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The plaintiff is owner of the word mark “TV PAPRIKA” registered for services relating to television entertainment and for the production of television shows.

The defendant used the sign “CHILITV” and the domain <chili.tv> in his television advertisement for gastronomic services.

The plaintiff sued for trademark infringement, and the Metropolitan Tribunal condemned the defendant, as the latter used its mark in publicity and as a domain name. The Tribunal held that there were visual and phonetical dissimilarities between the marks, but there was a clear conceptual similarity. The average consumer could confuse the two signs. The statement of the Tribunal was supported by an opinion poll filed by the plaintiff. Given that both parties used the sign for television services, the likelihood of confusion by consumers, even by low attention, cannot be excluded. Moreover, the reputation of plaintiff’s mark was also proved.

The defendant appealed against the judgement with the Metropolitan Court of Appeal, but the appeal was unsuccessful. The Court approved the opinion of the Tribunal and added that though the word elements TV PAPRIKA and CHILITV were visually and phonetically different, the conceptual similarity of these elements was high. The conceptual similarity is significant if it evokes spontaneous ideas in the consumer, without thinking. From the opinion poll filed by the plaintiff it was obvious that the sign of the defendant evoked the word mark of the plaintiff. The likelihood of confusion enhanced as the defendant also used his sign in television.

The defendant filed request for revision with the Supreme Court, but this was also rejected. The statement argued that the question in the opinion poll was only: “What is the meaning of the term “chili”?”. The Supreme Court held that contrary to the Tribunal’s view, for the assumption of the conceptual difference by the consumers a longer, more-in-depth thinking was necessary.

The Supreme Court said that with the opinion poll the plaintiff proved that the average consumer interpreted the term paprika in question in the frame of spices. The defendant’s argument that the average consumer who is sufficiently informed needed a long thinking process for the interpretation of the meaning of plaintiff’s mark. The conceptual similarity is acceptable even without proving, based on common knowledge. As a result, the courts of lower instances were right holding that the likelihood of confusion could be stated without evidence. In the case law it is accepted that the two marks are not simultaneously present, and the older mark exists only in the memory of the consumer. The lower instances were also right holding that the possibility of confusion is enhanced by the circumstances that the services (TV-shows, television entertainment) are identical, or very similar. The standard case law is that the courts can state the likelihood of confusion and a special demonstration is not necessary.

(Pfv.IV.20.717/2018)

Comments

The standard case law in many countries is that criteria of likelihood of confusion in respect of trademarks are visual, phonetical, or conceptual similarity. Though visual or phonetical similarity is often stated, conceptual similarity, i.e., association by consumers in Hungarian case law occurs seldom.

In the above reported case, the two dominant elements of the conflicting signs were “paprika” and “chili”, both are spices. Chili is a kind of paprika and both goods are hot. This quality (hot) is transferred to the mind of consumers, i.e., viewers could get the idea that the television shows streamed are of the same or related origin. I believe that is why the Supreme Court referred to association in the thinking of the TV viewers.

Opinion polls are not cheap and their use in trademark cases is rare. Referring to the opinion polls, quoted by the Court (IPSOS) it is worth mentioning that a representative sample of 1.000 persons has been questioned (90 % of them replied). 94,8 % of the replies were associated with paprika.

Namely:
56.6 % paprika (in general)
17,7 % spice paprika
15,7 % strong paprika
6 % hot paprika
0,3 % red paprika
0,3 % chili paprika.

There was also a further opinion poll filed by the defendant in which to a similar question 48 % of the interviewed persons replied strong, hot. This second opinion poll was not mentioned by the courts, I believe that is because it went to another direction, and not in respect of the origin of the service.

Reference to origin is namely the basic function of the trademark. On the other hand, reference to quality or characteristics (hot) is only a secondary function of the trademarks. As a result, I agree with the courts that they used the opinion poll which reported on answers in relation to the association between paprika and chili.

DR. SÁNDOR VIDA LLD.

In-house Counsel
Doctor of the Hungarian Academy of Sciences
Partner

P.S. I thank herewith to Dr. Katalin Árva, attorney at law, representative of the plaintiff for providing me the two opinion polls and revising this report.

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Claimant is owner of two European trademarks protected in classes 9, 10, 35 and 44. Namely, for medical instruments and services based on bioresonance. The defendant, a former employee of the claimant established an own company and became a competitor of the claimant.

In its business communications addressed to the relevant public, the defendant stated that his goods bearing the trademarks are genuine products as opposed to the claimant’s products bearing the same trademarks which are fake and called the relevant public for a boycott of the claimant’s products. The claimant filed a request for interim injunction in which he asked to prohibit the defendant from using their mark.

The Metropolitan Court prohibited the defendant by interim injunction from using claimant’s mark in the above context. The Tribunal held that defendant’s activity is supposedly trademark infringement. The defendant in his advertisements claimed that the goods offered by him for sale are of better quality than those traded by the claimant. This allegation was unfair.

The defendant filed an appeal with the Metropolitan Court of Appeal, which was successful, and the Court annulled the Tribunal’s decision. The Court held that the defendant’s use of the mark did not qualify as trademark use within the meaning of the EUTMR. As the parties traded the goods parallelly, the consumers associated the sign with both parties. The claim based on unfair competition could not be judged on the basis of the Trademark Act.

The claimant requested review with the Supreme Court. The Supreme Court changed the decision of the court of second instance. The Supreme Court held that in the advertisements and offers the defendant used claimant’s mark. This activity of the defendant must be qualified as use of the mark in the frame of trade and is therefore deemed to be infringement. The Supreme Court held that the Tribunal was right in his conclusion in respect of trademark infringement. Moreover, the Tribunal was also right considering the unfair behaviour of the defendant: the mark must be used within the framework of fair trade. Contrary to the decision of the court of second instance, the circumstance that the infringement can be condemned also under the Law of Competition, does not exclude the condemnation under the Trademark Law. In a procedure for interim injunction, it is not necessary to prove the situation in every detail, it is enough to prove the probability of infringement.

COMMENTS

The situation of the hereabove reported case seems to be a good example for the dilemma of the judges, namely a positive decision by the Tribunal, a negative one by the Court of Appeal and a positive one again by the Supreme Court. It is worthwhile repeating in this respect the word of the Supreme Court, which underlines that the function of the interim injunction is to secure a provisional measure. It follows from the idea that the final decision, i. e. judgement in merito can sometimes differ from the interim injunction.

I believe that regarding the question of judging the case on the basis of the Trademark Law and Competition Law separately or in a complex manner, the instruction of the Supreme Court is especially positive when it produces the complex appreciation of the two legal measures. In Hungarian case-law it happens quite often that courts (as in the here reported case: the Court of Appeal) prefer a separate handling of trademark infringement from an unfair competition action.

DR. SÁNDOR VIDA LLD.

In-house Counsel
Doctor of the Hungarian Academy of Sciences
Partner

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Claimants called “ZSOLNAY”, descendants of Mr. ZSOLNAY, founder of the famous Hungarian porcelain brand “ZSOLNAY”, are owners of European word mark

ZSOLNAY

registered in classes 17, 18, 20, 25 and 45, but the mark is not used by them in their market activity.

The defendant, a trading company, uses the same mark on clothing as well as on the internet in relation with its clothing collections. An intervening party named ZSOLNAY ceramics factory, intervened for the defendant. The intervening party company is the manufacturer of the famous Zsolnay porcelain (tableware, porcelain figurines etc.) and owner of several “ZSOLNAY” trademarks protected in class 21 and some other classes but not in class 25. The defendant and the intervening party agreed that the defendant can use the mark “ZSOLNAY” for clothing, in exchange for license fee. The claimants were aware of the defendant’s activity.

The claimants sued the defendant for trademark infringement. The defendant filed counterclaim. They held that the claimant was in bad faith when applying for the European mark.

The Metropolitan Tribunal, as a European Tribunal of first instance rejected the infringement claim. On the other hand, the counterclaim was successful. The Tribunal stated that the mark was reputed, and the claimants filed their EU trademark application in bad faith, as they were aware that the mark of the intervening party -had reputation, and they filed the same mark without permission of the intervening party.

The Metropolitan Court of Appeal, as European Court for Trademarks as second instance approved the judgement of the Tribunal. The court added that the reputed mark “ZSOLNAY” of the intervening party had been used since the 19th century. The claimants’ bad faith was also proved, as they were aware of the use of the mark “ZSOLNAY” of the intervening party on the market, as the latter protested the claimants’ application; the claimants’ behaviour was unfair.

The claimants filed a request for revision with the Supreme Court, but this was rejected. The court referred to the standard case law, which does not allow revision of statement of facts, namely how the lower instances rendered judgement on these. In respect of the counterclaim the lower instances had to judge whether the European application for the reputed mark “ZSOLNAY” was filed in bad faith by the claimants. As a result, the claimant’s cited EU trademark was invalidated.

The lower instances were right stating that the mark “ZSOLNAY” was reputed, it had been used for about a hundred years and obtained even the title “Hungaricum” (a value worthy of distinction, which is the peak achievement of Hungarians with its characteristics, uniqueness, specialness, and quality).

In respect of the goods the court stressed that a reputed mark confers protection even on goods that are not recorded in the Trademark Registry. This is true also in the present situation, where the mark of the intervening party was not recorded, as a result the lower instances had to examine whether the claimants were aware of or should have known that the mark had been a property of the 3^rd company, and that they were unfair having filed the same mark. Relating to this question the opinion of the lower instance is convincing and the court agreed with their conclusion.

In this respect the court said that the claimants were aware of the goods in respect of which the reputed mark of the intervening party is registered (Pfv.IV.20.602/2019).

P.S. I express my thanks to Bérczes Law Office, representative of the defendant, who provided me with a copy of the Supreme Court’s judgement. The study of this allowed me a much better understanding of the case.

COMMENTS

1. The European Material and Trademark Law is eclectic. It contains elements of German, French, British etc. rules. This is even more so for the procedural law: jurisdiction is divided between European and national competencies.

The hereabove reported case is an example. Namely, the EU General Court has competence for lawsuits, except for infringement suits for which the national courts of the claimant are competent. To be more exact: every member state operates one or more European trademark courts. In Hungary this is the Metropolitan Tribunal, as European Trademark Court of First Instance, and the Metropolitan Court of Appeal as Trademark Court of Second Instance.

The same is valid in respect of the procedures of counterclaims in a trademark suit, for which the court of the infringement case is competent. Such a rule on counterclaim was unknown in the former German (Austrian, Hungarian etc.) trademark laws.

2. It is remarkable that the claim was rejected: claimant’s European mark was annulled.

Counterclaim can be a dangerous weapon in the hand of the defendant. In the reported case the defendant’s counterclaims succeeded, because  the intervention of the owner of the reputed mark was object of the proofs. When filing the claim, the claimant probably did not think that the owner of the mark would intervene. But at least after the Tribunal’s judgement they ought to have realised that they had no chances.

3. Protection of a reputed mark even if this is not registered was previously unknown in Hungarian Trademark Law, this was introduced only by harmonization with the European Trademark Law. In this respect the European Trademark Directive provides in Sec. 5 (2) that goods and services which are not like those for which the trademark is registered, where the latter has a reputation in the member state and where use of the sign without due cause takes unfair advantage, are detrimental to the distinctive character or the repute of the trademark.

The mark “ZSOLNAY” meets these conditions: in Budapest both the roof of world-famous Matthias church,  ( where formerly kings had been crowned), and the Museum of Fine Arts  have been covered by ZSOLNAY ceramics. Moreover, the fact that the name “ZSOLNAY” is recorded in the list of Hungaricums, serves as evidence that class 25, in which this mark is not recorded for the intervening party, deserves trademark protection.

4. Bad faith activity has been prohibited for 2000 years. The rule on mala fides in Roman Law had existed long before trademark law was construed by French lawyers.

Though the reference to bad faith of the claimants in the case hereabove reported is just the cherry on the top of the cake. I believe that even without this reference the judgements would have been convincing. The counterclaim alone, based on the objective circumstance of the reputation of the mark “ZSOLNAY”, would have been sufficient.

DR. SÁNDOR VIDA LLD.

In-house Counsel
Doctor of the Hungarian Academy of Sciences
Partner

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The applicant is owner of a word mark and two word-and-device marks each comprising the term “Használtautó” [meaning: ”second hand car”], registered in class 35 for advertisement, in class 38 for telecommunication services and in class 41 for entertainment services. Moreover, he is owner of an identical domain name. The defendant is owner of a similar domain name used for internet advertisement of cars.

The claimant sued for trademark infringement and unfair competition. The Metropolitan Tribunal said that with his advertisement the defendant infringed the claimant’s trademark and condemned him for trademark infringement. Further, the Tribunal said that the suffix “for sale” figuring in the defendant’s advertisements is not sufficient to make a distinction from the mark of the claimant. Therefore, the domain name used by the defendant can be confused with claimant’s mark.  (As the Tribunal condemned the defendant for trademark infringement, it did not examine the claim for unfair competition.)

The defendant filed an appeal with the Metropolitan Court of Appeal, but this was rejected. The Court approved the grounds stated by the Tribunal and added that the defendant’s advertisements, informing the public using the claimant’s device mark constituted unfair competition, too. Moreover, the Court said that though the word component of the figurative mark had no inherent distinctive character, in a procedure of cancellation against the claimant’s mark, it had been established that the mark has acquired distinctiveness through its intensive use.

The defendant requested revision with the Supreme Court, but this was also rejected. The Supreme Court approved the grounds presented by the two lower instances but completed the operative clause of their judgement with the statement that infringement was also committed by using the domain name of the claimant (Pfv.IV.20.700/2018).

Comments

It is interesting to state that every instance dealing with the case hereabove reported went a step further than the previous instance, namely:

• The Tribunal condemned the defendant for infringement of the claimant’s device mark;
• The Court stated that the behaviour of the defendant was also unfair;
• The Supreme Court condemned the defendant also for infringement of the domain name.

With the Supreme Court’s judgement, the circle of stating the defendant’s fault became complete.

The Supreme Court’s decision is also useful as the applicant’s device mark is contestable by view of marketing psychology, namely it was not per se distinctive, but it acquired distinctiveness only by use. As the defendant filed for cancellation of claimant’s device mark, and this was rejected, all three instances were correct condemning the defendant. I mean this does not change the fact that the word component of the claimant’s device mark is not inherently distinctive but as a result of acquired distinctiveness.

DR. SÁNDOR VIDA LLD.

In-house Counsel
Doctor of the Hungarian Academy of Sciences
Partner

Plaintiff’s trademarks and domain name:

<hasznaltauto.hu>

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