Hungary: Law No. XI Of 1997 On The Protection Of Trademarks And Geographical Indications

The present reform of the regulatory system has two essential motifs: partly it has to take into consideration the changed circumstances of the modified market economy and that of politics, having in view to support and to increase the effectiveness of the new regulations aiming to bring into existence a sound market economy, partly it should satisfy to the requirements of harmonization being Hungary’s endeavour and duty for the sake of joining the European Community.

As it is known, the new Law No. XI of 1997 on Trademarks elaborated for this purpose, has been approved by the Parliament and entered into force on July 1, 1997.

The subject of the trademark protection can be a mark that can be delineated graphically - such as a word, word compounds, a personal name, a slogan, a letter, a number, a drawing, a picture, a two-, or three- dimensional device, the form of a packaging, a color, or a color-combination, a hologram, a sound and the combination of these elements.

A mark shall not be granted trademark protection if it has no distinctiveness, if it indicates exclusively the kind, quality, quantity, purpose, value, the geographical place of origin of the goods, if it is commonly used in the respective trade, a form deriving from the character of the goods - except if it has already acquired distinctiveness.

Trademark protection shall not be granted to a mark if its use is contrary to law or socially accepted moral rules, if it is liable to create confusion, further if the application for the registration was made in bad faith. Names, abbreviations, flags, armorial bearings etc. designated for the exclusive use by the state, by authorities and international, or intergovernmental organizations as defined in the Paris Union Convention, and other marks being of public interest, further symbols offending relegion or whatever conviction cannot obtain protection.

Among the relative excluding reasons are figuring marks being identical, or confusingly similar to a trademark of earlier priority date, which can obtain protection for a third party’s benefit only - in case of identical, or similar goods - if the legal obstacle has been overcome by a Consent given by the owner of the trademark of prior registration/ being the obstacle. If different goods are concerned, but the mark is identical, or resembling to a third party’s trademark that acquired reputation by use - this mark is excluded from protection, too.

On grounds of the Paris Union Convention protection for a trademark - considered to be „ well-known" on the home market - cannot be granted in favour of a third party. Among the reasons for exclusion are cited : marks offending a third party’s personal- or copyright, geographical denominations as well as marks being in conflict with a third party’s mark that had been effectively in prior use for identical, or similar goods. The reason of exclusion is not existing, however, owing to conflict with a trademark of prior registration - if this latter had not been used by its owner.

The mark being in conflict with a trademark - protection of which has expired - cannot be registered for a third party’s benefit either within 2 years - but in case of non-use of the trademark of prior registration there is no prohibition to the registration. Finally the representative, or agent cannot acquire ownership on the mark in his own name without the trademark owner’s permission.

Trademark protection may be obtained by anybody on his own name, but even more applicants may seek registration for a given mark. In this latter case whichever owner may dispose of his own portion, but the other owners have pre-emption right against the third person. They can grant the right of use to a third person only in common. The costs involved by the common trademark protection are to be borne by the owners in the proportion of their share.

The right adhering to the trademarks comes into existence by the registration, with retroactive force to the day of filing the application. It is granted for a period of 10 years, which can be renewed for further 10 years periods.

The exclusive right of the trademark owner means that the trademark cannot be applied on goods, on its packaging by a third party without his permission, the goods cannot be merchandised with it, he may not offer the goods for sale, or cannot keep them on store for this purpose ie. may not offer or perform services with it. Further it is prohibited to import and to export goods into- and from the country bearing a third party’s mark without the owner’s permission and it is prohibited to use the mark in business correspondence, or in advertisements, too.

Trademark rights might be transferred, assigned and charged by mortgage.

The trademark owner can give a permission for the use of the trademark on grounds of a Licence Agreement. He may control at the user’s premises the quality of the goods or services provided with the trademark. The essential particulars of the Licence Agreement are regulated by law, in respect of its content, however, the stipulations of the Civil Code are directive ie. this depends on the contracting parties’ will.

On grounds of trademark protection the owner of the trademark generally cannot prohibit the use of a trademark in respect of goods merchandising of which has been started by him, or with his consent on the domestic market. (Exhaustion of the right ).

Should the trademark owner have tolerated the use of a trademark of later registration in the country during 5 years in spite of the fact that he was aware of it, - he cannot take measures against it and cannot claim cancellation of the later trademark with reference made to his own - in respect of goods regarding which the later trademark has been effectively used. Except for the case that the later trademark was registered in bad faith. At the same time the owner of the later trademark cannot take measures against the owner of prior registration.

Should the trademark owner have missed to begin the national use within 5 years reckoned from the registration in the country, or if he failed to do so during 5 years without interruption, his right to protection will be terminated with the day when the request for cancellation has been filed - in respect of the whole list of goods, or partially. Expiry of the protection will not be stated, if the trademark owner has furnished acceptable proofs to support the reasons of non-use.

A „ different use" - not affecting, however, the distinctive character of the trademark - is qualified to be a „real use" - if the difference is tiny and insignificant . It is considered to be a „sufficient domestic use" - if goods to be exported, or their packaging is provided with such a mark in the country. Finally it is qualified to be an „use" as well, if the trademark’s owner has given a „licence" for the use to a third party.

The unjustified use of the trademark is qualified to be an infringement, against wich law provides for the enforcement of different claims in the domain of civil law. By means of legal action the following claims can be put forward: it should be stated that infringement has been committed with the view to abandon it; the infringer be prohibited to commit further violation of the law. The infringer is obliged to furnish data on the circumstances - if requested. ( Who participated in the production, in merchandising, on the network developed for the promotion ) Further it can be asked to make amends by a declaration made public at infirnger’s expense and to demand restitution of the enrichment obtained by the trademark infringement. The trademark owner is entitled by the legal regulations to the seizure of the instruments, materials, products and packaging materials utilized at the infringement.

The court may rule that the items involved be divested of their infringing character, or even that they be annihilated.

Seizure of dutiable goods is also provided by law, with the view to avoid that counterfeited products be imported.

The trademark owner may claim damages from the infringer payable under the relevant provisions of the Civil Code. In trademark actions the court may serve an interim injunction, too.

In addition to the general cases when trademark protection ceased (expiry, surrender, expiry for lack of use, cancellation) the right might also be terminated if the trademark has lost its distinguishing ability, or if it became liable to create confusion. The first case happens when - owing to the trademark owner’s conduct - the trademark turned into the usual denomination of the goods, or services for which it had been registered. The second case may occur especially regarding the character, quality or geographical origin of the goods/services that turn into confusing similarity .

Should a trademark not be suitable for protection ( for lack of distinctiveness, or being excluded from protection ) then it must be totally, or partially cancelled depending thereof whether the fulfilled conditions refer to the whole list of goods, or cover only a part of it. The cancellation procedure might be initiated on a request.

In all these cases cancellation is of retroactive effect to the date of registration.

Protection of collective marks is also possible for members belonging to an organization of the society, to a public corporation, or an association for the sake of that their goods or services be distinguished with the view to emphasize their quality, origin, or other properties. The collective trademark is not used by the owner himself, but by its members under the trademark owner’s control. Stipulations in respect of the right of use, the conditions of the use, the way how controlling is to be executed etc. are to be contained in a separate regulation. The Law provides detailed stipulations regarding the special requirements ( extra ways and methods for the termination, measures to be taken against the infringer, possibility of assignment ) .

The introduction of the certification mark is a new institution in the Hungarian trademark law-system to certify that the goods or services dispose of the quality, or of other characteristics as defined. The Law contains stipulations in respect of the special questions pertaining to this category of trademarks ( requirements to obtain protection, directives pertaining to the regulations etc.), too.

To pursue trademark proceedings partly the Hungarian Patent Office, partly the courts - the Metropolitan Court of Budapest and the Supreme Court - have jurisdiction. If there is no special stipulation in the law on trademarks, then the Patent Office is proceeding on grounds of the general procedural rules of the public administration, while the courts are proceeding on grounds of the rules of non-contentious civil law set for nonlitigation procedures. Except for lawsuits instituted for trademark infingement.

There is an important new element in the domain of trademark procedure that subsequent to the publication of the data in the Official Gazette an observation /remark can be made by anybody, which must be taken into consideration in the course of the meritory examination and though the one who makes the remark does not become a client - nevertheless he must be notified of the outcome.

The powers of the Hungarian Patent Office are to register trademarks, to renew protection of trademarks, to declare expiration-, or nullity of trademark protection, further division of the application or of the trademark, to keep records on the different registrations and recordals of trademarks. Modification of the meritory decisions of the Hungarian Patent Office belongs to the jurisdiction of the Metropolitan Court of Budapest, being the court of first instance. Against its order a second instance appeal can be lodged to the Supreme Court. The special procedural regulations to be observed and applied by these courts in trademark matters are contained in the Law on Trademarks.

In procedures at the Patent Office and before the courts foreign persons shall empower a patent attorney, or an attorney at law domiciliated in the country with their representation.

When filing a trademark application in addition to the filing priority an Union , or exposition- priority - further in the given case a special, so called „interior" priority can be claimed, too. These must be requested within 2 months reckoned from the filing date of the trademark application. The certificate proving Union- ie. exposition priority must be submitted within 4 months.

Infringement actions belong to the Metropolitan Court in Budapest and against the orders passed by this court a second instance appeal can be lodged to the Supreme Court.

Protection of geographical marks on goods and that of appelations of origin is provided in a special chapter of the law enabling their national registration. It contains stipulations regarding material law as well as procedural regulations in this field. ( Definition of the conceptual sphere, reasons to exclude from protection, claiming the right of protection, how protection comes into existence, its duration, infringement, expiry of the protection, procedural regulations to be observed by the Hungarian Patent Office and by the courts. )

A separate regulation provides for the use-requirement and control of geographical marks to be applied in the trade of agricultural products and of foodstuffs.

Budapest, May 15, 2001