The case which is the subject of a recent judgment of the Court of Justice of the European Union (CJEU) concerns relatively frequent situations of disloyalty consisting in a trademark application by a former distributor, representative or agent.
Judgment of the CJEU of 11 November 2020, case no. C-809/18 P.
The facts of the case relate to two companies: John Mills Ltd and (British) and Jerome Alexander Consulting Corp. (American). The former was a distributor of cosmetics of the latter company, who owns American trademarks MAGIC MINERALS BY JEROME ALEXANDER, which were not registered in the EU. After the cooperation ceased the British company applied for registration of the EU trademark MINERAL MAGIC in order to – as it may be assumed – take over the market of the American company in the EU.
Jeorme Alexander Consulting Corp. had to oppose the trademark filed by John Mills Ltd., based on Article 8 (3) of the Council regulation no 207/2009 of 26 February 2009 on the Community trade mark Regulation no. 207/2009) (now Regulation no. 2017/1001), which states that a trade mark shall not be registered where an agent or representative of the proprietor of the trade mark applies for registration thereof in his own name without the proprietor’s consent, unless the agent or representative justifies his action. A similar regulation is included in the Polish Industrial Property Law Act of 20 June 2000, in Article 161 item 1. These provisions constitute a qualified form of bad faith and may lead to not only to a refusal of registration but also a transfer of rights to trademark from a dishonest contractor to the entity entitled to the trademark (art. 21 of the Regulation no. 2017/1001).
A problematic issue in this case was that the applied trademark was not identical to the trademark of the entitled company, and the dishonest applicant was not expressly an agent or representative, but only a distributor of the goods. Therefore, the decisions of the EUIPO and the Court were not uniform.
The CJEU had no doubts that the trademark for which John Mills Ltd. applied cannot be registered. It stated that Article 8 (3) of the Regulation 207/2009 aims at preventing a misappropriation of someone else’s trademark by an agent or representative, and that these terms must be interpreted broadly. Therefore, the existence of a distribution agreement is sufficient to apply the above-mentioned provision, as well as the similarity between the trademarks. In the event of a different solution, the mechanism of protection of the rights resulting from registration of the proprietor of the trademark would be limited, which is contrary to the purpose of this provision, to prevent the former agent or representative from deriving an undue advantage from the knowledge and experience gained during the period of mutual commercial relations.
The CJEU extended the existing understanding of the terms agent and representative. They should be understood as entities representing interests of the other party in various economic fields. Their understanding covers all forms of contractual relations regarding a commercial cooperation agreement, based on the principle of mutual trust and loyalty, also expressed implicitly. In addition, the Court found it irrelevant to assess the identity of the good designated by the earlier trademark with those which were to be marked by the contested mark. It is sufficient that they are similar, taking into account all the essential factors characterizing the relationship between these goods: their intended use, their use, and their competitiveness.
The judgement is unquestionably correct and will certainly contribute to a more effective protection against disloyal contractors. The facts of the case also show the need to register the mark before commencing operations in a given territory as well as agree on contractual provisions with a distributor or representative blocking their possible unfair actions after the termination of the co-operation.