CELEX: 62018CJ0528
Language: en
Date: 2019-11-13
Title: Judgment of the Court (Tenth Chamber) of 13 November 2019.#Outsource Professional Services Ltd v European Union Intellectual Property Office.#Appeal — EU trade mark — Regulation (EC) No 207/2009 — Absolute grounds for invalidity — Article 52(1)(b) — Bad faith at the time that an application for a trade mark is filed.#Case C-528/18 P.

JUDGMENT OF THE COURT (Tenth Chamber)
13 November 2019  (*)
(Appeal — EU trade mark — Regulation (EC) No 207/2009 — Absolute grounds for invalidity — Article 52(1)(b) — Bad faith at the time that an application for a trade mark is filed)
In Case C‑528/18 P,
APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 6 August 2018,

Outsource Professional Services Ltd, established in Friedrichshafen (Germany), represented by A. Kempter, Rechtsanwalt,
appellant,
the other parties to the proceedings being:

Flatworld Solutions Pvt Ltd, established in Bangalore (India), represented by S.O. Gillert, K. Vanden Bossche, B. Köhn-Gerdes and J. Schumacher, Rechtsanwälte,
applicant at first instance,

European Union Intellectual Property Office (EUIPO), represented by D. Botis and D. Gája, acting as Agents,
defendant at first instance,
THE COURT (Tenth Chamber),
composed of E. Juhász, acting as President of the Tenth Chamber, M. Ilešič (Rapporteur) and C. Lycourgos, Judges,
Advocate General: E. Sharpston,
Registrar: A. Calot Escobar,
having regard to the written procedure,
having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,
gives the following

Judgment

1        By its appeal, Outsource Professional Services Ltd  seeks to have set aside the judgment of the General Court of the European Union of 31 May 2018, Flatworld Solutions v EUIPO — Outsource Professional Services (Outsource 2 India) (T‑340/16, not published, ‘the judgment under appeal’, EU:T:2018:314), by which that court annulled the decision of the Fourth Board of Appeal of the European Union Intellectual Property Office (EUIPO) of 15 April 2016 (Case R 611/2015-4) relating to invalidity proceedings between Flatworld Solutions Pvt Ltd (‘Flatworld’) and Outsource2India Ltd, which has been replaced by Outsource Professional Services (‘the decision at issue’).
 Legal context

2        Council Regulation (EC)  No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78,  p. 1) was amended by Regulation (EU) 2015/2424 of the European Parliament and of the Council of 16 December 2015 (OJ 2015 L 341,  p. 21), which entered into force on 23 March 2016. It was subsequently repealed and replaced, with effect from 1 October 2017, 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).

3        Since the application for registration of the EU mark at issue was made before 23 March 2016, as was the registration decision and the application for a declaration of invalidity, the present dispute must be examined in the light of Regulation  No 207/2009 in its original version.

4        Article 8 of that regulation, entitled ‘Relative grounds for refusal’, was worded as follows:
‘1.      Upon opposition by the proprietor of an earlier trade mark, the trade mark applied for shall not be registered:
(a)      if it is identical with the earlier trade mark and the goods or services for which registration is applied for are identical with the goods or services for which the earlier trade mark is protected;
(b)      if because of its identity with, or similarity to, the earlier trade mark and the identity or similarity of the goods or services covered by the trade marks there exists a likelihood of confusion on the part of the public in the territory in which the earlier trade mark is protected; the likelihood of confusion includes the likelihood of association with the earlier trade mark.
2.      For the purposes of paragraph 1, “earlier trade marks” means:
(a)      trade marks … with a date of application for registration which is earlier than the date of application for registration of the [EU] trade mark …
…
5.      Furthermore, upon opposition by the proprietor of an earlier trade mark within the meaning of paragraph 2, the trade mark applied for shall not be registered where it is identical with, or similar to, the earlier trade mark and is to be registered for goods or services which are not similar to those for which the earlier trade mark is registered, where, in the case of an earlier [EU] trade mark, the trade mark has a reputation in the [EU] and, in the case of an earlier national trade mark, the trade mark has a reputation in the Member State concerned and where the use without due cause of the trade mark applied for would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark.’ 

5        Article 52 of that regulation, entitled ‘Absolute grounds for invalidity’, provided in paragraph 1:
‘A[n EU] trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings:
…
(b)      where the applicant was acting in bad faith when he filed the application for the trade mark.’ 

6        Article 53 of that regulation, entitled ‘Relative grounds for invalidity’, provided, in paragraph 1:
‘A[n EU] trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings:
(a)      where there is an earlier trade mark as referred to in Article 8(2) and the conditions set out in paragraph 1 or paragraph 5 of that Article are fulfilled;
…’ 
 Background to the dispute and the decision at issue

7        On 25 June 2007, Outsource2India, established in Germany, filed an application with EUIPO for registration of the following sign as an EU trade mark (‘the contested mark’):

8        The mark was registered on 20 May 2008 in respect of services in Classes 35, 36 and 41 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. Those services included ‘business administration’, ‘office functions’, ‘receiving, processing and handling of orders’ and ‘temporary employment agencies’.

9        On 4 February 2013, Flatworld, established in India, filed an application for a declaration that the contested mark was invalid on the basis of Article 52(1)(b) of Regulation  No 207/2009.

10      On 3 February 2015, the Cancellation Division of EUIPO granted that application for a declaration of invalidity. It found that, by applying for registration of the contested mark, Outsource2India had intended to appropriate the element ‘outsource2india’, already used by Flatworld in the European Union. By filing such an application for registration, Outsource2India had acted in bad faith.

11      Outsource2India filed a notice of appeal with EUIPO against the decision of the Cancellation Division.

12      By the decision at issue, the Fourth Board of Appeal of EUIPO annulled the decision of the Cancellation Division.

13      The Board of Appeal considered that it was not apparent from the case file that Outsource2India had acted in bad faith. Outsource2India had envisaged establishing a commercial relationship with Flatworld by helping undertakings established in Germany or elsewhere in the European Union to outsource their services to India. It was not apparent from the case file that Outsource2India had had the intention of appropriating the element ‘outsource2india’. Since that term is descriptive and may therefore be freely used by all traders in the sector for outsourcing services to India, the intention of using it cannot be regarded as dishonest intent. It had not been established that Outsource2India wanted to undermine Flatworld’s interests. On the contrary, the fact that it had applied for registration of a mark which included figurative elements that Flatworld had never used indicated that it had not had such an intention.

14      In paragraph 2 of the decision at issue, the Fourth Board of Appeal took into account the following sign, containing the element ‘outsource2india’ and certain figurative elements, which Flatworld applied to register as an EU trade mark on 27 April 2010 and which was registered as such by EUIPO on 25 May 2011:

15      In paragraph 14 of that decision, while noting that Flatworld claimed that it had begun using that sign well before 25 June 2007, the Board of Appeal considered that, although it was apparent from the case file that Outsource2India was aware of Flatworld’s use of that sign, that did not suggest that it had acted in bad faith by applying for registration of the contested mark, which contained different figurative elements.

16      In paragraph 20 of that decision, the Fourth Board of Appeal of EUIPO added that ‘the scant evidence showing that [Flatworld] had an information page in German on its website in 2006 … is no proof that it was actually providing any services there’.
 The procedure before the General Court and the judgment under appeal

17      By application lodged at the Registry of the General Court on 28 June 2016, Flatworld requested that the decision at issue be annulled and that the decision of EUIPO’s Cancellation Division be upheld. In support of its action, Flatworld put forward a single plea in law, alleging infringement of Article 52(1)(b) of Regulation  No 207/2009.

18      In the course of those proceedings before the General Court, Outsource Professional Services was granted leave to replace Outsource2India.

19      In paragraph 20 of the judgment under appeal, the General Court noted, as a preliminary point, that the EU trade mark registration system is based on the ‘first-to-file’ principle and that, therefore, ‘the mere use by a third party of a non-registered mark does not preclude an identical or similar mark being registered’. The General Court concluded, in paragraph 35 of that judgment, that the mere fact that Flatworld had previously used ‘its non-registered mark outsource2india’ did not preclude registration of the contested mark. Nevertheless, it added that, where it is apparent that the holder of an EU mark was, at the time of filing the application for registration, acting in bad faith, that mark must be declared invalid, irrespective of whether or not earlier trade mark rights exist.

20      Next, with regard to the criteria for assessing bad faith, the General Court noted, in paragraphs 23 to 25 of the judgment under appeal, with reference to paragraph 53 of the judgment of 11 June 2009,  Chocoladefabriken Lindt & Sprüngli (C‑529/07, EU:C:2009:361), that account should be taken of, in particular, the fact that the trade mark applicant knew or should have known that a third party was using, in at least one Member State, an identical or similar sign for an identical or similar product or service that could be confused with the sign for which registration was sought, the applicant’s intention of preventing that third party from continuing to use such a sign, and the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration was sought. Nevertheless, those factors are merely ‘examples drawn from a number of factors which may be taken into account in order to decide whether the applicant … was acting in bad faith’. In any event, it is also necessary to examine ‘the applicant’s intention at the time of filing the application for registration, which is a subjective factor that has to be determined by reference to the objective circumstances of the particular case’.

21      As regards those objective circumstances, the General Court noted, in paragraph 29 of that judgment, that on 4 November 2006, Flatworld had been contacted concerning possible collaboration with a partner established in Germany and that, on 13 December 2006, it was informed of the creation, for that purpose, of a company in Germany named ‘Outsource2India Ltd’ and of that company’s wish to use Flatworld’s sign containing the element ‘outsource2india’.

22      According to the findings in paragraphs 30 to 32 of that judgment, Flatworld had doubts about those collaboration proposals and some of Outsource2India’s conduct, as it repeatedly expressed in writing by raising objections, and it finally informed Outsource2India, by email of 25 May 2007, that it saw no prospect of collaboration and that it considered that Outsource2India was, essentially, seeking to take advantage of the element ‘outsource2india’.

23      The General Court stated, in paragraph 38 of that judgment, that Outsource2India was aware that Flatworld was already using in Germany ‘a similar sign for the same services, that could be confused with the contested mark’, since Flatworld had ‘offered and provided, from 2006, its outsourcing services, under the name of its non-registered mark, to client companies established in the European Union and, more particularly, in Germany’.

24      In paragraph 39 of the judgment under appeal, the General Court stated that Flatworld also wished to develop its business in Spain and France, and that it was also apparent from the documents before the court that, contrary to what the Fourth Board of Appeal of EUIPO had found in paragraph 20 of the decision at issue, Flatworld was, at the time the application for registration of the contested trade mark was filed, actually marketing services in Germany using the element ‘outsource2india’ and it did so ‘through its website, which was not merely intended to provide information’.

25      In paragraph 41 of that judgment, the General court pointed out that ‘the fact that the applicant knew or should have known that a third party had long been using, in at least one Member State, an identical or similar sign for an identical or similar product that may be confused with the sign for which registration is sought is not sufficient, in itself, to permit the conclusion that the applicant was acting in bad faith’ since ‘consideration must also be given to the applicant’s intention at the time the application for registration was filed’. The General Court considered that it was therefore necessary for it to examine Outsource2India’s intention at the time  the  application was filed.

26      With regard to that intention, it was noted in paragraphs 42 to 47 of that judgment that, in the context of the ‘pre-contractual relationship’ arising from Outsource2India’s collaboration proposal, the latter ‘undertook’ to rename the sign it used and its website in the event that there was no collaboration agreement. According to the General Court, when it became clear that there would not be an agreement, Flatworld ‘understandably, was genuinely surprised’ when it realised that Outsource2India continued to use the element ‘outsource2india’. By  filing, shortly after the termination of the pre-contractual relationship, an application for registration as an EU trade mark of a sign similar to that used by Flatworld, Outsource2India intended to exploit the economic potential of the element ‘outsource2india’, which, in view of the correspondence exchanged between the parties — in particular Flatworld’s email of 25 May 2007 — and developments in their exchanges, demonstrated that Outsource2India had acted in bad faith. In paragraph 47 of the judgment under appeal, the General Court stated that this assessment was ‘[independent] of the question whether the wording “outsource2india” is descriptive’.

27      On the basis of those considerations, the General Court annulled the decision at issue.
 Forms of order sought by the parties

28      Outsource Professional Services claims that the Court should:
–      set aside the judgment under appeal;
–      uphold the decision at issue, and
–      order Flatworld to pay the costs.

29      EUIPO claims that the Court should:
–      set aside the judgment under appeal, and
–      order Flatworld to pay the costs.

30      Flatworld contends that the Court should:
–      dismiss the appeal, and
–      order Outsource Professional Services to pay the costs, including those incurred by Flatworld at first instance.
 The appeal

31      In support of its appeal, the appellant raises a single ground of appeal, alleging infringement of Article 52(1)(b) of Regulation  No 207/2009.
 Arguments of the parties

32      According to the appellant, it cannot be accepted that Outsource2India acted in bad faith by filing its application for registration of the contested mark.

33      First, it claims that it has not been demonstrated that Flatworld had, before 25 June 2007, used a sign similar to the contested mark in the European Union.

34      The only similarity between the contested mark and the sign allegedly used in the European Union by Flatworld before 25 June 2007 is the element ‘outsource2india’, which describes the commercial activity in question. There is nothing dishonest in using descriptive terms to describe a business. Given that the element ‘outsource2india’ must therefore be excluded from the assessment and that the contested mark is figuratively different from Flatworld’s sign, the sign was wrongly found, in paragraph 38 of the judgment under appeal, to be ‘similar’ to the contested mark.

35      The General Court also erred in finding, in paragraph 39 of that judgment, that Flatworld was, by using that sign, offering services in Germany before 25 June 2007. In that respect, the appellant states that Flatworld’s website contained only one page in German, which was purely informative.

36      The appellant adds that, at the time of filing the application for registration of the contested trade mark, Flatworld did not have any trade mark rights in its sign. At that time, that sign was not registered as a trade mark and, contrary to the view taken by the General Court in paragraph 37 of that judgment, Flatworld did not hold any ‘non-registered [marks]’ within the meaning of German law or within the meaning of the law of any other country.

37      The finding in paragraph 42 of that judgment that Flatworld was understandably surprised to discover that Outsource2India continued to use the element ‘outsource2india’, even though Outsource2India had ‘undertaken’ to stop using it if no agreement was reached between the parties, is also incorrect. The appellant claims that the parties never agreed and Outsource2India never promised that it would stop using that element.

38      Likewise, the finding in paragraph 45 of the judgment under appeal that Flatworld could reasonably expect Outsource2India to change the name of its company is incorrect. Such a name change was never agreed between the parties or promised by Outsource2India.

39      Secondly, the appellant claims that the General Court should have included in its assessment each of the factors set out in the judgment of 11 June 2009, Chocoladefabriken Lindt & Sprüngli (C‑529/07, EU:C:2009:361), and cited in paragraph 23 of the judgment under appeal. The General Court erred in law by subsequently finding that it was not necessary for all those elements to be taken into account.

40      Thus, the General Court erred by failing to assess, on the basis of the criteria laid down for that purpose in the case-law of the Court of Justice, whether the contested mark and Flatworld’s sign were likely to lead to confusion on the part of the public. According to the appellant, if the General Court had carried out such an assessment, it would necessarily have concluded that there was no likelihood of confusion. Owing to the descriptive nature of the element ‘outsource2india’, the figurative elements of the contested mark and of  Flatworld’s sign are dominant. As those elements are visually different, there can be no likelihood of confusion.

41      EUIPO, for its part, argues that the General Court failed to substantiate its conclusion that Flatworld’s sign is a ‘non-registered mark’ conferring legal protection. In addition, the General Court failed to state the reasons for its assessment that there is a likelihood of confusion between that sign and the contested mark.

42      Those failures to state reasons must, according to EUIPO, result in the annulment of the judgment under appeal since, without a finding of a likelihood of confusion and a non-registered mark conferring legal protection, the General Court could not reasonably conclude, in the present case, that Outsource2India had acted in bad faith.

43      With regard to the concept of ‘non-registered mark’ referred to by the General Court, EUIPO notes that there is no such concept in EU law. While that concept does in fact exist in some national legal systems, the General Court should have set out the grounds for its conclusion that Flatworld’s sign enjoyed legal protection as a ‘non-registered mark’.

44      As regards the finding of a likelihood of confusion, EUIPO considers that the judgment under appeal is contradictory as it includes such a finding without giving reasons. By finding a likelihood of confusion in paragraph 38 of that judgment, the General Court essentially concluded that Flatworld’s sign, containing the element ‘outsource2india’, is distinctive, even though it implicitly accepted, in paragraph 47 of that judgment, that that element is descriptive.

45      In any event, according to EUIPO, it seems doubtful whether the trade mark applicant can be accused of acting in bad faith when it merely incorporated, in the sign it sought to register as an EU trade mark, a descriptive element from a sign used by others. EUIPO therefore challenges the General Court’s finding, in paragraph 47 of the judgment under appeal, that it is irrelevant whether the element from a sign used by others is descriptive. Such a finding is incompatible with the principle that purely descriptive terms may be used freely by all traders.

46      Flatworld considers that the appeal is, in part, manifestly inadmissible and, as to the remainder, unfounded.
 Findings of the Court

47      Under the second subparagraph of Article 256(1) TFEU and the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union, an appeal lies on points of law only. The General Court thus has exclusive jurisdiction to find and appraise the relevant facts and assess the evidence. The appraisal of those facts and the assessment of that evidence thus do not, save where the facts or evidence are distorted, constitute points of law subject, as such, to review by the Court of Justice on appeal (see, inter alia, judgments of 18 December 2008, Les Éditions Albert René v OHIM, C‑16/06 P, EU:C:2008:739, paragraph 68, and of 31 January 2019, Pandalis v EUIPO, C‑194/17 P, EU:C:2019:80, paragraph 51).

48      In addition, such distortion must be obvious from the documents in the Court’s file, without there being any need to carry out a new assessment of the facts and the evidence. The appellant must indicate precisely the evidence alleged to have been distorted by the General Court and show the errors of appraisal which, in its view, led to that distortion (see, to that effect, judgment of 31 January 2019, Pandalis v EUIPO, C‑194/17 P, EU:C:2019:80, paragraphs 52 and 53 and the case-law cited).

49      In the present case, the appellant’s challenge to the finding of fact in paragraph 39 of the judgment under appeal that, at the time the application for registration of the contested mark was filed, Flatworld marketed services in Germany using the element ‘outsource2india’ contained in the sign reproduced in paragraph 14  above is not supported by any specific indications or documents demonstrating that the General Court manifestly distorted the facts or evidence by inferring from them, in particular from Flatworld’s website, that that company was, at the time of filing the application for registration of the contested trade mark, active in Germany and offering services there by using the element ‘outsource2india’.

50      It follows that the appeal is inadmissible in so far as it seeks to challenge that finding of fact made by the General Court.

51      However, as regards the findings of fact in paragraphs 42 and 45 of the judgment under appeal, to the effect that Outsource2India undertook to change, in the event that the parties did not agree to collaborate, the sign used by it, the name of its website and its company name, the appellant did state precisely why it considers that, by those findings, the General Court distorted the facts and evidence before it. In an annex to its appeal, it submitted draft contracts and correspondence exchanged between the manager of Outsource2India and Flatworld, which were also submitted to the General Court and demonstrate, according to the appellant, that the parties had never agreed that Outsource2India would stop using the element ‘outsource2india’. In addition, none of the statements made by the manager of Outsource2India in those documents resulted in there being such an obligation on that company.

52      That argument put forward by the appellant is therefore admissible and must be examined by verifying, in accordance with the case-law cited in paragraph 48  above, whether it is clear from those documents that the General Court misread them.

53      In that regard, it should be noted that it is absolutely clear from the correspondence exchanged in May 2007 between the manager of Outsource2India and Flatworld, which were annexed to the appeal and were submitted to the General Court during the proceedings before it, that the views of the parties differed significantly, specifically in relation to the scope of the commitments made by Outsource2India in the event of no agreement being reached. Although Flatworld was convinced that Outsource2India had undertaken, in the event that the parties did not agree to collaborate, to stop using the element ‘outsource2india’ in the sign it used, in the name of its website and in its company name, Outsource2India stressed in that correspondence that it had only undertaken not to use Flatworld’s sign as reproduced in paragraph 14  above and not to use Flatworld’s website in its commercial acts.

54      By finding, in paragraph 42 of the judgment under appeal, that ‘[Outsource2India] undertook to rename its own mark and its own website’ and, in paragraph 45 of that judgment, that ‘[Outsource2India] had itself told the appellant that it would change the name of its company’, the General Court endorsed the assertions made by  Flatworld that were contradicted by the correspondence exchanged between the parties, since, in that correspondence, Outsource2India pointed out that it would not enter into such an undertaking. Furthermore, notwithstanding the detailed exposition of the facts and the reference to numerous documents in the judgment under appeal, the General Court did not specify which document or documents that had been submitted for its assessment in its view supported Flatworld’s claims.

55      In those circumstances, it is clear that, by finding that Outsource2India had given such an undertaking and by considering, moreover, in paragraph 42 of the judgment under appeal, that that undertaking was apparent from the ‘objective circumstances of the present case’, the General Court distorted the facts and evidence submitted for its assessment.

56      Since the findings in paragraphs 42 and 45 of the judgment under appeal, referred to in paragraph 54  above, are vitiated by distortion, they cannot form the basis for the General Court’s decision that, by applying for registration of the contested mark, Outsource2India acted in bad faith.

57      Nevertheless, the General Court based its decision on a set of circumstances, some of which may be sufficient to justify it. It is therefore necessary to examine the appellant’s other arguments in order to determine whether they are well founded and whether, alone or in combination with the argument accepted above, they must result in the judgment under appeal being set aside.

58      As regards those other arguments, the appellant claims that the General Court erred in law in so far as it did not duly examine whether there was a likelihood of confusion on the part of the public between the contested mark and the sign allegedly used before 25 June 2007 by Flatworld. According to the appellant, the action before the General Court should have been dismissed in the absence of such a likelihood of confusion, since the contested mark and Flatworld’s sign are figuratively different and their only common element, namely the element ‘outsource2india’, is descriptive.

59      In that regard, it may, admittedly, be observed, as noted by the appellant and EUIPO, that the General Court neither justified its assessment, in paragraph 38 of the judgment under appeal, that there was a likelihood of confusion between the contested mark and the sign used by Flatworld, nor duly substantiated its assessment, in the same paragraph of that judgment, that that mark and that sign are similar within the meaning of Regulation  No 207/2009.

60      However, notwithstanding that lack of reasoning regarding there being a likelihood of confusion and a similar sign, the General Court’s decision that Outsource2India acted in bad faith appears to be well founded on other grounds.

61      Contrary to the appellant’s argument, 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 Regulation  No 207/2009 to apply. In the absence of any likelihood of confusion between the sign used by a third party and the contested mark, or if there has been no use, by a third party, of a sign identical, or similar to, the contested mark, other factual circumstances may, in some cases, constitute relevant and consistent indicia establishing the bad faith of the trade mark applicant. Where it is apparent from those other circumstances that the holder of the contested mark filed the application for registration of that mark with the intention of undermining, in a manner inconsistent with honest practice, the interests of third parties, or with the intention of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark, such an intention must result in the application of the absolute ground for invalidity referred to in Article 52(1)(b) of Regulation  No 207/2009, whether or not there was a likelihood of confusion on the part of the public (see, to that effect, judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraphs 46, 54 and 56).

62      The scope of Article 52(1)(b) of Regulation  No 207/2009 as set out above is not invalidated by the judgment of 11 June 2009, Chocoladefabriken Lindt & Sprüngli (C‑529/07, EU:C:2009:361), cited by the appellant. It only follows from that judgment that, where it is established that use by a third party of an identical or similar sign for identical or similar goods or services existed and was capable of causing confusion at the time the application for registration of the contested mark was lodged, it is necessary to examine, in the context of the overall assessment of the relevant circumstances of the particular case, whether the applicant for the contested mark was aware of that fact (judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraph 55).

63      The intention of an applicant for a trade mark, as referred to in paragraph 61  above, is a subjective factor which must, however, be determined objectively by the competent administrative or judicial authorities. Consequently, any claim of bad faith must be the subject of an overall assessment, taking into account all the factual circumstances relevant to the particular case (judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraph 47  and the case-law cited).

64      In the present case, in paragraphs 42 to 47 of the judgment under appeal, the General Court took into account a number of circumstances in order to determine the applicant’s intention at the time of filing the application.

65      It is true that, as explained in paragraphs 53 to 55 above, the judgment under appeal is vitiated by distortion of the evidence in so far as it finds that Outsource2India ‘undertook’ to change its sign and the name of its website and ‘had itself’ said that it would change the name of its company in the event that there was no collaboration agreement.

66      Moreover, the finding in paragraph 43 of the judgment under appeal that the appellant intended to exploit the economic potential that could be mined from the name of Flatworld’s non-registered mark cannot be taken into account as it is essentially based on the premiss that the applicant applied for registration of a sign similar to Flatworld’s, whereas, as observed in paragraph 59  above, the General Court did not substantiate that assertion.

67      Nevertheless, in paragraphs 42 to 47 of the judgment under appeal, the General Court also highlighted other circumstances of the present case, in particular the attempt by a German entrepreneur, as from November 2006, to collaborate with Flatworld on a commercial basis in Germany, the establishment by that entrepreneur, for that purpose and without prior consent from Flatworld, of a company governed by German law named ‘Outsource2India’, which includes the element ‘outsource2india’ used by Flatworld, the use by Outsource2India of that element in the name of its website, and the reluctance and subsequent objections expressed between February and May 2007 by Flatworld regarding that situation, which it did not intend to continue unless a collaboration agreement was reached. Those factual findings of the General Court have not been challenged in the present appeal.

68      The General Court was properly entitled to conclude, solely on the basis of those duly established objective circumstances, that Outsource2India had acted in bad faith in so far as it had filed an application for an EU trade mark in relation to a sign which contained the reproduction of the element that was already used by Flatworld in its commercial activity, even though, in the period immediately preceding that application, from November 2006 to May 2007, Outsource2India had systematically presented its use of that element as being linked to its proposed collaboration with Flatworld.

69      Moreover, and contrary to the claims of the appellant and EUIPO, the General Court was right to find and did not contradict itself in finding, in paragraph 47 of the judgment under appeal, that the potentially descriptive nature of the element ‘outsource2india’ did not prevent it from concluding that Outsource2India had acted in bad faith by seeking, in the circumstances described in the previous paragraph, to exploit that element on the coat-tails of Flatworld.

70      It is important to note in that regard that the General Court did not find that Flatworld had an exclusive right to use the element ‘outsource2india’ and did not rule out the possibility that that element, with figurative elements, may, in some circumstances, be registered as an EU trade mark on the application of a competitor of Flatworld. By the judgment under appeal, it merely found that Outsource2India, a company governed by German law created with the objective of cooperating with Flatworld, acted in bad faith by requesting, shortly after Flatworld refused such cooperation, registration of an EU trade mark specifically containing that element, used by Flatworld in its commercial activities.

71      Finally, in so far as the appellant and EUIPO argue that the General Court should have further clarified and substantiated why it referred to the sign, reproduced in paragraph 14  above and used by Flatworld before 25 June 2007, as a ‘non-registered mark’, it must be pointed out that it is clear from paragraphs 20 and 35 of the judgment under appeal that, by using those words, the General Court was not alluding to a particular type of mark under German law or under another legal system; rather, it was merely indicating, first, that, at the time the application for registration of the contested mark was filed, the sign used by Flatworld was not a registered mark, with the consequence that the ‘first-to-file’ principle did not preclude the registration of the contested mark and, secondly, that the contested mark may have fallen within the scope of the absolute ground for invalidity referred to in Article 52(1)(b) of Regulation  No 207/2009. In that last regard, the General Court stated that, irrespective of whether or not Flatworld had an earlier trade mark right in the sign it used, the contested trade mark would have to be declared invalid if it became apparent that Outsource2India acted in bad faith by applying for registration of the contested mark.

72      Those findings are not vitiated by any error of law and there was no need to provide further reasoning. In that regard, it is sufficient to state that the absolute ground for invalidity referred to in Article 52(1)(b) of Regulation  No 207/2009 is fundamentally different from the relative ground for invalidity referred to in Article 53(1)(a) of that regulation, since the latter provision presupposes the existence of an earlier trade mark referred to in Article 8(2) of that regulation as well as the existence of a likelihood of confusion, within the meaning of Article 8(1)(b) of that regulation, unless that earlier mark has a reputation within the meaning of Article 8(5) of Regulation No 207/2009 or unless Article 8(1)(a) thereof applies. However, in the case of an application for a declaration of invalidity based on Article 52(1)(b) of that regulation, there is no requirement whatsoever that the applicant for that declaration be the proprietor of an earlier mark for identical or similar goods or services (judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraph 53).

73      It follows from all the foregoing considerations that the single ground of appeal must be rejected and, consequently, the appeal must be dismissed in its entirety.
 Costs

74      Under Article 137 of the Rules of Procedure of the Court of Justice, applicable to the procedure on appeal pursuant to Article 184(1) of those rules, a decision as to costs is to be given in the judgment or order which closes the proceedings. Pursuant to  Article 138(1) of the Rules of Procedure, which is also applicable to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.

75      Since Flatworld has requested that Outsource Professional Services be ordered to pay the costs and the latter has been unsuccessful, Outsource Professional Services must be ordered to bear its own costs and to pay those incurred by Flatworld in relation to the appeal proceedings.

76      Since EUIPO has been unsuccessful, but Flatworld did not request that it be ordered to pay the costs that Flatworld incurred in relation to the appeal proceedings, EUIPO must be ordered to bear its own costs in relation to these proceedings.
On those grounds, the Court (Tenth Chamber) hereby:
1.      Dismisses the appeal;

2.      Orders Outsource Professional Services Ltd to bear its own costs and to pay those incurred by Flatworld Solutions Pvt Ltd in relation to the appeal proceedings;

3.      Orders the European Union Intellectual Property Office (EUIPO) to bear its own costs in relation to the appeal proceedings.

Juhász

Ilešič

Lycourgos

Delivered in open court in Luxembourg on 13 November 2019.

A. Calot Escobar
 
E. Juhász

Registrar
 
Acting as President of the Tenth Chamber

*      Language of the case: English.