Unfair competition, case V CSK 237/06

June 22nd, 2007, Tomasz Rychlicki

Hortex Holding SA Company (Hortex) filed a suit against Hortino, seeking (i) a preliminary injunction to prohibit Hortino labelling its products with its trade mark, (ii) an order that Hortino publish an apology in the press, and (iii) the return of unjustified and undeserved profits gained through the trade mark infringement.

The legal dispute between Hortex and Hortino spanned two different jurisdictions. Trade mark invalidation suits are based on the administrative procedure and this case was reported in my post entitled “Trade mark law, case II GSK 63/05“.

While the administrative procedure was running its course, Hortex commenced civil proceedings against Hortino. Its petition included a claim for trade mark infringement under articles 19 and 20 of the old Polish Trade Mark Act – TMA – (in Polish: Ustawa o znakach towarowych) of 31 January 1985, Journal of Laws (Dziennik Ustaw) No 5, item 15, with later amendments, repealed on 22 August 2001 by the Act of 30 June 2000 on Industrial Property Law – IPL – (in Polish: ustawa Prawo własności przemysłowej) of 30 June 2000, published in Journal of Laws (Dziennik Ustaw) of 2001 No 49, item 508, consolidated text of 13 June 2003, Journal of Laws (Dziennik Ustaw) No 119, item 1117, with later amendments, and breach of article 10 of the Polish Act of 16 April 1993 on Combating Unfair Competition – CUC – (in Polish: ustawa o zwalczaniu nieuczciwej konkurencji), Journal of Laws (Dziennik Ustaw) No. 47, item 211, with later amendments.

Article 10
(1) Such indication of products or services or its lack, which may mislead customers in relation to the origin, quantity, quality, components, manufacturing process, usefulness, possible application, repair, maintenance and another significant features of products or services as well as concealing the risks connected with their use, shall be the act of unfair competition.
(2) Releasing for free circulation products in the packing which may cause effects referred to in section 1 above shall be the act of unfair competition, unless the use of such packing is justified by technical reasons

Hortex asked the court to issue a preliminary injunction against Hortino and to order Hortino to publish a specified apology in the press. Hortex also asked the court to order the reimbursement of unfounded and undeserved profits gained by means of its trade mark infringement. The Court of the First Instance acknowledged the first two claims in its judgment but did not issue any order regarding the monetary award because, in its opinion, Hortex had not proved sufficiently that any of Hortino’s profits had been obtained through the use of its similar trade mark. Both parties appealed.

The appellate court varied the judgment in so far as it affected monetary damages and ordered Hortino to pay 304,000 zloty. The court based its calculations on a test of a fictional licence fee. Hortino then filed a cassation complaint before the Supreme Court, insisting that the judgment was decided in contravention of the CUC and the TMA, some procedural regulations, and even international treaties. The Supreme Court in its judgment of 10 August 2006, case file V CSK 237/06, dismissed the petition and upheld the contested judgment. Judge Tadeusz Zyznowski pointed that all courts, including the Supreme Administrative Court, had reached their decisions in a proper manner. Hortino’s actions were clearly made in bad faith and could lead many consumers to confusion about the origin of labelled and sold products.

The method of establishing the quantum of profits gained by the trade mark infringer is based on the Court of Second Instance’s findings. That court ruled that the measure should be a fictional and hypothetical licence agreement’s fee that would be owed to the trade mark holder if the disputing parties were to have signed a trade mark licence agreement. In the civil proceedings, the appellate court set the fee level at 3 per cent of all profits gained by Hortino when it was selling goods bearing the disputed trade mark.

The Republic of Poland is one of many European countries that, in the course of its legal history, adopted the civil law system. From the point of view of common law lawyers, it simply means that Polish courts do not follow their opinions and judgments. There are no legally binding precedents except for the Supreme Court’s legal rulings. Nonetheless, after the Supreme Court’s final judgment in the issue described above, based on the cassation procedure, one may be sure that all inferior courts will be eager to employ the methods stipulated in this instance.