It is common for trademarks to be filed by individuals acting on behalf of a company in the process of creation.
The founder of the company is then the regular owner of the trademark until the company in question takes over the filing. Therefore, the founder may initiate proceedings, in the meantime, in case of trademark infringement.
But what happens if the company that was supposed to be created and, therefore, become the owner of the trademark, is never formed?
The French Supreme Court expressed its view in a decision dated October 14, 2020. Ms. T, who had registered the trademark “Dousè Péyi” in the name of the company in the process of being created Dousè Péyi, filed a lawsuit against the company Sérénade des saveurs (Cass. Comm. 14 Oct. 2020, No. 18-23-965 T.c/ Sté Sérénade des saveurs).
The dispute concerned the filing of the trademark “Doucè Péyi”, almost identical to the earlier trademark.
Following this application, Ms. T sued Sérénade des saveurs for trademark infringement and unfair competition. The applicant raised a motion to dismiss the action, based on the lack of interest of the founder of the company to act in defence of a trademark registered on behalf of a company which was not yet created (see Article 31 of the French Code of Civil Procedure).
The company Sérénade des Saveurs claimed that Ms. T did not personally own the trademark. According to the defendant, since the company had never been created, Mrs. T should have recorded the change of ownership of the trademark at the INPI.
The first judges declared Ms. T’s action for infringement inadmissible for lack of interest in acting. The Court of Appeal confirmed this decision and stated that Ms. T “cannot claim ownership of this trademark in a personal capacity without having [recorded the change of ownership] on the National Trademark Register before initiating any action reserved to the owner of the trademark”. Otherwise, the change is unenforceable and any action in defence of the mark is therefore inadmissible.
Ms. T appealed to the Supreme Court and, rightly so, since the Commercial Chamber of the Court of Cassation ruled that the Court of Appeal had violated Article L210-6, paragraph 2, of the French Commercial Code, which establishes a system of taking over acts performed on behalf of a company in the process of creation: “every person who acted on behalf of a company in the process of creation before it acquired legal personality shall be held jointly and indefinitely liable for the acts thus performed, unless the company, after having been duly formed and registered, takes over the commitments entered into. Such commitments are then deemed to have been entered into from the outset by the company”.
The Supreme Court overturned the appeal decision and affirmed that in the absence of legal personality, the founder of the company, who registered the trademark, is the owner of the trademark and therefore Ms. T could rightly file a trademark infringement suit.
This solution guarantees the legal security of project leaders. The creation of a company can, in fact, take time. During this time, several acts must be accomplished and the law acknowledges their retroactive effect.
Filing a trademark in the name of a company in the process of creation is an interesting practice to enhance the value of the trademark assets and protect them against third parties that may file a similar or identical trademark while the company is not yet formed.
However, case law in this area is not consistent and requires to be attentive to details when filing a trademark.
In order for the company to automatically become the owner of the trademark at the time of its registration, a statement of the acts performed on behalf of the company while it being created should be made, which will be annexed to the articles of association, and should mention the filing of the trademark, indicating that the company takes over the legal act of filing on its behalf.
Dreyfus can assist you with the management of your trademarks portfolios in all countries around the world. Please feel free to contact us.