GHI – Can a mark be cancelled for non-use if the non-use was the result of opposition proceedings?

Gemstones...

Gemstones…

Sections 39 of the Israel Trademark Ordinance allows trademarks to be opposed for various grounds. Section 41 of the Israel Trademark Ordinance legislates that trademarks may be cancelled due to lack of use. This decision relates to the issue of whether a mark that is not in use allegedly due to an ongoing opposition to its registration can be cancelled as a result of the lack of use

Gemology Headquarters International LLC registered Israel trademarks 187385 and 187386 for the letters GHI in December 2007. The marks cover gemological services such as identification, authentication and ranking of diamonds, precious stones and for providing certification of precious metals, diamonds, gemstones and pearls in classes 42 and 16.

Under Section 41 of the Trademark Regulations, in December 2011 the Gemology Institute of America Inc. filed cancellation proceedings alleging that the marks weren’t in use.

The cancellation proceeding was filed whilst the same parties were fighting an ongoing opposition proceeding against the marks under Section 39 that claimed unfair competition and that that marks were not-registerable. That proceeding was combined with another opposition relating to stylized trademark numbers 200701 and 200702 for GHI. Those oppositions were eventually rejected and the marks were considered registerable. However, before the ruling, the Opposer filed to cancel the marks on grounds of lack of use, arguing that they could not initiate cancellation proceedings earlier as the minimum period of three years of lack of use hadn’t occurred when the mark was opposition proceedings was filed.

Evidence for and against the alleged lack of use included statements by the management of the two companies and also an affidavit by a private detective.

Section 41 states:

[a] Without prejudice to the generality of the provision of sections 38 to 40, application for the cancellation of the Registration of a trade markregarding some or all of the goods or classes of goods in respect of which a trade mark is registered (hereinafter – goods regarding which the cancellation is requested) may be made by any person interested on the ground that there was no bona fide intention to use the trade mark in connection with the goods for which it is registered in connection with the goods regarding which there is a request to cancel the registration and that there has in fact been no bona fide use of the trade mark in connection with those goods in connection with the goods regarding which there is a request to cancel the registration, or that there had not been any such use during the three years preceding the application for cancellation. 

[b] The provisions of subsection (a) shall not apply where it is proved that the non-use is due to special circumstances in the trade and not to any intention not to use, or to abandon, the mark in respect of the said goods. 

[c] For the purpose of this section, there shall be deemed not to have been bona fide use of the trade mark in the event of any of the following: (1) use of the trade mark in Israel in advertising only whether in the local press or in foreign newspapers reaching Israel unless there are special circumstances which in the opinion of the Court or the Register justify the non-use of the mark on goods manufactured or sold in Israel. (2) cancellation of an authorisation to use the mark given to a manufacturer in Israel under section 50 unless the authorisation is cancelled following an infringement of conditions or because the person who gave the authorisation intends himself to manufacture the goods for which the mark is to be used or to grant the authorisation to another manufacturer in Israel. 

[d] Application for cancellation may be made in the prescribed manner either to the Supreme Court or, at the option of the applicant, may be made in the first instance to the Registrar. 

[e] The Registrar may at any stage of the proceedings refer the application to the Supreme Court, or he may, after hearing the parties, determine the question between them subject to appeal to the Supreme Court.

[f] in this section, “use” of a trade mark shall include [1] use of a registered trade mark by its proprietor or by an authorized person under section 50 in a manner that differs from that noted on the register in such a way as not to change the distinct character of the mark as it is registered; [2] use by an authorized person under section 50 on condition that such use is subject to the control of the proprietor of the mark.

 The Mark holder first tried to get the proceedings dismissed on grounds that cancellation due to lack of use can only be initiated by an “interested party” and that the Opposer does not fall into this category. The Commissioner of Patents and Trademarks ruled against throwing the request out and decided that the issue would be judged on its merits. Then, based on a close reading of Section 41a and 41b and the case law, the Commissioner ruled that a mark not in use should be cancelled unless extraordinary justification for lack of use is given, and that such extraordinary justification should be more than simply the business considerations of the parties concerned. Accepting such an extraordinary justification was the prerogative of the commissioner who did not feel that it was warranted in this case.

Legal Arguments for not throwing the case out due to lack of standing

In an Appeal to the Supreme Court from 1971, (67/71 “Pharmo LTD vs. the Commissioner of Patents and Trademarks P.D. 28(1) 802, 8/6/71, Judge Vitcon addressed the issue of interested parties by contrasting with the term “injured party” as it appears in Section 38. The Israel Law does not relate to injured parties, but to ‘interested parties” and even the more limited term “injured parties” has been interpreted broadly in the English rulings, such that one can generally assume that parties requesting cancellation of a mark have standing. Even if one disputes the general applicability of Pharmo, in 144/85 Klil vs. Commissioner of Patents and Trademarks PD 42 (1) 309 a similar conclusion was reached, i.e. that interested parties are not just aggrieved parties.

In the present case, the requester for cancellation is anyway an aggrieved party, in that he opposed registration on grounds of unfair competition. Consequently, even if one holds that the term interested party should be considered narrowly, the requester for cancellation fulfils the requirements and has standing. Even though the Requester for cancellation is at a disadvantage having lost the opposition, he nevertheless has standing which is considered in Klil to be a basic constitutional right and has the right to request cancellation. Thus, even if not considered an injured party, he may be considered an interested party, and the change of terminology indicates that the two groups are different and the interested party is wider than an injured party.

Anyway, in Appeal 2209/08 Gigiesse Confezioni S.P.A. vs. Amphom, it was stated that Section 41 is to prevent defensive registrations and to keep the maintain the integrity of the register. Where the claim is lack of use, this is precisely what Section 41 is for. Furthermore, the Commissioner should take into account public interest and clearly the Requester for cancellation has at least the standing of disinterested parties. In this regard, even were the request to be filed and then dropped, the Commissioner would have a duty to examine the evidence and to consider canceling the mark due to lack of use.

 

Legal arguments on the merits for not considering this instance as an exception justifying lack of use.

From Bagatz 302/84 Nicholas it is clear that 41a states that lack of actual use is a basis for cancellation and under certain circumstances 41b allows intent to use to be considered as a defense against cancellation. In other words, the first thing to be considered is whether there is use, and if not, the mark should be considered voidable unless a good reason for lack of actual use is brought, in which case the mark may be maintained at the Commissioner’s discretion.

In this instance there is consensus that the mark was not in use, and the question is simply whether the Commissioner is persuaded that the lack of use is justified in the circumstances.

Citing 95/54 Chanel vs. Commissioner, the term extenuating circumstances is understood to be something general and not company specific.

Nicholas and Mig both give guidelines for extenuating circumstances.

GHI claim an intent to use the mark as their world wide branding apart from in US where EGL is used. GHI further claim actual use in India and the fact that they are fighting for the TM in China, Canada, Israel and Hong Kong is, itself proof of intent to use. That as may be, apart from in India, GHI have postponed launching the mark.

Without wishing to nail the lid down, the Commissioner was not convinced that legal battles constitutes proof of intent to use. The investment in a laboratory is not considered evidence of proof to use the mark, only of investment to provide services, which could be provided under a different mark. In addition to not using the GHI mark, there is a further mark GIH, also not in use. When this was opposed, the mark owner did not show actual use.

Whatever the reason, the mark owner has not actually used the mark and the Supreme Court has already ruled that not using the mark for defensive reasons is not sufficient to maintain the registration.

The mark owner is entitled to weigh up the pros and cons of using a challenged mark, but if he decides not to use it, he cannot then object to cancellation due to lack of use. There are insufficient grounds to justify an exception under 41b and the Commissioner therefore declined to use his prerogative to maintain the mark under 41b.

The commissioner considered the case to be analogous to Amphom and, like Judge Danziger, held that the mark was void through lack of use.

Cancellation Ruling re GHI, Asa Kling 2 February 2015

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