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Trademark Rights & Business Identifiers





September 22, 2009

Sponsoring Committee: Trade Names Subcommittee of the Enforcement Committee


Resolution

WHEREAS, INTA endorsed the World Intellectual Property Organization’s 1998 Joint Recommendation on the Protection of Well-Known Marks, which inter alia addressed conflicts between well-known marks and business identifiers and which defined business identifiers as any sign used to identify a business of a natural person, a legal person, an organization or an association;

WHEREAS, in establishing laws related to business identifiers, certain jurisdictions create a right separate and apart from trade names for shop signs, commercial designations, and/or website names, even if identical to a trade name, trademark, or well-known trademark, and even for identical or related goods;

WHEREAS, certain jurisdictions provide that a trademark holder can take action against a business identifier only after the trademark is registered, regardless of an earlier filing date, no matter whether the trademark is in use, is advertised extensively, or is arguably already well-known as a result, thereby creating a loophole allowing for the infringement of a trademark in the interim period between filing and registration;

WHEREAS, given the extensive trademark office delays in many jurisdictions, the filing-to- registration period results in trademark holders being subject to infringement and/or dilution of their mark, the possibility of consumers being confused, and the opportunity for a subsequent business identifier to be used to block or extort payments from the valid trademark holder;

WHEREAS, many jurisdictions allow for the registration of a business identifier identical to a trademark merely by tacking on generic, non-distinctive elements such as “incorporated” “limited” “services” “technology” thus enabling counterfeiters to hijack a trademark and use the name to convince the public and/or relevant authorities that they are a valid branch or overseas office of the legitimate trademark rights owner, a process referred to as creating “shadow companies,” which are of particular concern in and between certain jurisdictions;

WHEREAS, certain jurisdictions accord continuing rights to business identifiers even if there has been no valid or subsisting use and the company has been out of business for an extended period of time and there is no option for removal for non-use; and

WHEREAS, registries in several jurisdictions are powerless to change, modify, amend and/or cancel an infringing and/or diluting business identifier despite a court order to do so;

BE IT RESOLVED, that the International Trademark Association supports the adoption of laws to reduce conflicts between trademarks and business identifiers based on the following principles:

  • The relevant test as to whether a business identifier has been used in a manner that subjects the user to a claim for violation of a pre-existing right in a trademark or business identifier should be whether a business identifier is being used to identify or to designate a business, business activity, vocation and/or to otherwise distinguish the user's goods and/or services from those of another, including use for shop names, website names, labeling or packaging goods, business stationery, and/or advertising of goods and services.
  • To the extent that a trademark has been registered or to the extent that a trademark or business identifier has been put to use, the owner of such trademark or business identifier should be deemed to own enforceable prior rights at least to the extent against a later-adopted business identifier if:
    1. before adoption of the later-adopted business identifier, the prior trademark has been registered and/or,
    2. the prior trademark and/or prior business identifier has been put to use in such a manner that it has established a reputation and come to represent goodwill of its owner such that it functions as an indicator of source of the trademark owner and/or,
    3. there is bad faith in the use and/or registration of the later-adopted business identifier (for example, and without limitation, for purposes of frustrating trademark law principles or otherwise preventing the exercise of a valid trademark right).
  • Severe penalties should be imposed for the intentional infringement of a trademark by the holder of a business identifier, particularly for activities that support, enable, or encourage counterfeiting activities.
  • Notwithstanding any other law or regulation, trade name and other business identifier registrars should be empowered and required to comply with court orders requiring the removal, modification, and/or amendment of an infringing and/or diluting business identifier,
BE IT FURTHER RESOLVED, that the Trade Names Subcommittee of the Enforcement Committee, in consultation with the Legislation & Regulation Committee, will draft model provisions based on the foregoing principles which may apply to the relevant laws of individual jurisdictions.


 Model Trade Name Law Guidelines

 Guide to Understanding the Model Trade Name Law


Background

For more than 15 years several attempts have been made to address the issue of conflicts between trademarks and the newly coined concept of “business identifiers.” This concept, which is broader than “trade names,” was defined in the World Intellectual Property Organization’s 1998 Joint Recommendation on Provisions Concerning the Protection of Well-Known Marks as “any sign used to identify a business of a natural person, a legal person, an organization or an association.” INTA passed a resolution in support of the Joint Recommendation.

In 2006 INTA intervened in the landmark case Céline SARL v Céline SA, Case C-17/06, in which the Cour d'Appel de Nancy referred to the European Court of Justice (ECJ) the following question:

Must Article 5(1) of Directive 89/104/EEC be interpreted as meaning that the adoption, by a third party without authorisation, of a registered word mark, as a company name, business name or style in connection with the marketing of identical goods, amounts to use of that mark in the course of trade, which the proprietor is entitled to stop by reason of his exclusive rights?

INTA recommended that the ECJ answer the question in the affirmative, because use as a company or trading name may constitute use in the course of trade and thus is capable of being an infringing use within the meaning of Article 5(1) of the Trademark Directive.

In light of the ECJ’s decision that the adoption of a shop sign is to designate a business and is not necessarily use if not affixed to the goods and services it sells, as well as other issues identified via survey and by members of the Trade Names Subcommittee, many jurisdictions do not have adequate laws to address conflicts between trademarks and business identifiers. The key issues pertain to: (1) business identifier carve outs; (2) registration and use of business identifiers identical to trademarks for purposes of supporting counterfeiting, piracy, and/or for which there is no valid or legitimate use; and (3) business identifier registries that have no jurisdiction and are not empowered with the ability to change or cancel an infringing trade name, even in the face of a valid court order.

Business Identifier Carve Outs
Certain jurisdictions create a separate right for certain business identifiers, e.g., shop signs, commercial designations, and/or website names that are distinct from a trade name or trademark. In so doing, a shop sign, for example, can be identical to a trade name, trademark, or even famous trademark, even for identical or related goods. However, the test should not be what type of trade is in issue, but whether the name used as a business identifier is one which is capable of distinguishing its goods and/or services from those of another, and whether there is a likelihood of confusion, association and/or dilution.

In addition, certain jurisdictions provide that a trademark holder can take action against a business identifier only once the trademark has registered, regardless of an earlier filing date, even if the mark is in use and advertised extensively, and even if the mark is arguably already famous as a result. This requirement creates a loophole that allows the infringement of a mark in the interim period between filing and registration, which in some jurisdictions can be years. In other words, if a trademark were to be filed, and then put to extensive use in the marketplace on goods and in advertising such that the mark establishes a reputation and goodwill, because it is not yet registered in the trademark office but simply pending, a 3rd party can register the identical name as a trade name and commence use (even for identical goods/services) with impunity until such time that the prior user and senior applicant obtains a registration. However, by that time, the damage has already been done to the senior mark, and the junior user has been able to commercially trade off the goodwill at the expense of the senior. Thus, given the extensive trademark office delays in many jurisdictions, trademark holders are forced to tolerate the dilution of their famous mark or the infringement by a business identifier despite the fact that consumers are likely to be confused. Furthermore, this is in contradiction to the fundamental principle of trademark law where a subsequent filer or user should not trump the rights of the more senior trademark applicant. Of course, though, the analysis of the case in terms of whether there is an infringement and/or dilution in a given matter would be under the local jurisdiction’s laws and regulations, the difference being that the senior trademark applicant would not be precluded from bringing an action if the mark has been put to use, though not yet registered in the trademark office.

Business Identifiers with No Valid or Subsisting Use
Granted, there is recognition that a valid business identifier in use and subsisting prior to a given trademark may have valid rights that should not be subsumed.

On the other hand, many jurisdictions allow for the registration of a business identifier identical to a trademark merely by tacking on generic, non-distinctive elements such as “incorporated” “limited” “services” “technology”. As a result, counterfeiters are able to hijack a trademark, tack on a non-distinct element, and use the name to convince the public and/or the authorities that they are a valid branch or overseas office of the legitimate trademark owner. Some of these activities are serious and involve the names of financial institutions, manufacturers, and service providers. This phenomenon has become known as ‘shadow companies’ and is of particular concern in certain jurisdictions in Asia. For example, a shadow company is created in one jurisdiction, and then used to license the manufacture of counterfeit product in another.

Similarly, if there is no valid intent to use a business identifier, the holder should not be able to block or extort payment from the trademark owner. To that end, certain jurisdictions have enacted legislation (e.g., the UK) or are looking to enact legislation (e.g., Hong Kong) to address this issue.

Lastly, some jurisdictions accord rights to business identifiers or interpret them as impacting the rights of a valid and subsisting trademark, even if there has been no use and the company has been out of business for an extended period of time. However, similar to trademark abandonment of 3-5 years, a business identifier should not be granted a perpetual right if there is no use and no business entity behind it.

Empowerment of the Trade Name and other Business Identifier Registries
In several jurisdictions, registries are powerless to change and/or cancel an infringing trade name and other business identifiers despite a court order to do so. In light of the shadow company issue, this is a significant problem as it allows names to continue to have rights to trade because under the local law, their business identifier is still registered. Additionally, registries can also be encouraged to find ways to address these issues.

Conclusion
In light of the foregoing issues, the Trade Names Subcommittee of the Enforcement Committee requests that the INTA Board adopt the above resolution in order to protect trademark owners from loopholes that allow for the infringement and/or dilution of their marks by holders of business identifiers.