Article 269 (1) of the Portuguese Industrial Property Code states that "forfeiture of a registration shall be declared if the trade mark has not been the object of serious use for a period of five consecutive years, unless there are just grounds for the non-use".
This rule leads to two different situations: first, the obligation to make serious use of a trade mark for a period of five years; and, second, the authorisation of non-use of the trade mark for five consecutive years, as long as there has been a just ground. So it is a question of knowing what "serious use" means.
Serious use
Although the Portuguese Industrial Property Code does not provide any rule defining "serious use", it is considered serious use when the owner of a trade mark, or a third party with the owner's consent, through repeated and public acts of commercialisation, allows the relevant goods to come to the consumers' knowledge. What are the criteria for determining serious use?
The serious use of a trade mark implies use in the scope of the economic activity in the market, so that consumers interact with the trade mark and with the goods or services designated by it. Consumers should be able to differentiate the goods or services bearing each one of the trade marks.
This differentiation is made based on the consumer's ability to identify the trade mark through its goods, in a simple way, without the need for any careful examination or comparison with other trade marks (Article 245 (c) of the Portuguese Industrial Property Code).
Should the evidence of serious use be focused not only on quantitative criteria (for instance, turnover and expenses with advertising and promotion of the trade mark) but also on qualitative criteria? That is to say: will it be necessary to maintain the quality of the goods or services designated for the mark to be the object of serious use?
We believe that in order to assess the serious use, the quality of the goods or services designated by the trade mark is, in fact, important. What is vital to know is if the trade mark is being used in an effective and real way.
If a certain trade mark changes the quality of its goods or services, it is being used differently from what was intended. Therefore, that use is not a serious use. Consequently, its registration should be the object of a declaration of forfeiture in accordance with articles 261, 268 (1) (a) and 269 (2) (b) of the Code.
To be considered serious, use must be real and effective, translated into placing the goods or services for which the trade mark is intended at the consumer's disposal.
Test sales
What about test sales? Can this commercial practice hinder the forfeiture declaration of a trade mark registration? Test sales correspond to the placing into the market of goods or services identified by a certain trade mark, before the final offer, as part of a market survey to find out possible sales success. That is to say, the trade mark owner, before investing in the effective sale of the goods bearing its trade mark, makes a sort of test and places only some of those goods into the market, to avoid unnecessary expenses.
With test sales it is possible to find out buying trends for the relevant goods and why consumers prefer certain goods over others of the same kind. It is also possible to ascertain if the goods are well accepted by consumers and if commercialisation will be a success.
In view of this, and taking into account that, for assessing the serious use of a trade mark, it is necessary to verify the effective commercialisation of the goods or services, can we say that test sales fulfil the serious use requirements?
In our opinion, test sales constitute, by themselves, a serious use, insofar as the goods or services are placed into the market and consequently commercialised, thereby fulfilling the distinctiveness role.
Although they are test sales, consumers have access to the goods and services under the specific trade mark, and differentiate them from others bearing dissimilar trade marks.
After the test sales, if the trade mark owner does not commercialise those goods, then the five-year legal term required for the serious use of the trade mark starts counting.
Preliminary steps
As for the preliminary steps to place the goods or services into the market, it seems clear that these cannot be considered as serious use of a trade mark.
The manufacture of the goods, labelling, leasing of warehouses for keeping the stocks and hiring employees for preparing the goods to be placed into the market are preliminary steps that are not taken into consideration concerning the trade mark serious use concept.
They are in-house business acts and, although the goods are ready for the market, the commercialisation needed to comply with the serious use requirement did not take place.
Goods for export
As for the importance given by the law-maker to the serious use of registered trade marks intended solely for export, it is under the supervision of the export trade to avoid the situation that third parties register the exploiting company's trade mark, which would prevent that company from using the trade mark on national territory.
By laying down that the concept of serious use comprises the use of trade marks to cover goods or services intended only for export, article 268 (1) (b) of the Code protects trade mark owners who do not commercialise them in the domestic market. Thus, as long as the goods or services protected by the trade mark are effectively exported, it is a case of serious use.
We believe that, for trade marks for goods or services that are solely for export, the simple fixing of the trade mark label on those goods/services is not enough to comply with the serious use requirements. This also applies to the existence of those goods/services at the export place.
It is necessary that those goods/services are in fact exported, fulfilling the purpose they are intended for.
Let's now examine the question of knowing if, where the goods/services have gone astray and do not reach their destiantion, this can be considered as serious use of the trade mark.
We stress two important aspects: first, the need for the goods/services to reach the consumer; second, the reason why the goods have gone astray.
If a certain good, manufactured and bearing a trade mark, is ready to be used but is not placed into the market, there is no serious use of the trade mark. It is necessary that the good reaches the consumer to establish if the trade mark is being the object of serious use.
The consumer should be able to differentiate the goods/services bearing that particular trade mark from those bearing other trade marks. For that purpose, he must have access to the goods or be able to use the services bearing the trade mark.
When merchandise bearing a trade mark solely intended for export has gone astray, the goods/services cannot be placed into the market, or at least into the targeted market. This way, the trade mark is not able to fulfil its distinctive role and, although the commercial purpose of exporting is achieved, we cannot consider that trade mark is being the object of serious use. Otherwise, one would allow that trade marks owners could simulate the miscarriage of goods to keep their registrations in force.
If the relevant goods do not reach their destination, there is no serious use of the trade mark. Nevertheless, one should take into account the reasons why the goods did not reach their end.
Once again the "just grounds" concept, as laid down in article 269 (1) of the Code, which we will discuss below, is applied. It is important to mention that, if the miscarriage of the goods was not the fault of the trade mark owner, the lack of serious use does not lead to the forfeiture declaration.
Lack of use just grounds
Article 269 (1) of the Industrial Property Code says that, if there is no serious use of a trade mark due to just grounds, the registration cannot be the object of forfeiture. What is meant by "just grounds"?
The law-maker does not state exactly what he means by just grounds or motives justifying the lack of use, in article 269 (1). However, doctrine has considered that there is just ground for the non-use of a trade mark if its owner is hindered from using, or exceptionally finds it difficult to use, the trade mark in the market.
Examples of just grounds for the non-use of a trade mark are cases of force majeure such as wars, natural catastrophes, fires, floods, earthquakes; the impossibility (for reasons beyond the control to the trade mark owner) of importing raw-materials necessary for the manufacture of the goods; and the national, regional or other kind of suspension resulting from legal documents of the practice of services for which the trade mark has been registered.
Nevertheless, these causes are not enough to hinder the forfeiture declaration for lack of use. So that all the just ground requirements are gathered, the trade mark owner should have taken the necessary steps to fulfil the use obligation. Only then can one state that, in fact, the non-use of the trade mark was due to facts beyond the responsibility of its owner.
Who has the burden of proof regarding the non-use just ground? In our opinion, according to article 270 (6) of the Code, the burden of proof belongs to the trade mark owner.
Only the trade mark owner is provided with the means of establishing that he was prevented from using his trade mark registration. In our opinion, it is not consistent that the Portuguese PTMO, or a third party interested in the trade mark forfeiture declaration, should provide the reasons to set aside the forfeiture.
Besides, article 342 (1) of the Portuguese Civil Code, says that anyone who claims a right should prove the facts constituting that right.
The procedure is: the third party interested in that trade mark requests the declaration of the forfeiture of the registration for lack of use; the Portuguese PTMO notifies the trade mark owner to file evidence of use of the trade mark during the past five consecutive years. Subsequently, it is up to the trade mark owner, if it is interested in keeping the registration, to state that he used the trade mark and to prove such use, or else that he did not use the trade mark and submit the just grounds for the non-use.
Once a just ground for the lack of use is established, what are its effects regarding the five-year term for the forfeiture declaration as laid down in the law?
If the just ground occurs during the five-year period, in our opinion the solution would be to suspend the term. One could think that the suspension of the term in that case would prevent the fulfilment of the legal requirement of five years for the forfeiture.
If that were the case, by changing the reckoning of the term after the just ground having been established, the trade mark owner would have to prove the use of the trade mark for a shorter period of time than the five-year term, since he justified the non-use of the concerned trade mark in that period of time.
Nevertheless, after the end of the just ground, if the new term started counting, one would be extending the five-year period laid down in the law.
For instance, assume that the registration of trade mark A was granted in 2000, but by force majeure it was not used between 2002 and 2004. If the new term starts counting in 2004, the trade mark owner would have to prove its use between 2000 and 2002 and between 2004 and 2009. This way, one would indirectly be imputing the just ground to the owner.
Just grounds not resulting from the trade mark owner's will must have a suspensive effect as regards the forfeiture term. If anyone wishes to declare the forfeiture of the trade mark registration, they must wait to see that between 2004 and 2009 it is not the object of a serious use, since the law requires that the required five years be consecutive.
There are several grounds for article 269 (1), including the trade mark's distinctive role. This role is to identify the goods bearing the mark and, consequently, to guarantee the marked goods compared to similar goods, thus preventing the risk of confusion among consumers.
By using a trade mark, its owner fulfils the distinctive role of that mark, allowing the consumer to be able to identify the goods, differentiating them from identical or similar goods.
The fact that the trade mark is not being used infringes fair competition since its owner holds the exclusive right, thus preventing others from using it.
One of the consequences of compulsory trade mark use is the attempt to prevent the existence, if only deceptive, of trade marks that in spite of being registered are not used and so they in fact non-existent.
As stated in the Recitals of Decree-law 36/2003 of March 5 ratifying the Portuguese Industrial Property Code "(...) industrial property takes upon itself the role of a mechanism regulating the competition and guarantees consumer's protection". From this, it should be concluded that the disposition safeguarding the use of a trade mark to a sole economic agent was worded to satisfy fears related to competition regulation and consumer protection.
In the absence of compulsory trade mark use, there would be several cases in which the owner of a trade mark, by not using it, could prevent third parties from registering and making an effective use of their trade marks.
In the same way, if there was no compulsion to use a trade the goods or services in the market would be limited, leading to the reduction or even withdrawal of goods or services available to consumers.
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| Wanda Honwana |
Raul César Ferreira (Herd) Lda
Rua do Patrocínio, 94
1399-019 Lisbon
Portugal
Tel: +351 213907373
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mail@raulcesarferreira.pt
www.raulcesarferreira.pt