Tarek Farran February 12 2019 Beirut Supreme Court confirms that trademark ownership is acquired through use, not registration Farran Law Firm | Litigation - Lebanon Tarek Farran Litigation FactsDecisionsCommentIn its recent decision in Kataeb Political Party v The Modern Media Company, the Beirut Supreme Court confirmed that the ownership of a trademark or trade name is acquired through use and not through registration with the relevant authorities.FactsIn 1958 the Kataeb Political Party (KPP) launched the radio station Voix Du Liban – VDL, which the Ministry of Telecommunications licensed in 1976.In 1994 the law regulating the broadcasting of radio stations and TV channels was promulgated. Among other things, the law stipulates that only joint stock companies can obtain a radio or TV broadcasting licence.In 1996 The Modern Media Company (MMC) was incorporated on the KPP's initiative. The MMC subsequently obtained a licence to operate a radio station under the name Voix Du Liban – VDL and rented premises and related equipment, as well as the station's archive, from the KPP in order to run and operate the station. The MMC was supervised by the KPP to which it provided regular reports. The MMC proceeded, with the KPP's knowledge, to register Voix Du Liban - VDL as a trademark.Several months prior to the rental agreement's expiry, the KPP sent a notification to the MMC requesting, among other things, that it:refrain from using the VOIX DU LIBAN – VDL trademark; andtransfer the trademark's registration to the KPP.The MMC failed to comply with the notification. As such, the KPP filed suit against the MMC, reiterating its claims. However, the MMC claimed ownership of the trade name Voix Du Liban - VDL based on the fact that:the KPP had stopped using the trade name in 1994 and had therefore lost any ownership thereof;as of 1994, only joint stock companies can own, run and operate radio stations;the KPP, being a political association, is prohibited from undertaking commercial activities; andthe MMC had registered the trade name in 1996 with the KPP's knowledge. As such, any right of objection had been lost in view of the applicable statute of limitation.DecisionsFirst-instance courtOn 25 September 2013 the first-instance court (ruling on commercial matters) held that it was obvious that the trademark belonged to the KPP, which had granted the MMC implicit authority to use it. The court based its conclusion on the following facts:The KPP had created the VOIX DU LIBAN - VDL trademark and used it until 1994 (as acknowledged by the MMC).The law does not prohibit associations from owning trade names with the right to license them.Despite registering the trademark in its own name with the official authorities, the MMC had been unable to provide the court with a written deed of the trademark's transfer thereto.The MMC had been incorporated on the KPP's initiative and had regularly reported to the KPP.Appeal court decisionOn 2 February 2016 the appeal court confirmed that:the KPP was the owner of the VOIX DU LIBAN – VDL trademark;the MMC had been unable to produce written evidence of the trademark's transfer;the KPP had granted the MMC implicit authority to use the trade name Voix Du Liban; andsuch authority had been revoked by the letter served to the MMC in which it had asked the MMC to refrain from using the trade name. Therefore, the statute of limitation had started running from the date on which such letter had been served.Further, the appeal court confirmed that, despite the fact that the legislation concerning associations (and political parties) prohibits such entities from undertaking any commercial activity with the aim of benefiting its members, such prohibition does not cover situations in which an association may generate revenue from commercial activities, provided that such revenue will be dedicated exclusively to fulfilling the entity's main activity. A typical example of such a situation is the revenue that an association generates from licensing a trademark.Beirut Supreme Court decisionOn 4 May 2017 the Beirut Supreme Court confirmed the appeal court's conclusions, stating that Lebanese legislation protects the initial use of a trademark and clearly states as follows:the created trade name or trade mark or service name is by itself a legitimate object (Res Nullius) and is considered to have its own existence and it can be owned as long as it doesn't have a previous owner, and such ownership is established pursuant to its use and not its registration, whereas the registration's role is restricted to publicize such right and not to create it.CommentThe Beirut Supreme Court has once again confirmed the model adopted by Lebanese law with respect to trademark registration – namely, that the purpose of such registration is to proclaim the right to use a trademark and not to create such a right.The MMC believes that the Beirut Supreme Court made a serious error in confirming that the KPP had granted the MMC implicit authority to use the trademark, but denying that the transfer of a trademark is not in itself a commercial activity which can, by law, be proved by all means and not merely a written instrument. As such, the MMC filed an appeal before the highest court (which comprises the presidents of all cassation court sections) on this ground, among others. The highest court's verdict has yet to be issued.For further information on this topic please contact Tarek Farran at Farran Law Firm by telephone (+961 1 426 174) or email ([email protected]). The Farran Law Firm website can be accessed at www.farranlaw.com.