The decision of the Federal Patent Court (case no. 29 W (pat) 14/21) of 15 January 2025 deals with the issue of bad faith trademark applications in connection with the trademark ‘Testa Rossa’. A particular focus is on the relationship between bad faith and the so-called functionally invalid application.

The court dismissed the appeal against the decision of the DPMA, which had rejected the cancellation request. It came to the conclusion that a trade mark application in bad faith could not be established with the necessary certainty.

The appellant argued that the German case law on trade mark applications in bad faith was not in line with the current case law of the ECJ, since, in the appellant’s view, a trade mark application in bad faith could also be assumed in the case of an application contrary to the function of the trade mark, where it was not a question of harmful effects in relation to third parties, but the necessary subjective element already lay in the intention of use contrary to the function of the trade mark.

The Federal Patent Court rejected this view. It emphasised that the groups of cases established in German case law (such as speculative trade mark, interference with a vested right worthy of protection, etc.) are not exhaustive and that further circumstances are taken into account as part of the final overall assessment.

The court clarified that for bad faith to be assumed, there must be an abuse of rights or immoral behaviour, which also requires a subjective element, namely an intention to obstruct or another unfair motive.

It is therefore not sufficient for the application to be ‘contrary to its function’, i.e. not intended to fulfil the actual function of a trade mark (indication of origin). It must also be the case that the applicant is pursuing unfair aims with the application, such as hindering competitors.

The court argued that even if one were to rely on an ‘application contrary to function’ independent of an intention to hinder, this would not lead to the assumption of a trade mark application in bad faith in the present case, as the use of the trade mark planned by the respondent by way of licensing was not to be regarded as contrary to function.

It referred to the fact that the trade mark is used in accordance with its main function, namely the function of origin, even if it is licensed.

Key points of the decision:

• The Federal Patent Court requires an unfair motive or an intention to obstruct in order to assume bad faith.
• An ‘application contrary to function’ alone is not sufficient to establish bad faith.
• The planned licensing of the trade mark does not constitute ‘use contrary to its function’.
• The court emphasises that the exploitation of the reputation of an earlier sign is not sufficient for the assumption of bad faith without special circumstances.
• Further circumstances justifying bad faith are required to justify the judgement of bad faith in the trade mark application and to qualitatively distinguish this absolute ground for refusal from merely relative grounds for refusal.

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