Sándor Vida November 21 2022 Court rules that reputation of ZSOLNAY trademark confers extra protection Danubia Patent and Law Office LLC | Intellectual Property - Hungary Sándor Vida Intellectual Property FactsMetropolitan TribunalMetropolitan Court of AppealCommentFactsThe claimants are descendants of Mr Zsolnay, the founder of the famous Hungarian porcelain brand Zsolnay. The claimants own the European word mark ZSOLNAY, which is registered in classes 17, 18, 20, 25 and 45. However, the claimants did not use the mark in their market activity.The defendant, a trading company, used the same mark on clothing, as well as on the Internet, in relation to its clothing collections. An intervening party named ZSOLNAY Ceramics Factory intervened for the defendant. The intervening party is the manufacturer of the famous Zsolnay porcelain (ie, tableware and porcelain figurines) and the owner of several ZSOLNAY trademarks protected in class 21, among others, but not in class 25. The defendant and the intervening party agreed that the defendant could use the ZSOLNAY mark for clothing, in exchange for a licence fee. The claimants were aware of the defendant's activity.The claimants sued the defendant for trademark infringement. The defendant filed a counterclaim. They held that the claimants had acted in bad faith when applying for the European mark.Metropolitan TribunalThe Metropolitan Tribunal, as a first-instance European trademark court, rejected the infringement claim. However, the counterclaim was successful. The Tribunal stated that the mark was reputed, and the claimants had filed their EU trademark application in bad faith – they had been aware that the mark of the intervening party had a reputation and they had filed the same mark without the permission of the intervening party.Metropolitan Court of AppealThe Metropolitan Court of Appeal, as a second-instance European trademark court, approved the Tribunal's judgment. The Court added that the intervening party's reputed ZSOLNAY mark had been used since the 19th century. The claimants' bad faith had also been proved – they had been aware of the use of the intervening party's ZSOLNAY mark on the market, as the intervening party had protested against 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 standard case law, which does not allow revisions of statements of facts or, in particular, how the lower instances rendered their judgment on such facts. In respect of the counterclaim, the lower instances had to judge whether the claimants had filed the European application for the reputed mark ZSOLNAY in bad faith. As a result, the claimants' cited EU trademark was invalidated.The lower instances were right in stating that the ZSOLNAY mark was reputed – it had been used for approximately 100 years and had even obtained the title of "Hungaricum" (meaning that it has a value worthy of distinction – the highest achievement in Hungary).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 applied in this case – the intervening party's mark was not recorded, so the lower instances had to examine whether the claimants had been or should have been aware that the mark belonged to the third company and whether they had acted unfairly when filing the same mark. Relating to this question, the opinion of the lower instance was convincing and the Court agreed with its conclusion.In this respect, the Court said that the claimants had been aware of the goods in respect of which the reputed mark of the intervening party was registered.(1)CommentJurisdiction over European trademarksEuropean trademark law is eclectic. It contains elements of German, French and British rules, among others. This is particularly the case for procedural law: jurisdiction is divided between European and national competencies.The case discussed in this article is an example of such eclecticism. The EU General Court has competence for all lawsuits apart from infringement suits, for which the national courts of the claimant are competent. Every member state operates one or more European trademark courts: in Hungary, this is the Metropolitan Tribunal, as the first-instance European trademark court, and the Metropolitan Court of Appeal, as the second-instance trademark court.This principle is also valid with respect to the procedures of counterclaims in a trademark suit, for which the court of the infringement case is competent. Rules on counterclaims were unheard of in the former national trademark laws.Annulment of claimants' European trademarkCounterclaims 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 the object of the proof. When filing the claim, the claimants likely did not think that the owner of the mark would intervene. However, after the Tribunal's judgement, they ought to have realised that they had no chance of success.Protection of reputed mark even if not registeredSuch protection was previously unheard of in Hungarian trademark law; it was introduced only through harmonisation with European trademark law. In this respect, section 5(2) of the EU Trademark Directive provides that where a trademark has a reputation in a member state and where use of the sign without due cause would take unfair advantage, goods and services which are not like those for which the trademark is registered are detrimental to the distinctive character or the repute of the trademark.The ZSOLNAY mark met these conditions: in Budapest, the roofs of both the world-famous Matthias church and the Museum of Fine Arts are covered by Zsolnay ceramics. Moreover, the fact that the name "Zsolnay" is recorded in the "Hungaricums" list evidences that the trademark deserves protection in class 25, despite not being recorded therein for the intervening party.Bad faith activityBad faith activity has been prohibited for thousands of years. This concepted existed in Roman law long before trademark law was construed by French lawyers.However, even without the reference to the claimants' bad faith, it is likely that the judgments would have been convincing. The counterclaim alone, based on the objective circumstance of the reputation of the ZSOLNAY mark, would have been sufficient.For further information on this topic please contact Alexander Vida at Danubia Patent & Law Office LLC by telephone (+36 1 411 8700) or email ([email protected]). The Danubia Patent & Law Office LLC website can be accessed at www.danubia.hu.Endnotes(1) Pfv IV 20 602/2019.