A fraud is achieved when a trademark is acquired without intent to use it but only to oppose it to a competitor. The finding of a fraud is much more complicated when the aim of the trademark assignment occurs in a counterfeiting context.
No offensive fraud is made in such a situation. The defensive purpose of the trademark purchasing makes the fraud difficult to deduce. Judges have to decide whether the trademark assignment should be regarded as a reprehensible tactic to avoid a counterfeiting action or as a rightful mean to strengthen rights on a trademark that is allegedly an infringement. Needless to say that it is very difficult to draw a line between both situations. According to French case law, a trademark acquired during the proceedings is insufficient to qualify the fraud.
On March 2nd, 2006, the Paris First Degree Court declared null the assignment of the trademark CROQ™FRUIT to the defendant during the course of counterfeiting proceedings based on the mark CROC™FRUIT because of fraudulent acquisition. The assignment was the outcome of a transaction settling litigation with a third party handling trademark rights prior to than those owned by the plaintiff.
For the judges, the defendant was fully aware of the plaintiff™s use of the name CROC™FRUITS and of his trademark rights on this denomination when he started using the trademark CROQ™FRUIT. The plaintiff deliberately ran the risk to be sued in Court although he was not yet the owner of the older trademark. Thus, the acquisition of the earlier trademark relied only on a pure intent to ignore the plaintiff™s rights.
The Paris Court of Appeals had ruled on January 21, 2000, that the assignment of a prior trademark was not fraudulent when the assignee succeeded in demonstrating that (i) he was interested in using the litigious trademark before the plaintiff files its own trademark, (ii) the plaintiff was not a potential competitor of the defendant and (iii) was not using his trademark when the defendant decided to capitalize on this trademark.
Therefore, Judges punish the fact that the assignment could injure the well-attested activity of a competitor even if the trademark assigned is not opposed to this competitor. This position should be approved as it falls within the scope of the fair competition principle.