The Obligation of the Trademark Holder to Remain Vigilant in Order to Avoid Loss of Rights Against the Offenders

legal insight

April 2024

Thanasis Ioannou, LL.M.

Abstracts: Under the regime of the new Trademark Law, the registration of a trademark is no longer equipped with the immunity that the case law recognized under the regime of the previous law. Trade mark law has moved away from the rigid model of the formal system and is now approaching the substantive system, according to which only the diligent and competitively conscientious proprietor is deemed worthy of protection, who on the one hand makes genuine use of his trade mark in trade and on the other hand reacts in good time and with appropriate legal means against unlawful infringement of his trade mark by third party competitors. The object of this study is to analyse the conditions of the provision of the new trademark law on the weakening of the right to the trademark due to tolerance, and to suggest the appropriate reaction against infringements of a company's trademark in order to avoid the adverse consequences of weakening.

1. Introduction 

The recent reform of trade mark law (implemented by the adoption of Law 4679/2020) has led to a partial abandonment of the rigid formal system, which is based exclusively on the formal registration of an indication in the trade mark register, through which the right to the trade mark is acquired, without taking into account the reality of the behaviour of the proprietor both in the period preceding the registration of the trade mark and, above all, in the period following it. To this end, the new law has introduced a number of institutions which soften the strictness of the formal system and bring trade mark law into line with the dynamics of business in a modern competitive environment, where the trade mark right has been stripped of its legal monopoly status and gradually transformed into a driving force for healthy competition between businesses for the benefit of the consumer. These institutions are the opposition of proof of use, the counterclaim of revocation or invalidity, and the weakening of the trade mark right by reason of tolerance, which we will discuss below. The common denominator of all these institutions is the approximation of trade mark law to the substantive system in the sense that the proprietor is now worthy of protection only when he actually uses his trade mark in trade to distinguish the goods and services for which it has been registered, but also when he reacts in good time and with the appropriate legal means whenever he becomes aware of any infringement of his trade mark by his third party competitors, that is to say, when a third party competitor either uses or registers his trade mark while

The diligence and vigilance of the proprietor in the event of infringement of his trade mark through the use of an identical or similar indication in trade is indirectly imposed by the Trade Mark Law (and in particular the provision of Article 12 of Law 4679/2020). According to the aforementioned provision, "the proprietor of an earlier trade mark[... ]does not have the right to request the cancellation or to prohibit the use of a later trade mark registered in Greece for the goods or services for which it was used, if he has knowingly tolerated the use of that trade mark for a period of five (5) consecutive years, unless the filing of the later trade mark was made in bad faith". Accordingly, the conditions for the occurrence of the dilution of the rights of the proprietor, which must be cumulative, are: a) the registration of the later mark; b) the expiry of five years from registration; c) the uninterrupted use of the mark in trade for five years; d) knowledge of the use of the mark; and e) tolerance of the use of the later mark for a period of five years. The absence of bad faith in filing the subsequent trade mark in so far as it is expressed as a negative condition in the provision of Article 12 of the Act. 4679/2020 may constitute grounds for the proprietor of the earlier trade mark to oppose the rejection of any objection of invalidity raised by the proprietor of the later trade mark defending himself against an application for a declaration of invalidity or a counterclaim for invalidity or an action for infringement of a trade mark.

2. The individual positive conditions for dilution 

2.1. Registration of the later mark

Within the subjective scope of Article 12 of Law No. 4679/2020 on dilution on grounds of tolerance include registered subsequent trade marks for which, as a rule, the relevant opposition is invoked either in the context of trade mark infringement actions or applications for interim measures or in invalidity proceedings before the Administrative Trademark Committee or the civil courts which deal with such cases following either an opposition under Article 52 of Law No. 4679/2020 or an opposition under Article 52 of Law No. 4679/2020. 4679/2020 or a counterclaim for invalidity pursuant to Article 38(1)(b) of the Trade Mark Regulation. 12 of Law 4679/2020. In order for the provision of Article 12 to apply, the defendant in an action for infringement or the defendant in an application for interim measures or the counterclaimant in a counterclaim for invalidity or the defendant in an application for invalidity must be the proprietor of a later (in relation to the earlier right) registered trade mark. 

2.2 Uninterrupted use of the mark for a period of five years from the date of registration.

The starting point of the five-year period of uninterrupted use of the later mark is the date of registration. The five-year period does not start to run before registration, and any use going back to a time prior to registration is irrelevant for the purposes of the attenuation for tolerance rule.

Use shall mean the actual use of the trade mark in the form in which it is registered and in relation to the goods and services for which it is registered. Therefore, any use of the later mark for related goods or services, if it is not also registered for them, is not covered by the dilution rule. The same applies if the later mark is used in a form which differs from the registered form to such an extent that its distinctive character is altered. This means that if the later mark is registered for handbags, for example, but is used in practice to distinguish clothing or footwear, such use cannot lead to dilution of the earlier right, even though the clothing and footwear may be related to the handbags. As regards the form in which the later mark is used in trade, if, for example, a descriptive element is added to a word mark referring to a characteristic of the goods/services distinguished, for example the word 'deluxe', then such use of the later mark is considered to be use of the later mark in its registered form and thereafter use which may result in the dilution of the earlier right. If, however, the subsequent proprietor, in the course of use in trade of the abovementioned hypothetical word mark 'A' registered for handbags, adds a word which has no connection with the goods in question, such as, for example, the name of the proprietor of the undertaking, then, since that addition alters the distinctive character of the subsequent mark, use of the mark in that form cannot lead to dilution of the earlier right. 

Moreover, the continuous five-year use of the later mark does not have to be by a single person. What is therefore relevant for the purposes of dilution is the use made by both the original proprietor and his successor, to whom the later mark has been transferred either independently or together with the undertaking whose goods or services it distinguishes. The legal successor of the original proprietor will in such a case be able to count in his favour the use already made by his licensor. Of course, the use of the subsequent mark by the licensee of the mark, who has either obtained a contractual licence from the subsequent proprietor or is simply using the subsequent mark by virtue of the informal consent of the proprietor, is also legally significant in the light of dilution. The most classic cases of trademark or distinctive sign licensing in practice occur in the distribution networks of a producer or even in franchise networks (for example, fast food, petrol or coffee chains), where the members of the network cannot develop their activity without the licence to use the producer's or supplier's trademark.

2.3. The condition of positive knowledge of the prior beneficiary

The weakening of the rights of the earlier proprietor or proprietor of an earlier distinctive sign of the essential system presupposes, inter alia, the existence of positive knowledge on his part both of the registration of the later mark and of the use of that mark. Knowledge of the person of the subsequent proprietor is not required. Furthermore, where the later mark has been registered for several goods or services, the positive knowledge of the earlier proprietor must be present for each of the goods and services separately. Furthermore, if the earlier proprietor has organised a network of commercial agents in the context of the marketing of its products, any knowledge of the use of the later mark by a commercial agent, contrary to what applies in civil law (Article 214 CC), is not attributable to the earlier proprietor, since, as is accepted, in commercial practice the commercial agent is appointed for another purpose and not to take knowledge of the use of the opposing mark by third parties.  However, in practice the commercial agent, if he becomes aware that a third party has registered and is using a mark which is identical or similar to the earlier mark or distinctive sign of the supplier of the represented supplier, will normally be obliged by an express contractual term to inform him accordingly. 

In any event, the burden of proving such knowledge on the part of the earlier proprietor is borne by the subsequent mark infringer.

2.4 The condition of tolerance of the use of the later mark

The concept of "tolerance" is a concept of EU origin and as such it must be interpreted autonomously and uniformly throughout the territory of the EU. The Court of Justice of the European Union, equipped with the exclusive competence to interpret autonomous concepts of EU law, in its very recent judgment in the Heitec case (judgment of 19.05.2005 2022 in Case C-466/2020) interpreted the concept of "acquiescence" as inaction on the part of the proprietor of the earlier trade mark or earlier distinctive sign of the essential system, while knowing the use of the later trade mark to which he would have been able to object. In other words, acquiescence amounts to a waiver of the measures available to the earlier proprietor in order to counteract the infringement of the mark or distinctive sign. Such acquiescence must last for five consecutive years in order to result in dilution. If, however, the earlier proprietor has either granted a contractual licence to the subsequent proprietor or has expressly or implicitly given his consent to the use of the subsequent mark, then there can be no question of acquiescence as long as that use of the subsequent mark is covered by a licence or the consent of the earlier proprietor, because the later proprietor is not in a position to oppose the lawful use of the mark or its distinctive sign by the later proprietor.

In order to break the tolerance in order to prevent the adverse effects of dilution from occurring, the earlier proprietor must take steps that 'clearly express its intention to oppose the use in question and to remove the alleged infringement of its rights' (judgment of 19.05.2022 in Case C-466/2020, para. 50). As a general rule, it is not sufficient for the five-year limitation period to be interrupted by the mere service of an extrajudicial statement of protest on the subsequent signatory, but it is necessary to bring an action before an administrative authority (e.g. opposition or application for a declaration of invalidity) or a court (action or application for interim measures) before the expiry of the five-year limitation period. In this respect, it should be pointed out that the interruption of the above time limit occurs only if both the filing and service of the contested legal remedy on the subsequent signatory-appellant take place before the expiry of the five-year period. 

3. Consequences of dilution

The tolerance of the use of the later mark by the earlier proprietor for a period of five years from the registration of the later mark leads to the weakening of the rights of the earlier proprietor. In practice, this means that the earlier proprietor will not be able to apply for a declaration of invalidity of the later mark before the Administrative Trademark Committee or a counterclaim for invalidity before the civil courts (if the later proprietor brings an action against it), nor will he be able to prevent the use of the later mark by means of an action or an application for interim measures.  In the aforementioned Heitec case, the Court of Justice of the European Union held that the occurrence of dilution also renders inactive "ancillary or related claims, such as damages, the provision of information or the destruction of goods", which in essence complete the legal arsenal of the earlier marker against infringements of its rights. Therefore, if the subsequent proprietor successfully invokes the weakening of the earlier proprietor's rights due to tolerance, the later mark on the one hand and the earlier mark or distinctive sign of the essential system on the other hand will no longer coexist on the market, since the later proprietor will not be able to prohibit the use of the weakened earlier mark or distinctive sign of the essential system (Article 12 of Law 4679/2020).

4. Instead of epilogue

Attenuation by acquiescence is an institution of trade mark law that rationalises the weaknesses of the formal system and balances the need to protect the earlier trade mark or distinctive sign of the substantive system with the need to surround the registration of the later trade mark with legal certainty. Where the earlier trader has been inactive for five years and tolerates the infringement of his right, even though it has come to his attention, the law breaks the principle of priority in time and inactivates all rights and claims arising from the earlier right, allowing the later marker to use his mark in trade, even though in doing so he is in principle infringing an earlier mark or right. It is worth pointing out here that dilution has an effect only inter partes, that is to say, between the parties, with the result that the earlier proprietor can bring his claims against another competitor who has registered as a trade mark a sign identical or similar to his own, provided that the conditions for dilution are not met in respect of that competitor.

In conclusion, the correct and appropriate practice, both from a legal and a purely business point of view, is to monitor the market constantly and to react immediately whenever it is established that a later mark has been registered which infringes an earlier mark or a distinctive sign of the undertaking of the earlier proprietor. This prevents, on the one hand, the formation and consolidation of irreversible situations on the market which are irreversible for the earlier right and, on the other hand, the weakening of the claims deriving from the earlier right due to the five-year tolerance of the use of the later infringing mark. It could therefore be argued that the new trade mark law protects and rewards the diligent and competitively conscientious proprietor who not only makes genuine use of his mark in trade but also takes appropriate steps in good time to remove any infringements of it.