad faith if it is made with the intention of not using the trademark itself, but (only) to prevent others from using it. The trademark agency had made it its business principle to register trademarks for medicinal products that are not protected in Germany but are used abroad by other companies to label certain medicinal products. The pharmaceuticals in question are sold by parallel importers in Germany under the respective foreign trademark. The trademark owner does not intend to use the trademarks it has applied for for the distribution of pharmaceuticals itself; rather, it has only acquired the trademark rights for the purpose of selling them to third parties or granting them licenses to the trademark rights. Under these circumstances, the only potential licensees or acquirers of these trademarks are the manufacturer of the medicinal product concerned or the parallel importers who distribute it domestically. For other pharmaceutical companies, the acquisition of trademark protection is not of interest due to the fact that corresponding parallel-imported medicinal products are already distributed in Germany under these names. For the manufacturer or parallel importers, this results in obstacles and thus the obligation to license the trademark of the trademark agency, which makes this application appear to be in bad faith.