Spanish telecoms giant prevails against local company before Corporate Registry

Article 29 of the Costa Rican Trademark Law (Law No 7978) provides that legal entities may not establish themselves or register their name in a public registry if their business name or company name includes a registered trademark that may cause confusion, unless the trademark owner consents to it. Costa Rican entity Movistar SA is currently prevented from performing any type of corporate management after Spanish entity Telefonica SAA prevailed in an administrative action against Movistar.

Decision RPJ-0014-2014 of the Costa Rican Corporate Registry requested the administrative custody of Movistar due to the abuse, in its trade name, of IP rights owned by Telefonica. This is a somewhat common procedure in Costa Rica in light of the large number of companies that include a registered trademark owned by a third party in their name. In the past, the Corporate Registry did not make cross checks of registered trademarks, but it is now a mandatory requirement when allowing the incorporation of new companies, in order to prevent IP rights violations.

In this particular case, Telefonica argued that the Costa Rican entity sought to trade off the goodwill and reputation of the well-known mark MOVISTAR, which is a top brand for mobile phone services in Spain, Portugal and Latin America. The Trademark Law sets forth that a trade name cannot include a previously registered mark, even if the corporation is not engaged in the same line of business as the trademark owner. The Corporate Registry declared an administrative disablement against Movistar due to the infringement of Telefonica's trademark and due to the fact that the Costa Rican entity had the same business scope as the international company.

Right holders should make sure that their trademarks are not included in a previously registered company name in order to ensure that their IP rights are protected and enforced, and to maintain the brand’s goodwill and reputation.

María del Pilar López and Esteban Monge, Zürcher Lawyers, San Jose