The Naughty or the Nice List? – Merry evergreening

Christmas is fast approaching, and no doubt Santa is carefully checking his lists to determine who has been naughty and who has been nice this year. But it might not only be St. Nick who has been keeping a Naughty or Nice list. In this article, we will explore what it means if a trademark holder has been filing “naughty” or “nice” lists in terms of bad-faith trademark applications, and how this connects to the seasonally appropriate concept of “evergreening”.

As has become apparent in recent years, bad faith is an increasingly important concept within trademark law, both in the EU and internationally. Filing trademarks is not only becoming more complex with each passing year, but trademark filing strategies that were commonplace just a few years ago may now present both risks and opportunities. Trademark holders should therefore be aware of how the trademark landscape has changed with regard to filing and maintaining trademark rights.

When applying for a trademark in any given jurisdiction, you generally need to specify which goods and services the trademark is to be granted protection for. This is known as the list of goods and services, and alongside the mark itself (word, figurative, combined, or otherwise), this list largely determines the scope of trademark protection.

But what happens if the list itself is designed solely to circumvent the trademark system and the grace period for genuine use that is granted to a new trademark right? Could this be considered bad faith on the part of the trademark holder? The trend within EU-case law certainly suggests that it could.

Historically, bad faith meant filing a trademark with prior knowledge that the mark belonged to someone else. In recent years, however, both the EU and other jurisdictions have broadened the concept to include a different scenario: evergreening. This involves re-filing an existing trademark in order to circumvent the five-year genuine use requirement. By continuously and systematically re-filing the same mark, trademark holders were able to shield established trademarks from non-use cancellation, even where genuine use could not be demonstrated.

As noted, this strategy may now be considered a form of bad faith, where the trademark holder is seen as attempting to bypass the intended purpose of the trademark system through dishonest conduct.

This raises the question of whether all re-filings are automatically considered evergreening or bad faith. Surely there must be situations where it is warranted to re-file a trademark, for example by adding or removing items in the list of goods and services to better reflect the actual scope of the business? So which lists are naughty, and which are nice? As is often the case, the answer lies in the specific circumstances of each filing.

So how does the EUIPO determine whether a list of goods and services is naughty or nice when assessing bad faith?

Bad faith is still not strictly defined in the EU case law, but a number of interesting cases in recent years have pointed toward an overall assessment in each matter determining whether a filing has been made in bad faith or good faith.

Key factors include whether re-filings are made merely to circumvent the trademark system’s intended purpose and the limitations placed on exclusive rights during and after the grace period.

Re-registering a trademark has long been regarded as a legitimate brand protection strategy. A business may wish to alter or extend the scope of trademark protection for various reasons. This may occur shortly after initial registration as the business evolves, or because the company is unable to use the mark as planned within the first five years but retains an honest intention to use it in the future. This can be the case where product development is lengthy or complex, or for international businesses where expansion plans may take years to materialise. Where there are legitimate reasons for re-filing, this would likely qualify as a “Nice list”.

By contrast, re-filing strategies intended solely to circumvent the five-year grace period and gain a commercial advantage have been regarded as an abuse of the trademark system. While evergreening to avoid the consequences of non-use may be common, that does not prevent it from constituting bad faith. In short, there must be a rationale for the new application that goes beyond simply extending the grace period. Where no such rationale exists, the filing is likely to qualify as a “Naughty list”.

Although case law has expressly stated that the prevalence of re-filing does not render the practice legitimate, it is equally important to note that rulings on evergreening do not impose a blanket prohibition either. In bad-faith actions, there is generally a presumption of good faith, and the burden of proof lies with the party seeking cancellation.

As one would expect, everything ultimately depends on the circumstances of each cancellation case. Trademark holders would therefore be well advised to prepare in advance and gather evidence should they decide to re-file an existing mark.

Some general tips for trademark holders:

• Keep records of business decisions that clearly demonstrate the commercial logic behind re-filings (for example, outdated earlier rights, a genuine change in commercial focus, or the timing of decisions to file new marks).

• Filing a broad specification covering both current and potential future goods and services may be acceptable, particularly where there are credible expansion plans or changes in business focus. However, the need must be genuine and not artificially constructed.

• Removing goods and services that are no longer relevant supports an honest intention to update the scope of protection.

• Timing matters. Filing just before the grace period expires may indicate bad faith, whereas filing earlier during the grace period or after it has expired may point towards good faith.

These are only examples, but the key point is that trademark owners should be prepared to rebut any allegations of bad faith through demonstrably honest business practices.

I would therefore argue that it is not simply a matter of “use it or lose it”, but that there are some shades of gray (or perhaps rather shades of evergreen) that determine whether a trademark list of goods and services is naughty or nice. With this in mind, all trademark holders should review their brand protection strategy and consider the commercial benefits of refiling, and if using this strategy, to carefully collect evidence of their honest commercial intent.

I will conclude with some seasonal greetings and a Christmas-themed trademark jingle:

♫ If you’re making a list, you’re checking it twice. Or else we’ll find out if it’s Naughty or Nice. Bad Faith is coming to town! ♫

Happy Holidays!