Metropolitan Court of Appeal
A party ("the cancellation applicant") requested the cancellation of the mark WU2 on the grounds of its similarity to a prior WU2 word mark and a prior WU2 device mark, which were both known by the owner of the later mark ("the trademark owner").
The trademark owner requested the suspension of the cancellation procedure with reference to a separate lawsuit that he had initiated against the cancellation applicant. The lawsuit concerned the nullity of the agreement regarding the assignment of the older identical mark on which the cancellation request was based ("the nullity procedure").
The Hungarian Intellectual Property Office (HIPO) suspended the cancellation procedure until the issuance of a final decision by the Metropolitan Tribunal on the nullity procedure, holding that the claim to be judged by the Metropolitan Tribunal was a preliminary question as regulated by section 43 of the Trademark Act.
A request to review the HIPO decision was filed with the Metropolitan Tribunal, but was rejected. The Metropolitan Tribunal held that the nullity procedure was a preliminary question to the cancellation procedure in which it could be clarified whether at the filing date of the mark in question, the cancellation applicant had been entitled to use the WU2 mark, or whether the cancellation applicant had acted in bad faith when filing his application. To establish bad faith, proof of the cancellation applicant's intention of fraud would be necessary. If, in the nullity procedure, the trademark owner was the successful party, the trademark owner would be the claimant. As a result, the Metropolitan Tribunal would be able to clarify whether the trademark owner had been entitled to use the mark at the date of the filing of the later WU2 trademark.
An appeal of the Metropolitan Tribunal's decision was filed with the Metropolitan Court of Appeal, but this was also rejected. The Court said that the Metropolitan Tribunal's decision was substantially in accordance with the HIPO decision as the main question to be clarified was whether the cancellation applicant had been entitled to use the mark at the filing date.(1)
The WU2 mark is well known in Hungary for shampoos. It is unsurprising that there was a dispute as to whom the mark really belonged. The question of bad faith was raised but not answered by the courts in this procedure, as the proceeding was directed to whether a legal dispute on ownership constituted a basis for the suspension of a cancellation proceeding.
The rule on suspension of a suit or an action is well known in civil and in administrative procedural law.(2) This institution is adapted by the Trademark Law (among other laws, such as the Patent Law) with some changes relating to trademark procedures. Section 34(1) of the Trademark Act states as follows:
If a lawsuit is launched concerning a trademark application or entitlement to the trademark, the trademark proceedings shall be suspended, pending final conclusion of the lawsuit. Where the final decision in a trademark proceeding requires the preliminary judgement of an issue where the decision lies with another authority, the Hungarian Intellectual Property Office shall suspend the trademark proceedings.
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(2) Code of Civil Procedural Law and Act on Administrative Procedural Law.