Poland: Bad faith and trademark registration

 
The Warsaw Patent Office's decision in the disputed case two years ago ended a long-running dispute over the right to a word and figurative trademark. The dispute arose between the Company and its former President. The Company, operating in Poland, was part of an international group of companies, operating in Central and East­ern Europe. The headquarters of the parent company, a typical "Familienunternehmen", had been located in Ger­many for many generations. By a decision of the shareholders, a Polish CEO was hired to manage the affairs of the Polish company. As the only member of the board, he enjoyed the unlimited trust of the shareholders. The company was growing, demand for its products and services was increasing. The company's name was built in the verbal layer from a stem constituting the uncommon name of the company's founder and from a part describing – using two words – what the company does. For this article, we will use an analogous but in­vented name: "Beckenbauer – Agrarmaschinen GmbH". The graphic layer of the name consisted of using an interesting font in combination with three colors. As before in other European countries, for more than 40 years now, the name became recognizable in the industry and was associated by customers with reliability and good quality.

After the company had been operating in Poland for several years, financially serious embezzlements came to light as a result of the CEO's actions, and the German shareholders, after an audit, had to decide whether the company should continue to operate. In addition, they received from the former CEO, a summons to pay a six-figure sum as payment for the rights to a trademark identical to the Company's name. This trademark, as it turned out – at the end of his presidency – the former CEO, behind the backs of the shareholders, had regis­tered for his own private benefit. If the Company was unwilling to pay the amount demanded, the trademark was to be sold to a competitor.

The Rödl & Partner Law Firm, representing the Company, filed an application with the Patent Office in Warsaw for cancellation of the trademark's protective rights, pointing out that under Polish intellectual property law (Art. 131(2)(1) and Art. 131(1)(1)), bad faith on the part of the applicant for a trademark is one of the absolute prerequisites for refusal to grant the right of protection to the trademark applied for. In addition, the applica­tion simultaneously violated the rights and personal interests of the Company, including that of its shareholder (whose name was a distinctive part of the Company's name). Accordingly, the protection right granted to the former CEO for the word and figurative mark: "Beckenbauer – Agrarmaschinen GmbH" should have been can­celled. 

What does "bad faith" mean in intellectual property law?

Bad faith is a general clause that signifies certain traits and values operating in a given social group, to which traits and evaluations are referred by regulations, and this is in order to take them into account in determining the facts falling under a given norm. General clauses are there so that, when applying them, there is a possibil­ity of departing from the rigid guidelines of positive law.

Intellectual property law does not define the concept of "bad faith." So, doctrine and case law come to the rescue.

According to the judgment of the Supreme Administrative Court of 4.07.2019, when assessing bad faith, the authority primarily takes into account the behavior of the trademark applicant that is unfair or contrary to good morals. At the same time, since there is no one-size-fits-all benchmark for bad faith, the circumstances sur­round­ing a particular trademark application should be considered in each case. In another judgment (27.10.2003, ref. II SA 88/02), the court held that an allegation of filing a trademark application in bad faith is particu­larly the case when the application is filed by a member of the management board for his own benefit.

Another ruling (23.02.2010, ref. II GSK 435/09) indicated that "an application for registration of a trademark, the purpose or conscious consequence of which is to take over the trademark of another entity, and in par­ticular one with which the holder had special ties of trust, by taking advantage of the fact that the trademark is unregistered, is in bad faith." 

The Court of Justice of EU in the Lindt case indicated that bad faith is a result of three factors – the applicant's knowledge, his intention and the legal status of the mark applied for and the mark used by another trader. The first element, which is purely subjective in nature, relates to the state of awareness as to whether, at the date of the trademark application, the applicant knew or should have known that another entity was using an iden­tical or similar mark for the same or similar goods. An applicant for a mark, being a businessman operating with professional diligence in a particular market, cannot be unaware of product or service marks used in a parti­cular market. However, mere knowledge that others are using the mark will not yet mean acting in bad faith. Variables such as the question of distinctiveness and the circumstance of prior use of the mark by both the applicant and others may come into play. For an allegation of bad faith to be invoked, the applicant's action must be unworthy, such as when the applicant knowingly takes advantage of a trademark position that was only achieved through the actions of an earlier-using competitor. It will be unworthy to want to take over some­one else's trademark. The second element necessary for the assumption of bad faith on the part of the appli­cant is his intention – the applicant's intention not to use the mark while intending to prevent others from using it. This includes both the intent to block others from registering the mark they are using and to continue using the mark.

In the case of the Company represented by Rödl &Partner, after two years of complicated evidentiary proceed­ings, the Patent Office in Warsaw invalidated the right of protection for the trademark, finding that the regis­tration application filed by the former CEO for his private benefit was made in bad faith.