The Swiss Federal Supreme Court, in a decision of 23 February 2012, has given welcome guidance on the requirements of proof in a trademark matter where one party claimed the other party's lack of any intention to use its registered trademarks in Switzerland and so the nullity of the marks in question.
Yello Strom GmbH, a major German energy distribution company (Yello), held several Swiss and international trademark registrations designating Switzerland, all containing the element "YELLO". Applications were filed in 1994, 1999 and 2002 claiming protection for a very wide range of goods and services. In May 2005, Sunrise Communication AG, a Swiss provider of telecommunication services (Sunrise), launched a telecommunication service under the name "Yallo" and in this regard registered several trademarks containing the element "YALLO". In response to Yello's demand for cancellation of the YALLO trademarks due to conflict with its YELLO marks, Sunrise invoked Yello's non-use and lack of any intention to use the YELLOtrademarks in Switzerland.
According to Swiss trademark law, in common with other jurisdictions, the holder of a trademark loses the right to assert its rights in the trademark if it has not used the trademark in connection with the goods or services claimed for an uninterrupted period of five years (art. 12 para 1 Swiss Federal Trademark Act, FTA). Pursuant to Swiss case law, based on the doctrine preventing abuse of legal rights, trademark protection cannot be claimed at all if the trademark has been registered without any intention of use but rather with the intention to prevent a corresponding trademark registration by third parties, to enlarge the scope of protection of actually used trademarks or to extract financial or other benefits from a former user. A lack of intention to use a trademark leads to its nullity. The owner of the defensive mark cannot invoke the five year grace period under art. 12 FTA.
In the case at hand, the non-use of the YELLO trademarks was undisputed, other than in relation to the use of one particular trademark by Yello's licensee, a music band named "Yello", where Sunrise failed to convince the Court of its argument of non-use. For the rest, Yello opposed the previous instance's presumption of a lack of intention to use its trademarks and challenged the allocation of the burden of proof made by the previous instance. As the burden of proof of the existence of an alleged fact lies with the person that derives rights from that fact (art. 8 Swiss Civil Code), the Federal Supreme Court noted that the party invoking the nullity of an allegedly defensive trademark (here Sunrise) bears the burden of proof. Nevertheless, the Court held that it has to be taken into account that the lack of an intention to use is a negative fact and also an internal fact and so can hardly be proven by the challenging party. Therefore, within the parties' general duty to cooperate, the party not bearing the burden of proof (here Yello) may be required to substantiate or at least to explain why its trademark registration is part of a fair trademark strategy, notwithstanding the alleged inconsistencies or prima facie evidence for a lack of intention produced by the other party. If the court considers such explanation to be implausible, abstract evidence of a typical defensive constellation will suffice to establish the lack of intention to use a trademark.
According to the Federal Supreme Court, in the present case Yello had failed to substantiate any intention to use the trademarks and could not demonstrate the existence of a fair trademark strategy. Instead, the Court considered the argumentation of Sunrise to be sufficient to establish a typical defensive constellation, amongst others, due to proof of the following points:
- Yello pursued trademark registration activities to the broadest extent possible (as regards content and geographical spread, even in countries where it was prevented by law from exercising its core business activity) to prevent third parties from using trademarks containing the term "Yello";
- Yello extended the scope of protection for its trademarks to goods and services not compatible with the marketing of its actual business activities;
- Certain YELLO trademarks were registered after the date of rejection of the draft Swiss Federal Electricity Market Act in 2002, so at a time when there was no longer any perspective of Yello ever operating in its core business area in Switzerland;
- The fresh international trademark registration in 2008, without any change to the goods and services to be protected and no added protection being gained through the change to a capital "Y", indicated Yello's intention was only to anticipate an impending revocation of its trademarks for non-use.
The Court also stated that the use of trademarks in Germany did not allow any conclusions to be drawn regarding an intention to use in Switzerland. However, cessation of use in Germany for certain goods and services did back-up the presumption of a lack of intention to use in Switzerland.
With its decision, the Federal Supreme Court has clarified the requirement for establishing lack of intention to use a trademark and so the hurdles to be jumped in order to successfully claim nullity of a defensive trademark registration.
An intention to use the mark for the protected goods and services in Switzerland remains key. While an overly wide description of goods and services will not of itself lead to a finding of full or partial nullity of the trademark, it will certainly be a factor that supports such a finding. Faced with a claim of this sort, the trademark holder must show more than a general intention to expand and diversify its business into new territories and product areas.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.