Supreme Court: first impressions are essential when analysing likelihood of confusion

Within the context of the adoption and registration of trademarks, different interests are at play: the interests of the owners of distinctive signs, who wish to safeguard their individuality; the interests of newcomers in the market, who seek to obtain new trademarks; and the interests of consumers. These different interests have become very difficult to reconcile in light of the number of new products and services coming to the market. As Chile is a developing country, there is a high number of new trademark applications.

Against this background, newcomers try to differentiate signs by providing sophisticated historical, etymological and cultural arguments; however, these arguments should not be accepted by the courts in cases where the risk of confusion remains. Nevertheless, the courts are not always indifferent to this kind of complex and formal arguments.

In the present case, the Chilean Supreme Court, reversing a decision of the Court of Appeals in Industrial Property, held on December 11 2013 that applicants could not dilute the distinctive power of a trademark by using speculative arguments. The court thus placed a curb on the exaggerated permissiveness of certain decisions in which the courts had accepted purely theoretical defences to refute real and practical risks of confusion.

The Court of Appeals, overturning a decision of the National Institute of Industrial Property, had accepted an application (No 921.629) by Cavallo, Bizzarri & Garcia for the trademark CRUSOE LODGE for tourism services in Class 39 of the Nice Classification, and rejected the opposition of Empresa Pesquera Robinson Crusoe Limitada, the owner of the registered trademark CRUSOE for identical services.

In particular, the Court of Appeals had declared that the trademark CRUSOE, which was associated with a literary character and was the name of an island in the Chilean archipelago of Juan Fernandez, should not be an obstacle to the registration by others of the term 'Crusoe' in association with other terms. Therefore, the court had accepted the trademark application for CRUSOE LODGE, considered as a whole, for tourism services.

The opponent filed a recourse before the Supreme Court, arguing that the Court of Appeals' decision was against the law, as it clearly violated:

• Article 15(25) of the Chilean Constitution, which grants ownership over intellectual property in general, and trademarks in particular; and
• Section 20 of the Industrial Property Law, which prohibits the registration of trademarks that are similar to earlier registered trademarks or might mislead consumers as to the origin of the products and/or services.

The Supreme Court accepted the recourse and refused to allow the registration of CRUSOE LODGE. It stated that the decision of the Court of Appeals was incorrect pursuant to the Industrial Property Law and that is was “slanted” based on the following reasons:

• The comparison between two trademarks must be made globally. Therefore, it must be considered that consumers are guided by the first impression given by the signs.
• The distinctive and main part of the trademark applied for was 'Crusoe', which is identical to the opponent's registered trademark, taking into account the descriptive meaning of 'lodge'.
• The applicant had added only the word 'lodge', which is of common use for accommodation and hotel services.
• The rights of the owner of a registered trademark must be protected. In light of the above-mentioned reasons, this would not be the case if the trademark CRUSOE LODGE was accepted for registration.
• The definition of a 'trademark' under the Industrial Property Law implies that a trademark has the capacity of distinguishing the trademark owner's goods/services. This was not the case here.
• There was an undeniable risk of error or mistake on the part of consumers as to the source of the services, especially as the word 'lodge' in the trademark applied for is connected to tourism services, which are covered by the opponent's CRUSOE mark.

In view of the above, the Supreme Court:

• issued a decision replacing that of the Appeal Court;
• upheld the opposition filed by the owner of the CRUSOE mark; and
• rejected the application for the registration of CRUSOE LODGE.

The decision shows that the likelihood of confusion between trademarks is based on real facts, rather than on complicated juridical arguments that do not take real life into consideration.

Sergio Amenábar, Estudio Villaseca, Santiago