Supreme Court rejects motion to appeal in cigarette trademark dispute

Argentina

The Supreme Court of Justice has rejected a motion to appeal in a dispute between cigarettes manufacturers.

In its decision of May 15 2012 (Court Docket No 6464/2001), the Federal Court of Appeals in Civil and Commercial Matters of the City of Buenos Aires had rejected a complaint regarding the use of the trademark WINSTON in Argentina, brought by Massalin Particulares SA, a Philip Morris subsidiary, against Japan Tobacco Inc (JTI) and its licensee Nobleza Piccardo SA, a member of the British American Tobacco Group. The complaint sought to enforce a self-imposed restriction placed on Reynolds Tobacco Company in 1954 and, consequently, cause Nobleza to cease using the trademark WINSTON for cigarettes made in Argentina. In 1954 Reynolds had agreed with Massalin to use that trademark in Argentina solely in association with imported cigarettes.  

Massalin attempted to have its complaint examined by the Supreme Court of Justice, but Argentina’s highest court rejected the motion by a resolution dated August 27 2013.   

In 1954 Reynolds - then the owner of the trademark WINSTON - unilaterally agreed to use that trademark in Argentina only in connection with imported cigarettes. In turn, Massalin assigned to Reynolds the trademark application for WINSTON SALEM, which it had previously filed.

This agreement was first honoured by Reynolds, and then by JTI after it acquired the rights in the WINSTON mark. As a licensee of JTI, Nobleza also abided by the agreement. In this respect, Nobleza first imported WINSTON-branded cigarettes from the United States and, in the 1990s (given the costs involved in such import operations), it started to manufacture them in Uruguay and import them into Argentina.

In view of this, Massalin launched an advertising campaign with ironic and mocking references to the Uruguayan origin of the Winston cigarettes. This had a negative impact on the sales of Winston cigarettes imported from Uruguay, which experienced a significant drop.  

JTI considered that Massalin had interfered with the use of the trademark made pursuant to the terms of the agreement and decided to terminate it. Winston cigarettes then started to be manufactured in Argentina. Another argument used by JTI to terminate the agreement was that, when Reynolds had entered into it in 1954, no cigarettes were manufactured in Argentina under a foreign trademark, which was not the case in the 1990s. This gave rise to Massalin’s claim that JTI should honour the initial agreement entered into by Reynolds. In light of JTI’s and Nobleza’s refusal to do so, Massalin brought suit against both companies.

The complaint brought by Massalin sought to prevent JTI and its licensee Nobleza from using the trademark WINSTON for cigarettes manufactured in Argentina. Massalin sought to maintain the validity of the agreement that Reynolds had unilaterally entered into. That agreement had been formalised through letters sent by Reynolds on June 18 1954, February 8 1974 and August 14 1996, whereby Reynolds - and later JTI - had agreed to use the trademark only on products imported into Argentina.  

When answering the complaint, JTI stated that:

  • the agreement entered into by Reynolds in 1954 had been validly terminated by JTI;
  • the agreement had been entered into when no cigarettes were manufactured in Argentina under a foreign trademark - a situation that had changed over the years; and
  • most importantly, Massalin had maliciously interfered with the use of the trademark WINSTON in connection with cigarettes imported from Uruguay.

In addition, Nobleza argued that Massalin's behaviour when launching the Winston cigarettes manufactured in Uruguay had interfered with the marketing of these cigarettes, causing extensive damage to the trademark. Nobleza also stated that the registrations for WINSTON were not subject to any restriction regarding the origin of the cigarettes. In addition, Nobleza argued that Massalin’s filing of the application for WINSTON SALEM was a clear act of bad faith, bearing in mind that the mark corresponded to Reynolds’ home town as well as of two of its brands.

The first instance court dismissed Massalin’s complaint, and this decision was upheld by the Court of Appeals based on the following arguments.

First, the court analysed the legal nature of the letters sent by Reynolds in 1954 and 1974. Massalin argued that it was a formal agreement. The court disagreed, finding that there had been no statement of common will - as evidenced by the fact that no representative of Massalin had executed it, which meant that the letters did not fall within the definition of ‘agreement’ set forth in the Argentine Civil Code. In contrast, JTI presented it as a self-imposed restriction, but this was not accepted by the court.

In brief, the court considered that, irrespective of the legal nature of the agreement, the dispute had to be examined under the principle of good faith.

After examining Massalin’s behaviour (ie, its advertising campaign, which had led JTI to terminate the self-imposed restriction on the origin of the Winston cigarettes), the Court of Appeals found that Massalin’s actions were close to bad faith. Such behaviour freed Nobleza from the restrictions opportunely agreed to by Reynolds and JTI. In brief, Massalin’s behaviour constituted a clear interference with Nobleza’s use of the trademark. Additionally, the court stated that, although the issue of Massalin’s application for WINSTON SALEM was not under discussion here, it could not be overlooked.

Consequently, the agreement - or self-imposed restriction - at issue was overruled, and JTI’s licensee Nobleza was held to be entitled to use the trademark WINSTON for cigarettes, irrespective of their place of manufacturing.

It should be noted that two other lawsuits between Massalin and JTI were joined to the present proceedings. In one of them, Massalin sought the annulment of the trademark WINSTON. This petition was dismissed by the Court of Appeals, which considered that such an extreme measure was not admissible, as Massalin had so far consented to the existence of the trademark. In the second lawsuit, brought by JTI against Massalin, JTI requested that the court dismiss oppositions filed by Massalin against applications for the registration of trademarks containing the term ‘Winston’ based on its registration for the trademark WILTON. The Court of Appeals found that the trademarks WINSTON and WILTON had co-existed in the market for many years and that there was no likelihood of confusion.

Fernando Noetinger, Noetinger & Armando, Buenos Aires

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