Viridis Pharmaceuticals Ltd v EUIPO & Hecht-Pharma GmbH

This case addresses whether use of a mark prior to marketing authorisation could be considered genuine use.

The life of a pharmaceutical product usually starts long before it hits the shelves. Factoring in clinical trials and the relevant marketing authorisation that must be sought makes it a lengthy process which can complicate matters when the five year period in which an EU trade mark must be put to genuine use is surpassed. Failure to use the mark within this period can leave it vulnerable to cancellation for non-use, which can in turn lead to cancellation actions against the mark from competitors. Genuine use means actual use that is not token, that serves to indicate the origin of the goods and services and which is aimed at establishing or maintaining an outlet or market share. This may include preparations to put the goods or services on the market. However, internal use will not normally qualify as genuine use as the use must be outward facing.

The question that arose in this case was whether the five year period should be adapted to account for the time lost waiting for marketing authorisation and cover use made of the mark during clinical trials. In short, the answer from the Court of Justice (CJEU) was “no”.

Viridis Pharmaceuticals registered BOSWELAN as a EUTM in class 5. Some years later, it applied for authorisation for a clinical trial involving a treatment for multiple sclerosis. Hecht Pharma then applied for cancellation of the trade mark on the grounds of non-use, when there was still no marketing authorisation. Viridis’s use of the mark had however included advertising in relation to a clinical trial.

Use or non-use?

A trade mark cannot be cancelled for lack of genuine use if the proprietor can show that there are “proper reasons” for non-use, such as import restrictions or government regulations. Where “proper reasons” can be established, the proprietor will be able to preserve the validity of the mark and commence use once the prohibition ends. It should be considered whether the obstacle to use arises independently of the will of the owner of the trade mark rather than in relation to the trade mark owner’s commercial difficulties. It is therefore important to ask whether putting the mark to use would have been unreasonable.

Further, it is possible for preparations for future marketing to qualify as “genuine use”; however, this only applies if entry to the market is imminent. In this case, BOSWELAN was not about to enter the marketplace.

The CJEU confirmed the earlier AG opinion and considered that the clinical trial use was not outward facing use of the mark as it was not aimed at establishing an outlet or market share for the goods on the relevant market. It also found that there was no direct preparatory evidence of an upcoming launch. Given that it is legally forbidden to advertise medicinal products prior to marketing authorisation, it is not possible to make “genuine use” of such trade mark at the clinical trials stage.

The court also held that Viridis could have anticipated at the date of filing that there might be delays and could have carried out the clinical trials more quickly, concluding that these were commercial difficulties that could have been managed. Therefore the need to carry out a clinical trial in and of itself did not amount to a proper reason for non-use.

Timing is key

Of course it is prudent for those in the pharmaceutical industry to look to carry out the necessary clearance searches and seek to obtain registrations for their trade marks; however, the question of timing is perhaps the take away message for this case.

Brand owners would benefit from factoring in the risk of applying too early and reaching the end of the five year period in which a mark can be genuinely used if there is a good chance that relevant marketing authorisation may be sought in time. There is currently no special test applied to genuine use of pharmaceuticals due to the regulatory framework that surrounds them.

Risks of repeat filings

Another risk is that if the owner then looks to effectively re-validate their mark by applying for the same mark again, after the five year non-use period, there is a risk that such action may amount to bad faith, which brings us to the second case of Kreativni Dogadjaji d.o.o. v Hasbro, Inc. which addressed the repeat filing of the MONOPOLY trade mark.

Kreativni Dogadjaji d.o.o. v Hasbro, Inc

The trade mark MONOPOLY has been protected on the EU Register since 1996, but there are in fact a number of registrations for the mark and this case concerned the registration dating back to 2010.

In 2015, Kreativni filed an application to cancel the 2010 registration on the ground that it was invalid. The basis of the invalidity action was that the application was a repeat filing and that Hasbro had a dishonest intention when the application was filed as Hasbro already had existing registrations of MONOPOLY and this application was a means of fraudulently extending the five year grace period for proof of use of the earlier registrations. The invalidity action was unsuccessful at the first instance and this case is the decision by the Second Board of Appeal.

In defence of its registration, Hasbro filed evidence including the statements that it regularly files new applications for MONOPOLY as a result of new product offerings, for strategic and administrative reasons, bearing in mind its trade mark portfolio and changes in business requirements.

Determining bad faith

As we know, if a trade mark registration has been on the register for over five years, a third party can apply to cancel that registration on the ground of non-use and the burden of proof will be upon the registered proprietor to show genuine use. The legal requirement that a trade mark that is the subject of an EU registration must be put to use is to avoid the situation where the trade marks register becomes almost a collection of inactive trade marks, each of which gives the owner a legal monopoly for an unlimited period. EU trade mark law does not refer to bad faith. However, bad faith can be inferred from the behaviour of a party which files a trade mark application with a dishonest intention. It has already been established that, if an application is filed with the aim of preventing another party from continuing legitimately to use a sign, bad faith can be inferred. This decision confirmed that, if a party re-files an application to register a mark that has already been protected, simply to avoid a successful cancellation action on the ground of non-use, it may be construed that the party acted in bad faith.

In these particular circumstances, it was clear that Hasbro already owned registrations of MONOPOLY; the attacked registration covered a combination of goods and services that were already covered by earlier registrations and new goods and services.

Unsurprisingly, it was confirmed that it is a legitimate business activity for a party to file an application to register a mark that is already registered, but for a new range of goods and services. The question concerns the goods and services for which the mark has previously been registered. As part of Hasbro’s explanation that the attacked registration was filed for administrative purposes, Hasbro argued that the attacked registration would make “lives easier” in relation to activities such as licensing and enforcement, including that oppositions based upon the MONOPOLY trade mark might be administratively easier and cheaper because it would not be necessary to file proof of use. The problem was that this statement was not backed up by the facts; the administrative burden of managing trade mark protection would be reduced if a trade mark owner filed a fresh trade mark application overlapping with its earlier registrations, but also covering new goods and services, if those earlier registrations were allowed to lapse. However, here the earlier registrations of MONOPOLY were renewed which did not show administrative sense. It was therefore confirmed that, as far as any goods and services that were already covered by existing registrations were concerned, the registration was invalid and the application had been filed in bad faith.

Comment

Brand owners are encouraged to work with their IP advisors to factor in the potential pitfalls of:

1. filing too soon if there is a good possibility that a mark may not be used genuinely during the relevant five year period (such as in the pharmaceutical sector where there are common delays due to R&D, clinical trials and authorisation, etc); and
2. re-filings for identical marks and the possibility that such filings may be considered to have been filed in bad faith.

Of course one may be as a direct result of the other and, whilst brand owners may have good intentions, they would benefit from giving early consideration to these risks and keeping the timing issues in mind where possible.