Background
Applicant's mark | Earlier mark |
THE COMMODORES (words) | COMMODORES (word) |
On 17 October 2014, Fifth Avenue Entertainment LLC (the "Applicant") filed an EU trade mark for THE COMMODORES (words) for various goods and services in classes 9 and 41.
The application was opposed by Commodore Entertainment Corp. (the "Intervener") in January 2015 in respect of all the goods and services, due to the company's prior unregistered rights in the sign COMMODORES. This was rejected by the Opposition Division, as the Intervener failed to provide the necessary information to evidence the national law or the conditions to be fulfilled in order to prohibit use of the mark.
The further information required was provided by the Intervener in a notice of appeal against the Opposition Division's decision, which confirmed the earlier unregistered sign COMMODORES and the applicable Member State, the UK (specifically, under section 5(4)(a) of the Trade Marks Act 1994). The Fifth Board of Appeal of EUIPO annulled the Opposition Division's earlier decision and rejected the trade mark application in its entirety, based on the Intervener's pre-existing unregistered rights.
The General Court's View
The Applicant appealed and claimed that goodwill in the UK had not been accrued by the Intervener in respect of the unregistered earlier right and, even if such goodwill had accrued, the Applicant would at the very least have acquired separate goodwill to allow use of the sign in parallel.
The EUIPO argued that the separate goodwill argument was inadmissible as it was presented for the first time before the Court. However this was rejected. The General Court held that the argument did not alter the substance of the dispute; the ownership of goodwill.
The Court explored whether the EU trade mark application could be opposed by the earlier sign as claimed by the Intervener. When assessing this, the Court took into consideration the following cumulative conditions (Article 8(4) of the EU Trade Mark Regulation):
- the sign must be used in the course of trade
- it must be of more than merely local significance
- the right to that sign must have been acquired in accordance with EU law or the law of the Member State in which the sign was used prior to the date of application for registration of the EU trade mark, and
- the sign must confer on its proprietor the right to prohibit the use of a subsequent trade mark.
In this case, only the third and fourth conditions were disputed, since the issue focused on who owned the goodwill in the name THE COMMODORES. These conditions looked at whether the earlier sign could justify a prohibition to the use of a subsequent EU trade mark. In the UK, assessing this meant demonstrating, in accordance with the legal rules for passing-off, the following three conditions:
- the goodwill acquired by the sign at issue
- misrepresentation by the proprietor of the subsequent mark, and
- damage caused to that goodwill.
The Board of Appeal held that the goodwill in the business operating under the name THE COMMODORES was owned by the Intervener and is protectable under UK law which prohibits use of the mark applied for in a passing off action. The Board also held that neither the Applicant nor Mr McClary (a band member) were entitled to the sole proprietary right in the name. This was due to a partnership agreement entered into by The Commodores band members in 1978. Under this agreement their rights had been assigned to Commodores Entertainment Publishing Corp., a company which subsequently merged with the Intervener.
The Applicant disagreed arguing that the term of the general partnership agreement had been limited to seven years and on the expiration of such agreement the rights previously assigned (including the right to the name THE COMMODORES) were re-assigned to the founding members of the band, including Mr McClary. Although there were amendments to the agreement in 1981, none amended the term. This demonstrated that Mr McClary had a separate right to the goodwill associated with the name, alongside the other founding members of the band.
The General Court criticised the Board of Appeal for not taking into consideration the fact that the partnership agreement had expired, as well as the fact it was governed by US law. Therefore, issues as to whether the sign had conferred a right to prohibit use of the subsequent EU trade mark application, including whether the Applicant was the co-owner and the impact of such co-ownership, were not examined. The Court did not substitute its own reasoning but found that the Board's decision was unlawful, annulling the decision and ordering that the EUIPO pay the costs.
Comment
In certain circumstances several persons can simultaneously own separate goodwill in a name and therefore use the name simultaneously. An action for passing-off in these circumstances would fail. It is therefore likely that if these issues had been examined by the Board of Appeal, taking into account the validity of the assignment contained within the partnership agreement, a finding of co-ownership of goodwill in the name THE COMMODORES between the original band members would have been found.
Case Ref: T-459/17
