Valid registration may not block third-party use of generic term
In a majority decision, the Third Panel of the Superior Court of Justice has ruled that in a trademark infringement case a defendant may be able to continue using the mark at issue if it can show that the mark is considered to be a generic term (Case 237954). This defence applies, even if the plaintiff's earlier mark was validly registered or has since become incontestable.
The decision originated from an action filed by Off Price Comércio de Roupas Ltda and Office Price Shopping Centre do Vestuário Ltda (plaintiffs) against Pro Mall Empreendimentos e Participações Ltda and New Concept Shopping SA (defendants), owners of a shopping mall named Rio Off Price Shopping in the city of Rio de Janeiro, Brazil. The plaintiffs took issue with the use of this name and filed a trademark infringement action. They claimed exclusive rights in the term 'off price' by virtue of (i) a trademark registration for OFF PRICE granted by the Brazilian Industrial Property Office (BIPO), and (ii) the fact that it forms part of their trade names registered with the Registry of Commerce of the State of Rio de Janeiro.
The Court of Appeals of the State of Rio de Janeiro upheld the plaintiffs' complaint, holding that the defendants could not use the term 'off price' unless the plaintiffs' OFF PRICE registration was cancelled by a final decision of a federal court. The defendants appealed, arguing that the term was generic.
A majority of the Third Panel of the Superior Court of Justice allowed the appeal. It agreed that the term 'off price' was generic. Referring to previous rulings in DELIKATESSEN (Case 242083) and BANK NOTE (Case 128.136), the majority held that the existence of a valid trademark registration for a generic term cannot block the use of that term by a third party. It clarified that, where, as here, the case at issue is for trademark infringement, the generic character of a mark can be argued as a defence before the state courts. However, a decision by the courts to allow such a defence is limited to the parties involved. This contrasts with the cancellation of a registration, which has the effect of invalidating it in full. The majority noted that cancellation can only be obtained by means of filing a proper action before the federal courts.
The dissenting opinion stressed the importance of preserving the effects of a registration granted by the BIPO, which, in the dissenting judge's opinion, should only be set aside by a proper court action.
The majority decision clarifies an important point of law as the Brazilian courts have been faced with a great deal of litigation involving generic terms due in part to the BIPO's lack of consistency when analyzing trademark registration applications. The defendants in such cases may now be able to rely on lack of distinctiveness as a defence to a trademark infringement action, even if the registration was valid or has since become incontestable following the expiration of the five-year cancellation term.
Rodrigo Borges Carneiro, Dannemann Siemsen Bigler & Ipanema Moreira, Rio de Janeiro
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