According to German trademark law a trademark registration can be declared invalid if it can be shown that the trademark owner was acting in “bad faith” at the time of filing the trademark application. However, the term “bad faith” is not defined in the German Trademark Act so that there is some uncertainty if the registration of a trademark which is used and known abroad, but not registered in Germany constitutes “bad faith”.
Decision of the Regional Court of Munich
“Bad faith”-cases are rather rare, however, in a decision rendered on June 1st, 2021 the Regional Court of Munich had to deal with the question whether the registration of trademarks known abroad constitutes “bad faith”.
Facts of the case
The confectionery manufacturer FERRERO had filed an action and asserted rights to the signs „Butterfinger“ and „Baby Ruth“. According to the plaintiff the signs “Butterfinger” and “Baby Ruth” are well known in the USA since the company Nestlé, from which the plaintiff had acquired parts of the US confectionery business in 2018, sold chocolate bars under these signs. The sued German company, which is mainly active in the beverage sector, is owner of the German trademarks for the signs „Butterfinger“ and „Baby Ruth“, including for “chocolate products”. The defendant also sold “Butterfinger” chocolate bars in Germany in a packaging design that is almost identical to the bar offered by Nestlé in the USA at the time.
FERRERO sought a ban on the sale of the “Butterfinger” chocolate bars and requested revocation of the German trademark registrations “Butterfinger” and “Baby Ruth” due to bad faith. FERRERO argued that the sole purpose of the registrations was to build up a lucrative potential threat to her in order to be able to subsequently sell the trademarks as profitably as possible. The defendant argued that the prerequisites for a bad faith application are not met since he did not register the trademarks with the intention of obstructing FERRERO, but always showed his own intention to use the trademarks.
The ruling of the Regional Court of Munich
The Regional Court of Munich ruled that the requirements for a bad faith trademark application were not met. The reason for this was, among others, that the defendant had used at least the trademark “Butterfinger” for chocolate bars which could be an indication that he did not have an intention to obstruct FERRERO at the time of application. Further, Nestlé itself had trademark rights for the signs Butterfinger” and “Baby Ruth” in Germany in the past, but had not used them since the end of 2010 at the latest. The court rejected the requests for revocation and prohibited only the sale of a “Butterfinger” chocolate bar in a presentation comparable to the US “original”.
Assessment and recommendation
The decision of the Regional Court of Munich is not final yet and might be overturned. The assumption of bad faith in this case seems possible. The genuine use of a trademark may be in principle an indication against an intent to block or obstruct. However, if the product is sold in a packaging that is almost identical to the foreign original, a conscious exploitation of the reputation of the (foreign) trademark seems obvious.
Regardless of the outcome of an appeal, the decision of the Regional Court of Munich clearly shows how important it is for trademark owners to also secure the relevant foreign markets by filing trademark applications. A well-known trademark is not (always) sufficient for protection abroad. In addition, bad faith procedures are always difficult and costly. The intention of the applicant at the time of the application is a subjective factor and hard to prove for third parties. However, the party requesting revocation due to bad faith bears the burden of proof. The timely applications of trademarks in the most important foreign markets is not only the safe approach, but in most cases also the much cheaper way.