SC recognises that bad-faith registrations may be challenged at any time

On January 21 2011 the Chilean Supreme Court reversed a decision of the Industrial Property Court of Appeals in which the latter had rejected O’Neill Europe BV's action for the cancellation of the trademark O’NEILL, owned by Jorge Halabi. The Supreme Court ordered the cancellation of the O’NEILL mark, which was registered for goods in Classes 9, 12, 25 and 28 of the Nice Classification.
The Court of Appeals had rejected the cancellation action on the grounds that it had been extinguished by virtue of the statute of limitations - the attacked registration had been granted under the Law of 1931, which remained in force until 1991, when the Paris Convention for the Protection of Industrial Property was ratified by Chile and the old law was replaced by the Industrial Property Law (19.039/1991).
The Court of Appeals noted that the O’NEILL mark had been registered by Halabi on September 28 1983 and had been used from 1988. The Appeals Court thus concluded that the cancellation action had been extinguished, because it was filed on September 2002. Consequently, O’Neill's action was rejected.
The Supreme Court reversed the decision of the Court of Appeals on the following grounds:              
  • It was true that the registration for O’NEILL had been granted in 1983 and that the trademark had been in use from 1988. However, Halabi's use of the mark was in bad faith and, therefore, should not have weighed in his favour.
  • Halabi's bad faith was obvious given the identity of the trademarks involved. The court noted that O’Neill was the first to protect the O’NEILL mark on an international basis, and that Halabi had registered the mark for the same products as those covered by O’Neill's registration. Therefore, it was unlikely that Halabi had registered the same mark in Chile by coincidence. The court stressed that this criterion to establish bad faith had already been recognised by the industrial property courts.
  • When the Paris Convention entered into force in Chile in 1991, the statute of limitations had not started to run due to the lack of good-faith use of the mark by Halabi. Therefore, the proper basis for deciding the case was Article 6bis of the Paris Convention, which states that there is no time limit for requesting the cancellation of a mark registered in bad faith. Consequently, the statute of limitations could not have extinguished O’Neill's action for the cancellation of Halabi's mark, irrespective of when the registration was granted.
The decision of the Supreme Court is of practical importance in that it recognises that registrations obtained and used in bad faith under the old law may be challenged at any time, even where the marks have been used in the country for two years or more as of the date of registration.

Importantly, in Chile, court decisions have an effect only on the case at hand - however, the reasons given by the Supreme Court constitute a very strong message for future cases.

Sergio Amenábar, Estudio Federico Villaseca, Santiago

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