On De facto marks, combination of colors and unfair competition.
On August 23, 2024, in re “UNILEVER NV c/ ITALOCOSMETICA SA s/ TERMINATION OF USE OF TRADEMARKS. DAMAGES AND INJURIES” (Expte. No. 97/2015), Division 1 of the Federal Court of Appeals in Civil and Commercial Matters admitted the appeal filed by Unilever and partially confirmed the district court’s judgment. Thus, it admitted the cease of use of the alleged color combination based on unfair competition and raised the amount of damages.
On February 3, 2015, Unilever filed a court action against Italocosmetica requesting i) the cease of use of the trademark “BAMBOO” in the product “CONDITIONER INECTO PROFESSIONAL”; ii) the cease of use of their color combination; and c) a compensation for damages from the trademark infringement of $1,000,000 (Argentine pesos).
The First Circuit Court partially admitted the claim, sentencing Italocosmetica to cease the use of the trademark “BAMBOO” and to pay $50,000 (Argentine pesos) in damages, plus interest. Likewise, it awarded 80% of the costs to the defendant and 20% to the plaintiff, and rejected the claim based on the color combination.
The judgment was appealed by the parties.
Second Instance
A) Unfair competition
Division 1 determined that it was necessary to establish whether Italocosmetica had indeed engaged in acts of unfair competition by attempting to capitalize on the plaintiff’s reputation and clientele.
In this context, case law has protected De facto trademarks based on unfair competition with the purpose of condemning reprehensible conducts, contrary to sound commercial practices. This occurs when a party, in bad faith, appropriates another’s unregistered but actively used trademark to divert customers. The focus of this rule is to prevent consumer confusion rather than to grant an exclusive right over the mark.
In addition, the Court cited article 10, paragraph h. of Decree 274/19, understanding that unfair competition is only configured when the imitated goods have competitive singularity. In other words, it is necessary that the imitated form be recognized by the public as an indicator of business origin, with a certain distinctive force.
Consequently, the Court assessed whether the criteria for unfair competition had been satisfied.
First, an analysis was conducted to determine if a “confusing similarity” had been created, taking into account the additional circumstances, i.e., the specific commercial activity of both parties, the range of the distinguished products, the extent of trademark exposure at time of the dispute and the segment of consumers. In the present case, it was noted that the opposing parties coincided in the following aspects: (i) they offered over-the-counter hair beauty products; (ii) they boasted the same consumer base; (iii) the compared containers were black with concave shape on top; (iv)the difference in height and width of the containers was almost imperceptible; (v) the containers consisted of a screw and pressure cap; (vi) the labels offered practically no differentiable elements; (vii) the color combination and distribution was the same; and (viii) the wave design was present in both products.
It was noted that the plaintiff had been using the packaging and design since 2005, whereas the defendant began marketing its products several years later.
Thus, the Court concluded that, in accordance with Article 10 bis of the Paris Convention, unfair competition was established due to the imitation of products, particularly regarding their external appearance, which resulted in creating confusion “by any means whatsoever.”
In conclusion, Division I admitted the cease of use of the color combination.
B) Damages
Division I considered the accounting expert opinion, the circumstances of the case and the rest of the evidence produced and ruled to increase the amount of damages to $500,000 (Argentine pesos), plus interest
C) Costs
In view of the objective principle of defeat and the outcome of the lawsuit, the Court ordered the losing defendant to bear the costs of both instances.
In conclusion, this ruling underlines the relevance of the protection of de facto non-traditional trademarks through unfair competition in the Argentine market. The decision of the Argentinian Federal Court of Appeals in Civil and Commercial Matters not only ordered the cease of use of similar color combinations, but also reinforces the need to safeguard the competitive uniqueness of the products to avoid consumer confusion.
For further information please contact lalmasque@ojambf.com
