28 Mar Coinbase vs bitFlyer – crypto exchanges battle over the coinbase trademark in EU
The General Court reminds EUIPO that, when assessing bad faith, it must consider all the factual circumstances specific to the case that pertained at the time of filing the contested mark
The General Court of the European Union did not agree with the European Union Intellectual Property Office (EUIPO) [which does not happen every day] in its recent judgment of 22 March 2023 in Coinbase v EUIPO – bitFlyer (coinbase), T‑366/21, ECLI:EU:T:2023:156. Instead, it sided with Coinbase, Inc., a US company that operates one of the biggest cryptocurrency exchange platforms – Coinbase, founded in 2012 with the idea that anyone, anywhere, should be able to send and receive the cryptocurrency Bitcoin easily and securely.
Background of the case
On 3 February 2016, Japanese company bitFlyer Inc., which operates the cryptocurrency exchange bitFlyer [No. 1 in Bitcoin trade volume in Japan since 2017], obtained from the WIPO the International Registration (IR) No. 1308248 for the word mark “coinbase” in relation to goods and services under Classes 9, 35, 36, 38, and 42.
On 29 June 2018, Coinbase, Inc. filed with EUIPO a request for a declaration of invalidity against the “coinbase” mark in its entirety. The grounds for invalidity relied on were those referred to in i) Article 60(1)(a) of EUTM Regulation 2017/1001, in relation to Article 8(1)(b) [likelihood of confusion], on the basis of, inter alia, earlier IR-EU 1216587 COINBASE (word), in Classes 9, 36 and 42, and ii) Article 59(1)(b) [bad faith]. To support its bad faith claim, Coinbase, Inc. argued, in essence, that bitFlyer Inc. knew or should have known about its intensive prior use of the COINBASE mark in the USA and EU for a software allowing the trade with the cryptocurrency Bitcoin.
EUIPO’s Cancellation Division declared invalid the contested mark regarding the identical and similar goods and services on the grounds of likelihood of confusion on the part of the public. It rejected the invalidity request in respect of the dissimilar goods and services. In particular, it considered that Coinbase, Inc. had not submitted concrete and persuasive evidence that bitFlyer Inc. acted dishonestly when it filed the contested mark.
Coinbase Inc. filed an appeal. In the statement of grounds of appeal, it limited the scope of the appeal to the goods and services for which the invalidity request had been rejected.
EUIPO’s Fourth Board of Appeal dismissed the appeal. It noted that the scope of appeal was limited to whether or not there had been bad faith with regard to bitFlyer Inc. having filed the mark for the dissimilar goods and services. It found that there was nothing on the file to conclude that regarding the dissimilar goods and services under appeal, bitFlyer Inc. had dishonest intentions and dishonestly attempted to block a legitimate trademark use by a competitor, such as Coinbase, Inc.
Coinbase Inc. appealed before the General Court.
The General Court’s findings
The General Court recalled that the CJEU case-law stated that in order to determine whether an applicant is acting in bad faith, all the relevant factors specific to the particular case which pertained at the time of filing the EU trademark must be taken into consideration (judgment of 11 June 2009, Chocoladefabriken Lindt & Sprüngli, C‑529/07, EU:C:2009:361, paragraph 53) [§34].
It added that account may also be taken of the origin of the contested sign and its use since its creation, the commercial logic underlying the filing of the application for registration of that sign as an EU trademark, and the chronology of events leading up to that filing (judgment of 16 December 2020, Pareto Trading v EUIPO – Bikor and Bikor Professional Color Cosmetics Małgorzata Wedekind (BIKOR EGYPTIAN EARTH), T‑438/18, EU:T:2020:630, paragraph 21) [§35].
It asked itself whether EUIPO’s Board of Appeal had correctly taken into consideration all the relevant factors specific to the case which pertained at the time of filing the contested mark [§36].
It answered in the negative because the Board of Appeal’s assessment of bad faith concerned only the dissimilar goods and services [§39&40].
Even if the appeal before the Board of Appeal was limited to the dissimilar products and services, in order to take into consideration all the relevant factors specific to the case when assessing bad faith, in accordance with the case-law, the Board of Appeal should have taken into consideration the similar products and services. They formed part of the products and services applied for by bitFlyer Inc. at the time of filing the contested mark. Therefore, the assessment of bad faith by the Board of Appeal should have also covered the similar goods and services and the evidence relating to them [§38].
By not including the similar products and services in its assessment of bad faith, the Board of Appeal did not properly take into consideration, in the overall assessment of bad faith, all the relevant factors specific to the case which pertained at the time of filing the contested mark, as required by the case-law. An error, therefore, vitiated its assessment [§51-53].
Consequently, the General Court upheld Coinbase, Inc.’s appeal [application] and annulled the Board of Appeal’s decision. But the matter is not over. It will now be for the Board of Appeal to rule again on the invalidity request in line with the commented judgment.
Comment
We agree with the General Court’s findings. It is apparent from the case law that, when assessing bad faith, EUIPO (or national courts) must take into consideration all the relevant factual circumstances as they appeared at the time that the contested mark was filed; that point in time is decisive (Chocoladefabriken Lindt & Sprüngli, §35). What should be decisive is not the scope of the appeal (which appears logical, given the partial cancellation) as limited years later, but the contested mark’s owner’s intention with all the goods and services and that the invalidity applicant sought to invalidate the contested mark in its entirety.
This case reminds us of the Stylo & Koton case (judgment of the CJEU of 12 September 2019, C-104/18, Stylo & Koton, EU:C:2019:724, quoted by the Board of Appeal in its decision, by the way), in which both EUIPO and the General Court held that there was no bad faith for the dissimilar services. In Stylo & Koton, the CJEU set aside the General Court’s judgment and annulled EUIPO’s Board of Appeal’s decision. It held, in essence, that the fact remains that the appellant has applied for the contested mark to be declared invalid in its entirety and that that application for a declaration of invalidity should therefore be examined by assessing the intervener’s intention at the time that he sought, for various goods and services, including textile products, registration of an EU trade mark containing the word and figurative element already used by the appellant for textile products [§61]. After that, EUIPO’s Board of Appeal held that there was bad faith for all the contested services even in the absence of a likelihood of confusion.
Author: Emil Edissonov, Lawyer
Photo by Jonathan Borba on Unsplash.com