Unfair competition law cannot be invoked to resolve trademark disputes
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The Supreme Court has issued a decision on the relationship between trademark rights and unfair competition law (Case 427/2008, May 28 2008, only recently published).
Trademark and unfair competition laws use similar concepts, such as likelihood of confusion and misappropriation of another’s reputation. However, the interpretation of these concepts must take into account the different legal rights conferred by the Trademarks Act and the Unfair Competition Act.
Whereas Articles 6 and 34 of the Trademarks Act refer to the likelihood of confusion between identical or similar distinctive signs for identical or similar products, Article 6 of the Unfair Competition Act refers to any unfair act which may mislead consumers as to the activities, performance or commercial services of a trader.
Furthermore, Articles 8 and 34 of the Trademarks Act define the ‘misappropriation of another’s reputation’ as taking advantage of the reputation of another party’s distinctive sign. In contrast, Article 12 of the Unfair Competition Act defines such misappropriation as taking advantage of the reputation of a third party in the market.
Due to the close relationship between trademark rights and unfair competition law, plaintiffs usually bring claims for both trademark infringement and unfair competition. However, the Supreme Court has stated in several decisions that facts cannot be assessed under the Unfair Competition Act if they can be judged under the Trademarks Act.
In the present case, the owner of the trademark MUGA for wines filed suit against the owner of the trade name Luis Gurpegui Muga for using this name on wine labels.
The claimant sought the cancellation of the trade name Luis Gurpegui Muga on the grounds that there was a likelihood of confusion between the trade name and the MUGA mark under the Trademarks Act. The claimant also sought a declaration that by using the term ‘muga’ on wine labels (the word ‘muga’ being written in larger letters than the two others words), the defendant had committed acts of imitation, confusion and misappropriation under the Unfair Competition Act. It thus requested that the court order the defendant to cease using the word ‘muga’.
The Supreme Court refused to cancel the trade name, holding that the differences between the trademark MUGA and the trade name Luis Gurpegui Muga were sufficient to avoid a likelihood of confusion under the Trademarks Act.
The court also found that the word ‘muga’ on the wine labels was not written in larger letters than the other words. Therefore, the court concluded that no unfair practices had occurred.
In addition, the Supreme Court held that:
“the dispute did not go beyond the scope of trademark rights, with regard to which the Unfair Competition Act complements, rather than substitutes, the Trademarks Act.”
This finding is in line with the decisions of the Madrid County Court (February 8 and June 14 2007) and the judgment of the Barcelona County Court (June 7 2005).
In analyzing the defendant’s alleged unfair practices, the Supreme Court formulated an interesting opinion regarding the general clause contained in Article 5 of the Unfair Competition Act:
“The function of the general clause in Article 5 is to sanction those practices that the legislature could not foresee as unfair at the time, and not to consider as illicit the practices listed in Articles 6 to 17.”
The Supreme Court reiterated that the list of unfair practices referred to in the Unfair Competition Act is not exhaustive. Any unfair practice carried out by a competitor may be considered as unfair competition under Article 5 of the act.
In conclusion, the court held that the claimant could not invoke the Unfair Competition Act and that the case should be decided solely on the basis of trademark law.
Eduardo Vila, Grau & Angulo, Barcelona
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