In depth

The judgment handed down in the civil procedure settles the classic conflict between the innovative company, a benchmark in its sector, which is confronted with a competitor whose new product, placed on the shelves alongside the innovative product, reproduces those elements that are most distinctive of the former, in such a way that the consumer appreciates at first sight that the new product is a "house brand" copy of the famous original product. In this case, the most characteristic and distinctive element of the original product formed part of the trademarks protected by the plaintiff.

The European Union Trademark and design Court has ruled in favor of the plaintiff, declaring that the defendant infringed the plaintiff's registered graphic and well-known trademarks. The Court considers that the infringing company parasitizes the plaintiff's registered trademarks, since it uses a sign identical to the one used by the plaintiff to advertise its product, and inserts it in the packaging accompanied by elements fully identifiable with those protected by the plaintiff, which emulate them. According to the Court, this will undoubtedly lead the public to associate the infringing product with the genuine product, which has been protected by IP rights for many years and which enjoys great notoriety thanks to the huge advertising and promotional investment carried out for decades by the plaintiff. In short, the Court considers that the infringing company, by its unlawful acts, has sought to position itself in the space occupied by the plaintiff in order to benefit from its power of attraction, its reputation, its prestige and thus exploit the commercial effort made by the same.

For all these reasons, the European Union Trade Mark Court orders the infringing company to cease selling the product, to withdraw it from the market - even if this means having to address its customers - to destroy the stock of packaging and to compensate the plaintiff for the damage caused, as well as to impose a coercive fine in the event that the infringer did not comply with the order.

For its part, the judgment handed down in the criminal proceedings resolves a case in which the convicted parties sold, among other infringing products, products that reproduced Registered Community Designs (RCD) protected by the plaintiff, but without incorporating the plaintiff’s trademarks. This conduct is part of an increasingly growing trend in the counterfeit market, in which infringers sell and offer for sale "semi-finished" counterfeit products, in the sense that they are an exact copy of the registered designs protected by the rightsholders – normally designs very famous and recognizable by any consumer – and at the moment of sale to the end consumer they also attach to the counterfeit product the patches reproducing the famous registered trademarks.

The High Court of Alicante has confirmed that the abovementioned action is punishable under Spanish criminal law and constitutes a crime against industrial property under article 273 of the Spanish Criminal Code. The High Court condemned those who carried out these acts of commerce to prison sentences, to a fine equivalent to double of the profit obtained, to the publication of the Judgment in official newspapers, and to pay a compensation of more than EUR 100,000.

Special mention should be made of the following considerations made by the High Court of Alicante:

• It is not necessary for the defendants to know the specific registration number of the designs they infringe. It is sufficient for them to know that these are designs protected by third parties. Professionals of a certain sector cannot pretend to evade their responsibility under the excuse that they "did not know" that they were dealing with registered designs because they had not been sent a prior cease and desist letter. Even less so in the case of well-known designs, of recognized prestige, which a fortiori are known by the professionals of the sector in question.
• Whether or not the consumer is misled as to the genuine character of the product is immaterial. The relevant criminal offences are not intended to protect the end consumer from deception, but to safeguard the exclusive exploitation of industrial property rights, to which the prestige or commercial reputation of their owner is attached. It is irrelevant whether there is (or not) confusion between the counterfeit product and the genuine one.
• The High Court confirms that in the case of offences of infringement of industrial property rights (legal assets protected by articles 273 and 274 of the Spanish Criminal Code), the damage is inherent and does not require additional proof.

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We want to thank Berta Cabañas, Rut Alemany, and Adriana Sanjurjo, trainees at Baker McKenzie, for their contribution to this legal update.