LIPPIZANER - bad faith a posteriori?

In its decision 4Ob54/23d, the Supreme Court recently once again dealt with the issue of bad faith on the part of the trademark applicant. What is particularly interesting here is that the applications, word mark and word/figurative mark LIPPIZANER, were filed more than 20 years ago and the bad faith of the applicant has now been established. The applicants argued that the term "Lipizzaner" has been long associated with the Spanish Riding School and is perceived as its product and trademark. The reputation and appreciation of the Lipizzaners had always been used commercially by the second applicant, for example through the sale of souvenir articles. The defendant had no connection whatsover to the term "Lipizzaner". It was therefore obvious that it had registered its trade marks solely for unfair motives. The clear intention to obstruct can also be deduced from the large number of classes of goods and services. The defendant argued that he had contacted all relevant trademark proprietors when applying for the trademark and that he was not concerned with obstructing third parties.

The Cancellation Division of the Patent Office cancelled the contested trademarks at the time of their registration due to an application filed in bad faith, i.e. it considered the requirements of Section 34 MSchG to be fulfilled. The defendant had no connection to horses or Lipizzaners. His application had not been filed in the interest of using the trademarks for the goods and services claimed, but only in order to prevent others from using the term "Lipizzaner" as extensively as possible.

The Court of Appeal upheld this decision.

The Supreme Court, to which the defendant appealed, confirmed the decisions of the Cancellation Division and the Higher Regional Court. In 1995, claims for injunctive relief against the sale of porcelain horses labelled "Spanish Riding School" and "Vienna" were denied on the grounds that there was no use as a trademark because the relevant public (at that time) did not assume that the porcelain figure came from the business of the trademark owner or an affiliated company, but that the public would merely assume that a horse from the Spanish Riding School was being depicted.

However, in a decision issued in the meantime, namely in 2011, it was stated that the perception of the public has changed insofar as it is generally known that even institutions that are outsourced from the direct administration of the public sector and are therefore economically independent, such as museums or the Spanish Riding School, must endeavour to generate additional income through the sale of various goods and services that are labelled with the institution's well-known trademark(s) as part of merchandising. Accordingly, the public now assumes that goods labelled accordingly originate from the business of the trademark proprietor or a company associated with it. This decision therefore marks a departure from previous case law, which is why the use of the trademarks by the defendant constitutes a use of the trademarks that is detrimental to the applicant's trademarks.

The registered trademarks would therefore enable the defendant to prohibit the Spanish Riding School from exploiting the trademark via merchandising, which it is entitled to do in view of the 2011 decision. According to established case law, bad faith is to be assumed if the trademark proprietor was aware at the time of application that competitors were using signs for similar or identical goods that are confusingly similar to the sign applied for as a trademark. Apparently, the Supreme Court now also considers this to be the case if the competitor is not yet using the sign at the time of application, but it is clear from the economic development that the use of the sign for these goods would be desirable or is economically necessary.

The Supreme Court thus seems to recognise bad faith a posteriori, i.e. arising only from a development after the filing date, which in my opinion is remarkable and at the same time conclusive, especially since the owner entitled to use the trademark for these goods, in this case the Spanish Riding School, would otherwise have no possibility to take action against the trademarks and to exploit the sign in the now authorised manner through merchandising.

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