Author: Lyubka Vasileva Karapanova1
Introduction
Trademarks are a specific object of property whose main function is to distinguish the goods or services offered by their owner from those of other market participants. A trademark well recognized by consumers, in combination with the high quality of the goods or services to which it relates, is a valuable asset to its owner as it "sells" the product and creates a circle of loyal customers, thus giving a competitive advantage over other similar goods on the market that may be of the same quality but are not as well known to the consumer. The large market participants are well aware of these benefits, and this is why they invest significant resources in building strategies to enforce and maintain the popularity of their brands. The opportunities that a well-recognized trademark provides can also give a strong impetus to the development of any start-up business. This is why the creation and maintenance of the reputation of a trade mark are often linked to disputes aimed at preserving its distinctive character and value as an asset by preventing the registration or use of a sign similar to the trade mark for the same or similar goods or services offered by someone other than the owner of the registered trade mark. The resolution of these disputes in the adversarial administrative or court proceedings provided for by the Law for marks and geographical indications (ZMGO, Bul.) is a lengthy process engaging significant financial resources, and insofar as the very subject matter of the dispute is specific, the process also requires specialized knowledge. Moreover, disputes often have a negative impact on the business of the disputants or on the product bearing the disputed trademark. The opportunity to resolve these types of disputes quickly and discreetly can therefore be of great benefit to both disputing parties.
Mediation is one of the most appropriate tools that gives the parties this opportunity and can be successfully used to resolve disputes related to trademarks and other intellectual property rights. Although still rarely used in Bulgaria to resolve disputes related to intellectual property, mediation reveals a number of advantages for the parties compared to the traditionally used methods of resolving the dispute through administrative or judicial procedures and on the global scale it is successfully used to resolve such disputes. It is a fact that within the World Intellectual Property Organization (WIPO), a Mediation and Arbitration Center has been operating for years, the purpose of which is to provide services for the out-of-court resolution of disputes related to intellectual property rights. The European Intellectual Property Office (EUIPO) also provides mediation services and other ADR to the parties in contentious proceedings before this office. The topic of the application of mediation in disputes related to intellectual property is becoming ever more relevant in Bulgaria as well. The amendments to the Mediation Act and the Civil Procedure Code that were endorsed in February 2023 (State Gazette, No. 11/2023) provide for the disputes in question that, at the discretion of the judge hearing the case, the parties may be obliged to participate in a mandatory first meeting in a court mediation procedure. (Details on the compulsory court mediation can be found at: link to the article "Briefly about mandatory judicial mediation in Bulgaria")
The purpose of the present article is to briefly outline (without claiming to be exhaustive) the main advantages of the mediation procedure in view of the specificities of disputes related to trademark rights and the stages of the trademark life in which mediation could be successfully used to resolve these disputes in a quick, efficient, and acceptable way for both parties to the dispute. The text is based on the provisions of the Bulgarian legislation only, which does not mean that the possibility of resolving disputes through mediation is limited singularly to the national trademarks registered under the ZMGO. On the contrary, as stated above, mediation is applicable and actually used in the practice of EUIPO and WIPO in disputes relating to European Union trademarks as well as to marks registered under the Madrid Agreement concerning the International Registration of Marks and the Protocol to the Madrid Agreement concerning the International Registration of Marks.
Part I: Nature and Major Characteristics of Mediation
According to the legal definition of the Mediation Act, mediation is a voluntary, confidential out-of-court dispute resolution procedure in which the parties are assisted by a neutral third party in the effort to reach an agreement on their dispute. The initiation and conduct of the procedure require the consent of both parties, each of whom may at any time request that the procedure be suspended or terminated.
2 Unlike court proceedings and contentious administrative procedures where the engaged official organ pronounces a decision that is made public and that is mandatory for the participants in the proceedings, mediation enables the disputing parties themselves, with the help of a neutral third party, to find a solution to the dispute that is mutually acceptable and based on their business interests. The confidentiality of the procedure is a guarantee for the parties that the facts of the dispute, subject to mediation, will not become public knowledge, thus providing them with the opportunity to prevent possible reputational damages. Important advantages related to the use of mediation are the suspension of the limitation period for filing a claim on the dispute, subject to mediation, and the possibility of making the agreement reached in mediation enforceable.
By its very nature, mediation is a process of assisted negotiation that requires the active participation of the parties to the dispute and is aimed at finding a solution that meets the interests of both parties. At the core of this process is the model of principled, or "interest-based" negotiations, which take into consideration the difference between the declared positions and legal arguments relating to the dispute and the deeper levels of the conflict - the specific needs, values, personal or business interests and long-term goals of the parties affected by the dispute (hereinafter collectively referred to as the "interests of the parties") that motivate the particular position taken. Exploring these deeper levels enables each party to identify and prioritize its interests and to identify different alternatives for satisfying them, which in turn expands the possible solutions and opens up the possibility of finding a solution to the dispute that satisfies the interests of both parties.
Key to the procedure is the role of the third party - the mediator, who assists. The mediator does not give legal advice or prescribe a solution, the negotiations between the parties by encouraging them to define a common understanding of the problem, to identify and prioritize their own interests in relation to that problem (often this may involve longer-term or different goals and business interests than initially stated), and to seek and discuss various options for a mutually acceptable solution that may satisfy each party's interests, maximize mutual benefits, or at least reduce losses.
Key in this procedure is the role of the third party - the mediator - who assists the parties in reaching a solution. The mediator does not give legal advice or suggest a solution; his/her function is to competently guide and facilitate the negotiations between parties by encouraging them to define a common understanding of the problem, to identify and prioritize their own interests in relation to that problem (often this may involve longer-term or different goals and business interests than initially stated), and to seek and discuss various options for a mutually acceptable solution that may satisfy each party's interests, maximize mutual benefits, or at least reduce losses that the parties, or one of them, could suffer in the event that the dispute is handed over for an administrative or a judicial resolution.
For the success of the procedure, both the active and good-faith participation of the parties and the skills and experience of the mediator are important. According to the Bulgarian Mediation Act, only a person who has successfully completed mediation certification training and is registered in the Unified Register of Mediators can act as a mediator. In view of the specific nature of disputes related to trademarks, it is preferable that the mediator in such disputes also has additional qualifications in this area in order to be of maximum use to the parties. A key requirement for the mediator is that he or she be neutral and impartial with respect to the dispute and the parties.3 A key requirement for the mediator is to be neutral and impartial with regard to the dispute and the disputants.
When compared to litigation or contentious administrative proceedings, mediation reveals a number of advantages for the parties, the most significant of which are:
1. Flexibility, speed and economy. Mediation is an informal, flexible procedure that allows for the organization of meetings between the parties and the mediator at a location agreed upon between the parties and the mediator (usually neutral) and within a timeframe set by them. Mediation can also be conducted online if the circumstances of the case require it (e.g., if the parties are located in different countries) and the parties and the mediator have accepted this way of conducting the procedure. In the context of the COVID-19 epidemic, this has increasingly become the preferred form for the parties. Parties to mediation may use lawyers and other experts. In most cases, the procedure is completed within several sessions. The parties themselves may also set a deadline after which, if no agreement is reached on the dispute, they may terminate the procedure and seek another means of resolution (e.g., arbitration or court). An example of such an arrangement are the recommended clauses of the WIPO Mediation and Arbitration Centre, in particular the so-called "multi-tier dispute resolution clauses," where the parties agree to refer their dispute to mediation, and if no agreement is reached within a time limit set by them, the dispute will be referred to another alternative means chosen by the parties (e.g., arbitration) or to court.
2. Confidentiality. The Mediation Act obliges the participants in the mediation procedure to keep secret all facts, circumstances, and documents they have become aware of in the course of the mediation procedure and to refrain from disclosing them to any third parties. The mediator is also bound by an obligation of confidentiality towards the persons involved in the mediation (internal confidentiality) and cannot communicate to the other participants in the mediation any circumstances that concern only one of the parties to the dispute without the consent of that party (Art. 10, para. 4 of the Mediation Act). As a guarantee of confidentiality, Article 7(2) of the Mediation Act expressly prohibits the mediator from being questioned as a witness about facts and circumstances which he has become aware of in that capacity. In the context of trademark disputes, the confidentiality of the mediation procedure is a particularly valuable advantage, as it gives the parties a chance to preserve their reputation, the image of the contested trademark and to prevent the related losses.
3. The parties have the right to choose the mediator themselves by addressing a person who has the necessary qualifications and expertise for the specific nature of the dispute. The Mediation Act also allows for the possibility of co-mediation, i.e., mediation conducted by a team of mediators (usually two), which enables the parties to choose mediators with complementary competences according to the specifics of the dispute.
4. Control of the parties over the decision and the possibility to negotiate on other important issues. Unlike the judge and the competent administrative authority seized with the dispute, the mediator does not make a decision on the dispute but rather assists the parties to find a solution themselves. The solution reached in mediation has the character of a contract, an agreement between the parties. Since the decisions in mediation are based on the business interests of the parties and are not limited to the specific disputed issue, mediation enables the parties to reach agreement on other issues of importance to them, including agreeing on their future conduct and cooperation (e.g., terms for joint use of the disputed trademark or a licensing agreement).
5. Preserving the relations and the communication between the parties. In mediation, the adversarial approach (stating and asserting positions) is replaced by a dialogue “in principle” on topics important for the parties, which allows them to maintain normal communication with each other even when they fail to reach a decision on the dispute within the current procedure. This advantage is particularly valuable in cases where the parties need to continue their relations ((e.g., in the case of joint ownership of a trademark).
6. Preserving the possibility to look for other ways to resolve the dispute if no solution is reached in the course of the mediation.
7. Possibility of applying mediation before or during a pending judicial or administrative proceeding on the same dispute, and even after the conclusion of such a proceeding - in connection with the implementation of the decision rendered therein or the negotiation of the future conduct of the parties.
At the same time, mediation provides the parties with important advantages and guarantees compared to the negotiations conducted outside of mediation, namely:
Suspension of the limitation period for depositing a claim in connection with the dispute subject to mediation. Directive 2008/52/EC of the European Parliament and of the Council from 21 May 2008 on certain aspects of mediation in civil and commercial matters obliges the Member States to ensure that the parties opting for mediation in an attempt to resolve a dispute are not prevented from any future initiation of legal proceedings or arbitration in relation to the same dispute due to the expiry of certain limitation periods (Article 8). This requirement of the Directive is reflected in Article 11 (a) of the Bulgarian Mediation Act, according to which limitation periods do not run during a mediation process.4
The possibility of giving enforceability to a settlement agreement reached in mediation is explicitly provided for in Article 18 of the Mediation Act (in addition to the general method of approving court settlements reached within the framework of pending litigation, provided for by Art. 234 CPC). This possibility is open to all settlement agreements to which the Bulgarian Mediation Act applies. For agreements on international disputes, reached in mediation, where enforcement is sought in another country the possibility of making that agreement enforceable is guaranteed by acts such as Directive 2008/52 on certain aspects of mediation in civil and commercial disputes 5 and the Singapore Convention on Mediation 67.
