Trademark Law Aspects of Distribution Contracts

Transcription

1 Trademark Law Aspects of Distribution Contracts INTERNATIONAL SALES AND DISTRIBUTION Negotiating and Managing International Sales, Agency and Distributorship Contracts Seminar organised by UIA June 29, 2013 Dr. Gusztav BACHER Szecskay Attorneys at Law

2 Overview 1. Typical clauses of distribution agreements on trademarks 2. Principle of trademark exhaustion 3. Distribution agreement: preventing exhaustion of trademark rights 4. Bad faith trademark application by the distributor (agent) 5. Domain registration by the distributor (ADR practice) Folie 2

3 New Hungarian Civil Code :372. [Distribution agreement] According to the distribution agreement, the supplier is responsible for the sale of the specified movable object (hereinafter: the product) to the distributor, and the distributor is responsible for the purchase of the product and for the subsequent sale of the product in their own name and for their own profit. 6:373. [Protection of reputation] (1) The parties are obligated to protect the reputation of the product. (2) The supplier is obligated to inform the distributor of any advertising related to the product, and in return for a fee the supplier is obligated to hand over advertisement necessary for the distribution of the product. 6:374. [Instruction and control] (1) The supplier has the right to give instructions with respect to the proper distribution of the products. (2) If the supplier's instruction is improper or impractical, the distributor is required to notify them of this. If, in spite of the notification, the supplier upholds the instructions, the distributor is required to carry out the instructions; any subsequent damages related to the instructions fall to the supplier. The distributor is required to refuse instructions if the completion of those violates rule of law or official regulations, or if it would endanger others' person or property. (3) The supplier is entitled to inspect the completion of the terms of the contract and his instructions. Folie 3

4 Typical clauses of distribution agreements ICC Model Distribution Agreement: - Supplier's trademarks and symbols: 13.1 The Distributor shall use the Supplier's trademarks, trade names or any other symbols. However, the Distributor may do so only for the purpose of identifying and advertising the Products within the scope of this contract and in the Supplier's sole interest The Distributor agrees neither to register, nor the have registered, any trademarks, trade names or symbols of the Supplier (or which are confusingly similar to the Supplier's), in the Territory or elsewhere The Distributor's right to use the Supplier's trademarks, trade names or symbols, as provided for under the first paragraph of this Article, shall cease immediately upon the expiration or termination, for any reason, of the present contract. This does not preclude the Distributor's right to sell the Products in stock at the date of expiration of the contract which bears the Supplier's trademarks The Distributor shall notify the Supplier of any infringement in the Territory of the Supplier's trademarks, trade names or symbols, or other industrial property rights, that comes to the Distributor's attention The Distributor is free to promote the Products through Internet, but he cannot use the Supplier's trademarks, trade names or any other symbols without previously agreeing in writing the details of such use. Folie 4

5 Typical clauses of distribution agreements on trademarks (2) The distributor shall not: (a) make any modification to any of the products bearing the supplier's trademark, or the packaging thereof unless it is compulsorily required by the applicable laws; (b) alter, remove or tamper with the supplier's trademarks, or any marks used in relation to the products; (c) use the supplier's trademarks in any way which might prejudice its distinctiveness, goodwill, reputation, or the validity; (d) use in relation to the products any trademarks other than the supplier's trademarks and the distributor's company name for labelling purposes only as required by law; (e) authorize other third party to use the trademarks for advertising without the supplier's prior written consent. Folie 5

6 Principle of exhaustion of trademark rights Article 7(1) of the Trademark Directive: The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the EEA under that trade mark by the proprietor or with his consent. Article 7(2) of the Trademark Directive: [The exhaustion] shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialization of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market. Folie 6

7 Distribution agreement: preventing exhaustion of trademark rights Breach of licence agreement by selling to nonauthorized distributor C-59/08 Dior v. Copad Perfume testers - 'not for sale'; 'demonstration C-127/09 Coty Prestige Lancaster Group Folie 7

8 DIOR - Copad Agreement between Dior and SIL (licensee): "in order to maintain the repute and prestige of the trade mark the licensee agrees not to sell to wholesalers, buyers collectives, discount stores, mail order companies, door-to-door sales companies or companies selling within private houses without prior written agreement from the licensor, and must make all necessary provision to ensure that that rule is complied with by its distributors or retailers. Article 8(2) of the Trademark Directive: The proprietor of a trade mark may invoke the rights conferred by that trade mark against a licensee who contravenes any provision in his licensing contract with regard to it s duration, the form covered by the registration in which the trade mark may be used, the scope of the goods or services for which the license is granted, the territory in which the trade mark may be affixed, or the quality of the goods manufactured or of the services provided by the licensee. Folie 8

9 Breach of the license agreement: No exhaustion of trademark right Article 7 of the Trademark Directive: 1. The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the EEA under that trade mark by the proprietor or with his consent. 2. [The exhaustion] shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialization of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market. The damage to the reputation of a trade mark: a legitimate reason to oppose further commercialisation of luxury goods. It will be for the national court to assess: does commercialization of the luxury goods by discount store damage the reputation of the trade mark? Folie 9

10 Evaluation of the DIOR-Copad decision Sale of luxury goods via unauthorised channels may constitute breach of quality-related conditions in a license agreement prohibiting such sale no exhaustion of trademark rights. Appointed distributor (SIL): (i) breach of contract, and (ii) trade mark infringement provided that such sales can damage the allure and prestigious image Unauthorised distributor (Copad) trade mark infringement "consent-breaker" contractual provision no exhaustion of trademark rights Folie 10

11 Coty - perfume testers Limitation in the distribution agreement: The advertising material made available to the authorized dealer by [Coty Prestige] may be used only for the specified advertising purposes. Any commercial use on the part of the authorized specialist dealer, in particular the sale of samples, testers or miniatures, is prohibited. Packaging of the testers: Demonstration and Not for Sale. Article 7(1) of Trademark Directive. 1. The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the EEA under that trade mark by the proprietor or with his consent. Folie 11

12 Bad faith trademark application by the distributor (agent) Jurisdiction Private international law rules: exclusive jurisdiction of the country in which the trademark is registered. Choice of jurisdiction in the distribution agreement does not exclude trademark cancellation proceedings. Folie 12

13 Paris Convention for the Protection of Industrial Property (Article 6septies) Registration in the Name of the Agent or Representative of the Proprietor Without the Latter s Authorization (1) If the agent or representative of the person who is the proprietor of a mark in one of the countries of the Union applies, without such proprietor s authorization, for the registration of the mark in his own name, in one or more countries of the Union, the proprietor shall be entitled to oppose the registration applied for or demand its cancellation or, if the law of the country so allows, the assignment in his favor of the said registration, unless such agent or representative justifies his action. (2) The proprietor of the mark shall, subject to the provisions of paragraph (1), above, be entitled to oppose the use of his mark by his agent or representative if he has not authorized such use. (3) Domestic legislation may provide an equitable time limit within which the proprietor of a mark must exercise the rights provided for in this Article. Folie 13

14 Practice relating to Community Trademarks (CTM) Article 8(3) CTMR: Upon opposition by the proprietor of the trade mark, a trade mark shall not be registered where an agent or representative of the proprietor of the trade mark applies for registration thereof in his own name without the proprietor's consent, unless the agent or representative justifies his action. Purpose: to safeguard the legitimate interests of trade mark owners against the arbitrary appropriation of their trade marks. Terms agent and representative - cover distributor some agreement of commercial co-operation Territorial scope of the agreement Folie 14

15 Domain registration by the distributor (ADR practice) UDRP Policy Uniform Domain Name Dispute Resolution Policy WIPO Arbitration and Mediation Center gtlds (.com,.net,.org,.biz) cctlds (.ch,.fr,.es) Complainant must demonstrate: (i) the domain name is identical or confusingly similar to a trademark in which the Complainant has rights; (ii) the Respondent has no rights or legitimate interests with respect to the Domain Name; and (iii) the domain name has been registered and used in bad faith. Folie 15

16 Distributor's right or legitimate interests with respect to the Domain Name (1) Three views can be distinguished in the previous WIPO decisions: (1) no authorization to use the manufacturer s trademark as a domain name or as part of a domain name (WIPO Case No. D ). (2) a reseller over many years had a legitimate interest in the domain name and was not using it in bad faith (WIPO No. D ). Folie 16

17 Distributor's right or legitimate interests with respect to the Domain Name (2) (3) Use by an authorized reseller is regarded as a bona fide offering of goods or services if the following conditions are satisfied: the respondent must actually be offering the goods or services at issue; the respondent must use the site to sell only the trademarked goods; otherwise, it could be using the trademark to bait Internet users and then switch them to other goods; the site must accurately disclose the registrant s relationship with the trademark owner; it may not, for example, falsely suggest that it is the trademark owner, or that the website is the official site, if, in fact, it is only one of many sales agents; the respondent must not try to corner the market in all domain names, thus depriving the trademark owner of reflecting its own mark in a domain name (WIPO No. D ). Folie 17

18 Thank you for the attention. Dr. Gusztav BACHER