Liability of licensor discussed by appellate court

Argentina

The Court of Appeals has held the licensor of a trademark liable for damage caused by a defective product manufactured by a former licensee (Case 26073/2003, May 18 2007).

The case arose when an individual named Bárbara Iuele de Pinotti sustained a severe eye injury caused when two pressurized carbonated water containers manufactured by Soda Profesional SA broke. The bottles had been manufactured and sold under the mark IVESS used under licence from Instituto Verificador de Elaboración de Soda en Sifones (Instituto Verificador), an organization formed by manufacturers of carbonated water with the purpose of enhancing and updating carbonated water manufacturing plants. Members whose products abide by the technical guidelines issued by Instituto Verificador are able to use the brand IVESS under licence. De Pinotti sued Soda Profesional in its capacity as manufacturer of the product and Instituto Verificador as the owner of the mark affixed to the containers.

The court held that Section 40 of the Consumer Protection Law 24.240 states that if damage to consumers arises from a defective product or as a result of the rendering of a service, the producer, manufacturer, importer, distributor, supplier or whoever has placed its trademark on the product or associated it with the service shall be held liable. This section clearly attributes strict and joint liability to the owner of the trademark. The mark may be exempted from liability only by proving that the cause of the damage was completely outside of its control. Section 40 also establishes that liability arising from the use of the mark is not ancillary to the liability of the producer or manufacturer, but is concurrent.

By enabling its members to use the mark IVESS on their products, Instituto Verificador was itself liable for the damage caused since it guarantees the quality and hygiene of the products manufactured by its members, who are entitled to use the mark under licence.

Thus, the court concluded that, to consumers, the fact that the product is sold under the mark IVESS is of relevance because it is viewed as a sign of quality. Furthermore, many consumers may assume that IVESS is the mark used for the water itself as opposed to a mark indicating a certain level of quality.

The court concluded that Instituto Verificador was liable despite the fact that Soda Profesional had ceased to be a member of its group and, therefore, no longer had the right to use the mark IVESS. The court reasoned that Instituto Verificador had failed to duly publicize that Soda Profesional was no longer a member.

Fernando Noetinger, Noetinger & Armando, Buenos Aires

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