How broad is free trademark use under the spare part exemption?

Other suppliers of accessories and spare parts for branded equipment should be careful to use the brand name to designate the equipment but not the spare part, explains Michael Lantos.

Article 15 of the Hungarian Trademark Law concerns the limits of trademark protection. It states that a trademark owner cannot prevent a party from using a trademark within its commercial activities if it is necessary to indicate the goods or services, especially in the case of spare parts or components.

This raises the question of how this exemption should be interpreted and what specific use is considered sufficient to indicate the goods in the case of accessories. A recent decision of the competent Metropolitan Court has shed some light on this issue.

There are several types of machines that operate with replaceable ink cartridges, such as printers, copiers and other similar equipment. The cartridges are supplied by the manufacturer of the equipment, but other manufacturers provide cartridges that can also be used, and some enterprises provide refill services for used cartridges that extend the lifetime of the cartridge.

A Hungarian company imported cartridges from a supplier to be used in equipment made by a well-known brand. The company advertised on its webpage that cartridges for the branded equipment could be ordered. Furthermore, when a customer placed an order for the cartridges, the package of the cartridge indicated the brand of the equipment, in the invoice the cartridge was designated by the brand name with the word ‘cartridge’, and the installation brochure of the machine was a copy of the brand owner’s brochure.

"from the labelling and presentation, it must be clear to all consumers that the particular cartridge is a refilled or clone product and not manufactured by the brand owner."

The brand owner wanted to terminate the activity and filed a request for preliminary injunction before the Metropolitan Court. It asked the court to prohibit the import and sale of the cartridges bearing its brand as a trademark and to order the removal of its brand name from the company’s website. It did not ask for prohibition of the use of the brochure in the preliminary proceeding, as the copyright issues would have resulted in a longer proceeding.

This request was directed to the preliminary injunction only, as Hungarian law permits a request for a preliminary measure to be filed before a main trademark infringement proceeding; the main proceeding must be initiated within 15 days of the date when the decision on the preliminary injunction becomes final.

Simultaneously with the request, the brand owner delivered a warning letter to the import company, which set out the injury to its trademark rights and asked the company to cease the infringing activity, including the use of the brochure. It also asked for a predetermined amount in compensation and information on the supplier of the cartridges and the customers who bought them.

To the surprise of the brand owner, the importing company acted immediately to the satisfaction of the brand owner, gave up the requested activities and paid an agreed compensation amount. The defendant company also notified the court of its law-abiding behaviour.

The court asked the brand owner whether the preliminary injunction request would be maintained or withdrawn. The brand owner limited the request to the preliminary prohibition of the import and sale of such cartridges.

The court rejected the request. In the decision, the court confirmed that the request was well founded, filed in a timely manner and there was an injury to law. The court went on to establish that the defendant had voluntarily obeyed and given up all its infringing activities, and so the immediate threat ceased to exist and there remained no cause for any urgent preliminary ruling.

The possibility of a repeated unlawful act existed, but preliminary measures are directed to terminate a standing unlawful status or to eliminate an imminent threat, and as the proceeding was not directed to establishing a trademark infringement, only urgent issues could be resolved.

The brand owner achieved its main objective as the defendant company gave up its infringing activity quickly, but a preliminary measure cannot replace a permanent injunction.

In a different lawsuit between different parties but concerning a similar cartridge issue, the same court decided that the brand can be used to indicate the type of the equipment only, but from the labelling and presentation, it must be clear to all consumers that the particular cartridge is a refilled or clone product and not manufactured by the brand owner.

The Article 15 exemption is applicable as long as the brand is used to designate the equipment but not the spare part, and the spare part or accessory should be labelled in such a way that the customer immediately knows it has not been manufactured by the brand owner.

A further question not yet decided by the courts would be to prohibit the use of the brand name for designating the applicable equipment, if the spare part or component was an inferior product to the extent that its use in the branded equipment could jeopardise the correct function or operation of the equipment. It makes sense to be careful with the application of this spare part exemption, as it could bounce back against the user.

Michael Lantos is managing partner and Hungarian and European patent attorney at Danubia Patent and Law Office LLC. He can be contacted at: lantos@danubia.hu