Property, intangible

a blog about ownership of intellectual property rights and its licensing

Who Owns a Community Trademark?

I’ve written a lot about trademark ownership disputes under US law, where trademark rights arise through use. The question comes up when two or more formerly cooperating parties have a falling out and each claim to own the same trademark. But the issue can’t arise just in the US, certainly there are failed business relationships in all countries. I’ve wondered how these disputes are resolved and I now have one view, for a Community Trademark. The case provides a helpful legal framework, but the facts make it an unsatisfying analysis.

In Pangyrus Ltd v OHIM, RSVP Design Ltd, we have competing claims to the mark COLOURBLIND for an “experimental learning toolbox” (intervener-registrant’s website). The decision starts with “In 1991, Mr. Cx invented a product consisting of an ‘”experimental learning” toolbox’ and the word sign COLOURBLIND.” Mr. Cx and his wife then formed Pangyrus Ltd. in 1993, and thereafter there was a complicated set of additional companies, an acquisition, a falling out, the dissolution of Pangyrus, Mr. Cx’s formation of RSVP Design, his assignment of the COLOURBLIND to RSVP Design, the mark’s subsequent registration, and the re-formation of Pangyrus by a former partner. The decision is on the new Pangyrus’ effort to invalidate the COLOURBLIND registration.

Pangyrus had two bases for invalidation. First is the predecessor to what is now Article 52(1)(b) of Regulation No 207/2009, “where the applicant was acting in bad faith when he filed the application for the trade mark.” Second is under what is now Article 53(1)(c), read in conjunction with Article 8(4), which allows the proprietor of senior unregistered rights to bring an invalidity action on any basis that a registrant could have raised, which in this case is likelihood of confusion.

Taking the second basis first, as the court did, we have an analysis that is commonly applied in the U.S. too, treating it as a situation where there are two separate proprietors and trying to decide who is the senior. It’s not the greatest fit for the problem though:

[W]e find that traditional concepts of priority and likelihood of confusion … are ill-suited in resolving this type of internecine dispute. As this Board has done in resolving trademark ownership disputes in previous fact patterns involving splintered family businesses, overlapping circles of not-for-profit companies, fifth-generation band members and past managers, divided auto clubs in neighboring towns, etc., we are wont to turn to an analytical framework drawing on evidentiary factors identified in Wrist-Rocket Manufacturing Co. v. Saunders, 379 F. Supp. 902 (D. Neb. 1974), aff’d in part and rev’d in part, 516 F.2d 846, 186 USPQ 5, 9 (8th Cir. 1975), cert. denied, 423 U.S. 870 (1975)….

However, the factual record in this case does not provide the evidentiary heft necessary to pursue this type of analysis, so we resort to our traditional analysis of priority and likelihood of confusion.

Lundin v. Svoboda, Cancellation No. 92054040 (TTAB Feb. 28, 2015).*

Pangyrus claimed to be senior, but didn’t have the documents to prove it. The main problem was that the COLOURBLIND goods were largely sold through another related company, Future Factory. There were only two invoices from 1998 that showed Pangyrus as the seller and the remaining invoices were from Future Factory. Although the court entertained the theory that Future Factory’s use would inure to the benefit of Pangyrus if Pangyrus had granted an implied license to Future Factory, Pangyrus had no evidence of the existence of a license. Pagyrus therefore had not proved it was the senior user of the mark.

As to the bad faith basis, Pangyrus’ theory was that Mr. Cx and Pangyrus had a common understanding that Pangyrus owned the rights in the mark, so it was bad faith on the part of Mr. Cx to register it. But that wasn’t good enough; Mr. Cx had invented the sign and there were no documents showing, expressly or by inference, that Mr. Cx had transferred his rights to Pangyrus. The trademark was therefore not registered in bad faith.

So we have some bad facts, a loose arrangement between Pangyrus and Future Factory, making it impossible for Pangyrus to prove seniority. Another piece of circularity also bothers me, which is the court’s assumption that Mr. Cx was the original owner of the mark. The court says  that he “invented” both the product and the trademark in 1991, but “inventing” a name doesn’t tell us anything about when the sign first served as a source identifier or for who. When discussing priority, the court acknowledged that proving an earlier right requires demonstrating commercial trading above a de minimis threshold, but in the bad faith portion of the decision the court assumed that Mr. Cx had rights that preceded the formation of Pangyrus without any proof of use. Mr. Cx and his wife formed Pangyrus in 1993, so it’s not inconceivable that there was no sale of product before he formed the company and the trademark was therefore first used by the company.

Nevertheless we have two theories for deciding ownership of a Community Trademark, priority (as if there are two properties, not one) and bad faith. Not unlike how it can be decided in the US.

Pangyrus Ltd v OHIM, RSVP Design Ltd, Case T-257/11

* Shameless plug; the Board was kind enough to suggest an article I wrote is helpful in deciding these matters.

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