Spain - Trade mark cancellation and damages: a matter of (bad) faith.

The Spanish Community Trade Mark Tribunal (seated -oh surprise- in Alicante) has recently handed down an interesting Judgment on trade mark cancellation actions (appeal roll no. 559 – C/22/08).

On the basis of their prior Community trade marks “DKNY”, the claimants Gabrielle Studio Inc. and Dona Karan Company LLC filed infringement actions against a Spanish individual and his company that registered and used the sign “GRUPO KNY”. The claim also requested the Court to cancel (i) the Spanish registered trade marks for “GRUPO KNY” and “GRUPO KNY”, (ii) the corporate name “GRUPO KNY EXCHANGE, S.L.” and (iii) the domain name “grupokny.es”. All these rights were registered by the defendants long after the “DKNY” marks were registered.

The Community Trade Mark Court (first instance) awarded the claim and cancelled the defendants’ rights on the basis that they were applied and registered in bad faith. The Court also understood that the defendants infringed the claimants’ trade mark rights. The defendants were condemned to cease in the use of the “GRUPO KNY” sign, and to pay damages in the sum of Euro.- 192,000.

The case was appealed and brought to the Community Trade Mark Tribunal. The appeal was partially upheld (with quite an explicit and uncommon reprimand to the lower Court, by the way).

The Tribunal considered that there was not a proper trade mark infringement as, while the sign “GRUPO KNY” was used by the defendants, they were legally covered by trade mark registrations. The Court referred that the claimants filed opposition against such trade marks before the Spanish Patents and Trademarks Office, and such oppositions were dismissed by the Office.

Following the appeal, the Court considered that the cancellation action was improperly construed on bad faith at the time of applying for the trade marks. According to the Judgment, there was no evidence proving that the defendants aimed to jeopardise the claimant’s rights over the Community trade mark registrations for “DKNY” when they applied for the registration of their marks, domain name and corporate name “GRUPO KNY”.

However, the Court did award the cancellation action filed by Gabrielle Studio Inc. and Dona Karan Company LLC on “relative grounds”: the similarity of the defendant’s trade marks, domain name and corporate name “GRUPO KNY” with the claimants’ pre-existent marks “DKNY”, which the Court rendered reputed.

Finally, the Court made a point on the damages awarded by the first instance. Based in the Latin legal principle “qui suo iure utitur neminem laedit” (my translation “who uses his right does not harm anyone”), damages arising from the use of a cancelled mark can be only awarded if its holder has acted in bad faith (typically, when applying for the trade mark). Given the fact that the Court expressly denied the existence of bad faith in the defendants’ behaviour, the Court dismissed the claim for damages.

Lastly, the Court ordered the defendants to stop all use of the “GRUPO KNY” signs, and to recall all materials bearing such sign.