Use of FORMENTOR unfair in absence of connection with Majorca

The Spanish Supreme Court has issued a judgment on the use of geographical indications (GIs) as trademarks and whether it may be considered fair use (Case 1.069/2006, October 25 2006).

Josefa Ramos, the owner of the trademark FORMENTOR - which applies to restaurant products and services in Class 43 of the Nice Classification - brought proceedings against Cosme Mayol and Arrocerías Formentor SL, the owners of a restaurant chain, for using the trademark FORMENTOR (alone or with the descriptive term 'arrocerías', which means 'rice restaurant') to identify their restaurant services (use as a mark), their company (use as a trade name) and their premises (use as a shop sign).

The defendants argued that there was no infringement because:

• the name Formentor is a GI of the island of Majorca that could not be used exclusively by Ramos;
  
  
• the opposing signs and the services to which they applied were not similar; and
  
  
• the use of the trademark FORMENTOR by the defendants was in line with the fair use rules, since the sign referred only to the geographical origin of the defendants' products and services.

The court of first instance dismissed the lawsuit, finding that Ramos had failed to demonstrate a likelihood of confusion. At second instance, the Madrid Court of Appeal found in favour of Ramos and upheld all claims, except that for compensation for damages.

The Supreme Court confirmed the court of appeal's decision. The Supreme Court dismissed the defendants' argument that Ramos could not have exclusive use of the trademark FORMENTOR, as the defendants had failed to bring an invalidity action against the trademark. The trademark was therefore valid; the defendants could not use the argument of the trademark's invalidity without bringing an invalidity action.

Moreover, the Supreme Court held that the court of appeal correctly found that there was a likelihood of confusion between the signs. The Supreme Court stated that the court of appeal decision was in accordance with European Court of Justice (ECJ) case law (ie, Robelco NV v Robeco Groep NV, Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV and Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc) and declared that:

• the use of a sign for a purpose other than identifying products and/or services (eg, use as a trade name and as a shop sign) is not the object of the harmonization envisaged by the First Trademarks Directive;
  
  
• likelihood of confusion is not exclusively a factual issue and its legal consequences may be subject to review by the Supreme Court; and
  
  
• the Madrid Court of Appeal correctly determined the following issues:
  
  
  • the interdependence between the similarity of the signs and the services to which they applied;
    
    
  • the distinctive character of Ramos's trademark; and
    
    
  • the perception of the relevant consumers.

Finally, the Supreme Court denied that the use of the trademark FORMENTOR by Ramos could be considered fair use. In order for the unauthorized use of a trademark to be considered fair, the sign must be used as a trademark for descriptive purposes only (in this case, designating a geographical origin). However, the defendants used the sign FORMENTOR not for descriptive, but distinctive purposes (ie, to identify the defendants' services, company and premises). In reaching this conclusion, the court relied on the ECJ judgment in the joined cases C-108/97 and C-109/97. Moreover, the court held that there can be no fair use where a GI has no connection with the products and/or services that it supposedly designates. In the case at hand, the use of the trademark FORMENTOR by the defendants could not be considered fair use as the defendants' products and services had no connection with the geographical region of Formentor on the island of Majorca.

Maite Ferrándiz, Grau Baylos & Angulo, Barcelona