Trade mark rights are based on the principle that parties must obtain a valid registration to ensure that said rights will be immediately in force once the registration is granted.

An exception to this is a trade name, which is used by merchants engaged in commercial activities to distinguish themselves from their competitors. In this respect, the trade name is similar to the service mark, but the main difference is that the trade name is the only distinctive sign that does not need to be registered in order to obtain an exclusive right regarding this, because its use is enough for this purpose.

Nevertheless, trade names can entail some troubles. First, an applicant for a trade mark is often unable to find information about the existence of a similar or identical trade name, since such information does not appear in a clearance trade mark search, that is, a search done on issued marks or on pending applications. Therefore, the applicant should conduct market research, which is extremely expensive and inefficient, due to market fluidity.

A typical case:

Andrew applies for the registration of a mark. Three months later, Andrew's application is published in the Gazette El Peruano. After two months, a third party, named Peter, starts using a trade name that is confusingly similar to Andrew's mark. Three months after the publication of Andrew's mark, it is granted a registration.

At this time, there are two exclusive rights: the one upon the mark obtained through its registration and the other upon the trade name obtained through its use. However, since these two rights are completely different, they cannot coexist, and it is therefore necessary that one of them prevails over the other.

Hence, the problem: while it is possible to apply the right inherent in the trade name, which starts from its first use, the applicant's efforts to register its trade mark are rendered futile, since Andrew could not have known about the existence of Peter's confusingly similar trade name.

Furthermore, it is not possible to state that Peter acted in a fraudulent way, since he began using the trade name before the trade mark application was published.

On the other hand, to privilege the filing of the trade mark application over the use of the trade name would be unfair, since that would mean favouring an expectative right (the right derived from a trade mark application) over a fully constituted right (the right derived from the use of the trade name).

This issue marks a legal gap in Andean trade mark legislation, which has yet to be resolved. One solution is to eliminate the way trade names are obtained and instead introduce them within the juridical frame of service marks, since there is a huge similarity between the two. This provides security for those who have invested a large amount of resources for obtaining an exclusive right, as in the case of trade mark applicants, who must conduct phonetic and design searches, as well as pay for the publication of their applications. Trade name owners do not have to cope with such tasks.

In this way, all entities who register a trade name or trade mark will be ensured the expected legal protection.

Alain C Delion and Lilie C Delion

Estudio Delion
Las Acacias 898, Urb. Las Palmeras
Los Olivos, Lima 39, Peru
Postal address
PO Box 27-0044, Lima 27, Peru
Tel: +51 1 523 9147 / 522 0360
Fax: +51 1 521 0685
vcd@estudiodelion.com.pe 
www.estudiodelion.com.pe