Trade mark law, case II SA/Wr 2928/02

July 10th, 2009, Tomasz Rychlicki

On 10 October 2002, the city council of Polanica Zdrój passed resolutution no XLIV/247/02 on permission to use the commercial name of the city. The council agreed that the trade mark application consisting of “Polanica Zdrój” words would be applied on behalf of ZUK company. The resolution also included an attachment – a model contract which was deemed as an integral part of the resolution. The format of this agreement had the same legal nature as the resolution. The agreement set out, inter alia, the terms and conditions of use of the city name as a trade mark for mineral water, the rules for ZUK company regarding the payment to Gmina, the amount of the monthly fee – set to one grosz (a hundredth part of 1 złoty) – from a bottle of water sold, but not less than 5000 PLN per month, the rules how to change the contract, the method of settling disputes.

On 5 Nover 2002, the governor of a voivodeship (a first instance body to decide on the validity of local governments legal acts) ruled the resolution invalid. The governor decided that Polanica Zdrój was not the name of local government (gmina) but a geographical designation that is widely used in the Republic of Poland and abroad. Nouns and adjectives based on that geographical name are used without any restrictions. Reducing the use of a common name and its commercialization requires a proper law – an enactment. In the current legal system, there is no such law, therefore in other cities their names are used without restrictions.

Gmina filed a complaint to the Supreme Administrative Court arguing that, while filing an application for the registration of trade mark consisting of the geographical name of Polanica Zdrój, the company ZUK has a mandatory obligation to demonstrate the right to use the name. The Governor asked the court to reject the complaint because a geographical name is not the name of local government but the name commonly used and there is no legal basis for placing restrictions on its use, and what is linked to that – to charge fees for the use of a Polanica Zdrój name and that the name of a place can not be regarded as a trademark.

The Supreme Administrative Court (oz. Wroclaw) in its judgment of 18 March 2003, case file II SA/Wr 2928/02 ruled that there is no legal basis for the municipal council to take a resolution on the commercial use of the name of the city and to establish the level of fees charged for such use. The city council has exceeded the scope of its powers by setting a draft of a contract in its resolution and stepped into the powers of the mayor which is a body entitled and empowered to manage the city, and thus being the right party to enter into such contracts.

See also posts entitled “Trade mark law, case I ACr 770/93“, “Trade mark law, case 6 II SA 1156/02“, “Trade mark law, case VI SA/Wa 1945/05“, “Trade mark law, case Sp. 127/07 and Sp. 254/07” and “Trade mark law, cases VI SA/Wa 1996/08 and VI SA/Wa 1995/08“.