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29 July 2014TrademarksOzlem Fütman

Cancellation: the s.Oliver case continues

As an introduction to new readers, I would like to summarise briefly what has happened so far in cases handled by the Izmir Court.

Years ago, based on its earlier registered trademarks, s.Oliver, the German fashion company, initiated an action against the Turkish textile company Süleyman Aydın Tekstil for cancellation of its ‘s.over’ brand, but lost. The Appeal Court reversed the decision and consequently s.Oliver won the case.

While the first case was pending, we filed a second case against the same company, claiming cancellation of the defendant’s following trademarks in Classes 18, 25 and 35:

•  ‘s.over’;

•  ‘s.over-device’;

•  ‘s.over free’; and

•  ‘my s.over’.

Based on the client’s earlier registration of the mark ‘s.Oliver’ in Turkey, we claimed for cancellation of the marks because of confusing similarity and the likelihood of confusion. s.Oliver had been using its marks in the Turkish market before the application date of the defendant’s mark and had earlier-use rights.

In those days, s.Oliver had no earlier registration in Class 35. However, Class 35 has a very close relationship to all other classes of goods and, even if this relationship is ignored, we said the marks should be cancelled because of the fame of the s.Oliver brand, the risk of confusion and the bad faith of the defendant.

We also claimed the following in the case:

•  Unfair competition;

•  Trademark infringement;

•  An injunction to prevent transfer of the subject marks to any third parties;

•  An injunction to stop any use of the defendant’s marks;

•  A halt to the defendant’s website www.s-over.com.tr until the decision became final, and then its closure;

•  Determination that s.Oliver is a well-known brand according to the Paris Convention; and

•  Publication of the court’s decision in a national newspaper.

On the first point, the fame of the brand was not a consideration.

On the second point, there is a very well established practice in Turkey that can be summarised as: “If a mark is registered, usage of the mark cannot be considered as trademark infringement and unfair competition and all usages of the owner are accepted as legal. Only after the mark/registration has been cancelled can one claim infringement and/or unfair competition for usages after the cancellation.”

Apparently, many of our claims were against settled practice.

We overcame the time limitation problem with this case, because five years had passed since the registrations by the defendant, by proving the bad faith of the defendant.

The case was admitted and the judge decided:

•  On the cancellation of all the defendant’s marks in question;

•  That the defendant’s use of the cancelled marks constituted both unfair competition and infringement, and therefore should be stopped. As a rule, usage of a registered mark is within the concept of ‘enjoyment of rights’. However, here the defendant’s marks were registered with the intention of coming close to the plaintiff’s well-known mark in order to exploit the perception of consumers of the well-known brand to gain unfair advantage.

•  A defendant cannot enjoy the right just because the marks are registered. Illegality has been going on since the application dates of the defendant’s marks. The plaintiff’s marks did not become well known until later (the defendant’s application dates) nor had they become generic. Considering bad faith, registrations would not give the defendant a right to enjoy them.

•  On the stop and closure of the defendant’s website www.s-over.com.tr, as there is no justifiable legal base to register such a domain and use it. When average consumers searched the internet to reach the plaintiff’s well-known brand, they would reach the defendant’s website and be misled. The basis of domain name registration is the trademarks but, as they are now cancelled, the domain should be cancelled too.

•  That s.Oliver is a well-known brand.

In the event, the trial judge accepted all our claims. With this decision the judge was going in a different direction from the one the Appeal Court had directed us to for many years.

Decision overruled

When I published a previous WIPR article on this case, the decision had been appealed against by the defendant.

Subsequently, the Turkish Appeal Court partially overruled the decision based on two points:

1. Until the marks are cancelled and that decision becomes final, all uses by the defendant are legal. This meant that by finding infringement and unfair competition, the trial judge had made a mistake; and

2. The plaintiff should have first applied to the Turkish Patent Institute (TPI) to register its brand as well-known and only if such a request had been refused should it have applied to the court for cancellation of the TPI decision. Therefore, the trial judge’s decision accepting the plaintiff’s mark as well-known was wrong.

The file came back to the Trial Court.

We asked the trial judge to insist on his initial decision on the well-known status of s.Oliver’s mark and left it to his discretion on whether to obey the Appeal Court’s overruling of his decisions on infringement and unfair competition.

After a 15-minute break, the judge announced that he insisted on both the initial rulings that the Appeal Court had overruled, a very interesting decision that challenged the long-settled practice of the Appeal Court.

In the verdict, the trial judge stated the following:

1. The Trial Court had taken into account the criteria of the World Intellectual Property Organization that are mostly followed by the Turkish Appeal Court when evaluating whether the plaintiff’s mark was well known or not. In the  TPI’s regulation it says that the owner of a mark needs first to apply to the TPI for such a determination and, if the decision is not in his favour, can bring the matter to court.

"the judge announced that he insisted on both the initial rulings that the Appeal Court had overruled, a very interesting decision that challenged the long-settled practice of the Appeal Court."

The TPI’s decision is open to judicial control and the final decision is made by the court. Therefore, there is no legal barrier to the plaintiff claiming such a determination without applying to the TPI first. As a matter of fact, the Appeal Court approves decisions granting well-known status to a mark by the courts. For instance, in the Aldi case, the Appeal Court said the “Trial Court determined that the plaintiff’s ‘Aldi’ mark has been well-known since December 31, 2002 and decided to cancel the defendant’s mark.” The decision was approved by the Appeal Court.

Our initial decision was right because arguments as to ‘well-knownness’ and cancellation are related and need to be evaluated together. The Aldi decision was entirely in line with our case. Determination of well-knownness is not a typical trademark application, but determination of a status that complies with the requirements over an existing right is. Well-knownness is an important basis for cancellation. These two rulings, on cancellation and well-known status, are legal conclusions of each other.

2. The bad faith of the defendant had been proved. By refusing the defendant’s arguments against it, the Appeal Court confirmed that too. Although there are precedents saying the use of a registered mark is the use of a legally-gained right, even though it is infringing, and should be considered as execution of a granted right, the facts of the present case should be taken into account. Determined bad faith by the defendant cannot be excused. The use of a similar registered mark cannot give a right of possession to a defendant as long as bad faith is there. Also, for this reason, even though five years from the registration date had passed, the marks were cancelled.

The Court of Justice of the European Union (CJEU) made similar rulings in its FCI decision C-561/11. In paragraphs 34–37, the CJEU explained the facts of the case, then said that the owner of the previously registered mark ‘FCI’ can prevent the use of the (later) registered mark ‘FCI Perros De Pura Raza’ without making a decision on the cancellation of the latter one. The CJEU based that decision on the priority principle in the EU Trademark Directive.

Registration gives a formal right to the owner, yet this should not result in a conclusion that gives the right to infringe on the rightful owner’s rights. Commercial Code Article 52/1 says one can ask for protection of a registered company name and claim cancellation or modification of an adversary party’s registered company name; meanwhile, the law provides rights for compensation, etc.

Thus, it can be argued that the owner of a previously registered mark can claim cancellation and also infringement against the owners of bad-faith registrations. Any contrary interpretation would be against the Article 2 of the Civil Code on good faith.

This second verdict has been appealed against by the defendant and the battle is still pending. We will see what the Appeal Court says. n

Ozlem Fütman is a lawyer and licensed trademark and patent attorney at OFO Ventura. She can be contacted at ofutman@ofoventura.com.tr

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