The Court of Justice of the European Union (CJEU) is clear on this point: statute of limitations due to tolerance cannot be invoked in invalidity actions based on bad faith, even if the applicant for invalidity was aware of the existence of bad faith at the time of sending a letter threatening the owner of the contested trademark with an action for invalidity based on relative grounds, within a period coinciding with the statute of limitations for the action due to tolerance of use.
On 30 April 2024, the CJEU received two preliminary questions from Commercial Court no. 1 of Alicante, arising from proceedings between two companies in the meat industry: Sánchez Romero Carvajal Jabugo, S.A.U., (“Sánchez Romero Carvajal”) and Embutidos Monells, S.A., (“Embutidos Monells”).
In this context, Sánchez Romero Carvajal is the owner of the European Union trademarks “5J Cinco Jotas SÁNCHEZ ROMERO CARVAJAL JABUGO S.A. DESDE 1879” and “5J”, applied for in Class 29 for meat products in 1999 and 2010, registered in 2006 and 2015 respectively.
For its part, Embutidos Monells is the owner of the trademarks in Spain “5Ms” and “5P”, both registered in 2012, for products included in Class 29.
In 2016, Sánchez Romero Carvajal sent a letter to Embutidos Monells requesting, among other things, to renounce the registration of the trademarks “5Ms” and “5Ps”, indicating that an action for invalidity could be brought against those trademarks before 28 February 2017 and before 18 March 2017, respectively (dates on which the action for invalidity would be prescribed due to tolerance of use).
At the end of 2021, Sánchez Romero Carvajal brought an action before Commercial Court no. 1 of Alicante for trademark infringement based on Article 59 of Regulation 2017/1001 on the European Union trademark against Embutidos Monells, in order to obtain the invalidity of the aforementioned trademarks, on the grounds that this company had acted in bad faith when filing the application for registration of the “5Ms” and “5Ps” trademarks, as it was aware of the reputation of the “5J” trademarks owned by Sánchez Romero Carvajal. For its part, Embutidos Monells argued that the action was prescribed, since the contested trademarks had been registered in 2012, Sánchez Romero Carvajal had long tolerated their use, and the time limits indicated in the request sent by the latter for the exercise of the action for invalidity had already expired.
In these circumstances, Commercial Court no. 1 of Alicante decided to stay the proceedings and refer two preliminary questions to the CJEU on the effect of specifying the time limit for bringing an action for annulment in an application and whether that party is bound by that time limit, having given the other party the impression that no legal action would be brought once that time limit had expired.
According to the High Court of the EU, it follows from the wording of Article 9(1) of Directive 2008/95 that the limitation period laid down therein does not apply in two cases:
- When the tolerance of the proprietor of the earlier trademark has not been established or, in any event, such tolerance has not been established for a period of five consecutive years;
- When the proprietor of the later trademark has acted in bad faith when applying for registration of that trademark.
In this regard, it is particularly relevant that the national court has found that Embutidos Monells acted in bad faith when applying for the contested trademarks, as it was aware of the reputation enjoyed by Sánchez Romero Carvajal’s “5J” trademarks at the time of the application.
In view of the above, the CJEU states that bad faith constitutes a ground for absolute invalidity, so that when an action for invalidity is based on it, the proprietor of the contested trademark cannot invoke the limitation period for the action for invalidity on the grounds of tolerance, even though, at the time the letter was sent, the proprietor of the earlier trademark had all the necessary elements to consider that the application for registration had been made in bad faith.
Sara de Toledo
Attorney at Law
