Supreme Court decision shows clear tendency to favour free competition principle

Portugal

The Supreme Court has issued its decision in DentalCare - Centro de Medicina Dentária Lda v Dental Link Consultoria de Gestão Lda (Case 478/09.7TBCBR.C1.S1).

Dental Care - Centro de Medicina Dentária Lda brought an action against Dental Link Consultoria de Gestão Lda requesting the cancellation of the national trademarks DENTAL CARE WE TAKE CARE OF YOUR SMILE and DENTAL CARE, registered in 2006 and 2007 for services in Class 44 of the Nice Classification (this class includes, among others, medical services) to designate a network of dental clinics in Portugal (called Dentalcare - dental clinics).

The plaintiff, which provides dental services, registered the corporate name Dental Care - Centro de Medicina Dentária (Dental Care - dentistry medicine centre) in September 2001. The plaintiff owns a dental clinic called the Square Clinic (due to its location in a building called Amoreiras Square).

According the plaintiff, the similarity between its corporate name and the defendant's trademarks was likely to mislead the average consumers of dental services into believing that the trademarks belonged or were related to the plaintiff. In its defence, the defendant alleged that its trademarks and the plaintiff's corporate name were not likely to be confused.

The court of first instance rejected the application for cancellation of the trademarks as unfounded, and the court of second instance affirmed.

The plaintiff appealed to the Supreme Court of Justice, alleging unfair competition. The plaintiff pointed out that, according to the Portuguese Industrial Property Code, unfair competition may occur not only where there is actual confusion between distinctive signs, but also where there is a mere likelihood of confusion between them.

The Supreme Court of Justice deemed the following facts to be established:

  • the trademarks and the corporate name were very similar; and
  • the trademarks and the corporate name were used in the same area of business and targeted identical consumers.

In an a priori judgment, the court found that the distinctive signs at issue were susceptible to be confused. However, focusing on the specific circumstances of the case, the court concluded as follows:

"Even though the applicant uses the term 'Dentalcare' in its corporate name, as well as in its billing information, the applicant is better known among Portuguese consumers as 'Square Clinic', which is easily understandable as 'Dentalcare' constitutes a generic name, of a descriptive nature, which has lost its distinctive character over the years. As a matter of fact, the existence of several dental clinics using the terms 'Dentalcare' and 'Dental' is well known. Furthermore, the geographical perimeter in which the applicant carries out its activity is completely different from the locations where the defendant operates its dental clinics. In conclusion, in this particular case, the likelihood of confusion between the distinctive signs concerned is practically non-existent. Even if it was admitted that there was a likelihood of confusion, [use of the marks by the defendant] is totally compatible with honest practices in commercial and industrial matters and, hence, does not constitute unfair competition."

The judgment is a useful reminder that claims of unfair competition must not be the subject of an abstract examination but, rather, of a case-by-case assessment. Moreover, the judgment reveals a clear tendency of the courts to favour the principle of free competition and, therefore, to remove obstacles preventing companies from freely pursuing their commercial activities.

While it is generally accepted that “any act of competition contrary to honest practices in industrial or commercial matters” (namely “any act of such a nature as to create confusion by any means whatsoever with the establishment, the goods, or the industrial or commercial activities of a competitor”) constitutes unfair competition, the truth is that the courts are likely to consider that a certain degree of likelihood of confusion between distinctive signs is compatible with fair competition.

Joana Reis, PLMJ - AM Pereira Sáragga Leal Oliveira Martins Júdice E Associados - Sociedade De Advogados - RL, Lisbon

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