The German Federal Patent Court (BPatG) recently gave an interesting ruling on the requirements of a trade mark cancellation for bad faith. The court took particular care in analysing the particularities of a lease contract between the parties involved and the rights in the property's name arising for each party from that contract.

The applicant is the lessor of a property in Berlin called LIQUIDROM and used for a swimming and recreation center. The respondent used to be the managing director of the lessee company that operated the recreation center. When both the lessor and the lessee filed for insolvency, they terminated the lease agreement. One year later, the respondent, as managing director of a newly founded company, participated in the procurement process for a new lease of the LIQUIDROM. As soon as it became clear that his company would not obtain the lease, the respondent filed the German word mark LIQUIDROM.

The applicant sought cancellation of the trade mark for invalidity, arguing bad faith. The applicant argued that the respondent filed the trade mark LIQUIDROM with the foremost aim to disturb the applicant's own rightful use. The respondent argued that it has acquired own rights in the name LIQUIDROM.  

The court upheld the decision of the PTO, confirming the cancellation of the trade mark based on bad faith. The court concluded that under the circumstances, it was proven to the court's satisfaction that the respondent had filed the trade mark LIQUIDROM in the knowledge of the applicant's own rightful use and with the intention of disturbing that use. The court weighed the interests of both parties carefully, finding that the respondent had not obtained any rights in the name LIQUIDROM which could have excluded bad faith. In particular, the court held that the applicant as lessor, and not the respondent as lessee, had acquired trade name rights in the name LIQUIDROM during the term of the lease contract and could assert these rights under German unfair competition law. The property had been identified in the lease contract as LIQUIDROM and the lessee had been entitled to use the property with all its facilities under that name. The court referred to German case-law under which name rights in a property leased together with its facilities and equipment arise for the lessor, not for the lessee. The court contrasted this with the case where bare rooms are rented by a commercial entity for the operation of its business. In that case, it is the tenant which acquires the rights in the name of the commercial operation conducted in those rooms.

An interesting, well-reasoned decision analysing and applying the criteria for a bad faith cancellation as developed under German and EU case-law, particularly in the ECJ's "Goldhase" decision (ECJ, decision C‑529/07 of 11 June 2009, Chocoladefabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH)

Case Reference: 30 W (pat) 32/12 of 17 April 2014.

The decision - in German - is available here.