In a recent decision, the Federal Supreme Court decided a case opposing Arthursgroup SA (“Arthur I”) on the one hand and Swiss Arthur Prod SA (“Arthur II”) on the other hand.
Arthur I – once operating a night club, now a restaurant/ bar/lounge – is the owner of the “ARTHUR’S” trademark, which has been registered since 1996 in classes 25, 35, 38, 41 and 42 (now 43). Arthur II – an entertainment company organizing and producing events and shows – registered the “Les Théâtrales de Swiss Arthur Prod” trademark in 2008 in class 41.
After battling over the course of a couple of years (sending cease and desist letters) without any results, Arthur I decided to bring the fight over the Arthur’s name to the Swiss courts. Claiming to be the rightful owner of the Arthur’s name, Arthur I requested the court inter alia to cancel Arthur II’s trademark and to order Arthur II to change its trade name (by removing the word “ARTHUR”). On the grounds of article 951 para. 2 of the Swiss Code of Obligations, which requires a registered trade name in the Commercial Register to have sufficient distinctiveness from an earlier registered trade name, Arthur I won a “small” battle: Arthur II was requested to modify its trade name but left free to decide on the appropriate changes to adopt. A trademark violation was however denied. This case is interesting in particular as regards (i) the genuine use of a trademark requirement, (ii) the similarity between services of classes 41 and 43, and (iii) the lapsing issue relative to the protection of trade names.
(i) Since both trademarks are registered in class 41 for similar services (organization of events), the Court first analyzed whether Arthur I’s use of its trademark in relation to these services was genuine.
According to articles 11 and 12 of the Swiss Trademark Act, a trademark shall be used in relation to the goods or services for which it was registered in the five years following registration, failing which the trademark rights are lost for such non used goods or services. The Court recalled that a genuine use must be serious in relation to each of the products or services for which the trademark has been registered, and in a way that the targeted audience recognizes such use of a trademark as a distinctive sign.
In this case, Arthur I had not genuinely used the trademark. On the one hand, hosting sporadic events organized by third parties (in a restaurant/bar/lounge) within the Arthur I premises was not considered as a use by Arthur I of its trademark. On the other hand, organizing three events over a four year timespan was not considered serious. Consequently, the Court concluded that Arthur I could not claim protection for its trademark for the services in class 41.
(ii) The Court then went on to examine the similarity of the services registered in class 41 for the Arthur II trademark (i.e. entertainment services, cultural activities, and shows and events production and organization) as compared to services of class 43 claimed (and genuinely used) by Arthur I (i.e. operation of a bar/restaurant) and considered that these services are not similar and, thus, that there was no likelihood of confusion between the signs. The rationale was that the purpose of these different services and the type of company actually offering such services are different. In addition, the Court found that the targeted audience of such services very well knows the difference between these services.
(iii) The third interesting point of this decision pertains to the lapsing of the right to claim a trade name infringement. In Swiss law, a right shall not be protected if it is exercised in an abusive manner (Article 2 para. 2 of the Civil Code). In the context of intellectual property rights, unfair competition and registered trade names, this principle has the consequence of preventing a party from claiming infringement if it tolerated an infringing use for too long. Such an assessment must be made on a case-by-case basis and courts will take into account whether or not the infringer can reasonably and in good faith believe that the rights holder has accepted the infringement and will no longer take action before the court. In this regard, it is relevant to determine if the litigious sign is known to the public further to a long and uncontested use.
In the case at hand, Arthur I waited 17 months after the publication of Arthur II’s trade name in the Commercial Register to send its first cease and desist letter. Contrary to the Cantonal Court, the Supreme Court held that this was not too long. Following this first cease and desist letter, Arthur I sent three more letters over the course of 18 months before starting legal proceedings against Arthur II. Each of the cease and desist letters was found to be a new starting point for the assessment of the lapsing of rights. Although an infinite reiteration of cease and desist letters without starting legal proceedings would likely not be compatible with article 2 para. 2 of the Swiss Civil Code, the Court found that Arthur II could not in good faith have believed that Arthur I had waived all rights to act in court and, hence, that Arthur I’s rights had not lapsed.
In conclusion, Arthur I won one battle, but did not come close to winning the war: the Supreme Court ordered Arthur II to modify its trade name in the Commercial Register, but – since the addition of distinctive elements to the word “ARTHUR” could already be enough to distinguish Arthur II’s trade name from that of Arthur I – it did not specifically order it to remove the word “ARTHUR”. The Court even suggested that “King Arthur” may not create a likelihood of confusion with Arthur I’s brand. Arthur II seemed more than pleased with that suggestion as it has now changed its trade name from “Swiss Arthur Prod SA” to “LES PRODUCTIONS DU ROI ARTHUR SA”.