Court of Appeal upholds trademark infringement claim against former distributor

The Iranian Court of Appeal has upheld Kintoy Die-Casting Manufactory Ltd's claim of trademark infringement against a former distributor (Court File No 9109980226300692; notice of cancellation: June 3 2014).

The plaintiff, a Hong-Kong based company, is the owner of the trademark KINSMART for diecast scale model cars. It sells its products through distributors in different countries, including Iran.

Kintoy had neglected to register the KINSMART mark in Iran. Its local distributor, Adak Tejarat Ghadir Company, registered the mark in its name during the term of the distribution relationship without informing Kintoy.

Due to some problems between the parties, Kintoy terminated the distribution agreement and appointed a new distributor, unaware that the KINSMART mark had been registered by its previous distributor.

In retaliation to the termination of the distribution agreement, Adak brought a criminal action against the new distributor and seized KINSMART-branded goods on the ground of infringement of its registration for KINSMART.

In response, Kintoy initiated trademark cancellation proceedings against Adak, alleging:

• bad faith on Adak's part;
• trademark infringement; and
• that it owned a prior registration for the trademark KINSMART in its home country, as well as other countries.

Kintoy argued that Adak was merely a distributor and was not entitled to register the trademark in Iran. It further claimed that the former distributor was fully aware that the trademark belonged to Kintoy; therefore, Adak had registered the trademark in bad faith.

Adak argued during the proceedings that the trademark had been registered lawfully and in accordance with the local provisions. Consequently, there were no grounds for the cancellation of the trademark.

The Court of First Instance ruled that the trademark should be cancelled, finding that the application had been made in bad faith by the former distributor. The court further held that the registration constituted an act of unfair competition.

The distributor appealed the Court of First Instance’s judgment, claiming that it had the benefit of a prior filing date in Iran and had used the trademark for some years in the local market.

The Court of Appeal dismissed the appeal and upheld the Court of First Instance's judgment.

Mohammad Badamchi, HAMI Legal Services, Tehran