In its Information Bulletin for 2006 the Commission for Protection of Competition has announced that 85 cases were launched in 2006 with the goal to specify whether there were offences against the Chapter 7 from Law on protection of Competition (LCP). The majority of the offences referred to the counterfeit of goods and services. That means that the article 33 paragraph 1 and 2 regulating imitation was the most frequently used article in the CPC’s practice.
The concrete ground for this article is a decision N3043/26.03.2007 referring to administrative case N129/2007 of the Supreme Administrative Court (SAC), which revoked decision N257/14.11.2006 of the Commission for Protection of Competition. In this decision the CPC imposed a pecuniary sanction for infringement of Article 33 paragraph 2 in connection to Article 30 of LPC. The question is, to what extent this decision contradicts to the present practice established by the Supreme Administrative Court? Have we got a new understanding about the protection of registered trademarks? How should we understand henceforth the definition: “use in a way that can impair negatively the interest of competitors and/or the consumers”?
The factual background
“Bella Bulgaria”AD is the owner of the duly registered in the Bulgarian Patent Office (BPO) trademark “NARODEN”*. “Dil-Tur Plovdiv”AD has a non-exclusive license to use the mark for production and trade with meat products. This company produces and distributes meat products- frankfurters, veal salami, cooked sausages, and larded sausages under the trademark “NARODEN”. All these products were widely advertised in national media. Meanwhile it was established that another company- “Mesokombinat Lovech” also uses this mark in the labels of its product “sushenica”, a type of air dried salami.
The CPC explored all facts related to the case and reached the inference that “the use of well-known and already established on the market trademark is an infringement of e fair-trade practice which aims to attract customers by using others efforts, money and time necessary for strengthen mark’s position on the market. The Supreme Administrative Court accepted that in this case “Mesokombinat- Lovech”AD had used the word “naroden” only as an adjective to describe its product “sushenica”, but not at all to imitate the competitor’s product and thereafter to confuse consumers. After examining the differences in the outward appearance, the Court concluded that “the substantive differences in the outward appearance of the products stipulate the different visual perception from the consumers, which is an obstacle for identification of “Mesokombinat-Lovech”AD’s products with those of “Bella” AD.
Article 33 paragraph 2 from the LPC:
“The use of trade name, marks or distinctive symbols identical or similar to those of other person in a way that may result in impairing the interests of competitors and/or consumers, shall be prohibited”.
This article comprises of two cumulative elements: 1) the use of others trade name, mark or distinctive symbol and 2) this must be done in a way that may impair the interests of competitors and/or consumers.
In its constant practice the CPC has invariably kept to the concept that the harmful consequences and the intention for infringement from the subjective side are not obligatory elements for the implementation of Article 33 paragraph 2. The SAC has also agreed with this understanding (decision N3624/04.04.2006, adm.case 100074/2005, decision N4096/17.04.2006, adm.case N3501/2005)
Brief overview of SAC’s practice related to article 33 paragraph 2 LPC
The case N3501/2005 was initiated by the owner of “Top Biscuit” mark against its competitors using the similar name “Top Biscuit-2” for the identical goods. The court appointed an expert who made the conclusion that the design of the packing and the labels of the both products are very different and there was no obstacle to register them as an industrial design. The SAC accepted entirely the expert’s evaluation, but also accepted the position of CPC that the imposed sanction is for the unallowed use of the mark “Top biscuit” which was well established on the market shared by the both producers. In its decision the Court wrote: “The use of someone else’s mark and protected graphic image misleads costumers about the origin of the products. This usage without doubts impairs the interest of the owner of trademark. The duration of infringement and the intention for the usage as well as whether the complainant had suffered damages are of no importance for the ascertained infringement. The usage of someone else’s registered trademark in a way that may impair the interests of a competitor and/or consumers per se constitutes a breach of the law prohibition for imitation”.
In case N4854/2006 the court compared the trade names of two competitive companies- “MATPU-96”Ltd and “MATPU-2000”Ltd. It was obvious that both names were similar, so that the court made the conclusion: “ In its constant practice the CPC has accepted that the usage of competitor’s trademark constitutes always infringement of Article 33 paragraph 2 when the mark was widely famous and the goods or services offered under this name were recognizable among the consumers as highly qualitative. It is so because such a behavior creates a real risk for confusion and may lead to impairment of the interests of competitors”.
The attitude of SAC expressed in decision to case N9903/2004 is very similar. Here the court put the stress on the fact that the mere usage of another company’s trademark is not enough to apply the Article 33 paragraph 2. The usage has to be made in a way that may impair the interests of competitors and/or consumers. In this decision we can see again the inference that “the usage of a competitor’s trademark in reality is always an infringement of Article 33 paragraph 2 when the mark has gained a wide popularity and the goods or services offered under this name have a good reputation. That is so because such as act creates a real danger of confusion in the minds of consumers and may lead to impairment of the competitor’s interests”.
From the above cited court decisions one can see that the SAC has paid special attention to the marks that have become famous, therefore the court puts them in a separate category. It contains the marks that have been well established on the market, can be easily recognized by the consumers, and have good reputation. In case of an imitation of such a mark is not necessary to explore the second condition, and namely to what extent the usage of this mark can impair the interests of the competitors and/or consumers because the likelihood of confusion is de facto obvious. In its practice by now, the court has been always searching for the presence of two elements: whether the marks in question are similar and whether this similarity can lead to impairment of the competitor’s interests. The court has been underlining that the existence of harmful damages and the intention for infringement are irrelevant elements for the application of Article 33 paragraph 2. That is why the new approach applied in decision N3043/26.03.2007 leaves us surprised. In this decision the court focused not on the similarity of the marks but on the goal for the usage of the mark. “The word “naroden” had been used only with the intention to characterize the produced product and not at all to imitate the competitor’s products and hence to confuse the costumers about the origin of the products.” But on the other side, in this particular case the word “naroden” was used not only as an adjective as a part of the speech but also to determine the qualities and properties of the products. And the most important thing here is that “naroden” is a registered trademark protected under the Bulgarian and European intellectual property law. According to legal definition given in Article 9 from the Law on Marks and Geographical Indications: “Marks are signs that are capable of distinguishing the goods or services of one person from those of other persons and can be represented graphically”. The company Mesokombinat-Lovech AD wants to distinguish and characterize its product as “naroden”. Following the same logic Bella AD also aims to establish its products on the market as “narodni”[1]. In order to achieve this goal the company registered this word as a trademark relying on the Law: “the holder of a mark shall be entitled to use it and dispose of it and to prohibit other parties from unauthorized use in the course of business” (Article 13 LMGI). Bella AD had invested a considerable amount of money for advertisement, market explorations and promotions, and succeeded in establishing this mark on the meat products market. Through the advertisement the mark has become famous and the customers have admitted that the products under this mark are highly qualitative. Due to created permanent consumer demand for Bella’s products, people already make direct association between mark and product and they barely pay attention to the additional elements of the package. There is substantive likelihood that people may accept the products produced by Mesokombinat Lovech and labeled as “naroden” just as an extension of the assortment of products offered by Bella AD under the same name. And this may cause impairment of Bella’s and consumers’ interests.
This decision was confirmed by the next court instance with very similar motives. Does it mean that the owners of the registered trademark, who have invested money to make their mark recognizable, cannot rely on an effective protection of their rights?
We are waiting for any comments and opinions regarding this topic.
