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Every law has it loophole…

  • 30 August 2016
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Not often do clients seek our advice in connection with the measures that should be taken in IP terms before going into the market or embarking on any venture. In those few but precious cases, we would doubtlessly advise on the benefits of registering a trademark and would highly recommend them to do so.

While it is true that the procedure seems straightforward, sometimes it is not, and it can get complicated, either by third-party oppositions, office actions, or even delays inherent to the procedure. Yet, generally, these issues can be overcome on the basis of agreements, abidance by the requirements prescribed for trademark registration in some cases, and exercising patience.

Conflict may arise in those cases where our clients allow for reasonable time to go into the market once the trademark application has been filed (publication period and deadline to file oppositions) and within that lapse their competition outpaces them with a similar trademark, in a clear move to boycott the business project.

In this scenario, the Law on Trademarks proves insufficient to safeguard the diligent merchant.

First and foremost, because the trademark application is not suitable for requesting legal assistance by means of precautionary measures, given the grant of these measures is subject to the status of “registered trademark” owner. The same standard applies to criminal proceedings, where those who use a registered trademark or violate the intellectual property rights of its owner are punished.

It is widely known that the ownership of a trademark and the exclusive right to use it derive from its registration. This statement, cited as a cliché, would be crucial in cases such as the that referenced before, where no such registered trademark exists, but the intention to register it is real.

Moreover, the credibility of the Law also proves weak, given that we only enjoy a “merely” right in expectation, and these measures have been granted solely for exceptional cases under similar circumstances.

In turn, the proceeding prescribed in section 35 of Law No 22362 aims at providing the petitioner with a guarantee in case the use of the trademark continues during the course of the trial. However, the decision to continue or discontinue the use of the trademark remains on the transgressor —who is entitle to bail so to further its exploitation—not on the petitioner.

And, even though the Law refers to the “petitioner”, certain court rulings have required to comply with the status of “owner of the registered trademark” to allow for an exploitation ancillary proceeding.

In any case, the advancement of the ancillary proceeding should keep pace with the lawsuit, and it should be notified to the transgressor, who, in turn, can file an appeal against the bail amount. Consequently, the procedure clearly lacks agility and reparation.

In other words, the merchant who had applied to register his trademark before going into the market has, in practice, no immediate measure to hamper the simultaneous exploitation on behalf of the competition of a similar or identical trademark.

It must be noticed that, nowadays, a medium-sized merchant devotes a great deal of effort and affords exorbitant costs, such as market studies, draft of business plans, product testing, creation and design of a trademark, among others, while the competition attains a different position, precisely because it gains advantage from somebody else’s work and effort.

Under these circumstances, what the desperate merchant truly needs is an urgent solution instead of a fair ruling that finally condemns the transgressor with an arbitrary amount for damages, which, obviously does not include moral damage in the case of individuals, given the requirements to award such damages.

The irreversible damage to the merchant and his trademark specifically arises when the third party in bad faith goes into the market, despite the impact resulting from such an act: widespread use in social media, products flooding gondolas, TV, web and radio advertising, discounts, just to name a few.

Precisely in that moment the applicant for registration needs to be backed by the law, which should make available effective and immediate measures for him to avoid the consequences that may bring forth the unlawful acts of his competition. Nevertheless, this scenario has never been considered.

In some special cases, precautionary measures have been awarded for trademarks pending registration, but mainly when the owner has succeeded in proving such a prior use that the symbol in itself had been deemed as a “de facto trademark”, where its users deserved protection, as well.

Those cases would not apply to our scenario, where protection is required for a “pending trademark application”, we may add, with an specific purpose of immediate use.

On top of that, the trademark procedure —I may even qualify it as a slightly wicked procedure— sometimes gives rise to unfair situations for those who chose a path that would enable the lawful exercise of their rights.

To the case cited before, and taking into account the special features of our registration system, we may add the bad faith of the competition when it decides to go into the market under a similar or identical trademark to that of the diligent applicant, and when it files an opposition to the application, either itself of by a third party. This claim, as ungrounded and implausible as it may seem, will surely delay the registration as long as the opponent persists in doing so and during the length of an ordinary trial, i.e., at least until a higher court issues its judgment.

In light of this, it takes only the submission of one form for the miserable applicant to end up demoralized, asking himself the reasons why he decided to follow right track. Regrettably, this a trademark paradox we are used to, indeed.

Yet even if the cited scenario is hardly the ordinary case, it truly depicts a real life situation, which can be encountered by anyone with a pending trademark. It is also a fact that both industrial espionage and unfair competition exist.

The applicant of a trademark pending registration that cannot be deemed as a de facto trademark has no immediate measure at hand to counteract the violation of his rights arising from unlawful acts. Even those rights are deemed as rights in expectancy, they take priority over a later use.

Since there is no opportunity to exercise such a right, when it is finally recognized, either by a favorable judgment, the registration of the trademark, an award for damages, or any other type of indemnification, it may be too late, or it may not even serve as a restitution to the owner for the suffered damage.

Still another paradox is the fact that, while the registration of a trademark for its use is not binding, the symbol must be registered to bring an action granted by law for its protection, and, in turn, that first step of registration —filing the application— has no validity whatsoever in itself to obtain protection, except for those cases where a trademark without registration has been used.

In all these scenarios, the previous application should — in certain and special occasions— enjoy a greater force and should rely on effective remedies to avoid conducts that may impinge on the chief purposes of Trademark Law.

I understand that for the scenario referenced before, judges should consider preparatory acts, any investment accredited by the merchant, and the filing date of the trademark application together with the dispositions set forth in section 1 of the Antitrust Law, prohibiting conducts which aim at limiting, restraining, falsifying or distorting the competition or the access to the market to the detriment of the general economic interest, in order to work out a solution for those who have endured or are likely to endure similar scenarios to that cited above.

Original Source: http://www.abogados.com.ar/hecha-la-ley/18510

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Every law has it loophole…Every law has it loophole…