Superior Court of Justice: HARRODS mark belongs to Harrods

On December 5 2013 the Brazilian Superior Court of Justice (STJ) issued an important decision in a case brought by Harrods Buenos Aires Ltd against Harrods Limited and the Brazilian Patent and Trademark Office (INPI), concerning the ownership of the famous trademark HARRODS in Brazil and the application of Articles 6bis (1) and 8 of the Paris Convention for the Protection of Industrial Property.

In 1913 Harrods founded Harrods Buenos Aires in an attempt to expand its activities to South America, granting Harrods Buenos Aires the right to exploit and register the trademark HARRODS in said territory. In 1963, however, the corporate relationship between the companies deteriorated and Harrods sold its shares in Harrods Buenos Aires to a third party.

Considering that, when selling its shares, Harrods had not expressly revoked Harrods Buenos Aires’ rights regarding the registration and exploitation of the HARRODS mark in South America, and that the registrations for that mark filed in Brazil up to that date had been cancelled due to lack of use, in 1985 Harrods Buenos Aires filed new applications for HARRODS with the INPI.

When Harrods became aware of these new applications, it started proceedings before the INPI to cancel them, claiming that it had sole right to register the HARRODS mark in Brazil, and filed new applications for the mark itself. As a result of this proceeding, the INPI recognised that Harrods had exclusive rights in connection with the well-known mark HARRODS; it thus cancelled Harrods Buenos Aires' new registrations and granted Harrods’ applications.

Following this decision, Harrods Buenos Aires filed a lawsuit against Harrods and the INPI, seeking the reinstatement of its trademark registrations and the cancellation of Harrods’ trademarks. Harrods Buenos Aires’ claim was based on the fact that the Brazilian trademark system works on a first-to-file basis, so trademark rights arise only from the filing of the application. In the present case, the application had been filed by Harrods Buenos Aires first, so it had ownership of the trademark HARRODS in Brazil.

When analysing the case, the Superior Court of Justice pointed out that, when Harrods decided to sell its shares in Harrods Buenos Aires to a third party (instead of dissolving the company) without expressly stating that Harrods Buenos Aires should refrain from using or registering the trademark HARRODS in South America, Harrods had profited from such transaction and had been negligent in relation to the future use of the trademark HARRODS in the territory in question, so it could not now claim that it had priority rights in that mark in Brazil.

However, in order to decide the case, the court took into consideration the main function of a trademark, which is to identify the source of specific goods or services in the market place, as well as to protect consumers. Within this context, the court clarified that, if the registration and use of the trademark HARRODS in Brazil by anyone other than Harrods was allowed, consumers would be confused as to the source of the goods bearing that mark, especially considering the previous relationship between Harrods Buenos Aires and Harrods.

Therefore, the Superior Court of Justice decided that the trademark HARRODS in Brazil belonged to Harrods, and rejected Harrods Buenos Aires’s claim. In particular, the court held that, even though Harrods had not previously protected its HARRODS mark in Brazil, that mark enjoyed special protection, regardless of whether it was registered in Brazil, pursuant to Article 126 of the Brazilian IP Law and Article 6bis (1) of the Paris Convention, given that it is a well-known trademark in its branch of activity.

In addition, considering that the term 'Harrods' has been part of Harrods’ company name since 1849, that name deserved protection in Brazil according to Article 8 of the Paris Convention and, therefore, could not be registered by any other parties as a trademark based on Article 124, V of the Brazilian IP Law. Further, the provisions of Article 124, XXIII of the IP Law prevented Harrods Buenos Aires from registering the trademark HARRODS in Brazil given that, in view of its activities and previous relationship with Harrods, Harrods Buenos Aires was well aware of the use of that mark to designate identical or similar goods in other countries with which Brazil has an agreement.

In conclusion, the Superior Court of Justice disregarded the previous relationship between Harrods Buenos Aires and Harrods to ensure that, through the application of national and international provisions, the function of the trademark HARRODS in Brazil would be protected and that consumers would not be misled as to the source of goods bearing the mark.

Fernando Eid Philipp and Carolina Lanza Brewer Pereira Freire, Gusmão & Labrunie, Sao Paulo