Tesla and the EUIPO Halt Trade Mark “Trolling”
In a recent decision, the EUIPO Cancellation Division declared the European trade mark “TESLA,” held since 2022 by Capella Eood, invalid on the grounds of bad faith. This ruling marks a significant victory for car manufacturer Tesla in its fight against abusive trade mark practices, often referred to as “trade mark trolling.” Here, we examine the key aspects of this landmark case.
Background and Stakes of the Case
In 2022, Tesla filed for the cancellation of the trade mark “TESLA” registered with the EUIPO by Capella Eood, a company linked to an individual notorious for “trade mark trolling” practices. The cancellation request was based on Article 59(1)(b) of the EU Trade Mark Regulation (EUTMR), which allows invalidation of a trade mark filed in bad faith.
Tesla argued that Capella Eood engaged in speculative strategies to register trade marks with the aim of blocking other businesses’ operations and extorting financial settlements. Evidence presented included examples of shell companies, delays in opposition proceedings, and strategic transfers of trade mark rights.
For its part, the trade mark holder denied the accusations of bad faith, calling Tesla’s claims defamatory and asserting that the mark was inspired by independent and unrelated sources.
Criteria Analyzed by the EUIPO to Establish Bad Faith
Under Article 59(1)(b) EUTMR, bad faith is assessed based on the applicant’s intent at the time of filing, considering honest commercial practices. The EUIPO examined this intent using several key criteria, informed by cases such as Sky and Others (C-371/18) and Koton (C-104/18 P).
- Motives and Context of the Filing
The contested trade mark was filed shortly after Tesla achieved international recognition, particularly following the success of the Tesla Roadster. This timing indicated that the trade mark holder was aware of Tesla’s growing reputation. Claims that the mark was inspired by a newspaper article or a CD were deemed implausible, especially since the targeted products—vehicles and accessories—matched Tesla’s offerings.
- History of Speculative Practices
Evidence revealed that the trade mark holder had a history of systematic filings through shell companies across different jurisdictions. These trade marks were often abandoned or withdrawn, reflecting a deliberate strategy to exploit the EU trade mark system for financial gain by creating blocking positions.
- Dilatory Tactics and Lack of Genuine Use
The EUIPO identified procedural delays, such as inconsistent modifications to descriptions of goods and services, aimed at stalling opposition proceedings for nearly 15 years. The holder failed to provide any evidence of genuine commercial activity linked to the mark, reinforcing the perception of a purely obstructive strategy.
- Awareness of Tesla’s Operations
Tesla’s products were already widely covered by the media in Austria and beyond before the filing of the contested mark. This media coverage, combined with other evidence, demonstrated that the trade mark holder was aware of Tesla’s operations and sought to capitalize on its anticipated success in the European market.
- Violation of Fair Practices
The EUIPO concluded that the trade mark was filed without any genuine intent to use it and with the purpose of obstructing legitimate filings. This conduct was deemed contrary to principles of good faith and fair commercial practices.
Implications of the Decision
This decision aligns with a growing body of case law aimed at curbing trade mark trolling and safeguarding fair competition. It also reinforces principles established by the Sky and Others and Koton rulings, which define bad faith as intent contrary to honest practices at the time of filing.
For businesses, this case highlights the importance of monitoring trade mark filings that could impede their operations and acting swiftly to contest abusive registrations. It also underscores the critical role of evidence—such as filing histories and dilatory tactics—in proving bad faith.
Conclusion
The EUIPO’s decision in the TESLA case is a significant step in combating systemic abuse in the trade mark domain. It underscores that commercial practices must remain fair and honest, and that the trade mark system should not be exploited for speculative purposes. For companies like Tesla, such rulings help protect their investments and reputation in the European market. Trade mark law professionals, such as Dreyfus Law Firm, remain committed to assisting clients in addressing such challenges effectively.
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