Loss of trademarks

The Court of Appeal, presided over by Chief Justice Silvio Camilleri, Mr Justice Albert J. Magri and Mr Justice Tonio Mallia on February 24, 2012 in the case ‘Dr Luigi Sansone on behalf of Britvic Soft Drinks Ltd vs Marsovin Ltd’ held, among other things, that the preparation to use a mark did not amount to use in terms of article 42 (3) of Chapter 416 of the Laws of Malta.

The facts in this case were as follows:

A trademark owner was not entitled to remain registered as owner if he ceased using the mark for a period mentioned by law

Marsovin Ltd had registered the trademark Tango No. 6261 on June 6, 1958, in respect of soft drinks, beverages and minerals and renewed it periodically.

The trademark was still registered to date. In the 1960s and 1970s it manufactured and sold a soft drink called Tango.

Production ceased in 1974; but Marsovin kept on renewing its trademark with the intention of one day re-launching a new soft drink named Tango. It made no use of the trademark after 1974.

The reason was that in 1974 Marsovin was not in a position to invest in new machinery. Subsequently, however, it started to make preparations to develop a new Tango product. In 2002 it commissioned work on new designs. There were product development proposals and tastings of various flavours. The company planned to introduce a new product in 2008.

On February 28, 2008, the British Company, Britvic Soft Drinks Ltd, filed legal proceedings in Malta against Marsovin Ltd requesting the First Hall of the Civil Court to revoke the registration of trade mark No. 6261 Tango in Marsovin’s name.

Britvic plc was one of the leading soft drinks companies in the EU. It also claimed that it was the registered owner of the trademark Tango in the same genre of products around the world.

Britvic informed the courts that it intended selling Tango products in Malta but was concerned by the fact that in the Trademark register in Malta, there was registered with effect from 1958, trademark No. 6261 Tango in the name of Marsovin.

Britvic based its application on the basis of article 42(1)(b) of Chapter 416. Article 42(1)(b) provides:

‘’ that such use has been suspended for an uninterrupted period of five years and there are no proper reasons for such non-use’’

It said that Marsovin had not used its trademark for over five years, for no good reason Britvic had an interest to file these proceedings as it could encounter difficulties in selling its Tango products in Malta and in registering in its own name ‘Tango on the Trademark register in Malta.

In reply, Marsovin contested the legal action, against it. It submitted in defence that it had made preparations to use its trademark before Britvic initiated legal proceedings; and that this court should dismiss Britvic’s application in terms on article 42(3), Article 42(3) of Chapter 416 provides:

‘’The registration of a trademark shall not be revoked on the ground mentioned in paragraphs (a) or (b) of subarticle (1) if such use as is referred to in those paragraphs is commenced or resumed after the expiry of the five-year period and before the application for revocation is made:

Provided that, any such commencement or resumption of use after the expire of the five-year period but within the period of three months before the making of the application shall be disregarded unless preparations for the commencement or resumption began before the proprietor became aware that the application is likely to be made.’’

Marsovin said that it never renounced the use of its trademark. On April 30, 2009, the First Hall of the Civil Court rejected Marsovin’s defence and ordered the revocation of its trademark Tango No. 6261 from the trademark register.

Reference was made to case law.

In A. Falzon Sant Manduca noe vs A. Mizzi dated February 21, 1996, it was held that the registration of a trademark did not create rights of property. It was only a confirmation of such right. The registration recognised a state of fact and the law protected this status.

It followed therefore that if this right was not used for no good reason and for a considerable time, it was lost. Marsovin had suspended use in 1974 as it was not in a financial position to invest in new machinery. This was, however, not a good enough reason under article 42(1)(b) of Chapter 416.

The court said that when a trademark was not used, consumers tended to forget about the product which the trademark represented.

The law required good faith and wanted the continuation of a trademark to be real and not fictitious.

It was not of the opinion that the proviso to article 42(3) Chapter 416 applied:

Preparation to use a mark did not amount to actual use, pointed the court, unde article 42(3) of Chapter 416.

It was not certain whether Marsovin had the machinery to manufacture the product and where production was to be based.

The court said that Marsovin was inactive for many years.

On the other side, Britvic’s trademark was known internationally and could be used in Malta without hindrance, provided it filed these proceedings, the court said.

Aggrieved by the decision of the First Hall of the Civil Court, Marsovin entered an appeal calling for its revocation.

It reiterated its argument that it suspended use of the trademark for good reason and in any case, it planned to have a new product bearing the Tango trademark.

On February 24, 2012, the Court of Appeal gave judgement by dismissing the appeal and by confirming the decision of the First Hall of the Civil Court. The following reasons were given for the court’s decision:

Financial Position: the lack of funds was not good reason, justifying the suspension of use. A ‘’good reason’’ had to be independent of the intentions of the trademark owner.

It was not acceptable for a trademark owner to plead as an excuse his dire financial condition, to justify ‘non-use’.

The financial position of a person could never be an excuse for the failure to perform an obligation. A trademark owner had a privilege.

He enjoyed a monopoly on its exclusive use and also had an obligation to use the trademark within the limits of the law.

The law did not intend to allow an owner to continue to enjoy such exclusivity when he failed for his own reasons to use the mark for a period of five years.

Reference was made to the Florence Court of Appeal decision of May 4,1950.

A trademark owner was not entitled to remain registered as owner if he ceased using the mark for a period mentioned by law.

The law wanted to counter against stock piling marks and to ensure that there was good faith in the use of marks.

Once it resulted that Marsovin stopped using the mark Tango for over five years, for no good reason, the court felt that it should order the revocation of the trademark No. 6261, registered in the name of Marsovin. The preparation to use a mark did not amount to use.

Marsovin had not re-started using its mark, pointed out the court.

In Hermes Trade Mark (WK) 1982: Falconer 5 said:

“Thus, if the registered proprietor should commence a series of advertisements featuring his mark as part of an introductory campaign, prior to putting his goods on the market under the mark, but before they were actually on the market, in my judegment such use would clearly be use of the mark in the course of trade, not upon the goods or in physical relation thereto, but it would be in other relation thereto, the point being that it would be use in the course of trade in those goods, albeit in advertisements.’’

Marsovin had only made tastings and considered launching a new product, but use in course of its business had not been done, the court said.

The court concluded that as consumers could not notice any use by Marsovin of the mark Tango, the requisites of article 42(3) were satisfied.

Dr Grech Orr is a partner at Ganado & Associates.

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