Yes. Under Article 261 of the Industrial Property Code, if the holder of a previous brand consciously tolerates the use of a later brand for five consecutive years, they lose the right to react against that use, either through opposition or through a request for annulment of the later registration.
There is, however, an important exception: if the registration of the later brand was made in bad faith, the holder of the previous brand can always act, regardless of the time elapsed. This safeguard aims to prevent abuses and unfair practices in the market.
But after all, what is bad faith registration?
European jurisprudence, particularly from the CJEU, has been consolidating a set of objective and subjective criteria to assess bad faith, namely:
- The knowledge (or duty of knowledge) that the sign was already used by someone else.
- The applicant’s dishonest intention at the time of the registration request.
- The lack of serious intention to use, or the use with the aim of blocking competitors or deceiving the consumer.
- The degree of legal protection of the previous sign and the commercial logic of the registration.
The applicant’s good faith is presumed, but it can be reversed if the injured party presents sufficient evidence of abusive behaviour. In this case, there is a kind of reversal of the burden of proof, and it is up to the holder of the later brand to justify its registration and, consequently, to demonstrate the legitimacy of their conduct.
Therefore, tolerating the use of a similar brand without acting can, in fact, result in the loss of rights.