The matter at hand

On 25 June 2007, Outsource2India, established in Germany, filed an application with EUIPO for the registration of a figurative sign containing the word elements ‘Outsource 2 India’ for various services including business administration, office functions, receiving, processing and handling of orders and temporary employment agencies.

At that time, Flatworld, a company established in India, was already using a sign containing the word elements ‘Outsource2India’, but in combination with different figurative elements. Outsource2India did not only know of this prior use, but established its company under that name with the sole purpose of pursuing a collaboration with Flatworld. Flatworld, however, had doubts about the proposal to collaborate and finally informed Outsource2India that it saw no prospect of collaboration. Shortly after that, Outsource2India filed the application for registration of the trade mark referred to above. Several years later, Flatworld filed an application for a declaration that the trade mark was invalid because it had been registered in bad faith within the meaning of Article 52(1)(b) of Trade Mark Regulation 207/2009Council Regulation [EC] No 207/2009 of 26 February 2009 on the Community trade mark.

After the Cancellation Division had granted the application and the Fourth Board of Appeal had annulled that decision, the General Court held that Outsource2India had registered the trade mark in bad faith. The General Court pointed out that Outsource2India knew of the prior use by Flatworld of a similar sign and had, during the negotiations regarding a possible cooperation, undertaken to cease the use of the contested sign in the event that no collaboration agreement was concluded. The General Court further held that the question of whether the word element ‘outsource2india’ was descriptive was irrelevant in this respect. Outsource2India subsequently appealed to the ECJ.

The judgment of the ECJ

It does not happen often, but in this case the ECJ holds that the General Court distorted the facts. According to the ECJ, the General Court misread correspondence from which it derived that Outsource2India had undertaken to cease the use of the contested sign and change the name of its company in case no cooperation agreement would be reached. The ECJ rules that such undertaking cannot be read in that correspondence.

However, the ECJ rules that the General Court also highlighted other circumstances on the basis of which it was entitled to conclude that Outsource2India had acted in bad faith. The ECJ mentions, in particular, the fact that the company under the name ‘Outsource2India’ was established with the purpose of pursuing a collaboration with Flatworld in Germany and without prior consent from Flatworld, the use by Outsource2India of the word element ‘outsource2India’ in the name of its website and the reluctance and subsequent objections expressed at that time by Flatworld regarding that situation (paragraph 67).

Although the ECJ admits that there is a lack of reasoning in the General Court’s decision regarding the signs being similar and their being a likelihood of confusion, the ECJ rules that the decision that Outsource2India had acted in bad faith was well founded on the basis of the other circumstances established by the General Court. In this regard, the ECJ recalls that “it is not necessary for a likelihood of confusion on the part of the public to be established in order for Article 52(1)(b) of [Trade Mark Regulation 207/2009Council Regulation [EC] No 207/2009 of 26 February 2009 on the Community trade mark] to apply”, nor is it necessary that there has been use, by the applicant for invalidity, of a sign identical, or similar to, the contested mark (paragraph 61). By lack thereof, other factual circumstances may still constitute relevant and consistent indicia establishing bad faith, including the circumstances established by the General Court in this case.

Finally, the ECJ holds that also “the potentially descriptive nature of the element ‘outsource2india’ did not prevent [the General Court] from concluding that Outsource2India had acted in bad faith” (paragraph 69). The ECJ clarifies that Article 52(1)(b) of Trade Mark Regulation 207/2009Council Regulation [EC] No 207/2009 of 26 February 2009 on the Community trade mark does not require that the applicant for a declaration of invalidity has an exclusive right to use the relevant sign or is the proprietor of an earlier trade mark, as that does not rule out the possibility that a trade mark containing that sign was registered in bad faith.