Lithuania: Aspects of Unfair Competition in the Field of Trademark Registration

This article seeks to provide a brief survey of Lithuanian laws and practice regarding unfair competition in the field of trademark registration.

First Law on trademarks and service marks in independent Republic of Lithuania has been enacted in 1993. Following the provisions of said law there was no possibility to contest the registration of dishonestly filed trademark before the State Patent Bureau. The owners of trademarks which rights were infringed by dishonest applications could defend their rights only on the basis of Paris Convention for the protection of Industrial Property to which Lithuania acceded in 1994 and on the basis of Law of Unfair Competition in the court proceedings.

During this period and continuing today, but in more limited occasions, there were frequent cases when different undertakings filed trademark applications in bad faith or having dishonest intentions, e.g. to prohibit other subjects from using their own marks, to monopolize the market, limit parallel import, sell the trademark, etc. Most of the cases were settled trough negotiations when the applicants withdrew their trademark applications or transferred the rights to the owners. But it was quite often that the real owner of the trademark had to buy its own mark, because the litigation was too time consuming and the norms and application of unfair competition laws were quite ambiguous.

Lithuanian Law of Unfair Competition (Art. 16.1) indicates that undertakings shall be prohibited from performing any acts contrary to honest business practices, including unauthorized use of a mark identical or similar to the registered or unregistered well known trademark or other reference having a distinguishing feature and prior rights, if this cause or may cause confusion with that undertaking or its activity or whether it is sought to take undue advantage of the reputation of that undertaking (its mark or reference) or where this may cause injury to the reputation (its mark or reference) of that undertaking or reduction of the distinguishing feature of the mark or reference applied by that undertaking.

The mentioned norm rises a very important interpretation question, namely whether registration of a trademark, if this trademark is not actually used, may be considered as an act of unfair competition, as the norm prohibits only unauthorized use of a mark. For a long time this question was left open and it was only in 2002 when the court had an opportunity to rule on it in Stada Arzneimittel AG vs. Nestra Limited case.

During the examination of the case it has been established that Stada Arzneimittel AG has invented and produced the medical preparation "Pfeil Zahnschmerz-Tabletten", which was used in Germany since 1989. But in Lithuania this trademark was applied to register only on June 16, 1998 and was in use since 1999. Meanwhile Nestra Limited on June 3, 1998 also filed an application for the registration of the identical trademark "Pfeil Zahnschmerz-Tabletten". Despite of the fact that at that time when Nestra Limited filed an application for the registration of mentioned trademark there were no registered identical or similar trademarks and no registered identical or similar medical preparations, the court made the conclusion that the actions of Nestra Limited contradicted to the honest practice of business and must be considered as unfair competition. The court stated that Nestra Limited has registered other subject’s product name as its own trademark with the purpose to prohibit Stada Arzneimittel AG from using the trademark "Pfeil Zahnschmerz-Tabletten" in the Lithuanian market and to make more complicated the distribution of this medical preparation in Lithuania. Such a conclusion was made because the court stated that the evidences have not been presented that at the time of filing the application for the trademark registration Nestra Limited had the intentions to use the trademark in its economic activity.

Another recent case UAB "Merand" vs. UAB "Opra" concerned the registration of the figurative trademark "IKRA LOSOSEVAJA ZERNISTAJA" (russian for red caviar) by UAB "Opra", which is one of the importers and distributors of red caviar in Lithuania. The court found that the registration of this trademark was an act of unfair competition, because until the date of filing of an application of this trademark in Lithuania a lot of companies imported and sold red caviar with the same label "IKRA LOSOSEVAJA ZERNISTAJA". An aspiration of UAB "Opra" to register trademark, which is used by many companies for a long time, was considered by the court as intention to establish his monopolistic rights in the market. But interestingly enough the court did not recognized the trademark (label) to be generic in the field.

So in their practice the courts, when establishing whether the acts of unfair competition took place considered a lot of circumstances, like the real intentions of the applicant, facts of the creation of the trademark, its first use, etc.

With the enactment of a new Lithuanian Law on trademarks, which came into force on January 1, 2002 the owners of trademarks which rights were infringed by the trademarks filed in bad faith, obtained new legal weapon in fighting unfair trademark applications. Now they are enabled to file the oppositions before the Board of Appeals of State Patent Bureaucan basing them directly on the norms of Trademark Law. Following said law, Article 7.3, the registration of the trademark may be declared invalid where it becomes evident that the application for the registration of this trademark was maid in bad faith. This procedure should be very welcomed by the trademark owners as it enables to save costs on court proceedings and is less time consuming.

The content of the notion "in bad faith" is rather wide and it depends on many facts of the concrete situation. Regardless the fact that in Lithuania there were no oppositions’ hearings on the base of analyzed norm so far, from the case law it is clear that following facts may and should be considered as evidences of bad faith by the Board of Appeals of State Patent Bureau:

• registration of many trademarks, which all are similar or identical to the marks of the others;
• registration of the trademarks with no real intention to start usage of them;
• registration of the trademarks with the intention to monopolize the market;
• selling or proposal to sell registered trademarks and other.

So recent changes in trademark law, wide application of unfair competition law and Paris Convention and court practice, all enable the owners of the trademarks to fight effectively with the applicants, registering their trademarks having dishonest intentions.