Hi, and welcome back to Legal Geek. This week, we review how Hasbro and its Monopoly brand have surprisingly ended up being the center of a seminal case changing how trademark filing practice works in the European Union.
Like many other jurisdictions, the European Union allows trademark registrations on brands and logos that have not yet gone into actual use, but eventually use in commerce must be proven to confirm the validity of the trademark. Whereas in the U.S. applicants are give up to 3 years to prove use to finalize a registration, in the EU a five-year grace period is provided before proof of use is necessary. The EU is more liberal as well in that during the grace period, the trademark rights are still enforceable, unlike the U.S. where use is required before final registration or enforcement.
As a result of this set of laws, many trademark owners in the EU have commonly refiled new applications covering their brands before the expiration of the 5 years, thereby resetting the clock on the grace period and avoiding the need to prove use through evidence. However, this practice is in jeopardy after a case involving Hasbro and its famous Monopoly brand.
Hasbro followed the common practice of re-filing trademark applications for the Monopoly brand in several classes of goods and services before the end of a 5-year grace period in a pending prior registration. Hasbro's most recent re-filing came under a cancellation attack from a company called Kreativni Dogadaji, specifically for violating a rule prohibiting bad faith in trademark filings, this rule demanding honest commercial and business practices from EU applicants. While an administrative review panel originally favored Hasbro and the historical re-filing precedent or practice, an Appeal Board reversed this decision last month and sent the EU trademark world into a new reality.
To this end, the Appeal Board held that when a party seeking cancellation of a trademark uses objective factors to support a claim of bad faith, the burden of proof shifts to the trademark owner to prove its use of good faith in the filing. That can be incredibly difficult to do when the new application contains identical or substantially similar marks or goods and services covered, as was the case in the Hasbro case. Hasbro appeared to admit clearly on the record that an important reason for the re-filing was the resetting of the grace period to minimize administrative burden of maintaining the trademarks, and the Appeal Board latched heavily onto this in their decision.
So the Monopoly brand is vulnerable to more competition in Europe, which puts Hasbro in a somewhat similar spot as in the U.S., where the suffix -opoly has been deemed to be descriptive and allowed for all similar game competitors to use. More importantly, the overall filing and maintenance strategy for trademarks in the EU has changed for all brand owners, as now avoiding the proof of use requirement is very difficult. And it all stems back to a case about the tabletop game Monopoly, go figure.
It will be interesting to see how filing strategy changes for European brand owners moving forward. Further court decisions are also due which may vary the outcome from the initial ruleset put out in the Monopoly decision.
The Bottom Line is: while the Appeal Board made a drastic change in trademark law and practice in the EU with this decision by shifting the burden of proof in a bad faith/good faith analysis, the end result may be an EU trademark system more in line with how brand owners must prove use to actually obtain an enforceable registration in many other jurisdictions. Consistency is a good thing for companies doing worldwide business, so this may be a welcome change despite the increased costs that will be incurred for collecting and submitting the proof of use evidence when the grace periods have run out. One might say the EU no longer has a monopoly on enforcing non-used trademarks, but we don't want to be too on the nose.
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