Supreme Court clarifies licensee rights to infringement claims

The Supreme Court of Estonia has clarified what rights a trademark licensee has in relation to trademark infringement claims (Case 3-2-1-44-07, May 30 2007).

The decision stems from a trademark infringement claim filed by Stol-I Ltd against Liviko Ltd. Stol-I claimed that:

• it had an exclusive licence to use the trademark STOLICHNAYA in Estonia;

• the trademark owner (currently Spirits International NV) had agreed to refrain from using the trademark in Estonia in both Latin and Cyrillic character forms (ie, STOLICHNAYA and СТОЛИЧНАЯ respectively); and
  

• as a result of the licence, no third party was allowed to use the mark STOLICHNAYA, СТОЛИЧНАЯ or PEALINNA VIIN (the translation of СТОЛИЧНАЯ into Estonian, meaning 'capital') without Stol-I's consent.

Stol-I sought Ekr16.48 million in damages against Liviko.

Liviko counterclaimed that Stol-I did not have the right to file an infringement claim. Article 36(1)(2) of the Trademark Act provides that the holder of a trademark (not the licensee) whose rights are violated may file a civil action. The licensee may file an action only if the proprietor of a trademark refuses to file an action, unless the licence agreement provides otherwise.

The County Court of Harju and the Circuit Court of Tallinn both found that Stol-I had not filed any evidence that the mark owner had refused to file an infringement action. Accordingly, the courts dismissed Stol-I's infringement claim.

On further appeal, the Supreme Court cancelled the Tallinn court's decision on the grounds that it had erred in its interpretation of the Trademark Act. The Supreme Court held that the Trademark Act does not specify which rights holder is entitled to file a claim under Article 36 - that is, whether it is the rights holder at the time of an infringement or the rights holder at the time the claim is filed. According to Article 59(1)(3) of the General Principles of the Civil Code Act valid until July 1 2002 and Article 6(1) and (2) of the current General Principles of the Civil Code Act, civil rights and obligations transfer from one person to another (legal succession) in the case of a trademark transfer. The Supreme Court concluded that only the trademark owner entered into the Trademark Register at the time of filing a claim has the right of make a claim of trademark infringement. Therefore, the plaintiff should prove that the owner at the time of claiming had refused to file the claim, not the owner at the time of infringement as the Circuit Court of Tallinn had found.

The Supreme Court remitted the case to the County Court of Harju to decide whether in the case at hand the owner at the time of filing the claim was aware of the infringement and if it was, whether the owner refused to file a claim within the meaning of Article 36(2) of the Trademark Act.

Mari Toomsoo, Käosaar & Co, Tallinn