On November 15, 2013, Division 2 of the Federal Court of Appeals in Civil and Commercial Matters of the City of Buenos Aires affirmed the First Instance Court’s decision that had ruled as timely the defendant’s motion to accept the plaintiff’s complaint and therefore confirmed that the latter had to bear the court costs (“Merlo Distribuciones S.R.L. v. Instituto Sidus I.C.S.A.”).

Intellectual Property

For a better grasp of this decision it is necessary to keep in mind that according to the Argentine trademark procedure oppositions cannot be dealt with by filing arguments at the Trademarks Office. They can only be overcome by friendly settlement (resulting from preliminary negotiations or from mandatory pre-trial mediation proceedings) or by instituting court action to have the opposition declared ill-founded, within a one year term from the date on which the applicant is notified of the opposition. Otherwise the application becomes abandoned. At the end, the issue is decided by the courts, not by the PTO.

The plaintiff instituted court proceedings seeking to remove the opposition against the trademark application “LINDIVA” in class 5. The opposing trademark “DIVARYL”, also in class 5, had not been renewed. After requesting that the assignment of the application from Wierhom Pharma S.A. to Merlo Distribuciones S.R.L. be recorded and since mediation was unsuccessful, the plaintiff limited the scope of the mark to “dermatological products” only, and on the following day filed the complaint with the Court seeking to have the opposition removed. The defendant accepted the complaint since it considered the limitation of the application to be a new and relevant fact as “dermatological products” were not similar to those protected by the opposing trademark. The plaintiff consented to the defendant’s acceptance of the claim but requested that the court costs be borne by Sidus.

Citing section 70 of the Code of Civil Procedure, the First Instance Court awarded the costs of the proceedings to the plaintiff ruling that the defendant had accepted the complaint in due time in view of Merlo’s limitation of the application. The Court of Appeals affirmed this decision.

The Court first stated that even if the opposing trademark had expired, the defendant’s right to file the opposition subsisted as it had filed a new application for the same goods and consequently this was a sort of refiling of the old registration. The Court went on to point out that the plaintiff, before filing the complaint, should have taken the necessary steps to inform the defendant that it had limited the scope of the objected application. Having failed to do so, the defendant only became aware of the exact extent of the plaintiff’s application when being served notice of the complaint; it was therefore the plaintiff’s responsibility that the conflict had reached the courts. Accordingly the defendant’s motion to accept was declared timely and the court costs were imposed on the plaintiff.

This decision highlights the importance of timely notifying the opponent of the limitation of the scope of the objected application before serving notice of the complaint, to avoid bearing the costs of the court proceedings.