The Donna Karan Case or “How the Spanish Supreme Court re-construes its doctrine on damages in cases of infringement involving previously valid registered trademarks”
Despite the fact the decision was adopted sometime ago, in Salvador Ferrandis and Partners we found quite interesting the judgement of Spanish Supreme Court of 4 April 2012, “Donna Karan“. In the decision, the court amends its previous case law based on the “qui iure suo utitor, neminem laedit” doctrine.
As a brief factual background, the given case (text in Spanish) affects as plaintiffs both The Dona Karan Company and Gabrielle Studio Inc. (owners of the Community trademark over the denomination “DKNY”) and Group NKY and Cebai Accessories as defendants (owners of three national trademarks over the denominations “Group NKY” and” Group NKY Exchange”). The issue at hand deals mainly with the invalidity of the defendants´ registries and with the alleged infringement of the prior rights of the applicants.
At first instance, the Tribunal recognized the infringement of the applicant trademarks-granting the corresponding damages- and declared the invalidity of the trademarks owned by the defendant.
On appeal, invalidity is not challenged. However, the previously declared infringement is indeed subject to revision and further scrutiny by the Tribunal that declares there is no such an infringement since the defendants were just making proper use-under the scope of Art 34.1 of the Spanish trademark act (STA)- of the registries they had validly been granted. For clarification purposes it is worth mentioning here, the afore mentioned article foresees an exclusive right in favor of the right owner to use it in an exclusive basis in the economic traffic. As a logical consequence of the non-existence of the infringement action, there is no room for any damages at all; in addition to this, the Tribunal also denies damages on the basis there is no bad faith in the behavior of the defendants.
For this second ground given in order to deny damages –lack of bad faith- the Tribunal on appeal applies the “qui iure suo utitor, neminem laedit” doctrine, established in the Ruling by the Spanish Supreme Court 74/2007 (text in Spanish); following this theory, the registry of a trademark justifies its use up to the date it is declared invalid, and exempts the user from damages unless bad faith in the registration process is proved. In other words, the ex tunc effects-as foreseen in art 54.2 STA- of the invalidity action are to some extent tinged due to the previous existence of a valid registry and the lack of bad faith.
With these facts, and having analyzed the allegations of both parties, the Spanish Supreme Court concludes that:
1. There is actually infringement of the applicants’ trademarks; the registries of the defendants do not give raise to a valid use as long as they have been declared invalid and this invalidity has ex tunc effects; in the Tribunal own words “(the registries) cannot justify the use in the economic traffic of the signs at hand as long as they have been declared invalid and therefore it is like they had never existed”
2. Regarding damages, the ruling also departs from the conclusions on appeal. Therefore, the High Court re-construes the previous doctrine applied for cases like this according to which damages are only to be granted when bad faith has been declared regarding the owner of the registered trademark that is subsequently declared invalid. Now, and following the new interpretation of the Tribunal, even in the event there is no bad faith damages will be granted as long as the facts fall within any of the scenarios foreseen in art 42 STA (article that deals with the general rules for damages).
In base to this reasoning, and since the infringing behavior could be subsumed in article 42.2 STA, the High Court revokes the ruling on appeal and declares that even without the existence of bad faith-fact not proved along the proceeding- damages are due.
Related Posts:
- Four Recent Judgments of the Spanish Supreme Court in the Field of Trademarks (II): “Masaltos I”
- Four Recent Judgments of the Spanish Supreme Court relating to Trademarks (III): “Champín”
- Four Recent Judgments of the Spanish Supreme Court in the Field of Trademarks (I): “Cointreau”
- On the power of owners of Spanish trademarks to file infringement action against owners of later identical or similar trademarks