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Court of Justice of the Andean Community [2023]: Preliminary Ruling 128-IP-2022



This is an informal case summary prepared for the purposes of facilitating exchange during the 2023 WIPO IP Judges Forum.

Session 1: Emerging Issues in Trademarks

Court of Justice of the Andean Community [2023]: Preliminary Ruling 128-IP-2022

Date of judgment: Issued on October 6, 2023; published on October 11, 2023 (Official Gazette of the Cartagena Agreement N° 5337)
Issuing authority: Court of Justice of the Andean Community
Level of the issuing authority: Final Instance
Type of procedure: Judicial (Administrative)
Subject matter: Trademarks
Plaintiff: Tapout, LLC
Defendant: National Institute for the Defense of Competition and Intellectual Property of the Republic of Peru (Indecopi), and Salem José Sumar Binda
Keywords: Andean law, Preliminary ruling, Industrial property, Nullity of trademark registration, Bad faith

Basic facts: Whether or not the annulment of the registration of the TAPOUT (denominative) trademark — which distinguishes products from Class 25 of the Nice International Classification and whose owner is Mr. Salem José Sumar Binda — is appropriate, for being allegedly obtained in bad faith by reproducing foreign registered trademarks owned by the company Tapout, LLC.

Held: The Andean Court does not resolve the specific case. This regional court interprets Andean law with the purpose of guiding the national judge, who must resolve the controversy raised in domestic law by applying the Andean Court’s interpretation of the applicable supranational law.

Relevant holdings in relation to emerging issues in trademarks [specifically, non- traditional trademarks]: The legal criteria for determining whether an applicant for a trademark registration has acted in bad faith in seeking to register a sign that is identical or similar to a trademark used by a third party abroad, are as follows:

1. A person acts in bad faith if, at the time of requesting a trademark registration of a distinctive sign, they know, or should have known, that said sign is identical or similar to the distinctive sign used by a third party abroad, to the point that it may give rise to confusion with the sign whose registration is requested in the local market. It is the third party who later requests the annulment of the registration granted who has the burden of proving said knowledge.

2. Such knowledge can be proven, for example, if the third party owner or licensee of the distinctive sign used abroad certifies that the applicant (in the local market) had been its partner, distributor or marketer, or that through any other contractual relationship became aware of the distinctive sign that the third party uses abroad. Such certification is proof that the applicant knew about the distinctive sign of the third party and the existence of previous relations between them.

3. If the distinctive sign used by the third party abroad is well-known or famous, the competent national office must take this circumstance into consideration when evaluating prior knowledge that proves bad faith. If the distinctive sign used abroad was famous, it may not be necessary to prove the existence of prior relations between the applicant and the third party. If the distinctive sign used abroad was well-known, it may be sufficient to prove that the applicant was part of the pertinent or relevant sector (e.g., manufacturers, distributors, marketers, clients, consumers) that should have been aware of the well-known sign.

4. This proof of prior knowledge is, in principle, sufficient to prove bad faith. It is not required to prove the applicant’s intention to prevent the aforementioned third party from using its distinctive sign in a Member Country of the Andean Community; that is, it is not necessary to prove the applicant’s intention to hinder the entry of the foreign distinctive sign into the local market.

5. This standard of proof is intended to encourage the creation of local distinctive signs. Distinctive signs are not scarce resources. The possibility of creating distinctive signs such as brands, trade names and industrial designs is infinite, so it makes no sense to protect a mere copy of distinctive signs that third parties use abroad.

6. Notwithstanding the above, if considered pertinent, the competent national office may reject the request for annulment of a trademark registration on the grounds of alleged bad faith if:

a. Despite prior knowledge being proven, the distinctive sign previously used abroad was ordinary (that is, it was not well-known or famous) at the time of submitting the application for local registration; and,

b. There is no competitive connection between the products or services that the foreign sign distinguishes and the products or services that the local sign distinguishes.

7. Another indication of bad faith that the competent national office may take into account is the opportunistic behavior of the trademark registration applicant. If the applicant’s behavior demonstrates that the applicant seeks to hoard various trademarks that already exist abroad without actually using them in commerce in the local market, it may suggest that the sole purpose of obtaining local registration is to subsequently sell them to foreign owners at a later date when they are interested in the local market, and can be a relevant indication of bad faith.

Relevant legislation:
Decision No. 486 Establishing the Common Industrial Property Regime
(this Andean law is applicable in Bolivia, Colombia, Ecuador and Peru)