Unauthorized use of mark by second-hand dealer held to be infringing

The Athens Court of Appeal has granted Caterpillar Inc's request for a permanent injunction and moral damages against a leading trader of second-hand Caterpillar machinery in Greece (Decision 6752/2009, March 12 2010).
The defendant affixed an adhesive label bearing its own company name and the CAT mark onto second-hand Caterpillar machinery (eg, tractors, loaders, excavators and compactors). Caterpillar initiated proceedings against the defendant, arguing that use of the label created the deceptive impression that there was a commercial relationship between the defendant and Caterpillar - namely, that the defendant was affiliated to Caterpillar’s authorized distribution network. Accordingly, Caterpillar requested:
  • a permanent injunction preventing any use of the label;
  • the removal and destruction of all labels;
  • the disclosure of information regarding the extent of use of the label, so as to quantify lost profits; and
  • moral damages.
In response, the defendant contended that, as a ‘CAT-specialist’, it was entitled to use the CAT mark in association with second-hand Caterpillar machinery without Caterpillar's consent, since:
  • use of the label amounted only to informative use of a trademark in advertisements relating to genuine products, and was thus authorized under Article 6(1)(c) of the First Trademarks Directive (89/104/EEC); and
  • Caterpillar's trademark rights had been exhausted following the placing of the goods on the market within the European Union, in accordance with Article 7(1) of the directive.
Furthermore, the defendant denied the existence of a risk of confusion or dilution, alleging that the relevant public (ie, professionals in the construction industry with an above-average level of attention) were aware that there were no authorized dealers of second-hand Caterpillar machinery in Greece.
In 2008 the Athens First Instance Court ruled in favour of Caterpillar (Decision 3853/2008). On appeal, the Athens Court of Appeal affirmed the decision of the lower court and rejected all grounds of appeal raised by the defendant. In particular, the Court of Appeal recognized the reputation of the CAT word and logo marks in Greece, and ruled that the unauthorized use of the label by the defendant:

  • created a risk of dilution of the CAT marks; and 
  • took unfair advantage of the reputation of these marks, contrary to honest practices in the relevant sector of trade.
Finally, the court awarded moral damages to Caterpillar, but rejected its claim for disclosure of information as unfounded.
The decision offers valuable guidance to trademark practitioners seeking to apply the decision of the Court of Justice of the European Union in BMW v Deenik (Case C-63/97) in the Greek courts. In particular, it establishes a presumption that any use of a registered trademark together with, or close to, a third-party mark, company name or title is sufficient to create the impression that there is a commercial relationship between the third party and the trademark owner. However, the rejection of Caterpillar’s disclosure request illustrates the practical difficulties faced by trademark owners when trying to quantify lost profits, which result from Greece’s failure to implement the IP Rights Enforcement Directive (2004/48/EC) in the field of trademark law.
Manos K Markakis, Dontas Law Offices, Athens

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