Mediation in trademark disputes (Part 3)
Applicability of mediation in civil disputes related to trademark rights
1. Disputes related to the infringement of trademark rights
Once registered, a trade mark confers on its proprietor the exclusive right to use it in connection with the goods and/or services for which it is registered, to dispose of it, and to prohibit any third party from using in the course of his trade a sign that is identical or similar to the trade mark to designate goods that are identical or similar to those in respect of which the trade mark is registered and, in cases where the trade mark enjoys a reputation, to even designate goods that are not identical or similar to those in respect of which the trade mark is registered.
A large category of disputes is related precisely to the exercise of this exclusive right, i.e., with the unlawful use of the mark by a third party. This category of disputes is considered by the Sofia City Court of Law as the first instance of court, in conformity with Chapter VI of the MGIA. Pursuant to Art. 116 of the MGIA, the person who considers that his/her trademark rights have been infringed has three main claims: for the establishment of the infringement (Article 116(1)(1)); for the cessation of the infringement and/or for the prohibition of the infringing activity (Article 116(1)(2)); and for the award of damages (Article 116(1)(3)). In addition to these claims, the claimant may seek the seizure and destruction of the goods that are the subject of the infringement, including the means and materials for its commission (Article 116(1)(4)), as well as: to surrender to him the property subject to the infringement; to pay him the costs associated with the storage and destruction of the property subject to the infringement; publication at the expense of the infringer of the operative part of the court's decision in two daily newspapers, in the time zone of a television program with national coverage, or in any other manner determined by the court (Article 116(1)(4)).
It is also possible an action to be brought against an intermediary for the termination of the activities or services provided by the intermediary where these contribute to the infringement of the exclusive right in the trade mark by third parties. The success of an action against the intermediary is not conditional on an action against the infringer itself.
The characteristic feature of all these disputes is that from a factual and legal point of view they are usually very complex, difficult to prove (especially in relation to damages from the infringement) and lengthy; they also require specific expertise and significant resources.
At the same time, there is no formal obstacle to the parties voluntarily resolving such a dispute - in essence, liability for trademark infringement is a form of tort liability, and there is no obstacle to the parties voluntarily agreeing on the existence and scope of such liability. In such disputes, mediation will always be possible, either in relation to the infringement or to negotiate the form and amount of damages, the manner in which they are to be paid, measures to prevent future infringement, etc. Insofar as the parties are not limited to the subject matter of the dispute and the remedies provided for by the law when negotiating in mediation, they may discuss various options and even agree on mutually beneficial future cooperation, such as joint use of the mark or the conclusion of a licensing agreement on terms to be determined by the parties. In any event, a voluntary settlement would save time and money, as well as avoiding publicity and preserving the reputation of the disputants themselves and of the disputed mark. On the other hand, if the parties' objective is to have the fact of the trade mark infringement recognized or denied as res judicata and to obtain publicity, they are more likely to prefer the court procedure and to obtain a binding judgment rather than using the confidential mediation procedure to achieve that objective. What is relevant here is that the parties have alternatives and, depending on their objectives and priorities, can choose whether or not to try to resolve their dispute voluntarily through mediation.
As stated in Part 1 of this article, Art. 140 "a" para. 2 of the Civil Procedure Code (effective July 1, 2024) provides for the possibility that these disputes may be referred for compulsory court mediation at the discretion of the judge hearing the case.
2. Disputes relating to the ownership of a trade mark or in connection with a contractual relationship, the object of which is the mark
A trade mark as an object of property may be owned by one person or co-owned by several persons. Co-ownership may arise both at the time of registration, as a result of a joint application for registration of the mark by several persons, and subsequently, as a result of inheritance, for example. According to Article 18 of the MGIA, each of the co-owners may use the mark without the consent of the others and without being accountable for it, unless otherwise agreed in writing between them. However, for the transfer of the trademark as well as for the conclusion of a licensing agreement with the subject trademark, the consent of all co-owners is required, unless otherwise agreed between them (Art. 23, para. 2, and Art. 24, para. 2 of the MGIA). Given the enduring relationship between the co-owners and the limitations on their rights imposed by the co-ownership of the mark, they should by necessity make joint decisions in relation to the mark. Possible disputes between them will have to be settled by negotiation, and mediation is a tool that could greatly facilitate those negotiations and increase the chances of finding a mutually acceptable solution.
Another large category comprises disputes arising in connection with contractual relations, whose subject is the trademark (most often a licensing or co-existence agreement, but possibly also in connection with other contracts). In most cases, the source of these disputes is either the parties' non-fulfillment of contractual obligations or going beyond contractual limitations. Disputes are also possible in connection with the occurrence of hypotheses that are not explicitly regulated in the relevant contract between the parties or in connection with the termination of such a contract and the consequences therefrom. What distinguishes these disputes from others is that they are usually preceded by long-term relations between the parties, where each of them has its own interests in the contract and in preserving relations with the other party. It is also important for the parties to preserve their reputation in the business community, as it is relevant to their business and to establishing and maintaining relationships with other existing or potential partners and customers. The use of mediation to resolve such disputes would guarantee confidentiality and help the disputants avoid potential reputational risks while significantly increasing the possibilities for finding a way out of the situation and preserving good relations between the disputing parties.
Conclusion
The conclusion, following the situations discussed in Parts 2 and 3 of this article, is that mediation can be successfully applied in almost all trademark disputes. The use of the procedure offers the disputing parties numerous advantages compared to the contentious administrative and judicial proceedings, including the saving of time and money, the control the parties have over the decision-making process, confidentiality, the ability to find a solution based on the business interests of the disputants, preserving their reputation and relations between them, and even the opportunity to negotiate future cooperation between them. In international disputes, of particular value is the fact that mediation eliminates the need to litigate in different jurisdictions that are subject to different legal regimes. In addition, instruments such as Directive 2008/52 and the Singapore Convention provide the possibility of enforcing a settlement reached in mediation on the territory of the states bound by the rules of the Directive or Convention. On the other hand, participation in mediation does not deprive the parties of the opportunity to seek alternative ways to resolve the issue, including by going to court, if they have failed to reach a settlement via mediation. This possibility is legally guaranteed by the envisaged suspension of the limitation period for the duration of the mediation process. Important for the success of the procedure are both the bona fide participation of the parties and the experience and skills of the mediator, and it is highly preferable that in IP-related disputes the mediator conducting the procedure possess special skill and knowledge in the sphere of intellectual property rights.
Currently, in Bulgaria, the possibility of resolving intellectual property disputes through mediation is undeservedly neglected, most likely due to a lack of knowledge of the procedure and its advantages. In the practice of the World Intellectual Property Organization and the European Intellectual Property Office, however, the procedure is successfully used to resolve precisely such disputes. According to the statistics of the Mediation and Arbitration Centre of the World Intellectual Property Organization, on average 70% of the mediation cases conducted in the center resulted in a settlement, and for 2020 this percentage is reported to increase to 78%.1
Author: Lyubka Vasileva Karapanova2 ©All rights reserved.
The present article is published for the first time in issue 6/2022 of the journal "Commercial and Contract Law" -"Labour and Law" Publishing House.
Last updated on June 23, 2023.
NOTES
1 Source: https://www.wipo.int/amc/en/center/caseload.html
2Lyubka Vasileva – Karapanova is an attorney and also a mediator, registered in the list of the Center for Mediation and Arbitration at the World Intellectual Property Organization (WIPO) as well as a mediation trainer, intellectual property representative in the sphere of trademarks and design at the Patent Office of the Republic of Bulgaria and the European Intellectual Property Office (EUIPO).
