Source: EURLEX
Language: en
Format: md

JUDGMENT OF THE GENERAL COURT (Third Chamber)

29 November 2018 ([\*](#Footnote*))

(EU trade mark — Invalidity proceedings — EU word mark ‘Khadi’ — Production of evidence for the first time before the Board of Appeal — Discretion of the Board of Appeal — Article 76(2) of Regulation (EC) No 207/2009 (now Article 95(2) of Regulation (EU) 2017/1001) — Absolute grounds for refusal — Mark of such a nature as to deceive the public — Article 7(1)(g) of Regulation No 207/2009 (now Article 7(1)(g) of Regulation 2017/1001) — Mark containing badges, emblems or escutcheons — Article 7(1)(i) of Regulation No 207/2009 (now Article 7(1)(i) of Regulation 2017/1001) — No bad faith — Article 52(1)(b) of Regulation No 207/2009 (now Article 59(1)(b) of Regulation 2017/1001))

In Case T‑681/17,

**Khadi and Village Industries Commission,** established in Mumbai Maharashtra (India), represented by J. Guise, N. Rose and V. Ellis, Solicitors,

applicant,

v

**European Union Intellectual Property Office (EUIPO),** represented initially by M. Rajh and D. Walicka, and subsequently by M. Rajh and H. O’Neill, acting as Agents,

defendant,

the other party to the proceedings before the Board of Appeal of EUIPO, and intervener before the General Court, being

**BNP Best Natural Products GmbH,** established in Munich (Germany), represented by M. Kloth and R. Briske, lawyers,

ACTION brought against the decision of the Fifth Board of Appeal of EUIPO of 30 June 2017 (Case R 2083/2016-5) relating to invalidity proceedings between Khadi and Villages Industries Commission and BNP Best Natural Products,

THE GENERAL COURT (Third Chamber),

composed of S. Frimodt Nielsen, President, V. Kreuschitz and N. Półtorak (Rapporteur), Judges,

Registrar: I. Dragan, Administrator,

having regard to the application lodged at the Court Registry on 2 October 2017,

having regard to the response of EUIPO lodged at the Court Registry on 15 December 2017,

having regard to the response of the intervener lodged at the Court Registry on 15 December 2017,

further to the hearing on 11 September 2018,

gives the following

**Judgment**

**Background to the dispute**

1        On 9 December 2011, Khadi Naturprodukte GbR filed an application for registration of an EU trade mark with the European Union Intellectual Property Office (EUIPO), pursuant to Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78, p. 1), as amended (replaced by Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (OJ 2017 L 154, p. 1)).

2        Registration as a mark was sought for the word sign ‘Khadi’.

3        The goods and services in respect of which registration was sought are in Classes 3, 21 and 31 of the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended, and correspond, for each of those classes, to the following description:

–        Class 3: ‘Bleaching preparations and other substances for laundry use; Cleaning, polishing, scouring and abrasive preparations; Soaps; Perfumery, essential oils, cosmetics, hair lotions; Dentifrices; Facial tonics (cosmetics); Colouring matters for the hair; Conditioning liquids for the hair; Gels for use on the hair; Hair conditioners; Hair moisturisers (beauty care products); Colouring matters for the hair; Conditioning liquids for the hair; Gels for use on the hair; Hair conditioners; Hair moisturisers (beauty care products); Body oil; Body oils; Body oils in spray form; Cosmetic body oil sprays; Colouring matters for the hair; Conditioning liquids for the hair; Gels for use on the hair; Hair conditioners; Hair moisturisers (beauty care products); Body oil; Body oils; Body oils in spray form; Cosmetic body oil sprays; Face masks; Face masks for cosmetic purposes; Beauty face packs; Face masks [cosmetic]; Colouring matters for the hair; Conditioning liquids for the hair; Gels for use on the hair; Hair conditioners; Hair moisturisers (beauty care products); Body oil; Body oils; Body oils in spray form; Cosmetic body oil sprays; Face masks; Face masks for cosmetic purposes; Beauty face packs; Face masks [cosmetic]; Hair oils; Hair oil; Colouring matters for the hair; Conditioning liquids for the hair; Gels for use on the hair; Hair conditioners; Hair moisturisers (beauty care products); Body oil; Body oils; Body oils in spray form; Cosmetic body oil sprays; Face masks; Face masks for cosmetic purposes; Beauty face packs; Face masks [cosmetic]; Hair oils; Hair oil; Hair shampoo; Hair wash; Hair cleaning preparations and rinses; Dandruff treatments in the form of shampoos; Colouring matters for the hair; Conditioning liquids for the hair; Gels for use on the hair; Hair conditioners; Hair moisturisers (beauty care products); Body oil; Body oils; Body oils in spray form; Cosmetic body oil sprays; Face masks; Face masks for cosmetic purposes; Beauty face packs; Face masks [cosmetic]; Hair oils; Hair oil; Hair shampoo; Hair wash; Hair cleaning preparations and rinses; Dandruff treatments in the form of shampoos; Cosmetic creams; Cosmetic creams.’

–        Class 21: ‘Household or kitchen utensils and containers; Combs and sponges; Brushes (except paint brushes); Brush-making materials; Articles for cleaning purposes; Steel wool; Unworked or semi-worked glass (except glass used in building); Glassware, porcelain and earthenware not included in other classes.’

–        Class 31: ‘Agricultural, horticultural and forestry products and grains not included in other classes; Live animals; Fresh fruits and vegetables; Seeds, natural plants and flowers; Foodstuffs for animals; Malt.’

4        The EU trade mark application was published in the *Community Trade Marks Bulletin* of 23 January 2012. The contested trade mark was registered on 2 May 2012 under No 10 479 954.

5        Khadi Naturprodukte GbR subsequently transferred the trade mark to the intervener, BNP Best Natural Products GmbH.

6        On 2 September 2014, the applicant, Khadi and Village Industries Commission, filed an application for a declaration of invalidity against the trade mark Khadi in respect of all the goods referred to in paragraph 3 above. In essence, the applicant based its action on the meaning and legal definition of the term ‘khadi’ in India, which, it argued, precluded the registration of the contested mark with EUIPO. The grounds for the application for a declaration of invalidity were those set out in:

–        Article 52(1)(b) of Regulation No 207/2009 (now Article 59(1)(b) of Regulation 2017/1001),

–        Article 52(1)(a) of Regulation No 207/2009 (now Article 59(1)(a) of Regulation 2017/1001), read in conjunction with Article 7(1)(g) and (i) of Regulation No 207/2009 (now Article 7(1)(g) and (i) of Regulation 2017/1001),

–        Article 53(1)(a) of Regulation No 207/2009 (now Article 60(1)(a) of Regulation 2017/1001), read in conjunction with Article 8(1)(a) and (b) of Regulation No 207/2009 (now Article 8(1)(a) and (b) of Regulation 2017/1001),

–        Article 53(1)(c) of Regulation No 207/2009 (now Article 60(1)(c) of Regulation 2017/1001), read in conjunction with Article 8(4) of Regulation No 207/2009 (now Article 8(4) of Regulation 2017/1001).

7        On 26 September 2016, the Cancellation Division dismissed the application for a declaration of invalidity.

8        On 15 November 2016, the applicant filed a notice of appeal with EUIPO, pursuant to Articles 58 to 64 of Regulation No 207/2009 (now Articles 66 to 71 of Regulation 2017/1001), against the Cancellation Division’s decision.

9        By decision of 30 June 2017 (‘the contested decision’), the Fifth Board of Appeal of EUIPO dismissed the appeal on the ground that the applicant had not adduced proof of any of the grounds of invalidity relied on.

**Forms of order sought**

10      The applicant claims that the Court should:

–        annul the contested decision;

–        declare the contested mark invalid;

–        make an order for costs in its favour.

11      EUIPO and the intervener contend that the Court should:

–        dismiss the action;

–        order the applicant to pay the costs.

**Law**

**Preliminary observations**

12      As a preliminary point, it must be recalled that in invalidity proceedings EUIPO cannot be required to carry out afresh the examination which the Examiner conducted, of his own motion, of the relevant facts which could have led him to apply the absolute grounds for refusal. It is apparent from the provisions of Articles 52 and 55 of Regulation No 207/2009 (now Articles 59 and 62 of Regulation 2017/1001) that the EU trade mark is regarded as valid until it has been declared invalid by EUIPO following invalidity proceedings. It therefore enjoys a presumption of validity, which is the logical consequence of the check carried out by EUIPO in the examination of an application for registration (judgment of 13 September 2013, *Fürstlich Castell’sches Domänenamt* v *OHIM — Castel Frères (CASTEL)*, T‑320/10, EU:T:2013:424, paragraph 27).

13      By virtue of the presumption of validity of EU trade marks, EUIPO’s obligation, under Article 76(1) of Regulation No 207/2009 (now Article 95(1) of Regulation 2017/1001), to examine of its own motion the relevant facts which may lead it to apply absolute grounds for refusal is restricted to the examination of the application for an EU trade mark carried out by the Examiners of EUIPO and, on appeal, by the Boards of Appeal during the procedure for registration of that mark. In invalidity proceedings, as the registered EU trade mark is presumed to be valid, it is for the person who has filed the application for a declaration of invalidity to invoke before EUIPO the specific facts which call the validity of that trade mark into question (judgment of 13 September 2013, *CASTEL*, T‑320/10, EU:T:2013:424, paragraph 28).

14      The pleas in law raised against the contested decision should be considered in the light of those considerations.

**First plea, alleging infringement of Article 76(2) of Regulation No 207/2009 (now Article 95(2) of Regulation 2017/1001)**

15      The applicant claims that the Board of Appeal erred in considering that certain items of evidence submitted by the applicant for the first time before the Board, namely Annexes 1 to 48 to the statement setting out the grounds of the appeal before the Board of Appeal, were inadmissible, since they were irrelevant to the outcome of the case. In that respect, the applicant maintains that the Board of Appeal’s reasoning is flawed because those items of evidence shed light on the perception of the term ‘khadi’.

16      EUIPO and the intervener dispute those arguments.

17      As the Board of Appeal pointed out in paragraph 16 of the contested decision, the applicant annexed to its statement setting out the grounds of the appeal before the Board of Appeal new items of evidence. Those annexes are comprised of extracts from a book, Indian press articles relating to the use of the term ‘khadi’ in India and inspection reports concerning undertakings in India.

18      In paragraphs 24 and 25 of the contested decision, the Board of Appeal took the view that the items of evidence at issue did not contain any potentially relevant information as they merely confirmed information relating to the historic context of the term ‘khadi’ in India and did not demonstrate any general awareness of the term in the European Union. The Board of Appeal therefore concluded that that evidence was inadmissible in the context of the appeal before it.

19      In that regard, it should be noted, first, that it follows from the case-law that no reason of principle relating to the nature of the proceedings under way before the Board of Appeal or to the jurisdiction of that department precludes it, for the purpose of deciding on the appeal before it, from taking into account facts and evidence produced for the first time at the appeal stage (judgment of 13 March 2007, *OHIM* v *Kaul*, C‑29/05 P, EU:C:2007:162, paragraph 49).

20      Indeed, it follows from Article 64(1) of Regulation No 207/2009 (now Article 71(1) of Regulation 2017/1001) that, through the effect of the appeal brought before it, the Board of Appeal may exercise any power within the competence of the department that was responsible for the contested decision and is therefore called upon, in this respect, to conduct a new, full examination as to the merits of the appeal, in terms of both law and fact (judgment of 13 March 2007, *OHIM* v *Kaul*, C‑29/05 P, EU:C:2007:162, paragraph 57).

21      According to the case-law, without prejudice to the special rule applicable to opposition proceedings referred to in the third subparagraph of Rule 50(1) of Commission Regulation (EC) No 2868/95 of 13 December 1995 implementing Council Regulation (EC) No 40/94 on the Community trade mark (OJ 1995 L 303, p. 1), as amended by Commission Regulation (EC) No 1041/2005 of 29 June 2005 (OJ 2005 L 172, p. 4), it is always possible to submit evidence, in due time, for the first time before the Board of Appeal in so far as such evidence is intended to challenge the reasons given by the Cancellation Division in the contested decision. That evidence is, therefore, either evidence supplementary to that submitted in the proceedings before the Cancellation Division or evidence on a new matter which could not be raised during those proceedings. It is for the party presenting the evidence for the first time before the Board of Appeal to justify why that evidence is being submitted at that stage of the proceedings and demonstrate that submission during the proceedings before the Cancellation Division was impossible. Thus, the evidence submitted for the first time before the Board of Appeal did not have to be considered to be out of time by the Board in all circumstances (judgment of 24 January 2018, *EUIPO* v *European Food*, C‑634/16 P, EU:C:2018:30, paragraphs 42 to 45).

22      In the present case, in paragraph 19 of the contested decision, after having noted that, pursuant to Article 76(2) of Regulation No 207/2009, EUIPO could disregard facts or evidence which were not submitted in due time by the parties concerned, the Board of Appeal recalled that the third subparagraph of Rule 50(1) of Regulation No 2868/95 provided that where an appeal is directed against a decision of an Opposition Division, the Board of Appeal is to limit its examination of the appeal to facts and evidence presented within the time limits set in or specified by the Opposition Division in accordance with that regulation, unless the Board considers that the additional or supplementary facts and evidence should be taken into account pursuant to Article 76(2) of Regulation No 207/2009. It further concluded that even if the latter provision only referred to opposition proceedings, it was also applicable to invalidity proceedings concerning a relative ground for refusal, since they had the same *ratio legis*.

23      It is apparent from the case-law that the special rule contained in the third subparagraph of Rule 50(1) of Regulation No 2868/95 is not applicable in the context of invalidity proceedings based on absolute grounds for invalidity (judgment of 24 January 2018, *EUIPO* v *European Food*, C‑634/16 P, EU:C:2018:30, paragraphs 48 and 49 and the case-law cited). Consequently, as the proceedings at issue are invalidity proceedings based on both relative and absolute grounds (paragraph 6 above), the Board of Appeal erred when it concluded that that rule applied to the invalidity proceedings at issue.

24      However, that error has no effect on the lawfulness of the contested decision, as the Board of Appeal examined the nature and the content of the evidence at issue and concluded that it was not relevant for the outcome of the case, before finding it to be inadmissible in the exercise of its discretion. In paragraphs 24 and 25 of that decision, the Board of Appeal found that that evidence was not relevant for the outcome of the case, as it did not prove an awareness of the term ‘khadi’ by the relevant public. As the Board of Appeal rightly concluded in paragraph 33 of its decision, in the present case, the application for a declaration of invalidity must be examined by reference to the perception and awareness of the term ‘khadi’ by that public.

25      In the light of the foregoing, the first plea must be rejected.

**Second plea, alleging distortion of the evidence**

26      The applicant claims that the Board of Appeal distorted the evidence in its assessment of the factual background relating to the term ‘khadi’, in its analysis of the relevant public, and in its assessment of the relationship between the applicant and the intervener.

27      First, with regard to the factual background of the term ‘khadi’, the applicant claims that, while the Board of Appeal rightly concluded that the term was iconic in India, it omitted an important factor, which the applicant asserts comes across clearly from the evidence, namely that the term is controlled and regulated in India and that therefore it cannot freely be used in accordance with, inter alia, the Indian Khadi and Village Industries Commission Act 1956. In that regard, the applicant maintains, in essence, that that factor is relevant for the purposes of assessing the validity of the contested mark. According to the applicant, that law establishes, inter alia, the powers of the Khadi and Village Industries Commission and provides that its function is to ‘plan, promote, facilitate, organise and assist in the establishment and development of Khadi and village industries in the rural areas’.

28      The applicant also claims that the Board of Appeal distorted the evidence by concluding that the meaning of the term ‘khadi’ was ‘arbitrary in relation to the goods at issue ... as it denotes principally the home-spun fabric’. The applicant submits that it is clear from the evidence that the range of products covered by the Indian law referred to in paragraph 27 above also includes non-textile products obtained while observing similar principles of local and artisanal manufacture.

29      More generally, the applicant claims that the Board’s finding that the term ‘khadi’ is arbitrary for goods in the classes concerned is incorrect and fails to reflect the fact that, as is clear from the evidence, the range of products at issue encompasses goods from a wide range of different sectors and has done so since well before the intervener set up its business.

30      Second, with regard to the analysis of the relevant public, the applicant criticises the Board of Appeal for concluding that the part of the United Kingdom population that was of Indian origin, which constitutes 2.5% of that population, is not a sufficiently large part of that public to have a bearing on this case. In that respect, the applicant submits that that part of the United Kingdom population amounts to around 1.63 million of the 65 million inhabitants of the United Kingdom, which is larger than the population of each of the four least populated Member States of the European Union.

31      Lastly, the applicant maintains that when the Board of Appeal describes the relationship between the applicant and the intervener as being limited to a one-off purchase of products from an entity authorised by the applicant, the Board distorted the evidence in its assessment of the relationship between the parties and thus minimised the intervener’s awareness of the applicant’s role in the supervision and production of the product range at issue and its control over the use of the term ‘khadi’.

32      EUIPO and the intervener dispute those arguments.

33      In the first place, with regard to the analysis of the relevant public, the applicant criticises the Board of Appeal for concluding that the part of the United Kingdom population that is of Indian origin is not a sufficiently large part of that public to have a bearing on this case. However, contrary to what is asserted by the applicant and as is pointed out by EUIPO, the Board of Appeal did not simply conclude that that part of the United Kingdom population is not a sufficiently large part of that public to have a bearing on the case. It found in paragraphs 34 and 35 of the contested decision that the applicant had failed to establish that that part of that public was familiar with the term ‘khadi’ and its meaning and that there was no reason to think that this was the case.

34      In the second place, with regard to the factual background and contrary to what is claimed by the applicant, in paragraphs 28 to 30 of the contested decision, the Board of Appeal described the role and the powers of the applicant and, therefore, the extent to which the term ‘khadi’ had a legal meaning. Thus, as is maintained by EUIPO, the Board of Appeal cannot be criticised for having failed to take into account the fact that that term is controlled and regulated in India by, inter alia, the Indian law referred to in paragraph 27 above. However, first, it cannot be inferred therefrom that in India that term cannot be used freely and, second, even if that use is considered to be restricted in India, the applicant does not demonstrate that that is relevant for the purpose of assessing the level of awareness of the term by the relevant public, namely the general public of the European Union (see paragraphs 32 and 33 of the contested decision).

35      In the third place, with regard to the meaning of the term ‘khadi’ in relation to the products concerned, in paragraph 28 of the contested decision the Board of Appeal took into account the definition given to the term by Article 2 of the Indian law referred to in paragraph 27 above, according to which that term refers to ‘any cloth woven on handlooms in India from cotton, silk or woollen yarn hand spun in India or from a mixture of any two or all of such yarns’. Therefore the applicant cannot reasonably claim –– without further substantiating its argument that the product range at issue also covers non-textile products obtained while observing similar principles of local and artisanal manufacture –– that the Board of Appeal distorted the evidence when it concluded that the term at issue had to be related to textile products.

36      In the fourth place, the applicant complains that, in paragraph 90 of the contested decision, the Board of Appeal described the relationship between the parties as having been limited to an isolated purchase of goods from an entity approved by the applicant, which, it maintains, was contradicted by the statements of the intervener itself, who notes that it discussed with the applicant the possibility of making deliveries within the European Union, therefore illustrating that the intervener was aware of the applicant’s role in the supervision and production of the goods at issue. In that part of the contested decision, the Board of Appeal analysed the moral and commercial obligations alleged to exist at the time of the registration of the contested mark and arising from the commercial relationship between the parties, rather than from the intervener’s awareness of the applicant’s role in the supervision and monitoring of the products at issue. Consequently, it is sufficient to note that the applicant has not substantiated the claim that the Board of Appeal distorted the evidence on the ground that the Board limited itself to describing, in paragraph 90 of the contested decision, the prior contractual relationship with the intervener as covering only the purchase of a limited number of cosmetic products from such an entity. The fact that there were discussions on the possibility of making deliveries within the European Union affects neither that finding nor the conclusion that the Board comes to: that that contractual relationship was not such as to give rise to particular obligations.

37      It follows from paragraphs 33 to 36 above that the applicant has failed to provide proof of distortion of evidence by the Board of Appeal and that the second plea must be rejected as unfounded.

**Third plea, alleging infringement of Article 7(1)(g) and Article 52(1)(a) of Regulation No 207/2009**

38      The applicant submits that the Board of Appeal incorrectly applied Article 52(1)(a) and Article 7(1)(g) of Regulation No 207/2009 when it concluded that the contested mark was not deceptive.

39      In that regard, the applicant claims that, contrary to what is required by the case-law, the Board of Appeal applied a quantitative threshold in relation to consumer perception when assessing deceptiveness and imposed on the applicant a burden of proving that a substantial proportion of consumers across the European Union would be deceived. According to the applicant, for the purposes of incompatibility with Article 7(1)(g) of Regulation No 207/2009, it is sufficient that a single consumer may be deceived by the contested mark.

40      The applicant adds that the fact that the term ‘khadi’ is regulated indicates that the products are monitored by the Indian State and infers from the principle that ‘ignorance of the law is no defence’ that the public is aware of the regulation of that term in India.

41      Thus, the applicant claims, in essence, that the relevant public, which is aware that the term ‘khadi’ is regulated in India, may be deceived by the contested trade mark and led to believe that the products marketed under that mark have been made under the supervision of the applicant and imported from India.

42      EUIPO and the intervener dispute those arguments.

43      Under Article 7(1)(g) of Regulation No 207/2009, registration is to be refused for trade marks which are of such a nature as to deceive the public, for instance as to the nature, quality or geographical origin of the goods or service.

44      It is apparent from settled case-law that the circumstances for refusing registration referred to by Article 7(1)(g) of Regulation No 207/2009 presuppose the existence of actual deceit or a sufficiently serious risk that the consumer will be deceived (see, to that effect and by analogy, judgments of 30 March 2006, *Emanuel*, C‑259/04, EU:C:2006:215, paragraph 47 and the case-law cited, and of 24 September 2008, *HUP Uslugi Polska* v *OHIM — Manpower (I.T.@MANPOWER)*, T‑248/05, not published, EU:T:2008:396, paragraph 64).

45      It must be borne in mind, in this respect, that the essential function of a trade mark is to guarantee the identity of the origin of the marked goods or services to the consumer or end user by enabling him, without any possibility of confusion, to distinguish those goods or services from others which have another origin. For the trade mark to be able to fulfil its essential role in the system of undistorted competition which the Treaty seeks to establish and maintain, it must offer a guarantee that all the goods or services bearing it have been manufactured or supplied under the control of a single undertaking which is responsible for their quality (judgment of 30 March 2006, *Emanuel*, C‑259/04, EU:C:2006:215, paragraph 38). A trade mark no longer fulfils that role of acting as a guarantee if the information that it contains deceives the public.

46      Consequently, the assessment of the absolute ground of refusal referred to in Article 7(1)(g) of Regulation No 207/2009 must be carried out by reference, inter alia, to the perception of the trade mark by the relevant public.

47      In the present case, it must be noted, as the Board of Appeal did, that, with regard to the relevant products, the relevant public is the general public of the European Union.

48      So far as the perception of the mark by the relevant public is concerned, the Court finds, as the Board of Appeal did in paragraphs 34 and 35 of the contested decision, that none of the applicant’s evidence or arguments permits the inference that the general public, or even the part of the United Kingdom population that is of Indian origin is generally familiar with the term ‘khadi’ or its role for Indian industry and, consequently, is sufficient to call into question the Board of Appeal’s assessment that the term is an uncommon word and that it cannot be assumed that the term will be understood by that public.

49      Some of the evidence submitted by the applicant has a link to the relevant public. This includes Annexes 49 and 50 to the statement setting out the grounds of the appeal before the Board of Appeal. The first of those annexes is a press article describing an event that took place in Poland in which more than 133 Indian exhibitors participated, including the applicant. While the article describes the success of the product range at issue at the event, it represents merely a one-off event with limited scope. The second of those annexes is a declaratory document relating to the participation of the applicant in international exhibitions in Germany, France, Italy and Poland for the purposes of promoting that product range. However, it cannot be concluded that the products of all exhibitors participating in an international fair in a Member State are, on that account, necessarily known by the general public of the European Union.

50      The other evidence comprises, inter alia, extracts from a book relating to the history and adoption of the Khadi ‘trade mark’ (Annexes 1 to 27 to the application), articles from websites and the Indian press concerning the use of the term ‘khadi’ in India and the operation of the industry supervised by the applicant (Annexes 28 to 45 and 48 to the application) and inspection reports concerning manufacturers operating within that industry in India (Annexes 46 and 47 to the application). It must be noted that none of these documents are relevant for the purposes of determining whether that term will be understood by the relevant public, as the Board of Appeal rightly pointed out in paragraphs 24 and 25 of the contested decision.

51      Further, the Board of Appeal observed in paragraph 41 of the contested decision that, even if a part of the relevant public associates the term ‘khadi’ with India, that does not mean that the mark at issue is deceptive, as the products concerned can be inspired by Indian formulas or contain ingredients originating from India.

52      Moreover, as is apparent from paragraph 37 above, the applicant has failed to establish, in the context of the present action, that the Board of Appeal distorted the evidence submitted to it.

53      If the relevant public does not associate the term ‘khadi’ with any specific meaning, the existence of actual deceit or a sufficiently serious risk that the consumer will be deceived cannot be established. Article 7(1)(g) of Regulation No 207/2009 implies a sufficiently specific designation of potential characteristics of the goods and services covered by the trade mark. Only where the targeted consumer is led to believe that the goods and services possess certain characteristics which they do not in fact possess will he be deceived by the trade mark (judgment of 24 September 2008, *I.T.@MANPOWER*, T‑248/05, not published, EU:T:2008:396, paragraph 65). As EUIPO points out, in the absence of awareness of that term, no expectations can be created by that public in respect of the mark.

54      It follows from the foregoing that the Board of Appeal did not err in concluding that there was no actual deceit or a sufficiently serious risk of the consumer being deceived within the meaning of Article 7(1)(g) of Regulation No 207/2009. The third plea must therefore be rejected as unfounded.

**Fourth plea, alleging infringement of Article 7(1)(i) and Article 52(1)(a) of Regulation No 207/2009**

55      The applicant submits that the Cancellation Division incorrectly applied Article 52(1)(a) and Article 7(1)(i) of Regulation No 207/2009 when it decided that the contested mark did not conflict with protected emblems or badges (other than those protected under Article 6ter of the Paris Convention for the Protection of Industrial Property of 20 March 1883, as revised and amended).

56      In that regard, the applicant maintains, inter alia, that the Cancellation Division concluded, in essence, that Article 7(1)(i) of Regulation No 207/2009 applies only to figurative marks, to the exclusion of word marks. The Board of Appeal allegedly endorsed the conclusions of that division.

57      EUIPO submits that this plea is inadmissible because, as Article 7(1)(i) of Regulation No 207/2009 was not put forward before the Board of Appeal, it does not form the subject matter of the proceedings. It also notes, inter alia, that the applicant submitted no arguments to this effect in the statement setting out its grounds of appeal before the Board of Appeal.

58      In that regard, it is apparent from the case-law that there is continuity, in terms of their functions, between the different departments of EUIPO, namely the Cancellation Divisions, on the one hand, and the Boards of Appeal, on the other. It follows, specifically, from that continuity in terms of functions between the various departments of EUIPO that, when the Boards of Appeal conduct the required review of decisions taken by the departments of EUIPO at first instance, they must base their decision on all the matters of fact and of law which the parties put forward, either in the proceedings before the department which heard the application at first instance or in the appeal. More generally, it follows from Article 64(1) of Regulation No 207/2009, which states that, following the examination as to the allowability of the appeal, the Board of Appeal is to decide on it and, in doing so, may ‘exercise any power within the competence of the department which was responsible for the decision appealed’, that by virtue of the appeal brought before it, the Board of Appeal is called upon to carry out a new, full examination of the merits of the case before it, in terms of both law and fact (see judgment of 12 November 2013, *Gamesa Eólica* v *OHIM — Enercon (Blended shades of green)*, T‑245/12, not published, EU:T:2013:588, paragraphs 18 and 19 and the case-law cited).

59      As the applicant asserted the ground of invalidity in Article 52(1)(a) of Regulation 207/2009 during the proceedings before the Cancellation Division, it must be held that that ground was included in the case before the Board of Appeal. As the Board of Appeal had additionally adjudicated on that ground by endorsing the conclusions of the Cancellation Division in that regard, it must be held that that ground is one of the matters in issue and, therefore, that the present plea is admissible.

60      In paragraph 44 of the contested decision the Board of Appeal fully endorsed the reasoning of the Cancellation Division. That division held that the contested mark contains no badges, emblems or escutcheons as the relevant public does not connect the term ‘khadi’ to any State organisation and that, therefore, that public cannot be misled. Further, it is apparent from the Cancellation Division’s decision that that division did not conclude either implicitly or explicitly that Article 7(1)(i) of Regulation No 207/2009 applied only to figurative marks, to the exclusion of word marks.

61      In that regard, it must be noted, as was pointed out in paragraph 50 above, that the evidence submitted by the applicant is insufficient to allow it to be concluded that the relevant public will attribute any meaning to the term ‘khadi’ or would associate it with any organisation whatsoever. In such circumstances, the Board of Appeal concluded rightly that no badge, emblem or escutcheon would be identified by that public in the sign at issue.

62      The fourth plea must therefore be dismissed as unfounded.

**Fifth plea, alleging infringement of Article 52(1)(b) of Regulation No 207/2009**

63      The applicant submits that the Board of Appeal erred in concluding that the applicant had failed to establish that the contested mark had been registered in bad faith.

64      In the first place, the applicant submits that the Board of Appeal failed to apply the correct criteria when it concluded that there was no bad faith when the mark was registered. According to the applicant, the Board of Appeal wrongly concluded that a precondition for the purposes of reaching such a conclusion was an established reputation, well-known character or a particular image associated with its mark in the European Union.

65      In the second place, the applicant submits that the intervener was aware of the Khadi ‘trade mark’, its use in India and, in particular, of the fact that the term ‘khadi’ was regulated and controlled by an Indian State body.Thus, the Board of Appeal allegedly failed properly to assess both the intervener’s awareness and the degree of legal protection enjoyed by the sign within the meaning of the judgment of 11 June 2009, *Chocoladefabriken Lindt & Sprüngli* (C‑529/07, EU:C:2009:361).

66      In the third place, the applicant complains that the Board of Appeal erred by failing to take full account of the fact that when the intervener envisaged selling goods using the contested mark, the intervener was aware of the fact that the applicant controlled the use of the term ‘khadi’, that the two parties had not reached a commercial agreement and that, consequently, the intervener had requested registration of the mark at issue. According to the applicant, such conduct constitutes acting in bad faith.

67      EUIPO and the intervener dispute those arguments.

68      As a preliminary point, it should first be noted that the EU trade mark registration system is based on the ‘first-to-file’ principle laid down in Article 8(2) of Regulation No 207/2009 (now Article 8(2) of Regulation 2017/1001). In accordance with that principle, a sign may be registered as an EU trade mark only in so far as this is not precluded by an earlier mark, whether an EU trade mark, a trade mark registered in a Member State or by the Benelux Office for Intellectual Property (BOIP), a trade mark registered under international arrangements which have effect in a Member State or a trade mark registered under international arrangements which have effect in the European Union. On the other hand, without prejudice to the possible application of Article 8(4) of Regulation No 207/2009 (now Article 8(4) of Regulation 2017/1001), the mere use by a third party of a non-registered mark does not preclude an identical or similar mark from being registered as an EU trade mark for identical or similar goods or services (see judgment of 9 July 2015, *CMT* v *OHIM — Camomilla (CAMOMILLA)*, T‑100/13, not published, EU:T:2015:481, paragraph 30 and the case-law cited).

69      Nevertheless, the application of that principle is moderated, inter alia, by Article 52(1)(b) of Regulation No 207/2009, under which, following an application to EUIPO or on the basis of a counterclaim in infringement proceedings, an EU trade mark is to be declared invalid where the applicant was acting in bad faith when it filed the application for the trade mark. Therefore, where the applicant for a declaration of invalidity seeks to rely on that ground, it is for that party to prove the circumstances which substantiate a finding that the EU trade mark proprietor was acting in bad faith when it filed the application for registration of that mark (see judgment of 9 July 2015, *CAMOMILLA*, T‑100/13, not published, EU:T:2015:481, paragraph 31 and the case-law cited).

70      Further, it must be noted that the concept of ‘bad faith’ referred to in Article 52(1)(b) of Regulation No 207/2009 is not defined, delimited or even described in any way in the legislation (judgment of 1 February 2012, *Carrols* v *OHIM — Gambettola (Pollo Tropical CHICKEN ON THE GRILL)*, T‑291/09, EU:T:2012:39, paragraph 44).

71      However, it should be observed that, according to the case-law, in order to determine whether an applicant for registration is acting in bad faith within the meaning of Article 52(1)(b) of Regulation No 207/2009, it is appropriate to take into consideration all the relevant factors specific to the particular case which obtained at the time of filing the application for registration of the sign as an EU trade mark, in particular: (i) the fact that the applicant knows or must know that a third party is using, in at least one Member State, an identical or similar sign for an identical or similar product or service capable of being confused with the sign for which registration is sought; (ii) the applicant’s intention to prevent that third party from continuing to use such a sign; and (iii) the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is sought (judgment of 11 June 2009, *Chocoladefabriken Lindt & Sprüngli,* C‑529/07, EU:C:2009:361, paragraph 53).

72      That said, the factors set out in paragraph 71 above are only examples drawn from a number of factors which can be taken into account in order to decide whether an applicant for registration was acting in bad faith at the time of filing the trade mark application. In that regard, it must be held that, in the context of the overall analysis undertaken pursuant to Article 52(1)(b) of Regulation No 207/2009, account may also be taken of the commercial logic underlying the filing of the application for registration of the sign as an EU trade mark, as well as the chronology of events leading to that filing (judgment of 9 July 2015, *CAMOMILLA*, T‑100/13, not published, EU:T:2015:481, paragraphs 35 and 36).

73      The fifth plea must be examined in the light of, inter alia, those considerations.

74      First, it should be noted, as EUIPO points out, that the applicant’s criticism in respect of the criteria applied to analyse the bad faith of the applicant for registration of the contested mark is the result of a misinterpretation of the contested decision. The Board of Appeal’s reference in paragraph 81 of that decision to the fact that, within the territory of the European Union, the applicant’s trade mark has no reputation and is not associated with any particular image was used to illustrate the fact that the applicant had failed to demonstrate that the goods subject to its supervision had any genuine interest or any real presence on the EU market when the application for registration of the contested mark was filed. Therefore, the Board of Appeal did not consider, as the applicant claims, that the ‘reputation, well-known character or a particular image associated with its trade mark’ were prerequisites to establishing that a party has acted in bad faith.

75      Second, with regard to the awareness of the use of the term ‘khadi’ when the contested mark was registered, it must be noted that the applicant refers to the first criterion listed in paragraph 71 above, namely ‘the fact that the applicant [for registration] knows or must know that a third party is using, in at least one Member State, an identical or similar sign for an identical or similar product or service capable of being confused with the sign for which registration is sought’. Both the reasoning expounded and the evidence mentioned in paragraphs 88 to 90 of the application seek to establish the legal framework governing the meaning of the term ‘khadi’ in India and the awareness of that term which the applicant for registration should have had at the time of registration of the contested mark, rather than its use in an EU Member State.

76      In addition, EUIPO is right in its assertion that the applicant derives its rights in respect of the term ‘khadi’ from the Indian law referred to in paragraph 27 above.That law specifies that its territorial scope is limited to India (with the exception of one of its States). EUIPO is also right to state that the applicant has not provided evidence of significant use or even awareness of the Indian Khadi ‘trade mark’ in the European Union.

77      Moreover, it is apparent from case-law that the fact that an applicant for registration knows or should know that a third party is using a mark abroad at the time of filing his application which is liable to be confused with the mark whose registration has been applied for is not sufficient, in itself, to permit the conclusion that the applicant was acting in bad faith (see, to that effect and by analogy, judgment of 27 June 2013, *Malaysia Dairy Industries*, C‑320/12, EU:C:2013:435, paragraph 37). In the present case, when the application for registration of the contested mark was lodged, the term ‘khadi’ was not protected by the applicant through a registration as a trade mark either in India or internationally, as EUIPO pointed out during the hearing. Therefore, particularly in the absence of an application by the applicant for legal protection of that term as a trade mark, although it is apparent from the documents before the Court that, when the contested mark was registered, the applicant for registration was aware of the applicant’s activities and the use of that term in India, that is insufficient to establish bad faith.

78      Third, the parties agree that the communications between them were requests for information sent to the applicant in respect of the goods and manufacturers subject to its supervision. Information was also requested on the possibility of arranging to have goods supervised by the applicant delivered to the European Union and, on one occasion, goods were purchased from one of the entities approved by the applicant. That evidence is insufficient to establish either the dishonest intention or the intention to act in bad faith of the applicant for registration when it lodged the application for registration of the contested mark.

79      Thus, the Board of Appeal did not err in concluding that it had not been established that, when the application for registration of the contested mark was filed, the intention of the applicant for that registration was to usurp the applicant’s reputation, inter alia because no recognition or extensive use of the applicant’s mark had been demonstrated. The fifth plea must therefore be rejected as unfounded.

**Second head of claim**

80      The applicant asks the Court to declare the contested mark invalid and, in essence, to alter the contested decision.

81      It must be recalled that the review carried out by the Court in accordance with Article 65(3) of Regulation No 207/2009 (now Article 72(3) of Regulation 2017/1001) is a review of the legality of the decisions of the Boards of Appeal of EUIPO and that the Court may annul or alter a decision against which an action has been brought only if, at the time the decision was adopted, it was vitiated by one of the grounds set out in Article 65(2) of that regulation (now Article 72(2) of Regulation 2017/1001) (see judgment of 5 July 2011, *Edwin* v *OHIM*, C‑263/09 P, EU:C:2011:452, paragraph 71 and the case-law cited).

82      As the pleas in law relied on by the applicant in support of its application for annulment are unfounded, as established above, the contested decision is not vitiated by any of the grounds of unlawfulness referred to in Article 65(2) of Regulation No 207/2009. It is therefore not necessary to grant the applicant’s application to alter contested decision, and the second head of claim must be rejected.

**Costs**

83      Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the forms of order sought by EUIPO and the intervener.

On those grounds,

THE GENERAL COURT (Third Chamber)

hereby:

1.      **Dismisses the action;**

2.      **Orders Khadi and Village Industries Commission to pay the costs.**

|  |  |  |
| --- | --- | --- |
| Frimodt Nielsen | Kreuschitz | Półtorak |

Delivered in open court in Luxembourg on 29 November 2018.

|  |  |  |
| --- | --- | --- |
| E. Coulon |  | A. M. Collins |

|  |  |  |
| --- | --- | --- |
| Registrar |  | President |

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[\*](#Footref*)      Language of the case: English.

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