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It's a Cat Fight on Bad Faith in Lion Capital

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Bad faith came to the fore again recently before OHIM, in a case involving big cats. While it breaks no new legal ground, the Opposition Division decision in Lion Capital LLP is nonetheless a useful reminder of the importance of registering trademarks early on and in taking evidence preparation seriously in bad faith claims.

Law of the Jungle

This case had its origins in a CTM acquired by Lion Capital LLP ("LC") for the word mark LION covering financial services in Class 36. LC had used LION and marks including LION on an international scale since May 2005, when it had changed its name from HM (EU) Partners to Lion Capital LLP.

LC fell into dispute with another financial services company, Lion Global Investors Limited ("LGI"), concerning their respective LION CAPITAL and LION GLOBAL INVESTORS marks. LGI had been founded in part by Straits Lion Asset Management Limited and its 70% owner, the Great Eastern insurance group, had used a lion device in its branding for over 100 years. As a result of the conflict, in 2007 LGI changed its name from Lion Capital Management Limited to Lion Global Investors Limited at LC's request.

The dispute rumbled on, though, and LGI applied to invalidity LC's CTM for the word mark LION, claiming that the latter had only filed for its CTM in order to "interfere with [LGI's] legitimate interests in the use of its LION marks" in the EU for financial and investment services. LGI asserted that LC had no genuine intention to use its CTM as a trademark, citing a UK opposition filed by LC against an application by LGI in which LC had withdrawn its opposition following a request by LGI for evidence of genuine use. LGI averred that LC had filed its CTM application for LION in 2007 merely to strengthen its position against LGI, since LC's UK registration had been vulnerable to non-use cancellation. LGI claimed that LC's CTM filing had therefore been made in bad faith.

LC Crowned Lion King

OHIM declined to be drawn into this prolonged cat fight, however, and rejected LGI's assertion that LC had filed its CTM in bad faith.

Although the CTMR contains no definition of "bad faith", OHIM noted that the concept refers fundamentally to an applicant's intentions when filing a CTM. Most commonly, bad faith could be found either where a commercial entity has obtained some degree of legal protection by virtue of the use of a sign on the market, and a competitor subsequently registers that sign with the intention to compete unfairly with the original user or to take action against it (see Lindt, C-529/07), or where the proprietor of a CTM makes repeated applications for the same mark so as to avoid revocation on the ground of non-use (see OHIM Appeal No. R1428/2009-2 for PELIKAN).

OHIM stated that, overall, the assessment of bad faith must take into account all relevant factors and must bear in mind that ownership of a CTM is acquired by registration and not by prior use.

In line with that approach, OHIM held that LGI had not shown that LC was aware of the use of LION by LGI or its part-founder, noting that trademarks based on animal names were fairly common in any event. The fact that LC had registered LION and not LION CAPITAL was of no consequence, since CAPITAL was descriptive and LION was clearly the relevant business identifier in LC's company name. It was common for companies to register their names or parts of them as trademarks without the business identifiers and LC's CTM corresponded with that practice. Moreover, LC had challenged LGI's use of LION prior to filing its CTM application.

OHIM held that there was no evidence that LC's CTM filing was purely a repetitive application filed with the intention of creating a new grace period, even if LC's UK registration had been vulnerable to non-use cancellation. The scope of a CTM extends EU-wide, not just to the UK, and LC had good reason to apply for a CTM given its international trademark portfolio. Rather than being a repetitive application, it was in fact an application for something fundamentally different.

Taking all these points into account, OHIM rejected the application for invalidity and declined to find bad faith.


Although this case does not break new ground, decisions on bad faith are not very common and when they arise they often serve as useful reminders of some fundamental principles.

In this case, one lesson that emerges is the importance of securing early registration for marks of interest in the jurisdictions where they are to be used. Had LC filed its CTM promptly on its original name change to protect its international business under the LION mark, it may not have had to fend off an invalidity claim by LGI, since a main plank of the latter's case was that the filing was made in order to improve LC's threatened claim against LGI's use, and not for any legitimate purpose.

Brand owners contemplating bringing a claim based on bad faith must also recognise that such cases are won on facts, not inferences, and should muster their evidence accordingly. In Lion Capital, LGI failed to prove that LC had filed its CTM in the knowledge of prior use by LGI and its part-founder and with the intention of preventing LGI from continuing to use the sign, rather than being filed in pursuit of a legitimate objective. Not all bad faith cases will be based on assertions of this nature, but all are likely to require hard evidence, and in this case LGI lost because it failed to build a persuasive and probative case.

The lion may well sleep tonight, but not perhaps for long in unresolved cases like this one where companies claim identical marks and share equally entrenched, and adversarial, positions. For those who seek to avoid such outcomes, Lion Capital speaks to the importance of early and adequate brand protection, and for careful evaluation of bad faith claims from both sides of the fence.