IIC https://doi.org/10.1007/s40319-018-0702-6 DECISION • TRADE MARK LAW
Argentina ‘‘Havana Club’’ Decision of the Federal Court of Appeals of Civil and Commercial Matters (Third Chamber) 29 April 2016 – Cases Nos. 17.516/03/CA3 and 11.349/05 Empresa Cubana del Tabaco et al. v. Tabacalera Sarandı´ S.A. and Empresa Cubana del Tabaco et al. v. Argen Tabak S.A. Trademark Act, Sec. 26
Max Planck Institute for Innovation and Competition, Munich 2018
Keywords Trademark renewal Requirement of effective use Cancellation Cease of use Force majeure Bankruptcy proceedings 1.
2. 3.
Bankruptcy does not fall under the scope of ‘‘force majeure’’ as foreseen by Sec. 26 of the Trade Mark Act for the exemption from cancellation of trademarks that have not been used due to ‘‘force majeure’’. The patrimonial situation of a bankrupt person is not an unforeseeable and unavoidable event, as implied by ‘‘force majeure’’. Furthermore, the bankruptcy of a company does not inexorably determine the cease of use of their trademarks.
Facts: The Cuban State-owned companies Empresa Cubana del Tabaco (d.b.a. Cubatabaco) and Corporacio´n Habanos S.A. initiated two lawsuits in Argentina, one against Tabacalera Sarandı´ S.A. and the other against Argen Tabak, S.A. In the first lawsuit, the plaintiffs requested that the defendant stop using the trademark ‘‘HAVANA CLUB’’ (Case No. 17.516/03/CA3 ‘‘Empresa Cubana del Tabaco et al. v. Tabacalera Sarandı´ S.A. in re cease of trademark use’’). In the Translation by Maximiliano Marzetti. For a comment on this decision by Maximiliano Marzetti, see this issue of IIC at https://doi.org/10.1007/ s40319-018-0703-5.
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second case, the plaintiffs demanded the cancellation of the abovementioned trademark from the trademark registry (Case No. 11.349/05 ‘‘Empresa Cubana del Tabaco et al. v. Argen Tabak S.A. in re cancellation of trademark’’). The judge of first instance unified both proceedings into one. Argen Tabak S.A. had lawfully acquired the ‘‘HAVANA CLUB’’ trademark in a judicial auction on 12 December 1997, during the bankruptcy proceedings of the former owner, Schelp & Schelp. Later, Argen Tabak S.A. renewed the trademark ‘‘HAVANA CLUB’’ in class No. 34, on 12 May 1998 (entry No. 2.150.398), which was accepted by the Argentinian Institute of Industrial Property (Instituto Nacional de la Propiedad Industrial, hereinafter, INPI). Section 20 of Argentinian Act No. 22.362 (hereinafter, the Trademark Act) requires the submission of a sworn declaration of use to the INPI stating that the trademark has been used in order to renew it. Pursuant to Sec. 5 of the Trademark Act, a trademark must be effectively used at least five years prior to the date of renewal. The judge of first instance found the defendant lied at the time of renewing the trademark. According to principles laid out in Sec. 1447 of the (former) Argentinian Civil Code,1 a trademark renewal that was based in false allegations must be declared void ex officio and does not benefit from the statute of limitations (absolute nullity). In addition, the judge found, thanks to information provided by the trustee in bankruptcy, that the previous owner, Schelp & Schelp, had not used the ‘‘HAVANA CLUB’’ trademark either from 12 May 1993 until 12 December 1997. Argen Tabak S.A. was summoned but never appeared before the judge of first instance, thus it was judged in absentia. In such a case, according to procedural rules, all the allegations of the plaintiffs are considered proven. Therefore, the judge of first instance declared the ‘‘HAVANA CLUB’’ trademark void and ordered its cancellation from INPI’s register. The judge considered it unnecessary to render a judgment in the other lawsuit (cease of use of the ‘‘HAVANA CLUB’’ trademark). According to the judge, a declaration of cease of use was no longer necessary because the trademark had already been cancelled. Argen Tabak S.A. appealed the judgment issued by the judge of first instance. The plaintiffs also appealed the decision, exclusively in relation to the dismissal of the lawsuit requesting the cease of use of the ‘‘HAVANA CLUB’’ trademark. On appeal, Argen Tabak S.A. advanced diverse arguments, both procedural and substantive. In relation to procedural law, Argen Tabak said the accumulation of processes ordered by the judge of first instance violated due process, and also objected to the determination of the legal fees, which according to Argentinian procedural law must be borne in its entirety (i.e. including the legal fees of the plaintiff’s lawyers) by the losing party. In relation to substantive law, Argen Tabak S.A. argued that the judge of first instance wrongly calculated the five-year term prior to the date of renewal and also stated that because it had acquired the ‘‘HAVANA CLUB’’ trademark during a bankruptcy proceeding it could not have used it. Such a situation, according to the 1
In August 2015 a new (unified) Civil and Commercial Code entered into force in Argentina.
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defendant, amounted to a case of force majeure that fitted into Sec. 26 of the Trademark Act (which mentions force majeure as an exception to the cancellation of a trademark for lack of effective use before the date of renewal).
Translation of Relevant Excerpts of the Judgment a.
Operative Part2
… [Recital IV] To clarify, it should be pointed out that from the time of registration, the trademark constitutes an acquired right, the validity of which can only be attacked when exceptional circumstances occur, and the action of nullity must be decided according to the restrictive criterion which prevails in general matters of nullity. To begin, I will refer to the first of the arguments of the defendant, who stated in its brief that the accumulation of processes decided by the Judge of First Instance was illegitimate since it was not properly notified, which violated its right to a fair trial (see 2.2, p. 1270, 3rd. paragraph). In this respect, it should be noted that a quick reading of Arts. 188 et seq. of the Federal Code of Civil Procedure shows with meridian clarity that the resolution found on page 376 of the Case No. 17.516/03 that decided to accumulate the processes is not subject to appeal, which is why the request by the appellant is absolutely inappropriate at this point of the process and at this instance. Nevertheless, I can not avoid pointing out the amazement that caused me to read such assertions; their lack of support and falsehood is evident if we read pages 346–347 where the plaintiff itself requested the said accumulation in a motion that was transferred to the other party by means of the interlocutory order on page 348 and the note on page 352, reverse side. From those pages it appears that the defendant withdrew a copy of the document in question, thus was duly notified and in its submission of pages 358–360 did answer. Therefore, the statement can only be understood as the confusion of someone who, pending an adverse judgment, hesitates as to which is the best way to attack it. … The a quo judge accepted the plaintiff’s argument and therefore did declare the nullity of the trademark ‘‘HAVANA CLUB’’ on the grounds that the declaration of effective use issued by Argen Tabak S.A. at the time of renewal on 12 May 1998 had been mendacious. As outlined in Recital II, the appellant claims that it acquired the trademark within the framework of a judicial auction during a bankruptcy proceeding. In that sense, the appellant argues that it was impossible to comply with the use 2
Translator’s note: All translations in the text are mine. This is not a literal translation. I have followed a functional approach similar, mutatis mutandis, to the one used in comparative law. Thus, I have shortened and replaced the verbosity and abundant pleonasms so typical of legal Spanish for the succinctness and more objective style of English. An English translation of the Argentinian Trademark Act can be found on WIPO’s website at: http://www.wipo.int/edocs/lexdocs/laws/en/ar/ar006en.pdf.
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requirement during the period established by the a quo judge, given the disempowerment of the trademark and consequent impossibility of using it, which falls within the scope of the provisions established by Sec. 26 of the Trademark Act, which states force majeure is an acceptable excuse for not using a trademark. … It should be noted that this Court has already analysed the issue discussed here in an opinion of my distinguished colleague judge Guillermo Antelo issued on 20 May of 2010 in ‘‘Valydar SRL v. Integracio´n Hogar S.A. in re cancellation of trademark’’, Case No. 7.288/03 and also in ‘‘Integracio´n Hogar S.A. versus Valydar S.R.L. in re expiration of trademark’’, Case No. 3.212/03. Therein, judge Antelo highlighted that Sec. 26 of Act. No. 22.362 constitutes a novelty with respect to the previous legal regime (Sec. 7 of Act No. 3975) whose purpose is to reduce the number of trademarks which are not used in connection to a real commercial exploitation. The rationale is to avoid speculative practices that increase the number of registered trademarks without effective use [references omitted]. In Recital VIII of the abovementioned judgment, my colleague pointed out that Sec. 20 of the Trademark Act provides that ‘‘When the renewal of a registered trademark is requested … a sworn declaration of use must also be presented, stating whether the trademark was used within the period established in Article 5 (five years before the date of expiration)’’. The rule does not provide for any exceptions. Article 26 of the same Act exempts from cancellation the trademarks that have not been used because of ‘‘force majeure’’. However, important hurdles prevent the assimilation of bankruptcy in force majeure. For starters, if such was the case, those in a situation of insolvency could be exonerated from paying their debts by invoking, precisely, force majeure (Secs. 543 and 514 of the Civil Code). Most importantly, ‘‘force majeure’’ not only implies an event that must be unforeseeable and unavoidable but also beyond the control of the debtor [references omitted]. It is clear that the patrimonial situation of a bankrupt person was hardly beyond his control. In addition, I’d like to point out that … the bankruptcy of a firm does not inexorably determine the ceasing of use of their trademarks. According to the criterion established in the decision mentioned above whose reading I refer, brevitatis causae, the circumstance that Argen Tabak S.A. acquired the trademark in a public auction during a bankruptcy proceeding does not exempt it from complying with the sworn declaration of use required by law or, at least, to inform INPI – with absolute clarity – about the lack of exploitation of the trademark … so that INPI could decide what was best. On the basis of the above and taking into consideration that the defendant, Argen Tabak S.A., left uncontested the claim and did not controvert any of the evidence provided in the case by the plaintiffs, it is appropriate to confirm the judgment appealed and declare the trademark null and void [references omitted]. [Recital V] It is now time to address the claim of the plaintiff by which it requests a declaration of cease of use of the same trademark. The judge of first instance ordered the cancellation of the registration of the trademark and as a consequence considered it
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unnecessary (because according to the judge the issue had become abstract) to attend the claim of cease of use. Such judgement had irreparable consequences with respect to Tabacalera Sarandı´ S.A., since it cannot acquire a better or more extensive right than that of its predecessors (cf. Sec. 3270 of the Civil Code and cited case law). Truth is, according to the documentation and the sequence of events narrated by the judge in his judgment, the defendant, Tabacalera Sarandı´ S.A., never ceased using the trademark ‘‘HAVANA CLUB’’. Consequently, a declaration on this aspect is required as it is a thema decidendi of the lawsuit. Otherwise, the defendant, who has not acquiesced to this claim, could continue using the trademark and the appellant would be obliged to initiate a new lawsuit to attempt to stop it, which would be ridiculous. Consequently, and in accordance with what has been previously decided, it is necessary to modify the judgment appealed in this respect and to accept the plaintiff’s request and order Tabacalera Sarandı´ S.A. to cease the use of the ‘‘HAVANA CLUB’’ trademark to distinguish products of class 34 of the trademark classification. The legal fees must be borne by the losing party. For the reasons mentioned above, to safeguard the essential purposes of trademark law, which is to protect the good faith of the consumers and healthy business practices [references omitted], therefore, I vote to confirm the judgment appealed except in regard to the ceasing of use requested by the plaintiffs in Case No. 17.516/03, which is to be amended in the terms set out in Recital V. The costs of the appeal must be borne by the losing party (pursuant to Sec. 70, first paragraph, and Sec. 280 of the Procedural Code). …
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