In a guest post, Carlos Castrillo brings news of a positive decision on damages for trade mark owners in Argentina:

In October, a new Court decision was published in Argentina. The Court of Appeal reviewed a previous decision at a lower instance of the Argentine Federal Appeal Chamber, by which the defendant was ordered to pay damages for a trade mark infringement of US$55,000. Although the lower instance decision ordered a much higher amount (US$165,000), what is important is that the Court of Appeal appears to be more comfortable ordering damages as if they would be punitive damages.

The plaintiff was Adidas AG while the defendant was Juan Carlos Chilemi SRL. The mark in dispute was applied to sport shoes, clearly resembling the famous Adidas three stripes (see images).

The defendant argued that he did not use the three stripes mark but used four stripes instead, which was something different that could not confuse consumers.

The Court held the marks were confusingly similar and therefore analysed the petition made by Adidas AG on damages, based on the total sales of all products made by the defendant.

Court of Appeal ruling

The Court of Appeal not only admitted that there was no proof of any loss by Adidas AG but also no proof of the benefits made by the defendant by its infringement. No such hint could be found in the total sales made by the defendant in the period in question (US$2,277,777). The Court of Appeal admitted that in the total sales, other models of shoes were sold with no stripes and that no proof was submitted regarding the quantities sold of the infringing model.

Therefore, strictly following our laws, there would be no ground to award damages based on the sole proof of an infringement since there was no proof of damages nor any proof of benefits.

Damages in Argentina

Both the new Argentine Civil and Commercial Code and the old Civil Code reformed by the first one are clear on the requirements needed to award damages:

1. The existence of an infringement.
2. Made with fraud or fault.
3. Causing proved loss or damage. No damages can be awarded based on benefits attained by the infringer under our Civil Code regarding IP.

There is no ruling that would authorise damages if you cannot prove that damage. Damage cannot be inferred; it has to be proved. If someone infringes your rights, you can ask for a cease-and-desist order to stop the infringement, but to be awarded damages you need to prove not only that the infringement was the cause of a loss in your profit and goodwill but the loss in itself, other than the violation of your rights which is not a damage.

There is only one exception in our laws in the Civil Procedure Code: it authorises the granting of damages if the damages are proven to have occurred but are difficult to determine. Again, this damage referred to by the law is not a violation of a right, but a damage in itself caused by the violation of the right.

It is under this exception that our judges have built the fundamentals to grant IP damages assuming that every time a trade mark right is infringed, there is damage, which of course is not what the law says. Damage has to exist and cannot be inferred.

This is why our Court of Appeal until the 1980s would refuse to accept claims for damages unless there were a clear proof of them.

Of course, this interpretation encouraged infringers, who knew their only risk would be a cease-and-desist order together with the payment of professional fees. Criminal law, although it covers piracy in Argentina, is not easy nor common to be applied.

New interpretation

By making this new interpretation, the judges knew that they went far ahead of what the law provided for, and therefore, for years, the decisions that did in fact award payment of damages never did so in amounts that would render piracy a bad business for the infringer. As we see, this is slowly improving although these decisions would not be under a strict interpretation of the law, but they are fair.

This fairness, in our opinion, could also be sustained under the punitive damage theory. Punitive damages were admitted under consumer protection laws to discourage certain practices in commerce. Analogously, IP judges would be seeking, by awarding large damages, to discourage piracy.

Of course, a law on punitive damages in IP or the admission of analogy would definitely close the gap between legality and fairness, and it would be an excellent tool to discourage piracy, but it is not reality for the moment. In the meantime, our Court decisions are interpreting the way towards this goal and we only hope they will gain enough confidence to continue their way in doing so.

Carlos Castrillo is a partner of Castrillo & Castrillo in Argentina and a member of MARQUES

The number of classes specified in trade mark applications grew by 26.8% in 2017, marking the eighth consecutive year of growth, according to figures in WIPO’s latest World Intellectual Property Indicators (WIPI) report.

The WIPI report, published on 3 December, found that an estimated 9.11 million trademark applications covering 12.39 million classes were filed worldwide in 2017. Announcing the findings, WIPO said:

The IP office of China had the highest volume of filing activity with a class count of around 5.7 million, followed by the U.S. (613,921), Japan (560,269), the European Union Intellectual Property Office (EUIPO; 371,508) and the Islamic Republic of Iran (358,353). Among the top 20 offices, the Islamic Republic of Iran (+87.9%) and China (+55.2%) reported high annual growth. At both of those offices, strong growth in resident filings drove the overall growth. Japan (+24.2%), the U.K. (+24.1%) and Canada (+19.5%) also saw considerable growth.

Offices located in Asia accounted for 66.6% of all trademark filing activity in 2017, up from 36.1% in 2007. Europe’s share declined from 38.9% in 2007 to 17.7% in 2017. North America accounted for 6.4% of the world total in 2017, while the combined share of Africa, Latin America and the Caribbean, and Oceania was 9.2% in 2017 – five percentages points below their combined 2007 share.

Trademarks associated with advertising and business management accounted for 11% of global trademark filing activity in 2017, followed by clothing (7%), computers, software and instruments (6.6%) and education and entertainment (5.5%).

There were an estimated 43.2 million active trademark registrations worldwide in 2017 – up 9.7% on 2016, with 14.9 million in China alone, followed by 2.2 million in the U.S., 1.9 million in Japan and 1.6 million in India.

The WIPO also looks at trends in patents, plant varieties, geographical indications and industrial designs: find out more here.

There are three EUIPO webinars scheduled this month:

Find out more about the webinars and register to join for free via the EUIPO Academy. You can also listen to recorded webinars three days after broadcast.

The General Court has recently held that the three-dimensional sign depicted below did not lack distinctiveness in respect of various goods in Classes 29, 30, 32 and 33, including "oils for food" and "soft drinks" (see Case T-313/17).

The Examiner had initially refused the EUTM application on the basis that it was devoid of any distinctive character within the meaning of Article 7(1)(b) EUTMR. The First Board of Appeal ("BoA") rejected the applicant’s appeal. The BoA held that the shape applied for did not depart significantly from the customs of the sector in question but simply resembled a common amphora (for further information, see http://en.wikipedia.org/wiki/Amphora). The only element that potentially made the shape somewhat unusual was a "kink" (German: "Wulst") at its centre. However, this kink would not be perceived as a badge of origin but as a functional feature necessary to properly store the vessel.

The General Court disagreed and annulled the BoA's decision. According to the Court, the combination of the elements of the shape applied for could not be considered "entirely common". Due to the striking kink, the relevant public could distinguish the overall shape of the mark from the types of bottles that were typically available on the market. Although the kink was a functional feature, it did also add to the "aesthetic value" of the mark. Consequently, the "characteristic combination of the presentational features" of the mark applied for possessed the required minimum degree of distinctiveness, said the Court.

The decision at issue is remarkable. According to settled case-law, only a "mark which significantly departs from the norm or customs of the sector" is not devoid of distinctive character (see Case C-218/01, Henkel, para. 49). The CJEU also confirmed that the mere fact that a shape is a "variant" of a common shape of a particular type of product or packaging is not sufficient to establish its distinctiveness (see Case C-136/02 P, Mag Instrument, para. 31). Moreover, it is commonly accepted that functional shapes will be perceived by the consumer as such and not as indicators of commercial origin (see, for instance, EUIPO Guidelines, Part B, Section 4, Chapter 3, p. 21). It seems, to say the least, difficult to reconcile these principles with the General Court's reasoning in the present case.

Benelux trade mark law is moving further towards harmonisation, as Lauranne de Montjoye and Marius Schneider explain in a guest post for Class 46:

As a consequence of the implementation of the Trade Mark Harmonisation Directive 2015/2436, important structural and organisational changes have already come into force in the Benelux as of June 2018.

In January 2019, more changes will be implemented and the fee structure of the Benelux Office for Intellectual Property (BOIP) will be revised.

The modernisation and centralisation that these changes bring about further harmonise Benelux and EU trade mark law.

Changes implemented in June 2018

New administrative cancellation procedure available

Although national judges remain competent to have jurisdiction in any claim for cancellation of a Benelux trade mark, the Benelux Office is now also competent to rule on the invalidation or cancellation of Benelux trade marks. This new administrative procedure offers a quick and cost-effective alternative to court proceedings.

From a procedural point of view, the newly introduced administrative cancellation procedure is very similar to opposition proceedings, whereby the parties take turns to file arguments with periods of two months and the defendant has the last word. 

Introduction of a new ground for opposition/invalidation proceedings

Trade marks with a reputation can now serve as ground for an opposition or invalidation proceedings. On this basis, it is now possible to oppose or invoke the invalidity of a later similar trade mark, irrespective of whether it is used for similar goods and services or not, where use of the sign without due cause takes unfair advantage of or is detrimental to the distinctive character or the repute of the trade mark. Previously, this ‘ground sub c)’ could only be invoked before the national jurisdictions. This new possibility centralises and simplifies the procedural structure in the Benelux.

Centralisation of the appeal of the decisions of the Benelux Office before the Benelux Court of Justice

Finally, all appeals against decisions of the Benelux Office are now to be brought before the Benelux Court of Justice. The new second chamber of the Court has been inaugurated and is currently ruling on its first cases. In the past, the Court of Justice served as Supreme Court for preliminary rulings, and appeals were handled by the national courts of Brussels, the Hague and Luxembourg, which led to diverse case law. The centralisation aims to obtain a more harmonised case law.

For more information about the procedural changes made in the Benelux, we refer to the following texts of the Benelux Convention on Intellectual Property (BCIP) and the Implementing Regulations under the Benelux Convention on Intellectual Property (trademarks and designs).

Changes expected in January 2019

Changes to the fee structure

As of January 2019, the fees in the Benelux will increase in general by 1.5%.

With regards to trade marks, the traditional practice of covering three classes with the basic fee will come to an end. Taking inspiration from the EU system, the Benelux Office will now introduce a fee per class for registrations and renewals, with the objective of dissuading applicants from systematically filing trade marks in three classes. This should help to resolve the problem of the cluttering of the Benelux Register.

Trade marks that are filed or renewed in 2018 will obviously still benefit from the ‘three classes for the price of one’ system.

Trade mark owners are hereby advised to anticipate upcoming filings and renewals: trade marks expiring after the implementation date (1 January 2019) in the course of the first half of 2019 (1 January to 30 June 2019) may thus be renewed before the end of 2018 in order to benefit from the current fee structure.

For renewals, from January 2019 it will be possible to renew a trade mark for only part of the classes designated.

Please however note that the fees for filing a trade mark in one class in 2019 will start off at a lower entry price than the current rate.

For the complete list of fees for 2019, please refer to the following link.

Abolition of the requirement of graphic representation

As from 1 January 2019, applicants will be able to file a trade mark without having to provide for a graphic representation of the sign. This will allow for less tangible elements to be registered as trade marks, such as sounds, colours, motion marks or holograms, as long as the signs stay clear and precise.

Strengthening of trade mark holders’ rights

The holders’ rights will be reinforced in several points: they will have the possibility to take action against counterfeit goods in transit, or against use of a trade mark as a commercial name in an advertisement.

Certification marks

Certification marks will now be explicitly recognised in the Benelux. Certification marks are signs capable of distinguishing goods or services which are certified by the proprietor of the mark in respect of material, mode of manufacture of goods or performance of services, quality, accuracy or other characteristics, from goods and services which are not so certified.

Currently, this category does not exist under Benelux law. De facto, quality marks are included in the broader concept of ‘collective marks’ which already exists. A new regime will be specifically introduced for certification marks, which will be different from the collective marks.

New opportunities available

With the entry into force of the updated Benelux Convention, many more changes will be implemented. We encourage trade mark holders to analyse the implications and review their strategies, as new opportunities may be available.

Lauranne de Montjoye and Marius Schneider are attorneys-at-law at IPvocate, the IP department of CEW & Partners

EUIPO is hosting the following webinars on Tuesdays this month (all times are CET). Webinars typically last 30 to 60 minutes and a live chat with the speakers is available. Find out more on the Academy Learning Portal. You can watch recorded webinars from three days after the broadcast.

The latest issue of the HouseMARQUES newsletter is now available to read online here.

This issue includes:

• Reports from the Judges Meetings in London and Stockholm (pictured)
• The CTA forum at the MARQUES Annual Conference in Paris
• Information on the first EU Judges Meeting (Amsterdam, 18 January) and the upcoming Finnish Judges Meeting (Helsinki, 26 November)
• A link to recent publications from EUIPO
• Latest IP treaty notifications from WIPO

To read this and previous issues visit the HouseMARQUES page on the new website.