Protection of a reputable brand

FACTS

The plaintiffs called “ZSOLNAY”, descendants of Mr. ZSOLNAY, founder of the famous Hungarian porcelain brand “ZSOLNAY”, are holders of the European word mark

ZSOLNAY

registered in classes 17, 18, 20, 25 and 45, but the mark is not used by them in their commercial activity.

The defendant, a commercial company, uses the same mark on clothing as well as on the Internet in connection with its clothing collections. An intervener named ZSOLNAY ceramic factory, intervened for the defendant. The intervening company is the manufacturer of the famous Zsolnay porcelain (tableware, porcelain figurines, etc.) and owner of several “ZSOLNAY” trademarks protected in class 21 and a few other classes but not in class 25. The defendant and the intervening party have agreed that the defendant may use the trademark “ZSOLNAY” for clothing, in exchange for a license fee. The plaintiffs were aware of the defendant’s activity.

The plaintiffs sued the defendant for trademark infringement. The defendant filed a counterclaim. They considered that the applicant was in bad faith when he applied for the European mark.

The Metropolitan Court, as the European court of first instance, dismissed the infringement claim. On the other hand, the counterclaim was successful. The court said that the mark was famous and that the plaintiffs filed their EU trade mark application in bad faith, because they knew that the intervener’s mark was reputable, and they filed the same mark without the permission of the speaker.

The Metropolitan Court of Appeal, as the European Trademark Court of second instance, approved the Court’s judgment. The court added that the intervening party’s well-known trademark “ZSOLNAY” had been in use since the 19th century. The plaintiffs’ bad faith has also been proven, as they were aware of the use of the “ZSOLNAY” trademark by the market participant, the latter having challenged the plaintiffs’ claim; the plaintiffs’ behavior was unfair.

The plaintiffs filed a petition for review with the Supreme Court, but it was denied. The court referred to standard case law, which does not allow revision of the statement of facts, namely the way in which the lower courts rendered a judgment on them. With regard to the counterclaim, the lower courts had to judge whether the European application for the famous trademark “ZSOLNAY” had been filed in bad faith by the plaintiffs. Accordingly, the EU trade mark cited by the applicant was invalidated.

The lower courts were right in stating that the mark “ZSOLNAY” was famous, it had been used for a hundred years and had even obtained the title “hungaricum(a value worthy of distinction, which is the supreme achievement of Hungarians with its characteristics, uniqueness, peculiarity and quality).

With respect to products, the court pointed out that a well-known mark confers protection even on products which are not registered in the trademark register. This is also true in the present situation, where the intervener’s mark was not registered, so that the courts below had to consider whether the plaintiffs knew or should have known that the mark had been owned by the 3rd company, and that they were unfair to have filed the same mark. On this issue, the opinion of the court below is persuasive and the court agreed with their conclusion.

In this regard, the court stated that the plaintiffs were aware of the goods for which the intervener’s famous mark is registered (Pfv.IV.20.602/2019).

PS I express my thanks to the law firm Bérczes, representing the defendant, who provided me with a copy of the judgment of the Supreme Court. Studying it gave me a much better understanding of the case.

COMMENTS

1. European material and trademark law is eclectic. It contains elements of German, French, British rules, etc. This is even more true for procedural law: competence is divided between European and national competences.

The case reported above is an example. Namely, the General Court of the European Union has jurisdiction for proceedings, with the exception of infringement proceedings for which the plaintiff’s national courts have jurisdiction. To be more precise: each Member State has one or more European Trademark Courts. In Hungary, these are the Metropolitan Court, as the European Trademark Court of first instance, and the Metropolitan Court of Appeal as the Trademark Court of second instance.

The same applies to trademark counterclaim proceedings, for which the infringement action court is competent. Such a rule on counterclaim was unknown in the old German (Austrian, Hungarian, etc.) trademark laws.

2. It is noteworthy that the claim was rejected: the applicant’s European trade mark was cancelled.

The counterclaim can be a dangerous weapon in the hands of the defendant. In the reported case, the counterclaims of the defendant were successful, because the intervention of the owner of the well-known mark was the subject of evidence. When filing the application, the applicant probably did not think that the trademark owner would intervene. But at least after the judgment of the Tribunal, they should have realized that they had no chance.

3. The protection of a well-known trademark even if it is not registered was previously unknown in Hungarian trademark law, it was only introduced by harmonization with European trademark law. In this regard, the EU Trademark Directive provides in Art. 5(2) only goods and services which are not similar to those for which the mark is registered, where the mark enjoys a reputation in the Member State and where use of the sign without due cause takes unfair advantage , affect the distinctive character or reputation of the mark.

The “ZSOLNAY” brand fulfills these conditions: in Budapest, the roof of the famous Matthias Church (where once kings were crowned) and the Museum of Fine Arts were covered with ZSOLNAY ceramics. Moreover, the fact that the name “ZSOLNAY” is registered in the list of Hungaricums, serves as proof that class 25, in which this mark is not registered for the intervener, deserves the protection of the mark.

1. Bad faith activities have been prohibited for 2000 years. The rule on mala fides in Roman law existed long before trademark law was interpreted by French jurists.

However, the reference to the plaintiffs’ bad faith in the case reported above is only the icing on the cake. I believe that even without this reference the judgments would have been convincing. The mere counterclaim, based on the objective circumstance of the reputation of the trade mark ‘ZSOLNAY’, would have been sufficient.

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