“Acotel” Decision: the highest compensation granted by the Spanish Community Trademark Court to date
The aim of this post is to analyse the Judgment of the Community Trademark Court 256/2014 of 18 December 2014 (in Spanish) in a proceeding in which Salvador Ferrandis & Partners acted on behalf of the plaintiff.
The decision is derived from litigation on trademark issues between ACOTEL SPA against APLICACIÓN FINANCIERA DE MENSAJERÍA S.L. (hereinafter, APLICACIÓN) et al. due to the use of the acronym of the company name ACOTEL/ACOTELSA as a trademark, as well as the registration of the domain names acotelsa.es, acotelsa.com and acotelsa.com.es.
The object of the lawsuit brought by ACOTEL is an infringement action on the basis of, on the one hand, the non-registered trade name “ACOTEL” used in Spain since 1998 pursuant to article 8 of the Paris Convention concerning article 9.1.d) of the Trademark Act; and on the other hand, of community trademark 1442268, which holds priority since December 27, 1999, and is granted for distinguishing telecommunications services in class 38 of the International Classification, with the following device:
The defendant used the acronym “ACOTEL/ACOTELSA” as a trademark within the economic traffic together with several graphic elements. Nonetheless the common item of all the presentations of this sign laid on the emphasized use of the “ACOTEL” name. All this despite the fact that the Spanish Patent and Trademark Office had rejected in the past two trade name applications filed by the defendant to designate telecommunications services under class 38, as well as design services and computer and software development under class 42 with the following signs:
Indeed, they were rejected because they were considered incompatible with the prior rights of the plaintiff.
In the present lawsuit, the defendant did not challenge the existence of a non-registered trade name owned by the plaintiff, the existence of which was deemed sufficiently proved by the documents enclosed to the lawsuit. The similarity between the signs at stake which was almost identical was not challenged either.
The main argument raised by the defendant was the total difference between the fields and services in which the signs at stake were used, alleging that the plaintiff´s activity was focused on the sector of value added services for mobile phones while the defendant was focused on software development, installation, maintenance and management. Notwithstanding the above, the fact that his clients might be telecommunications’ companies dedicated to the telecommunications services did not mean that the defendant took part in this activity.
In the First Instance, the Commercial Court of Alicante, acting as Community Trademark Court, understood that the provision of telecommunication services by the defendants, particularly within the banking sector, was duly proved by means of the documents filed by such defendants and through the fact of having applied in the past for the registration of two trade names under class 38 of the International Classification. Moreover, the Court, in application of the Judgment of the General Court of 15 March 2006, T-31/04 “euroMASTER” , dismissed the main argument of the defense because it understood that the applicative scope of a trademark is determined by the registration description, not being able to limit it to the main activity of the trademark holder because the fact that a company does not exploit a business area does not mean that it will never do it. The Court declaration was: “…is a possibility that cannot be fully dismissed, as its protection involves a potential use by the plaintiff´s trademark, finding otherwise would imply the reduction of the trademark scope without any justification”.
Lastly, the Community Trademark Court understood that although there could be differences between the services provided by the parties, it must be considered, in application of paragraph 23 of Judgment of CJEU, 29 September 1998, C-39/97, “Canon Kabushiki c. Metro Goldwyn-Mayer Inc.”, that the services were related since telecommunications services require computer services for their update, management and development.
In short, bearing in mind all the aforementioned, and in spite of acknowledging that the relevant consumer of the infringing services was an specialized consumer in connection with whom a higher knowledge and better information is presumed, the court considered that the degree of likeliness between the signs and its applicative scope was higher enough to cause a risk of confusion. For this reason, the court fully upheld the lawsuit brought by the plaintiff and sentenced the defendant to end up with the use of the ACOTEL sign, to cancel the domain names acotelsa.com, acotelsa.es and acotelsa.com.es, to remove and destroy all the materials including the infringing signs, to publish the decision and to pay a compensation amounting 700.375,31 €.
The judgment above was appealed by APLICACIÓN and contested by Acotel SpA with regard to the amount of the compensation for damages.
In the appeal, the defendant mainly reproduced the same arguments used in the first instance which were rejected by Section 8 of the Court of Appeal of Alicante, acting as the Community Trademark Court of Appeal, under Judgment No.256/2014 dated December 18, 2014, confirming at this point the decision of the First Instance judge.
On the other hand, ACOTEL SpA contested the assessment of the compensation for damages carried out by the First instance Court which just applied the corresponding 3% royalty to the provision of certain services whereas, according to ACOTEL SpA, such royalty must be applied to the whole defendants´ turnover because the whole services provided by the defendants were identified under the infringing sign “ACOTEL”.
The Court of Appeal found that considering that the defendants‘company purpose included the provision of telecommunication services, the royalty suggested by the plaintiff it must be applied to the whole turnover. Furthermore the Court of Appeal considered that the lack of any efforts on the defendant’s side to identify all those invoiced items in the invoices submitted that did not correspond to telecommunications’ services could not harm the plaintiff taking into account the principle of “ease of proof” and accessibility to the source of proof on the side of the defendant, and that it was not possible to request the plaintiff to prove a negative fact.
In view of the above, the Court of Appeal upheld the challenge raised by ACOTEL SpA and fixed as the compensation to be paid by the defendant, the amount resulting from applying a 3% royalty to the net turnover obtained during the term comprised between the five years immediately preceding the filing of the lawsuit until the date when the effective use of the infringing sign ceased. The total figure amounted to 2.893.262,06€, this being the highest compensation granted by the Community Trademark Court so far.
This judgment is subject to a cassation appeal filed by the defendant which is currently pending on admission by the Supreme Court.
Related Posts:
- On the perception of the terms “ifitness” and “fit” in the mind of the Spanish average consumer.
- Four Recent Judgments of the Spanish Supreme Court in the Field of Trademarks (II): “Masaltos I”
- Jugdement of Audiencia Provincial de Alicante of 12 January 2012, “Omega”
- The Supreme Court confirms that, in the absence of a link in the mind of the consumer, the reputation of the earlier mark is irrelevant