June 11 2012 Beware cover registrations imitating well-known trademarks Grau & Angulo | Intellectual Property - Spain Intellectual Property On March 6 2012 Section 8 of the Barcelona Court of Appeal confirmed the judgment issued by Barcelona Trial Court No 23 on December 1 2011 in a case involving the import of thousands of garments which imitated Giorgio Armani SpA's trademarks.The case is of interest because the importer produced a cover registration during the criminal proceedings in an attempt to justify the legality of the import. This is an increasingly widespread practice among brand infringers, which are becoming more professional and developing more sophisticated strategies.A 'cover registration' is a registered trademark that bears some resemblance to a well-known trademark, but which is not identical (so as not to raise the alarm during the registration process). This trademark is not registered to be used in the market as registered, but is rather intended to be used in a different manner and to 'piggyback' on an existing well-known trademark. Such a registration attempts to provide some legal cover to what is in reality a malicious act of imitation.Once the cover registration has been granted, goods carrying not the cover mark, but rather a sign which imitates a similar, well-known mark are manufactured, imported or marketed. Should Customs or the police attempt to stop such goods, the cover registration is produced to prevent their seizure. Unfortunately, this tactic is sometimes successful.Producing a cover registration gives the appearance of legitimacy to the use of an IP right. However, what is actually being used on goods is a sign which is different from the cover mark (and which is not registered as a trademark), but is similar to an already well-known trademark.If, despite having produced a cover registration, the goods are seized and criminal proceedings commence, the infringer will often provide the criminal court with the cover registration, as occurred in the Armani case.Given that Article 34 of the Trademark Act entitles the holder of a Spanish registered trademark to use the mark in trade, offenders often take refuge in this jus utendi (ie, the right to use property without destroying its substance) to justify their behaviour. They also argue that the holder of the earlier well-known brand did not object to its granting during the administrative procedure and did not request its nullification once it was granted.In this way, they hope that the criminal courts will conduct a cursory review of the case, creating confusion and diverting the discussion from the criminal perspective. However, the issue in contention in this type of criminal suit is not in fact the cover registration; the objective is to prosecute a case of imitation in which a sign not actually registered as a trademark is used and is simultaneously an imitation of a well-known registered trademark.The Barcelona Court of Appeal made clear in its judgment that:"The appearance of being protected by one's own registered trademark cannot produce the required exonerating effect, arguing that this trademark has not been contested by the holder of the [earlier well-known] mark".It also stated that the subjective requirement of the crime of which they are accused is satisfied:"from the very moment the decision is made to register a distinctive sign being aware of the similarity [to the well-known trademark] – as a preparatory act – to later carry out a massive importation of products intended to be protected under the umbrella of the registered trademark".Had the imported products faithfully and accurately reproduced the mark registered by the defendant, it is clear – the court of appeal stated – that this would not have constituted an IP crime. However, the defendant had tried to find protection in a cover registration for products labelled and identified with distinctive signs that coincided not with the registered mark, but with Armani's trademarks.For further information on this topic please contact Jordi Camo at Grau & Angulo by telephone (+34 93 202 34 56), fax (+34 93 240 53 83) or email ([email protected]).