June 29 2004
As from May 1 2004, the protection of over 300,000 Community trademarks has been automatically extended to Latvia, one of the new EU member states. In case of conflict, Latvian holders of earlier national rights may prohibit the use of the extended Community rights in Latvia. In such cases Latvian law remains applicable to the extended Community trademarks. Moreover, the Latvian courts will review disputes between the holders of national marks and those holding conflicting Community trademarks.
In case of conflict, actions will be reviewed on the basis of the Latvian Law on Trademarks and Geographical Indications, which is fully harmonized with the provisions of the EU Trademarks Directive (89/104/EEC). Nonetheless, court decisions often differ from country to country in similar cases.
Within this context, a recent Supreme Court decision is of particular significance. The court considered two interlinked issues: the similarity of trademarks and the scope of protection of trademarks.
On August 27 1999 SIA LION & Ko filed application with the Latvian Patent Office for registration of the figurative trademark BELOJE IGRISTOJE in Cyrillic, which was duly registered on July 20 2000 (Trademark M 46 402). Protection was sought in Class 33 in respect of sparkling wines.
No oppositions were filed against the trademark following its registration and publication. However, in 2002 an action was brought at the Riga District Court against the registration.
The claimant, JSC Latvijas Balzams, is Latvia's leading alcohol producer. It based its action on its earlier national mark SOVETSKOJE IGRISTOJE, also in Cyrillic (Trademark M 40 178). The mark was filed on August 1 1997 and registered on March 20 1998 in Class 33.
The claimant argued that a likelihood of confusion existed between the trademarks, which could be established on the basis of a comparison of the overall impressions they created.
The claimant stated, in particular, that both marks had a similar structure: both labels were divided into parallel segments of black, white and gold, with the middle black segment significantly wider than others. Two white segments were included at the top and bottom of the label, with a narrow gold stripe interposed between the lower white segment and the black segment. The black areas served as a background for other identical or very similar figurative elements: images of medals and a bunch-of-grapes motif. The word components of both trademarks were substantially similar and printed in an almost identical style. The colour combinations were almost identical. A comparison of the trademarks thus revealed a substantial likelihood of confusion. The claim was mainly based on the provisions of Article 7 of the Latvian Trademarks Law, which corresponds to Article 4 of the EU Trademark Directive.
The defendant challenged the claimant's arguments and pointed out that:
The Riga District Court rejected the defendant's arguments. The court found that from the overall impressions created by the marks, their similarity was so great that it could give rise to a likelihood of confusion. The court therefore decided that the BELOJE IGRISTOJE trademark should be invalidated.
The defendant appealed to the Supreme Court, which overturned the first-instance decision on February 18 2004. Upon reviewing the case on its merits, the Supreme Court found that there were substantial differences between the two marks, in the form of the number and positioning of the medals and differences in the grape motif (in particular, the configuration of the leaves). The court further emphasized that the earlier mark contained the owner's logo, while the BELOJE IGRISTOJE mark had been registered as two separate parts: a label and a bottle collarette. For this reason the court decided to reject the claim to invalidate the registration of the BELOJE IGRISTOJE trademark.
The Supreme Court's decision is surprising in several respects.
Firstly, the decision is essentially based on two incompatible principles. On the one hand, the Supreme Court upheld, at least formally, the assumption that "the overall impression is one of the factors that must be taken into consideration when evaluating the similarity of trademarks". However, although the court referred to this general principle of assessing trademarks on the grounds of the overall impression they create, there is no hint of such a comparison in its decision.
On the other hand, the decision evaluates only some individual elements of the conflicting trademarks. The general rule that an assessment of the similarity of trademarks must be based not only on some isolated elements, but rather on their estimation as a whole, was ignored. The court based its decision on insignificant differences and did not explain how such minor deviations could affect the impression of the average customer and prevent a likelihood of confusion of between two marks which were otherwise identical in many respects.
Secondly, the Supreme Court referred in its decision to Article 7(1) of the Latvian Trademark Law, which provides that a registered trademark may be declared invalid:
"(1) if it is identical to an earlier trademark, and the goods or services for which the trademark was registered are identical to the goods or services for which the earlier trademark was registered... [or]
(2) if, because of its identity or similarity to an earlier trademark belonging to another person and the identity or similarity of the respective goods or services, there exists a likelihood of confusion of the trademarks on behalf of the relevant consumers, which includes the likelihood of connection with the earlier trademark."
As is obvious from the circumstances of the case, the conflicting trademarks were not identical. Hence, only the provisions of the second subparagraph above applied. However, the court did not clearly define the legal grounds for the decision. Judging by the reasoning, these were confined to a conclusion that the compared trademarks were not identical.
Thirdly, the court did not evaluate the extent of the likelihood of confusion in the case of concurrent use of conflicting marks. It simply stated that this likelihood did not exist.
The decision may have an impact on the understanding of the scope of trademark protection in Latvia. It suggests that a different number of common elements, or a slightly different positioning or graphic presentation of common and similar elements, may be sufficient to prove a dissimilarity of very similar marks; in which case no trademark owner can be protected from infringement of its rights.
Latvia has no binding case law. However, it is unlikely that administrative bodies such as the Latvian Patent Office Board of Appeals and first-instance courts will ignore the reasoning of this decision.
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