No need for local law backing to apply Paris Convention, says Supreme Court

In Stada Arzneimittel AG v Nestra Limited, the Supreme Court has, for the first time, directly applied the Paris Convention for the Protection of Industrial Property to a case without also supporting its findings with local law. It upheld an Appeal Court ruling to invalidate the defendant's trademark registration on the grounds of unfair competition but held that the lower court should have based its decision solely on the Paris Convention and should not have included references to Lithuania's Law on Competition in its reasoning.

As reported in the January 16 2003 issue of World Trademark Law Report (Lithuanian court finds Nestra guilty of 'trademark theft'), Lithuania's Appeal Court held that UK company Nestra Limited's registration of the trademark PFEIL ZAHNSCHMERTZ-TABLETTEN was invalid on the grounds of unfair competition. The Appeal Court reasoned that, in contravention of the Paris Convention and Lithuania's Law on Competition, Nestra had registered the mark with the intention of hindering German pharmaceutical company Stada Arzneimittel AG's use of it in Lithuania. Nestra appealed against the decision.

The Supreme Court has now upheld the Appeal Court's ruling and has ordered the cancellation of Nestra's registration. However, the court stated that although the lower court had come to the right conclusion, it had incorrectly based its decision on both the Paris Convention and the Law on Competition. It reasoned that Article 10bis of the Paris Convention alone was relevant because the Law on Competition (i) does not regulate registration of trademarks or provide grounds for registration or opposition, and (ii) only prohibits actual unfair use of a trademark by another party. The Supreme Court concluded that registration of a trademark is not actual use and that since Nestra had not made any use of the mark following registration it had not acted in contravention of the Competition Law. Thus, the court cancelled Nestra's mark solely on the basis of Article 10bis of the convention, which prohibits acts of competition that go against fair customs of industry.

This decision is particularly noteworthy as it is the first time that a Lithuanian court has applied an international convention directly without feeling it necessary to back up its findings with local law.

Vytautas Kalmatavicius, AAA Legal Services, Vilnius