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Correct use of marks by resellers - the "Royal Canin bolt" case

On May 22, 2012, in its judgment No. 8.Pf.20.336/2012/4 (ROYAL CANIN SAS v. Mr. Árpád Fekete), the Metropolitan Court of Appeal of Hungary, addressed the issue of a reseller’s entitlement to use a trademark in relation to reselling and commercializing the goods covered by that trademark.


The plaintiff of the case (Royal Canin SAS) is the holder of the CTM No. 008272239 among others in class 31 (foodstuffs for animals) and in class 35 (retailing of animal foodstuffs and goods for animals. The defendant of the case registered the domain name <royalcaninbolt.hu> (the Hungarian word "bolt" means "shop" in English) and under that domain name he operated a webshop, where he distributed foodstuffs for animals. On the website the defendant used the following modified "Royal Canin" logo and the trade name "Royal Canin bolt".  



As a consequence of the plaintiff's cease and desist letter the defendant changed the logo to the following (the Hungarian phrase "viszonteladói bolt" means "reseller shop" in English):



The plaintiff filed a trademark infringement claim to the Metropolitan Court. The defendant did not file any response. The Court established the infringement and prohibited Mr Árpád Fekete from using the domain name, using "Royal Canin" as a trade name, as well as using the company logo on his website.

The defendant filed an appeal against the decision. In the appeal he set forth that he has been authorized to use the domain since he was selling ROYAL CANIN goods, which is in the interest of the trademark owner, too.

In numerous references for a preliminary ruling, the European Court of Justice has been asked under which circumstances resellers may use a trademark without the proprietor’s authorization.

In Case C-337/95 Dior v Evora [1997], the European Court held that when trade-marked goods have been put on the Community market by the proprietor of the trade mark or with his consent, a reseller is free to make use of the trade mark in order to bring to the public's attention the further commercialization of those goods. However, damage done to the reputation of a trade mark may, in principle, be a legitimate reason for allowing the proprietor to oppose the use of his trade mark for further commercialization of goods put on the Community market by him or with his consent.
 
In Case C-63/97 BMW v Deenik [1999], the Court pointed out that the mark may not be used in such a way that may create the impression that there is a commercial connection between the other undertaking and the trade mark proprietor, and in particular that the reseller's business is affiliated to the trade mark proprietor's distribution network or that there is a special relationship between the two undertakings.

At national level, the Federal Supreme Court of Germany (Bundesgerichtshof, “BGH”) set out in its judgment No. I ZR 33/10 of 14 April 2011 that an independent car repair shop (thus, not specialized in the repair of a certain brand), committed trademark infringement by advertising its services in relation to VW cars, under the figurative “VW” trademark. BGH held that use of the figurative trademark is not necessary for informing the public that they carry out the repair of VW cars; using the word signs “VW” or “Volkswagen” would have been sufficient.

In its recent decision, the Metropolitan Court of Appeal in Hungary, held that a reseller is entitled to use the trademark in relation to reselling and commercializing the goods covered by that trademark only if the mark is not used in such a way that may create the impression that there is a special relationship between the other undertaking and the trademark proprietor.

In light of the foregoing, it has been set forth by the Metropolitan Court of Appeal that the defendant may not reproduce the graphic representation of the trademark; moreover, choosing such commercial or domain names which contain the trademark name is not permitted, since using the trademark in such a way exceeds those cases set out in Article 12 of the Community Trademark Regulation and is likely to create the impression that there is a direct business relationship between the two undertakings. However, in its judgment, the Court did not address the issue of the exhaustion of trademark rights.

Therefore the Hungarian Court has followed the European Court of Justice’s guidance on the issue and joined the Federal Supreme Court of Germany in suggesting that the use of the figurative version of third party trademarks by resellers goes beyond what is necessary to bring to the public's attention the further commercialization of trademarked goods.


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