Trade mark law, case II GSK 950/08

August 12th, 2009, Tomasz Rychlicki

On 2 September 1998, the Polish Patent Office has granted the right of protection for word-figurative trade mark SCOTCH & SODA R-100588 for the Polish company “SCOTCH & SODA” POLSKA Jadwiga i Piotr Szlegiel Spólka Jawna from Gorzów Wielkopolski for goods in class 25. On 2005, Scotch & Soda B.V. from Netherlands filed a request for invalidation of the right of protection for SCOTCH & SODA R-100588 trade mark based on article 8(i) and 8(ii) of the old Polish Trade Mark Act – TMA – (in Polish: ustawa o znakach towarowych) of 1985, published in Dziennik Ustaw (Journal of Laws) of 1985 No. 5, item 15, with later amendments:

A trade mark shall not be registrable if:
i) it is contrary to law or to the principles of social coexistence;
ii) it infringes the personal or economic rights of third parties

The request was also based on provisions of article 6septies of the Paris Convention for the Protection of Industrial Property. The S&S company argued that for over twenty years it exports clothing goods marked with the Scotch & Soda trade mark to many countries in the world through local distributors. One of them was a Polish businessman, who in 1994 became the sole importer and distributor of Scotch & Soda products in Poland. According to S&S his Polish partner has abused its trust by obtaining the trade mark protection for Scotch & Soda trade mark for himself and in this way blocking access to the Polish market for S&S. In 2002, the S&S company has signed with Piotr Szlegiel a document called “cession of rights from the registration of the mark.” However, at the date of the signature of this document, the right of protection for word-figurative trade mark SCOTCH & SODA R-100588 already belonged to “SCOTCH & SODA” POLSKA. In addition the S&S company received a financial request from the Polish entrepreneur.

“SCOTCH & SODA” POLSKA claimed that it was an equal partner, rather than the official importer and sole distributor of the S&S company’s goods and it was not bound by the agency or representative contracts. The legal predecessor of “SCOTCH & SODA” POLSKA had full autonomy inter alia, he was allowed to apply for the registration of the disputed mark on the territory of the Republic of Polish. This fact was known to S&S. Polish company has claimed that S&S failed to obtain the trade mark protection for SCOTCH & SODA sign based on the international registration under the Madrid Agreement and it did not take any action to change this situation. After the completion of courts’ proceedings the S&S company has offered “SCOTCH & SODA” POLSKA a royalty-free (free of charge) license to use the disputed trade mark for shoes throughout Europe in return for the transfer of the right of protection. These negotiations have not yielded results.

“SCOTCH & SODA” POLSKA was astonished by the fact that the S&S company “challenged” the right of protection for word-figurative trade mark SCOTCH & SODA R-100588 for the first time after it has received a cease and desist letter (a request for voluntary fulfilment of plaintiff’s demand is a prerequsite to file a complaint in a civil suit against trade mark infringer) on October 2003.

“SCOTCH & SODA” POLSKA requested the Polish Patent Office to dismiss a request for invalidation of the right of protection for SCOTCH & SODA R-100588. The Polish company called the circumstances with regard to litigation that ended in a judgment issued by the Regional Court in Zielona Gora (case act signature V GC 522/03). the Regional Court dmissed a suit brought by S&S company based on article 161 of the Polish Act of 30 June 2000 on Industrial Property Law – IPL – (in Polish: ustawa Prawo wlasnosci przemyslowej) of 30 June 2000, published in Dziennik Ustaw (Journal of Laws) of 2001 No 49, pos. 508, consolidated text on 13 June 2003, Dziennik Ustaw No 119, pos. 1117, with later amendments.

1. To the extent as follows from an international agreement, where a trademark has been applied for protection by and on behalf of, or the right of protection has been granted for, an agent or a representative of the person enjoying the exclusive right to use that trademark in another country, that person may, if the agent or representative acted without that person’s consent, demand that the protection granting proceeding be discontinued or the right of protection revoked. He may also demand that the right of protection be granted on his behalf, or the right already granted transferred to him.

2. The right may not be demanded to be revoked or transferred, where the entitled person referred to in paragraph (1) has acquiesced, for a period of five successive years, in the use of the registered trademark while being aware of such use.

However, the PPO did not agree with “SCOTCH & SODA” POLSKA arguments and it has invalidated of the right of protection for SCOTCH & SODA R-100588 trade mark in its decision of 2007. In the PPO’s assessment the legal predecessor of “SCOTCH & SODA” POLSKA has been acting in bad faith while applied for the protection rights to the disputed sign. According to the Polish case-law and doctrinal opinions that were cited by the PPO, the applicant for trade mark registration is acting in bad faith when he/she knows or should know that such action violates third parties’ rights. Acting in bad faith is also one who is relying on a right or legal relationship and knows that this right or a legal relationship does not exist, or he or she does not know, but the lack of knowledge can not be regarded as the justified circumstances. The PPO has also noted that in the legal commentaries on Polish trade mark law two competing views on bad faith are taken into account. First, bad faith occurs when a person who owns a disputed trade mark registration had to know or should know that the legal conditions to acquire this right were not met. In such case, the owner is always acting in bad faith when a mark has been registered contrary to the applicable provisions of the law or expressly recognized principle of social coexistence (see: article 8(i) of the TMA). By contrast, in the case of trade mark registration that was made despite the existence of an earlier priority right, an owner of such righ can be entitled as acting in good faith only if he or she was deceived (and it can be justified) with regard the extent of protection resulting from the trade mark right with an earlier priority. If the registration has been aquired by a person for a purpose other than to use a trade mark (for example, to force financial concessions from other entrepreneurs, to obtain control over imports, to force reaching of a license agreement) in this case, bad faith is understood as a qualified form of a breach of social coexistence rules. Such opinion was issued by R. Skubisz, Prawo znak√≥w towarowych. Komentarz (in English: Trade mark law. Commentary), Warszawa 1997, p. 224. However, in turn, dr Elzbieta Wojcieszko-Gluszko thinks that there is no reason to modify the general concept of good and bad faith for the needs of the IPL regulations. According to dr Wojcieszko-Gluszko a valuable guidance for the interpretation with regard to bad/good faith may be a reference to the legal definition of a filing made in bad faith that is provided in the Benelux Trademark Law.

The PPO also cited arguments provided in the judgment of the Supreme Administrative Court of 6 August 2002, case file II SA 3879/01 and interpretation included in the judgment of 17 July 2003, case file II SA 1165/02 that was issued on the basis of article 8(i) of the TMA and in which the Court concluded that the issue of an assessment of the contradiction of a trade mark application with rules of social coexistence does not refer to trade mark only and itself, but also takes into account the contradiction with the principles of actions made by an applicant and their intended effect. In courts’ opinion the extending interpretation of the rules of social coexistence is justified if one notices that this general clause/rule has displaced such clauses and rules as the principles of good manners, fair trading and good faith. The PPO has considered as totally unfounded all arguments that the consent for a trade mark registration belonging to a partner was justified due to a lack of prohibition in the relevant articles of association, or in other agreements concluded between the parties. The concept of an agent or a representative in this case should be interpreted according to the Polish law. Selling products on the Polish market by the involved people was in such a role. “SCOTCH & SODA” POLSKA brought a complaint to the Voivodeship Administrative Court in Warsaw, which, in a jugment of 29 May 2008, case file VI Sa/Wa 402/08 dismissed the complaint. “SCOTCH & SODA” POLSKA brought a cassation complaint to the Supreme Administrative Court in Warsaw. The cassation complaint was dismissed in judgment of 2 July 2009, case file II GSK 950/08.

The SAC emphasized the fact that for the assessment of compliance of a registration of a mark with the principles of social coexistence (as referred to in article 8(i) of the TMA) the most authoritative is the moment of filing an application for trade mark registration of in the Patent Office, which in this case took place in March 1995. It could not be left imperceptible by the Courts that even “SCOTCH & SODA” POLSKA claimed that the disputed mark was not its property at the date of filing for registration in the Patent Office (sic!). Moreover, the legal predecessor of “SCOTCH & SODA” POLSKA did not inform S&S about his registration neither got a permission for such action. If it were otherwise, what is clear, the S&S company would not file for the recognition on the territory of the Republic of Poland of the protection for its international trademark.

As a distributor of the goods of an entrepreneur located abroad who was not leading any commercial activities in its own name on the Polish territory, the legal predecessor of “SCOTCH & SODA” POLSKA probably knew, or in any circumstance must have known that the application in its own name for registration of a trademark belonging to a foreign business violates provisions of article 6 septies of the Paris Convention. But not only. “SCOTCH & SODA” POLSKA predecessor’s behavior violated the rules of social coexistence, within the meaning of article 8(1) of the TMA. His actions in fact were directed at the appropriation of trade mark property rights owned by the S&S company, without obtaining any consent, in order to achieve unjustified benefits. Such behavior clearly violates the principles of social coexistence as it was decided by the Polish Patent Office and the Voivodeship Administrative Court in Warsaw.