Background
Facts
Decision
Comment
The registration of a trademark confers to the owner the right of exclusive use of the mark and empowers it to prohibit third parties from using the mark without its consent or authorisation. The unauthorised use of a mark constitutes a violation of IP regulations, and the affected party may take measures against the infringer. It can initiate an action for infringement of IP rights under article 99 et seq of Legislative Decree 1075 and articles 238 to 244 of Decision 486 of the Commission of the Andean Community (Decision 486).
Article 238 of Decision 486 states that:
the owner of rights protected under this Decision may bring an action before the competent national authority against any person who infringes his rights. He may also proceed against any person who engages in acts that indicate the imminence of an infringement.
Likewise, article 155(d) of this regulation states the following:
Registration of a mark shall confer on its owner the right to proceed against any third party who, without his consent, performs any of the following acts:
. . . .
d) using, in business dealings, a sign identical or similar to the mark in relation to any goods or services where such use could cause confusion or a risk of association with the owner of the registration. Where an identical sign is used for identical goods or services, it shall be presumed that there is a risk of confusion.
The complainant of a trademark infringement can request the authority to order measures such as cessation of the acts of infringement, compensation for damages, withdrawal from the market of the products resulting from the infringement, or prohibition of the import or export of those products, among other measures indicated in article 241 of Decision 486. In addition, the complainant may ask the authority to order immediate precautionary measures as set out in article 246.
Among the penalties that can be imposed by the authority for cases of trademark infringement, there is a reprimand and a fine. The fines imposed for violations are up to 150 tax units, and in cases where the real illicit profit obtained from the infringing activity is greater than 75 tax units, the fine may be 20% of the sales or gross income received from the infringing activity, as set out in article 120 of Legislative Decree 1075. In addition, it must be taken into account that reoffending in these acts is considered an aggravating circumstance.
The case of the sign AQUA TEARS(1) is an example of trademark infringement. Espect SA (Peru) (the complainant) was the owner of the trademark AKWA TEARS R that distinguished products in class 5. It commercialised eye drops, the therapeutic use of which was artificial tears. The complainant filed an action for infringement of IP rights against Eske SRL (the defendant) because it had launched a product called AQUA TEARS with a similar therapeutic use. The complainant requested the cessation of the commercialisation of the AQUA TEARS product by the defendant, along with the confiscation, deposit and immobilisation of the pharmaceutical products, labels, boxes and advertising material of AQUA TEARS, among other measures.
The defendant tried to absolve itself from the action by stating that the manufacturer and original owner of the mark was the Indian company CIpla Ltd. This company was the commercial representative in Peru responsible for the medicine. The defendant argued that there was no confusion between the signs if it was taken into account that "tears" was common to the construction of both marks, so the comparative analysis had to focus on the other denominations AKWA and R and AQUA. Furthermore, it added that the names AKWA TEARS R and AQUA TEARS were not graphically, phonetically or conceptually confusing, that the term "tears" is a common denomination, and thus that the signs could coexist peacefully in the market.
The Office of Distinctive Signs declared the infringement action filed by the complainant unfounded for the following reasons:(2)
- The sign AQUA TEARS lacked distinctiveness as it did not have any element that endowed it with this characteristic, and was a sign incapable of individualising itself before the consumer. For products to be distinguished, they have to come from a certain business origin. In this sense, the denomination AQUA TEARS lacked the necessary distinctiveness and could not constitute a mark; therefore its application on the products would not be perceived as such.
- The denomination AQUA TEARS fulfilled an informative function about the products it distinguished, since it referred directly to the characteristics and function by which the consumer would choose the products of class 5 of the official nomenclature offered by the defendant.
- The signs were not similar. The sign used by the defendant did not constitute a sufficiently distinctive sign by which the consumer could identify the product or perceive it as coming from a certain business origin. This was unlike the registered trademark AKWA TEARS R, which, as a whole, had elements that gave it the necessary distinctiveness to fulfil its function as an indicator of business origin.
The complainant filed an appeal, stating that the sign used by the defendant was distinctive: the AQUA TEARS sign was associated with a specific product on the market. The appeal also stated that the sign and the product differed from each other so there was no confusion between the two. In addition, the consumer would not know that "tears" was a word in English as it translates to "lágrimas" in Spanish. The defendant had been using the sign AQUA TEARS to distinguish pharmaceutical products in class 5 of the official nomenclature, which was confusing with its registered trademark AKWA TEARS. Likewise, the complainant stressed that there was the possibility of direct or indirect confusion, to the extent that the sign AQUA TEARS contained a name that is graphically and phonetically very similar to the registered trademark AKWA TEARS R, which would lead the consumer to think that they were similar products or from the same manufacturing company launching a new line of products onto the market.
By means of Resolution No. 0368-2005/TPI-INDECOPI, the Intellectual Property Chamber resolved to revoke Resolution No. 13549-2004/OSD-INDECOPI of the first instance. Consequently, the Chamber declared as founded the action for infringement of IP rights filed by the complainant against the defendant. The defendant was prohibited from using the name AQUA TEARS, both independently and jointly with other elements, to distinguish products of class 5 of the official nomenclature, and imposed a fine amounting to one tax unit on the defendant.
To issue this ruling, the Chamber took into consideration the following:
- The sign AQUA TEARS used by the defendant distinguished eye drops – products that are included within the class of pharmaceutical products. Such products were also covered by the trademark AKWA TEARS R, registered in favour of the complainant.
- From a phonetic point of view AQUA TEARS, the signs were phonetically similar.
- With regard to the look of the two trademarks, the presence of the letters "Q" and "U" in the defendant's sign instead of the letters "K" and "W" in the registered trademark, as well as the letter "R" at the end of the registered trademark, meant that the signs produced a different overall visual impact.
- From a conceptual point of view, although the word "tears" is in English, its meaning could be known by a consumer who used ophthalmic products. Although the term "aqua" comes from Latin, given its similarity to the Spanish word for water, "agua", it would evoke the Spanish meaning in the minds of consumers. Likewise, the name "akwa" in the registered trademark could be associated with the word agua. Taking into account the frequent use of the terms "aqua" and "tears" in the market to refer to various products in class 5, as well as the fact that advertising through the media has an increasing scope, the Peruvian consumer is familiar with other languages and cultures. Further, the knowledge of foreign languages in the country is not the same for all consumers. In this sense, from a conceptual perspective, the signs alluded to the same concept, and related to the products known as "artificial tears".
For these reasons, the Chamber indicated that, despite the graphic differences, given the existence of similarity or connection between the products that the signs distinguished and the phonetic similarity between the signs, the sign used by the defendant was capable of inducing confusion among consumers. The Chamber concluded that the sign used by the defendant violated the IP rights of the complainant with respect to its mark AKWA TEARS R, registered to distinguish products of class 5, under article 155(d) of Decision 486.
An incorrect decision by the Trademark Office could diminish the rights of registered trademark owners. In this case, if the reasoning of the Office of Distinctive Signs in the first instance had been accepted and not appealed by the owner of the registered trademark, the analytical ruling of the second instance would not have been obtained, and the action would have remained unfounded with no penalty for the defendant.
The second-instance decision was correct, since the Chamber did not focus on whether the sign lacked distinctiveness, but instead dealt with the main issue of whether the defendant, by the use of the sign, violated the IP rights of the owner company of the registered trademark.
For further information on this topic please contact Marietta Flores at OMC Abogados & Consultores by telephone (+51 502 6467 or +51 635 0641) or email ([email protected]). The OMC Abogados & Consultores website can be accessed at omcabogados.com.pe.
Endnotes
(1) Taken from Resolution No. 0368-2005/TPI-INDECOPI dated April 13, 2005, from file No. 201668-2004.