DURACELL distributor has the power to enforce trademark rights

Hungary

The Supreme Court has upheld a preliminary injunction granted by the Metropolitan Court in a case involving the parallel importation of DURACELL batteries into Hungary (Pf.IV.26748/2002). The court confirmed that, pursuant to the Trademark Act 1997, a trademark holder can assign its trademark enforcement rights - thereby allowing the assignee to enforce those rights on its own behalf - without having to transfer the actual trademark.

The plaintiff, the exclusive distributor of DURACELL batteries in Hungary, became aware of the unauthorized parallel importation of DURACELL batteries by the defendants and launched a trademark infringement action. The plaintiff certified its right to bring the action by submitting a statement in which the trademark holder authorized the plaintiff "to take all necessary action to prevent any unauthorized use of the trademark and enforce its exclusive rights against any third party".

At the plaintiff's request, the Metropolitan Court granted a preliminary injunction in order to prevent the sale of the parallel-imported goods in Hungary and ordered: (i) the seizure of the goods, and (ii) that the defendants cease infringement.

The defendants appealed against the order. They argued, among other things, that:

  • the requirements for granting a preliminary injunction had not been met;

  • the plaintiff had no right to initiate a lawsuit for trademark infringement because the plaintiff is neither the holder nor a registered user of the trademark, as required by the Trademark Act; and

  • the Metropolitan Court failed to require the plaintiff to provide security as a precondition to granting the preliminary injunction.

The Supreme Court rejected most of the defendants' arguments and held that all of the requirements for granting a preliminary injunction had been met. It stated that the seizure of the goods was the only way to prevent them from being sold in Hungary. It also found that the plaintiff had successfully proven its right to sue on the basis of the statement from the trademark holder. The Supreme Court noted that the Trademark Act permits the transfer of trademark enforcement rights and that the trademark holder's statement constituted a valid civil law assignment of these rights, allowing the plaintiff to sue on its own behalf.

However, the Supreme Court agreed with the defendants that the plaintiff must provide security as a precondition to granting the preliminary injunction and altered the Metropolitan Court's order in this respect.

The decision confirms a Supreme Court ruling published in 2001 but contrasts with the viewpoint of a number of critics, who have suggested that trademark enforcement rights may not be separately assigned. In their opinion, an attempted assignment should only have the effect of authorizing the intended assignee to enforce rights on behalf of the trademark holder and not on its own behalf. It should be noted that Hungarian civil procedure law does not allow the enforcement of third-party rights before the courts. Nevertheless, the DURACELL ruling demonstrates that the Supreme Court's interpretation of the Trademark Act and Hungarian Civil Code, set out in the 2001 decision, has become settled case law.

Péter Sipos, Martonyi és Kajtár Baker & McKenzie, Budapest

Unlock unlimited access to all WTR content