Pejovič v EUIPO - ETA zivilska industrija (SALATINA) (EU trade mark - Judgment) [2022] EUECJ T-287/21 (13 July 2022)

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(EU trade mark – Invalidity proceedings – EU word mark SALATINA – Absolute ground for invalidity – Bad faith – Article 52(1)(b) of Regulation (EC) No 207/2009 (now Article 59(1)(b) of Regulation (EU) 2017/1001))

Edvin Pejovič, residing in Pobegi (Slovenia), represented by U. Pogačnik, lawyer,

European Union Intellectual Property Office (EUIPO), represented by J. Ivanauskas, acting as Agent,

the other party to the proceedings before the Board of Appeal of EUIPO, intervener before the Court, being

ETA živilska industrija d.o.o., established in Kamnik (Slovenia), represented by J. Sibinčič, lawyer,

composed of V. Tomljenović, President, P. Škvařilová-Pelzl (Rapporteur) and I. Nõmm, Judges,

having regard to the fact that no request for a hearing was submitted by the parties within three weeks after service of notification of the close of the written part of the procedure, and having decided to rule on the action without an oral part of the procedure, pursuant to Article 106(3) of the Rules of Procedure of the General Court,

1 By its action under Article 263 TFEU, the applicant, Mr Edvin Pejovič, seeks the annulment and alteration of the decision of the Fourth Board of Appeal of the European Union Intellectual Property Office (EUIPO) of 23 March 2021 (Case R 889/2020-4) (‘the contested decision’).

2 On 18 October 2016, KPMS računovodske in finančne storitve, d.o.o. (‘KPMS’) filed an application for registration of an EU trade mark with EUIPO pursuant to Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78, p. 1), as amended (replaced by Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (OJ 2017 L 154, p. 1)).

4 The goods in respect of which registration was sought fall within Class 30 of the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended, and correspond to the following description: ‘Vinegar; dressings for salad’.

6 On 18 April 2018, a transfer of ownership of the mark referred to in paragraph 3 above from KPMS, via its subsidiary Šampionka d.o.o. (KPMS has a majority shareholding of 56.85% in Šampionka), to the intervener, ETA živilska industrija d.o.o., was entered in the register.

7 On 21 August 2018, the applicant filed an application for a declaration that the mark referred to above was invalid in respect of the goods referred to in paragraph 4 above.

8 The application for a declaration of invalidity was based on the following earlier marks, over which the applicant had a lien, following enforcement proceedings against his debtor Beohemija d.o.o., now Stečajna masa Beohemija d.o.o. – v stečaju (assets of the bankrupt company, formerly Beohemija d.o.o., in liquidation) (separately or together, ‘Beohemija’):

– the Slovenian figurative mark reproduced below, registered on 16 September 1996 under number 9182008 and renewed for ‘alcohol vinegar’ in Class 30:

– the Slovenian figurative mark reproduced below, registered on 21 June 1996 under number 9182009 and renewed for ‘wine vinegar’ in Class 30:

– the Slovenian figurative mark reproduced below, registered on 16 September 1996 under number 9182011 and renewed for ‘aromatic vinegar for preserving, vinegar for preserving’ in Class 30:

– the Slovenian figurative mark reproduced below, registered on 21 June 1996 under number 9182012 and renewed for ‘apple vinegar’ in Class 30:

– international registration designating the European Union in respect of the figurative mark reproduced below, registered on 27 April 2012 under number 1117310 and renewed for ‘wine vinegar’ in Class 30:

9 The grounds for invalidity relied on by the applicant were those referred to in Article 59(1)(b) of Regulation 2017/1001 and Article 60(1)(a) of that regulation, read in conjunction with Article 8(1)(a) and (b) of that regulation.

10 On 17 March 2020, the Cancellation Division rejected the application for a declaration of invalidity in its entirety and ordered the applicant to bear the costs.

11 On 12 May 2020, the applicant filed a notice of appeal with EUIPO against the decision of the Cancellation Division, followed, on 29 May 2020, by a statement of grounds of appeal, in accordance with Article 72 of Regulation 2017/1001.

12 By the contested decision, the Board of Appeal upheld the decision of the Cancellation Division and, consequently, dismissed the appeal and ordered the applicant to pay the costs.

13 In the contested decision, the Board of Appeal set out, inter alia, the following relevant facts relied on by the parties:

– on 12 June 2008, the applicant sold 100% of his shares in Pejo Šampionka d.o.o. to Beohemija for a total amount of EUR 6 million, of which EUR 2 million was not paid by Beohemija; therefore, the applicant is owed EUR 2 million by Beohemija;

– in 2008, Pejo Šampionka, which was the proprietor of the Slovenian marks referred to in paragraph 8 above, transferred those marks to Beohemija;

– on 15 February 2009, Beohemija and Šampionka concluded a contract under which Beohemija authorised Šampionka to manufacture and sell goods under its trade marks, including the Slovenian marks referred to in paragraph 8 above;

– in 2011, the applicant brought enforcement proceedings against Beohemija for recovery of the EUR 2 million debt owed to him referred to above;

– under the contract dated 14 May 2012, Beohemija sold to Šampionka the trade marks referred to in paragraph 8 above, transferred the respective intellectual property rights to Šampionka and authorised it to register and protect those trade marks in other countries of its choice; however, in the registers of the Slovenian intellectual property office and of the World Intellectual Property Organization (WIPO), those transfers were not recorded;

– in the context of the enforcement proceedings referred to above, the applicant was granted a lien over the Slovenian marks and the international registration referred to in paragraph 8 above, which were pledged on 9 May 2013 and 13 April 2016 respectively;

– on 14 February 2018, a business transfer agreement was concluded between Šampionka and the intervener, under which the intervener became the proprietor, inter alia, of the contested mark.

14 As regards the application for a declaration of invalidity based on Article 60(1)(a) of Regulation 2017/1001, read in conjunction with Article 8(1)(a) and (b) of that regulation, the Board of Appeal concluded, as did the Cancellation Division, that the applicant did not have standing to file that application.

15 As regards the application for a declaration of invalidity based on Article 59(1)(b) of Regulation 2017/1001, the Board of Appeal rejected it as unfounded. The Board of Appeal stated that the applicant had not proven that the pledgor-pledgee relationship between himself and the proprietor of the pledged marks, namely the earlier marks, established the allegation of bad faith against the proprietor of the contested mark and its predecessors in title. In particular, the Board of Appeal took the view that it had not been proven that the contested mark had been filed not with the aim of engaging fairly in competition, but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark.

– primarily, alter the contested decision in such a way as to uphold its appeal and alter the decision of the Cancellation Division of EUIPO of 17 March 2020 by approving the application for a declaration that the contested mark is invalid and declare that mark invalid in its entirety;

– in the alternative, annul the contested decision and refer the case back to EUIPO for re-examination;

– order EUIPO to pay the costs of the proceedings before the Court, as well as the costs of the invalidity and appeal proceedings before EUIPO.

18 Under Article 72(3) of Regulation 2017/1001, the Court has jurisdiction to annul or to alter the contested decision. It should be pointed out, however, that the annulment of all or part of a decision constitutes a necessary prerequisite in order to allow an alteration of that decision. Therefore, an application for alteration cannot be allowed in the absence of a claim for annulment (see, to that effect, judgment of 30 November 2006, Camper v OHIM – JC (BROTHERS by CAMPER), T‑43/05, not published, EU:T:2006:370, paragraph 99).

19 In the present case, it must be noted that, by his principal heads of claim, the applicant merely seeks the alteration of the contested decision. However, in the light of the contents of his application and, in particular, the heads of claim submitted in the alternative, the principal heads of claim submitted by the applicant may be interpreted as including an application for annulment (see, to that effect, judgment of 22 May 2019, Andrea Incontri v EUIPO – Higicol (ANDREA INCONTRI), T‑197/16, not published, EU:T:2019:347, paragraph 19).

20 Given the date on which the application for registration of the contested mark was filed, namely 18 October 2016, which is determinative for the purposes of identifying the applicable substantive law, the facts of the case are governed by the substantive provisions of Regulation No 207/2009 (see, to that effect, order of 5 October 2004, Alcon v OHIM, C‑192/03 P, EU:C:2004:587, paragraphs 39 and 40, and judgment of 23 April 2020, Gugler France v Gugler and EUIPO, C‑736/18 P, not published, EU:C:2020:308, paragraph 3 and the case-law cited).

21 Accordingly, in the present case, as regards the substantive rules, it is appropriate to interpret the references made by the Board of Appeal in the contested decision, by the applicant in the arguments raised by EUIPO and by the intervener to Article 8(1)(a) and (b), Article 46(1)(a), Article 59(1)(b), Article 60(1)(a) and Article 63(1)(b) of Regulation 2017/1001 as referring to Article 8(1)(a) and (b), Article 41(1)(a), Article 52(1)(b), Article 53(1)(a) and Article 56(1)(b) of Regulation No 207/2009 respectively.

22 Furthermore, in so far as, according to settled case-law, procedural rules are generally held to apply on the date on which they enter into force (see judgment of 11 December 2012, Commission v Spain, C‑610/10, EU:C:2012:781, paragraph 45 and the case-law cited), the dispute is governed by the procedural provisions of Regulation 2017/1001.

23 In support of the present action, the applicant relies, in essence, on two pleas in law, alleging, first, infringement of Article 53(1)(a) of Regulation No 207/2009 and of Article 56(1)(b) of that regulation, read in conjunction with Article 41(1)(a) of that regulation, and, second, infringement of Article 52(1)(b) of Regulation No 207/2009 and of Articles 94 and 95 of Regulation 2017/1001.

24 The examination of the present case will begin with an analysis of the second plea.

25 In the context of the second plea, the applicant criticises the Board of Appeal for having concluded that there was no bad faith when the application for the contested mark was filed, even though the circumstances of the case, as determined in the course of the proceedings before EUIPO, had demonstrated that there was bad faith. The applicant maintains that the findings of the Board of Appeal are based on a failure to assess all the relevant facts and evidence in the context of the proceedings and on an overly restrictive interpretation of the concept of ‘bad faith’ and, on that basis, constitute an infringement of Article 52(1)(b) of Regulation No 207/2009 and of Articles 94 and 95 of Regulation 2017/1001.

26 In that regard, first, the applicant maintains that the contested mark was registered in the knowledge and with the intention that such registration would be detrimental to his rights as pledgor of the earlier marks and, at the same time, seeks to exploit the distinctive character and reputation of the earlier marks. In the view of the applicant, the aim of Beohemija, KPMS and Šampionka was to prevent repayment of the debt owed to him by Beohemija. In particular, the applicant states that the value of the earlier marks over which he has a lien has been substantially reduced on account of the registration of the contested mark. Second, the applicant criticises the Board of Appeal for not having taken the view that the fact that Beohemija did not oppose the registration of the contested mark in any way, even though that mark was identical or very similar to its earlier marks, was indicative of bad faith. Third, the applicant submits that bad faith is based on an undeniable connection between KPMS, Šampionka and Beohemija, which is also established by the fact that KPMS and Šampionka were informed of the existence of the earlier marks and that they had been pledged. Fourth, according to the applicant, the fact that Šampionka attempted unsuccessfully to register the Slovenian marks Taliss and Salatena also supported the conclusion that the contested mark had been filed in bad faith.

27 EUIPO, supported by the intervener, disputes the applicant’s arguments. It maintains that it was correct in having rejected the application for a declaration of invalidity, given that it has not been proven that the application for registration of the contested mark had been filed with dishonest intentions, that is to say, in order to undermine the rights or interests of third parties. First, as regards the applicant’s assertions regarding the intention of preventing, by means of the registration of the contested mark, the recovery of the debt owed to him by Beohemija, which was guaranteed by the earlier marks having been pledged, EUIPO maintains that the applicant has not substantiated his allegation that the value of the earlier pledged marks had decreased or would decrease in the future as a result of the registration of the contested mark. Second, as regards the applicant’s allegation that the filing of application for registration of the contested mark sought to exploit the distinctive character or reputation of the earlier marks, that allegation must, according to EUIPO, be rejected as inadmissible, as the applicant has not substantiated it. Furthermore, use of the contested mark cannot be detrimental to the earlier marks, given that the contested mark had been filed with the intention of being used for the same goods as those covered by the earlier marks and with authorisation from Beohemija. Third, EUIPO states that it has not been proven that the contested mark was acquired with the intention of undermining the applicant’s rights and interests, that is to say, in order to prevent the repayment of the debt owed to him by Beohemija. Fourth, as regards the relations between the parties concerned by the present dispute, EUIPO submits that it has not been shown that there was a direct link between, on the one hand, the applicant and, on the other, KPMS and Šampionka. Fifth, according to EUIPO, the contested mark was filed for normal business purposes, as Šampionka manufactured and sold goods under the SALATINA marks even before the filing of the contested mark, whereas KPMS acted in the interest of its subsidiary, Šampionka. In addition, pursuant to the agreement of 14 May 2012, Beohemija agreed to transfer to Šampionka all of its SALATINA marks and also authorised it to register and to protect those marks in other countries of its choice. It was also logical that, after having given its consent, Beohemija did not oppose the filing of the contested mark. Sixth, as regards the attempts by Šampionka to register the Slovenian trade marks Taliss and Salatena, EUIPO submits, on the one hand, that the circumstances of those applications were different from those of the present case and, on the other hand, that that mere fact is not sufficient to substantiate the allegation of bad faith in the present case.

28 The intervener, for its part, disputes the applicant’s arguments and submits that the Board of Appeal was fully entitled to conclude that there was no bad faith at the time of filing the contested mark. First, the intervener states that it has no connection with the KPMS and Šampionka companies, apart from the agreement of 14 February 2018, by which Šampionka transferred its business to it. Second, according to the intervener, the registration of the contested mark is a normal business strategy aimed at protecting a successful trade mark in the territory of the European Union. In that regard, it points out that the contested mark was registered on the basis of the agreement of 14 May 2012 between Beohemija and Šampionka, which was concluded before the applicant obtained a lien over the earlier marks. Third, the intervener submits that it is natural that Beohemija did not oppose registration of the contested mark because it had been applied for in accordance with that agreement between Beohemija and Šampionka. Fourth, the intervener maintains that the applicant has not proven that the contested mark was registered with the intention of preventing the repayment of Beohemija’s debt to him and thereby to undermine his legal rights and interests.

29 As a preliminary point, it should be recalled that the concept of bad faith referred to in Article 52(1)(b) of Regulation No 207/2009 is not defined, delimited or even described in any way in EU legislation (judgment of 28 January 2016, Davó Lledó v OHIM – Administradora y Franquicias América and Inversiones Ged (DoggiS), T‑335/14, EU:T:2016:39, paragraph 45).

30 According to the case-law, the concept of bad faith relates to a subjective motivation on the part of the trade mark applicant, namely a dishonest intention or other ‘sinister motive’. It involves conduct which departs from accepted principles of ethical behaviour or honest commercial and business practices (judgment of 7 July 2016, Copernicus-Trademarks v EUIPO – Maquet (LUCEO), T‑82/14, EU:T:2016:396, paragraph 28).

31 That concept is therefore not applicable where the application for registration can be regarded as fulfilling a legitimate objective and the applicant’s intention is not contrary to the essential function of a trade mark, which is to guarantee to the consumer or end user the identity of the origin of the goods or services concerned, by enabling him or her, without any likelihood of confusion, to distinguish those goods or services from the goods or services of others (see, to that effect, judgment of 23 May 2019, Holzer y Cia v EUIPO – Annco (ANN TAYLOR and AT ANN TAYLOR), T‑3/18 and T‑4/18, EU:T:2019:357, paragraph 32 and the case-law cited).

32 Accordingly, Article 52(1)(b) of Regulation No 207/2009 meets the general interest objective of preventing trade mark registrations that are abusive or contrary to honest commercial and business practices. Such registrations are contrary to the principle that the application of EU law cannot be extended to cover abusive practices on the part of a trader which do not make it possible to attain the objective of the legislation in question (see, to that effect and by analogy, judgment of 23 May 2019, ANN TAYLOR and AT ANN TAYLOR, T‑3/18 and T‑4/18, EU:T:2019:357, paragraph 33 and the case-law cited).

33 In order to determine whether the applicant is acting in bad faith, all of the relevant factors specific to the particular case which pertained at the time of filing the application for registration of the sign as an EU trade mark must be taken into consideration (judgment of 11 June 2009, Chocoladefabriken Lindt & Sprüngli, C‑529/07, EU:C:2009:361, paragraph 53).

34 The facts taken into account in the case-law in the context of the overall analysis undertaken pursuant to Article 52(1)(b) of Regulation No 207/2009 include, in particular, the fact that the applicant knows or must know that a third party is using, in at least one Member State, an identical or similar sign for an identical or similar product or service which is capable of being confused with the sign for which registration is sought, the applicant’s intention to prevent that third party from continuing to use such a sign, the degree of legal protection enjoyed by the signs at issue, the applicant’s intention to prevent a third party from marketing a product, the origin of the contested sign and its use since its creation, the commercial logic underlying the filing of the application for registration of that sign as an EU trade mark and the chronology of events relating to that filing (see, to that effect, judgments of 11 June 2009, Chocoladefabriken Lindt & Sprüngli, C‑529/07, EU:C:2009:361, paragraphs 38 and 44, and of 28 January 2016, DoggiS, T‑335/14, EU:T:2016:39, paragraphs 46 and 48).

35 That said, the factors referred to in paragraph 34 above are only examples drawn from a number of factors which can be taken into account in order to determine whether an applicant for registration was acting in bad faith at the time of filing the trade mark application (see judgment of 14 February 2019, Mouldpro v EUIPO – Wenz Kunststoff (MOULDPRO), T‑796/17, not published, EU:T:2019:88, paragraph 83 and the case-law cited).

36 Furthermore, it must be noted that it is for the applicant for a declaration of invalidity who intends to rely on the ground in Article 52(1)(b) of Regulation No 207/2009 to prove the circumstances which make it possible to conclude that the proprietor of an EU trade mark was acting in bad faith when it filed the application for registration of that mark, and that good faith is presumed until proof to the contrary is adduced (judgment of 8 March 2017, Biernacka-Hoba v EUIPO – Formata Bogusław Hoba (Formata), T‑23/16, not published, EU:T:2017:149, paragraph 45).

37 In addition, in that regard, the Court has stated that, in order to determine whether there is bad faith, it is necessary to take into consideration, in particular, the intention of the applicant at the time of filing the application for registration. That subjective factor must be determined by reference to the objective circumstances of the particular case (judgment of 11 June 2009, Chocoladefabriken Lindt & Sprüngli, C‑529/07, EU:C:2009:361, paragraphs 41 and 42).

38 It is in the light of the foregoing considerations that it is necessary to review the legality of the contested decision in so far as the Board of Appeal concluded that there was no bad faith on the part of the applicant for registration of the contested mark, namely KPMS, at the time of filing that application for registration.

39 Having regard to the case-law cited in paragraphs 29 to 37 above, in order to determine whether, in the present case, Article 52(1)(b) of Regulation No 207/2009 has been infringed, it is necessary, in essence, to assess whether the registration of the contested mark, in the context of the earlier marks’ existence, must be regarded as abusive or contrary to honest commercial and business practices.

40 In the contested decision, first, the Board of Appeal concluded that the filing of the contested mark had no effect on the protection of the pledged marks. According to the Board of Appeal, regardless of whether or not KPMS and Šampionka were aware, at the time of filing the contested mark, of the lien granted over the pledged marks, and regardless of their exact relationship with the proprietor of those marks, there was nothing to prove that KPMS or Šampionka actually sought to prevent enforcement of the debt owed by Beohemija to the applicant and therefore to defraud it as a creditor. In that regard, the Board of Appeal found that the applicant had not proven that the registration and/or use of the contested mark on the market had actually reduced, or could have reduced, the value of the pledged marks, or that the contested mark had had a negative effect on potential purchasers’ intention and readiness to purchase the pledged marks, let alone that these affected the right in rem of the applicant for a declaration of invalidity.

41 Second, the Board of Appeal concluded that the contested mark had been filed for normal business purposes, in particular taking into account the fact that Šampionka, with the consent of Beohemija, engaged in commercial activities and offered, on the Slovenian market, vinegars under the Salatina mark.

42 In order to assess whether those findings of the Board of Appeal are correct, it is necessary, in the first place, to examine the question of the potential effect of the registration of the contested mark on the value of the earlier marks and on the enforcement of the applicant’s debt against Beohemija.

43 In that regard, first, it must be pointed out that the earlier marks were pledged as part of Beohemija’s bankruptcy assets. By contrast, the contested mark does not form part of that group of pledged marks. It follows that, if the earlier marks were to be sold, in order to ensure that the applicant would obtain repayment of Beohemija’s debt, the contested mark would not form part of that sale.

44 Therefore, a potential purchaser of the pledged marks would be faced with a situation where, after its possible purchase of those marks, another mark would continue to exist, which would be similar to those marks, and in which that potential purchaser would have no rights. It should be noted, in that regard, that the parties do not dispute that the marks at issue are at least similar.

45 The applicant is correct in submitting that that necessarily applies to the intention to purchase of potential purchasers. In particular, such potential purchasers might decide not to purchase the earlier marks referred to above, or to purchase them only at a price lower than the price they would have been prepared to pay if the contested mark had not existed, which would have the obvious result of reducing the value of the marks at issue.

46 Second, it is apparent from the case-law that one of the criteria which may have the effect of reducing the value of a mark is the fact that another mark seeks to take advantage of the distinctive character and repute acquired by that mark (see, to that effect, judgment of 16 December 2010, Rubinstein v OHIM – Allergan (BOTOLIST), T‑345/08 and T‑357/08, not published, EU:T:2010:529, paragraph 88).

47 According to the applicant, the contested mark was registered with the aim of, in particular, exploiting the distinctive character of the earlier marks.

48 In that regard, it is necessary to reject at the outset EUIPO’s argument that that allegation by the applicant must be rejected as inadmissible as the applicant has not substantiated it with any evidence or arguments.

49 Contrary to EUIPO’s submissions, the applicant’s argument in question is admissible because, first, it was adduced together with other arguments seeking to demonstrate that there was bad faith, which makes it possible to identify, in a manner that is sufficient, the evidence on which he relies. Second, the applicant has stated the reasons which, in his view, bore out his allegation, namely, in essence, the fact that the marks and the goods in question were identical or similar.

50 In the present case, it must be held that, from the point of view of a potential purchaser of the earlier pledged marks, the contested mark, which is similar to the earlier marks, might be perceived as being capable of exploiting their distinctive character or their reputation.

51 In accordance with the case-law cited in paragraph 46 above, the value of the pledged marks, in the eyes of a potential purchaser, might thus be reduced by the mere fact of there being another mark in existence which does not form part of the group of pledged marks, but which is similar to those marks.

52 Third, it must be observed that the interests of potential purchasers of the earlier marks are determined, inter alia, by the essential function of registering EU trade marks, to which the applicant also refers in his action, namely to guarantee the identity of origin of the marked goods or services to the consumer or end user by enabling that person, without any possibility of confusion, to distinguish those goods or services from others which have a different origin (see judgment of 25 September 2018, Gugler v EUIPO – Gugler France (GUGLER), T‑238/17, EU:T:2018:598, paragraph 40 and the case-law cited).

53 In the present case, a potential purchaser of the earlier pledged marks would be faced with a situation where, after the possible purchase of those marks, goods of a different origin are designated by another mark, namely the contested mark, which is similar to its marks. It follows that, in the eyes of a potential purchaser, the existence of the contested mark risks jeopardising the essential function of the earlier marks, which may have an effect on their value and the intention and readiness of a potential purchaser to purchase them.

54 The findings in paragraphs 43 to 53 above cannot be called into question by the arguments of EUIPO or of the intervener.

55 First, it is necessary to reject EUIPO’s argument that the fact that Beohemija did not oppose registration of the contested mark suggests that it did not identify risks related to the value of those marks.

56 In particular, the circumstances of the present case confirm that the registration of the contested mark was not capable of undermining Beohemija’s interests, because, first, Šampionka had been authorised since 2009 to carry on its business activities using Beohemija’s marks. Second, KPMS acted in the interest of Šampionka and with the objective of registering the contested mark for its use. As is apparent from the information in paragraphs 5 and 6 above, that is confirmed not only by the fact that KPMS transferred the contested mark to Šampionka shortly after its registration, but also by the fact that those two companies are economically linked.

57 It is therefore unsurprising that, from Beohemija’s point of view, there was no risk to the value of the earlier marks for as long as the contested mark belonged to Šampionka or, previously, KPMS, since all those similar marks were subject to unified economic management.

58 It follows that Beohemija’s failure to oppose the registration of the contested mark cannot be regarded as an objective criterion which would support the conclusion that that registration was not capable of affecting the value of the pledged marks in the eyes of potential purchasers of such marks.

59 Second, the findings concerning the effect of the registration of the contested mark on the value of the earlier marks cannot be called into question by EUIPO’s argument that the filing of that registration did not seek to exploit the distinctive character or reputation of the earlier marks, as that registration was filed with the intention of using the contested mark in respect of the same goods as those for which the earlier marks were used.

60 As has been pointed out in paragraphs 50 and 51 above, in the context of the assessment of the effect of the registration of the contested mark on the value of the earlier marks, it is necessary to examine the possible exploitation of the distinctive character or repute of those marks by reference to the perception of a potential purchaser. It follows that EUIPO’s argument in question would be valid if the earlier marks had not been pledged, but the existence of that pledge, which is capable, if that pledge is called upon, of leading to the sale of those marks to a third party, renders that argument irrelevant, for the reasons set out in the paragraphs referred to above.

61 Third, it is necessary to reject EUIPO’s arguments that the registration of the contested mark had no effect on the value of the earlier marks, or on the intention to purchase them, as potential purchasers of them would have been able to file a cancellation action against the contested mark on the basis of the earlier marks.

62 It is true that potential purchasers of the earlier marks might contemplate a cancellation action. However, it is clear that such a prospect would be capable of discouraging them from acquiring the pledged marks or, at the very least, of having a negative effect on potential purchasers’ assessment of their value.

63 In the light of the assessments set out in paragraphs 43 to 62 above, it must be held that the applicant has provided sufficient evidence of the potential effect which the registration of the contested mark might have on the value of the earlier marks and on their attractiveness to potential purchasers, which inherently affects that value.

64 Consequently, in the contested decision, the Board of Appeal relied on an incorrect premiss in finding that the applicant had not proven that the filing of the contested mark could, at the very least, have affected the value of the earlier marks.

65 The fact that the registration of the contested mark might have a negative effect on the value of the earlier marks leads to the conclusion that that registration might also have a negative effect on the enforcement of the debt owed to the applicant by Beohemija, in particular because that enforcement might have been prevented or impeded.

66 In the second place, in order to assess whether the Board of Appeal’s findings regarding there being no bad faith are correct, it is necessary to examine, in accordance with the case-law cited in paragraph 30 above, the intentions of the applicant for registration of the contested mark, namely KPMS, in the light of the consequences which its actions were likely to have.

67 In that regard, the Board of Appeal found that there was no evidence that KPMS and Šampionka were actually seeking to prevent enforcement of the debt owed by Beohemija to the applicant and therefore to defraud the applicant as a creditor, regardless of whether or not KPMS and Šampionka knew, at the time of filing the contested mark, of the lien granted over the earlier pledged marks, and regardless of their exact relationship with the proprietor of those marks.

68 First, if KPMS had been or ought to have been aware of the pledge of the earlier marks, that would mean that, when it filed the application for registration of the contested mark, it would have known or ought to have known that such filing could have the negative consequences for the applicant which are referred to in paragraph 65 above, that is to say, that it could prevent the enforcement of the debt owed to the applicant. The decision to register the contested mark, in those circumstances, implies that the intention of the applicant in respect of that registration, namely KPMS, was to pursue that registration despite all the foreseeable negative effects of that registration on the applicant. Such conduct on the part of KPMS cannot be perceived as irrelevant to the assessment of whether it was acting in bad faith.

69 Second, it cannot be ruled out that the systemic analysis of the links between the applicant, KPMS, Šampionka and Beohemija, as apparent, in particular, from their contractual relationship and from their potential economic interdependence, could make it possible to carry out a better assessment of the context in which KPMS filed the application for registration of the contested mark and, in particular, could be used to assess that company’s knowledge of the pledging of the earlier marks. Consequently, the links between all the parties referred to above also cannot be regarded as irrelevant to the outcome of the case.

70 In the light of the foregoing, it must be held that, in the contested decision, the Board of Appeal carried out its assessment of the intentions of the applicant for registration of the contested mark, namely KPMS, without having taken account of the important circumstances which the applicant had raised before it and which related to the possibility that KPMS knew of the pledging of the earlier marks and of the links between all the parties referred to in the preceding paragraph, namely the applicant, KPMS, Šampionka and Beohemija.

71 That conclusion cannot be called into question by EUIPO’s argument that KPMS or its successors in title could not have intended to undermine the value of the earlier marks, since they ought to have known that the proprietor of those marks could, at any time, bring a cancellation action in respect of the contested mark.

72 That argument cannot reasonably be relied on since, as has been stated in paragraphs 56 and 57 above, the registration of the contested mark is not at variance with the interests of Beohemija. It is true that that might change, in particular if the earlier pledged marks had to be sold to a third party with no link to the proprietor of the contested mark. However, as has been noted in paragraph 62 above, the prospect of being able to bring a cancellation action in respect of the contested mark is not capable of eliminating all the negative effects of the registration of the contested mark on the value of the earlier marks, but, on the contrary, would discourage potential purchasers of those marks and, accordingly, contribute to reducing their value.

73 In the third place, given that the Board of Appeal found that the registration of the contested mark had been requested for normal business purposes, it is necessary to assess whether that fact could have been sufficient to rule out there being bad faith in the present case.

74 As the Board of Appeal has done, EUIPO and the intervener submit, in that regard, first, that the contested mark was registered with the intention of it being used in accordance with its essential functions and, second, that that registration was consistent with normal business logic, given the contractual relationship between Beohemija and Šampionka and the fact that the contested mark was filed by KPMS in the interest of its subsidiary Šampionka.

75 It is true that the facts referred to in paragraph 74 above might be capable of indicating, in normal circumstances, honest behaviour. However, in the present case, those facts have to be assessed in the light of the exceptional circumstances of the case, in particular those linked to the pledging of the earlier marks.

76 In any event, the Board of Appeal’s finding regarding normal business practice is not sufficient to rule out there being bad faith without an assessment of all the relevant factors specific to the particular case, in particular the exceptional circumstances linked to the pledging of the earlier marks.

77 Furthermore, contrary to what was stated, in essence, by the Board of Appeal in paragraph 53 of the contested decision, the evidence and arguments submitted by the applicant provided a sufficient basis for the Board of Appeal to have to consider the potential effect of a direct or indirect relationship between the parties concerned by the present dispute on whether or not there was bad faith. As is apparent from the contested decision and from the file relating to the proceedings before EUIPO, the applicant argued, first, that there was a link between KPMS, Šampionka and Beohemija, relying on the fact that they all belonged to the same group of companies. Second, the applicant argued that the business transfer agreement concluded on 14 February 2018 between Šampionka and the intervener was capable of demonstrating that the parties to the agreement and KPMS were aware of the existence of the pledged marks and of the lien which he enjoyed with regard to them.

78 In the light of those factors, the Board of Appeal was required to make a specific examination of the relationship between all the parties referred to above and the possible effect of those relationships on whether or not there was bad faith.

79 In the light of all the foregoing, it must be held, as the applicant submits, that the errors made by the Board of Appeal, as established in paragraph 70 above, resulted in the Board of Appeal ruling out the existence of bad faith without taking account of the relevant factors specific to the particular case, which, if they had been taken into account, might possibly have changed its assessment.

80 In that regard, it should be borne in mind that, in accordance with the case-law cited in paragraph 33 above, the assessment of whether the applicant is acting in bad faith requires that all the relevant factors specific to the particular case which pertained at the time of filing the application for registration of the sign be taken into account.

81 It follows that the Board of Appeal did not correctly assess whether there was bad faith in the present case and accordingly infringed Article 52(1)(b) of Regulation No 207/2009.

82 Consequently, the second plea in law must be upheld, there being no need to examine the other arguments and complaints raised by the parties in that context, in particular possible infringement of Articles 94 and 95 of Regulation 2017/1001.

83 Therefore, the action must be upheld, there being no need to examine the first plea, and, consequently, the contested decision must be annulled.

84 As a principal argument, the applicant also claims that the Court should alter the contested decision so as to uphold his action and alter the decision of the Cancellation Division of EUIPO of 17 March 2020 by approving the application for a declaration that the contested mark was invalid, and that the Court should declare that mark invalid in its entirety.

85 It must be held that, by that request, the applicant has made an application for alteration, under Article 72(3) of Regulation 2017/1001, asking the Court to adopt the decision that the Board of Appeal ought to have taken (see, to that effect, judgments of 21 March 2012, Feng Shen Technology v OHIM – Majtczak (FS), T‑227/09, EU:T:2012:138, paragraph 54, and of 13 May 2020, Divaro v EUIPO – Grendene (IPANEMA), T‑288/19, not published, EU:T:2020:201, paragraph 85).

86 In that regard, it should be recalled that the power of the Court to alter decisions pursuant to Article 72(3) of Regulation 2017/1001 does not have the effect of conferring on that Court the power to carry out an assessment on which the Board of Appeal has not yet adopted a position. Exercise of the power to alter decisions must therefore, in principle, be limited to situations in which the Court, after reviewing the assessment made by the Board of Appeal, is in a position to determine, on the basis of the matters of fact and of law as established, what decision the Board of Appeal was required to take (see, by analogy, judgment of 16 May 2017, Airhole Facemasks v EUIPO – sindustrysurf (AIR HOLE FACE MASKS YOU IDIOT), T‑107/16, EU:T:2017:335, paragraph 45).

87 The request that a contested decision be altered is not a request to the Court to require EUIPO to do or to refrain from doing something, which would constitute a direction addressed to the latter. On the contrary, it is a request to the Court to decide, on the same basis as the Board of Appeal, whether the contested mark must be declared invalid in the light of Article 52(1)(b) of Regulation No 207/2009. Such a decision is among the measures which, in principle, may be taken by the Court in the exercise of its power to alter decisions (see judgment of 16 May 2017, AIR HOLE FACE MASKS YOU IDIOT, T‑107/16, EU:T:2017:335, paragraphs 46 and 47 and the case-law cited).

88 In the present case, the conditions for the Court to exercise its power to alter the contested decision are not met.

89 As has been stated in paragraph 70 above, the Board of Appeal did not examine, in order to assess bad faith on the part of KPMS, all the relevant factors specific to the particular case relied on by the applicant, in particular the possible knowledge of the pledging of the earlier marks and the links between the applicant, KPMS, Šampionka and Beohemija.

90 Consequently, the factors examined in the contested decision do not make it possible to determine the decision which the Board of Appeal was required to take. While those factors do not justify the finding that KPMS was not acting in bad faith at the time of filing the application for registration of the contested mark, as was observed in paragraph 79 above in the context of the examination of the application for annulment, they also do not, in themselves, justify the contrary finding.

91 It follows from the case-law that such circumstances are regarded as preventing the General Court from exercising its power to alter decisions (see, to that effect, judgment of 21 March 2012, Feng Shen Technology v OHIM – Majtczak (FS), T‑227/09, EU:T:2012:138, paragraphs 56 and 57).

92 In the light of the foregoing, it is necessary to reject the application for alteration submitted by the applicant, which requested the Court to declare the contested mark invalid.

93 Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. In addition, under Article 134(2) of those rules, where there is more than one unsuccessful party, the Court is to decide how the costs are to be shared.

94 The applicant claims that EUIPO and the intervener should be ordered to pay the costs relating to the proceedings before the Court as well as the costs of the invalidity and appeal proceedings before EUIPO.

95 Since EUIPO has been essentially unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the applicant in relation to the proceedings before the Court.

96 As regards the costs relating to the invalidity proceedings before the Cancellation Division and the appeal proceedings before the Board of Appeal, it should be recalled that, under Article 190(2) of the Rules of Procedure, costs necessarily incurred by the parties for the purposes of the proceedings before the Board of Appeal are to be regarded as recoverable costs. However, that does not apply to costs incurred for the purposes of the proceedings before the Cancellation Division.

97 Consequently, the applicant’s request that EUIPO be ordered to pay the costs relating to the proceedings before the Cancellation Division and before the Board of Appeal may be granted only as regards the costs incurred for the purposes of the proceedings before the Board of Appeal.

98 Since the intervener has been essentially unsuccessful, it must be ordered to bear its own costs.

1. Annuls the decision of the Fourth Board of Appeal of the European Union Intellectual Property Office (EUIPO) of 23 March 2021 (Case R 889/2020-4);

3. Orders EUIPO to bear its own costs and to pay those incurred by Mr Edvin Pejovič for the purposes of the present proceedings and for the purposes of the proceedings before the Board of Appeal;

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Pejovič v EUIPO - ETA zivilska industrija (SALATINA) (EU trade mark - Judgment) [2022] EUECJ T-287/21 (13 July 2022) URL: http://www.bailii.org/eu/cases/EUECJ/2022/T28721.html Cite as: ECLI:EU:T:2022:441, EU:T:2022:441, [2022] EUECJ T-287/21

Court of Justice of the European Communities (including Court of First Instance Decisions)