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04 August 2008
In a landmark case that has attracted considerable media attention, two private individual trademark owners sued one of Hungary's best-known luxury hotels for trademark infringement. The hotel responded by bringing a cancellation action against the two individuals, alleging that their application had been made in bad faith and with the intention of deceiving consumers. The cancellation action was ultimately upheld by the Supreme Court.
The trademark GRESHAM KFT was protected in respect of Classes 1, 3, 5, 30, 32, 35, 39 and 42 with a priority date of April 23 1997. The application was filed by a Hungarian firm, Gresham Kft, and the registered trademark was later assigned to two Hungarian individuals.
The trademark owners brought an infringement action against the owner of a hotel that opened and operated under the name 'Four Seasons Hotel Gresham Palace Budapest'. On January 21 2003 Gresco Rt, the company that owned the hotel, filed a cancellation claim against the trademark in respect of Classes 35 (advertising) and 42 (luxury hotel services), claiming that the application had been filed in bad faith and that use of the trademark was liable to deceive the public about the origin of goods or services connected with it.
On the question of the deceptive nature of the trademark, the claimant stated that it was the developer and operator of the luxury hotel in question, which is in a famous Budapest landmark. It stated that for over a century the well-known and widely used name of the building had been Gresham Palace; therefore, the public strongly associated the names 'Gresham Palace' and 'Gresham' with the building itself. Furthermore, the claimant argued that the building is a part of Hungary's cultural heritage and is known as Gresham Palace in this context. The claimant also argued that the plan to transform the building into a luxury hotel had been widely known in Hungary; therefore, the use of the name 'Gresham' for luxury hotel services by anyone other than the owner of the building was likely to mislead consumers.
On the question of the bad-faith application, the claimant presented evidence of a complicated chain of connections. It stated that the Hungarian firm Agentúra Kft had had its main office in the building between 1989 and 2000. Moreover, the claimant pointed out that Agentúra's managing director had later become the owner and managing director of Gresham Kft, the applicant and first owner of the contested trademark. Between 1989 and 2000 the residents of the building, among them Agentúra's managing director, were notified on more than one occasion of the plans to redevelop the building as a luxury hotel.
The claimant referred to articles in the press in support of its claim that the plans were widely known to the Hungarian public. In support of its claim of deceitful intent, the claimant referred to the fact that Gresham Kft had assigned the trademark to two private individuals in exchange for a share of future profits. The trademark owners also contacted the claimant and offered to assign the contested trademark to it, but the assignment fee was several times higher than that asked in normal Hungarian trademark practice.
At first instance the Hungarian Patent Office accepted all of the claimant's arguments on both counts and cancelled the trademark in respect of Classes 35 and 42. The Metropolitan Court of Budapest and the Metropolitan Court of Appeal heard appeals and both courts upheld the cancellation. The trademark owners brought a claim for legal review(1) before the Supreme Court of Hungary, which upheld the earlier decisions.
The patent office and the courts established fundamental findings in connection with the interpretation and practical aspects of bad-faith applications.
On a practical point, the patent office and the courts accepted the claimant's arguments by which it was shown that at the date of the trademark application, the applicant was aware that the sign for which it claimed trademark protection did not belong to it. The patent office and the courts thereby demonstrated their willingness to accept an indirect and complicated chain of connections as proof of such knowledge.
The Metropolitan Court of Budapest laid down an essential finding in relation to the interpretation of bad-faith applications. Previous trademark cases have established that the court must consider whether an applicant (i) acted with deceitful intent, and (ii) knew or ought to have known at the date of the trademark application that the sign did not belong to it. However, the court established a lower threshold for a finding of bad faith: the claimant need not prove that the applicant knew or ought to have known the identity of the third party that was entitled to the sign, but need merely prove that the applicant knew or ought to have known at the time that it was not itself entitled to use the sign.
For further information on this topic please contact Katalin Szamosi or Peter Lukácsi at SBG&K Patent and Law Office by telephone (+36 1 461 1000) or by fax (+36 1 461 1099) or by email (email@example.com or firstname.lastname@example.org).
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