Protection of IP rights as 'possessions' confirmed

The European Court of Human Rights has partly reversed its earlier decision in the fight between US beer giant Anheuser-Busch Inc (AB) and Czech brewer Budĕjovický Budvar, národní podnik (BB) on the use of the name Budweiser in Portugal.

AB brought the claim before the court after losing its case before the Portuguese Supreme Court. This court had ruled in 2001 that BB had the right to use the brand name under the treaty on the protection of appellations of origin that was signed between the then Czechoslovakia and Portugal in 1986.

AB based its claim on Article 34 of the European Convention on Human Rights, alleging a violation of its right to the peaceful enjoyment of its possessions as a result of being deprived of the right to use its BUDWEISER trademark.

AB claimed priority for its BUDWEISER mark under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), alleging that it filed an application to register the mark with the Portuguese Institute for Industrial Property in 1981. The Portuguese Supreme Court held that the TRIPs agreement did not come into force before January 1 1996 and could therefore not affect the right to the appellation of origin based on the 1986 treaty. Further, the court ruled that AB had not presented any factual information that proved its good faith when applying for the mark, as requested under the TRIPs Agreement.

The European Court of Human Rights confirmed that IP rights are 'possessions' within the meaning of Article 1 of Protocol 1 of the European Convention on Human Rights and Fundamental Freedoms, a position the court first took in SmithKline v the Netherlands with respect to a patent (Case 12633/87, October 4 1990).

Article 1 of the protocol, the judges said, has "an autonomous meaning which is not limited to ownership of physical goods and is independent from the formal classification in domestic law", and this includes IP rights such as trademarks.

The court held that although Article 1 of Protocol 1 extends to intellectual property, in the case at hand, AB's legal position was not sufficiently strong to warrant protection under the provision.

The court reasoned that while AB had filed an application to register its mark, it could not be sure of becoming the holder of the registration until the registration procedure was completed. Objections could be raised by any third party affected by the application and therefore there was a long way to go until the mark was registered. The conditional right recognized at the filing stage of the application was not strong enough to warrant the kind of protection that AB claimed. Accordingly, AB did not have a 'possession' to enjoy under the terms of Article 1 of Protocol 1 - only the hope to acquire such a 'possession'. Therefore, the Portuguese courts had not infringed Article 1 of Protocol 1 (see BUDWEISER Case rejected by Human Rights Court).

However, the Grand Chamber has now held that BB's application is a possession under the convention, because (i) the application for a well-known trademark such as BUDWEISER cannot be said to have no financial value, and (ii) it is possible that under Portuguese law the applicant could obtain compensation for illegal or fraudulent use of a mark for which the application was pending.

This, the court said, gave rise to "interests of a proprietary nature" that justified treatment of the application as a possession. It was, the court continued, irrelevant for the qualification as a possession that an application could be rejected and that the preliminary value of the application could thereby be revoked later.

Consequently, the judges did not deal with the question of whether, given that BB had filed a complaint against the 1981 application, AB still had a legitimate expectation to be granted registration of the trademark.

However, the court still denied AB's claim, finding there was no sign for arbitrariness or manifest unreasonableness in the Portuguese Supreme Court decision. AB had claimed that the manner in which the Portuguese court had interpreted and applied domestic law in the proceedings infringed its rights. But the Grand Chamber reiterated its settled case law that according to Article 19 of the convention its function is not to take the place of the national court and apply the national law itself, but to ensure that the decision of those courts are not arbitrary or manifestly unreasonable.

The court had touched on the question of protection of applications for the registration of IP rights under Article 1 Protocol 1 of the convention in the case of British American Tobacco v the Netherlands (Case 19589/92, November 20 1995), however, it had left the question open after denying British American Tobacco's claim on other grounds.

Julia Meuser, Freshfields Bruckhaus Deringer, Hamburg