Cryptocurrency exchange platform Coinbase wins trade mark bad faith battle before EU General Court

In a recent judgment, the General Court upheld the Court of Justice of the European Union (CJEU’s) reasoning in Chocoladefabriken Lindt & Sprüngli (C‑529/07) EU:C:2009:361 and held that, when an applicant is acting in bad faith, all the relevant factors specific to the particular case at the time of filing the EU trade mark must be taken into consideration (and not merely the scope of appeal as limited years later). The judgment adds to and further clarifies the broad implications in so far as bad faith is concerned.

If you are into cryptocurrencies, you will most likely be familiar with the cryptocurrency exchange platform “Coinbase”, originally founded in the US in 2012. Coinbase essentially enables users to buy, sell, and store various cryptocurrencies, including Bitcoin and Ethereum.

In 2019, Coinbase filed an application for a declaration of invalidity against the earlier mark “coinbase”, held by the Japanese cryptocurrency exchange platform bitFlyer Inc. Coinbase claimed that the earlier mark had been filed in bad faith, pursuant to Article 59(1)(b) of Regulation 2017/1001 (the EUTMR). It argued that bitFlyer knew or should have known about its intensive prior use of the “coinbase” mark in the US and EU.

The EUIPO Cancellation declared the contested mark invalid on the basis of identical and similar goods and services, creating a likelihood of confusion on the part of the relevant public. It rejected the bad faith claim in relation to the dissimilar goods and services, since Coinbase Inc had not submitted sufficient evidence proving that bitFlyer had acted dishonestly during the time of filing the contested trade mark.

The decision was appealed to the EUIPO Fourth Board of Appeal (the Board), which dismissed the appeal. In particular, the Board considered that the scope of the appeal was limited to the question of whether bitFlyer Inc had acted in bad faith at the time of filing the mark for the dissimilar goods and services. The Board therefore concluded that there was nothing to indicate that the dissimilar goods and services under appeal had been designated dishonestly to block legitimate trade mark use by a competitor.

Coinbase Inc subsequently appealed to the General Court.

With reference to the CJEU’s judgment in Lindt, the General Court confirmed that bad faith requires a multi-factorial assessment. Consideration is inter alia given to the origin of the contested sign, use since its creation, commercial logic underlying the filing of the application for trade mark registration, and chronology of events leading up to the filing.

According to the General Court, since the Board’s assessment of bad faith only concerned dissimilar goods and services, the Board’s decision was vitiated by an error of assessment, in that it had not considered all the relevant factors specific to the case which pertained at the time of filing the contested mark. The similar goods and services formed part of the products and services at the time of bitFlyer’s filing of the contested mark and should have therefore also been considered by the Board.

In conclusion, the General Court upheld Coinbase’s appeal and annulled the Board’s decision.

The judgment is another piece in the increasingly crowded puzzle that the bad faith absolute ground for invalidity has become (see IPKat here, here, and here). Once again, the establishment of bad faith requires consideration of multiple factors, which depend on the circumstances at issue. Because of this very ‘fluidity’, the relevance of bad faith is likely to continue to grow in the foreseeable future. The genie is clearly out of the bottle and has been for a while!