Some Reflections on the Concept of Trademark Use as a Requirement for the Preservation of a Registration
By Juan Carlos Ojam and Camila Sirianni *
* This article was published on Dial.com on October 10, 2023, elDial DC32C8
Introduction – Issue Statement
In the rapidly evolving world of business, where borders are blurred by the omnipresence of the internet and networks, many may agree that legislation does not always keep up with changes. Thus, Intellectual Property (IP) practitioners constantly face challenges in effectively protecting intangible assets.
Globalization, along with technological advancements, have changed the way companies operate and promote their products and services, raising questions regarding traditional concepts of trademark protection.
In this article, we will explore how the demands of commerce (and why not, of the users) and new trends in trademarks use, challenge existing norms, especially concerning the use of a brand as a requirement for maintaining a trademark registration.
According to our system, use in Argentina3 is a sine qua non for repelling a non-use cancellation action against a registration. We wonder if this statement admits nuances depending on the type of brand in question, the characteristics of the targeted consumer, or the evidence that can be provided, among other factors.
We believe that legislation may not be aligned with market dynamics on this issue.
Companies operating internationally promote and sell their products and services in multiple countries through platforms that transcend borders, leading us to suggest that in certain cases, the spatial requirement becomes outdated.
Indeed, trademark law, in its traditional approach, only associates the use of a brand/trademark with the commercialization of a product or the provision of a service. In the era of connectivity and social networks, this approach must evolve and give relevance to the presence of a brand not only in the market but also, in the minds of consumers. This phenomenon can occur with a brand that has not yet formally arrived in the country or with a brand that, due to business decisions or the vicissitudes of commerce, has ceased to exist.
For a long time, the main focus in brand protection was its use in the local market. If a brand was not marketed in the country or specific region for a certain period, it was not considered worthy of protection and had to be removed from the trademark registry. This was based on the idea that value, and subsequent protection, were only built through the commercialization of products or services in that market. It was not questionable then, that the protection of brands focused solely on their use within the borders of the country of registration. If the brand was not used, it was good practice to remove it from the trademark registry to not hinder new brands that did intend to be used.
This approach prioritized the idea that only the use of the brand could penetrate the minds of consumers. Decades ago, it was unthinkable to maintain that a brand without use was notably known by a large number of people, even those who had never consumed the brand in question.
Even before the explosion and massification of the Internet in our country, there were brands that earned a place in the minds of consumers without being present in the local market. Foreign brands such as OAKLEY, MC DONALDS, MICROSOFT, AMAZON, APPLE, and many others managed to gain recognition even before their commercialization. These brands began to be known either by the boom of Argentine travelers during the ’90s or by access to international publications and specialized media that naturally reached our country.
We remember that the first STARBUCKS cafe that opened in Argentina in May 2008 at the Alto Palermo Shopping Center in Buenos Aires, accumulated lines of consumers and brand enthusiasts eager to try the mermaid’s coffee that they had known while abroad or simply had seen or heard about in American shows or movies. On a smaller scale, the same happened when MC DONALDS opened its first location in 1986.
It is clear that, in these cases, a clientele was developed even before the brands effectively began to be used in our country. In other words, the prestige arrived here before the actual commercialization of the product in question.
So we wonder if the requirement of use in the strict sense is so important, when there are brands that make their way even without being present through the commercialization of a product or the provision of a service in the country in question, or even in the opposite situation when the brand fell into disuse or was withdrawn from the market.
Trademark owners face the obligation to demonstrate the continuous use of their brands. However, is this realistic? Meaning, are we protecting consumers from being misled or deceived regarding the true origin of a brand? As we will see, other jurisdictions are clearly more in line with the updating of traditional concepts in light of market reality.
Trademark Law and the Spatial Requirement of Use
In our country, a trademark right is obtained with its registration4, regardless of whether it was used or not at the time of application. However, the legislation introduces a rule that exposes the need for the brand to be used, to preserve it against a request for expiration of registration due to non-use.
Our first Trademark Law5 did not contemplate the requirement of use6 and did not establish expiration as a means of extinction. However, with Law 22.3627, that obligation was introduced to prevent the proliferation of unused brands in the registry.
After almost four decades of validity, that law was reformed in 20188, introducing significant changes such as the opposition resolution system before the National Institute of Industrial Property (INPI), as well as the filing of expiration actions due to non-use and nullities of art. 24 inc. a) in the administrative headquarters.
However, despite this reform, the spatial requirement is present in art. 269, and consequently, if a brand is attacked for lack of use, its owner must demonstrate use in Argentina.
Advances and transformations in the digital era are upon us minute by minute. The reality in which we live does not admit distractions.
Usually, two elements were distinguished as defining a reality: space and time. Today, we can see that this link is tending to fade.
This dichotomy, while necessary for many areas in the commercial world, loses strength as the market progresses and eliminates borders, as stated above.
While the principle of territoriality prevails in registration, brands have not been confined exclusively to one territory for a long time. We cannot deny that there are countless cases of globally known brands that are registered in a particular Trademark Office, even when they are used in another territory.
Therefore, the registration grants the right of exclusive use of the trademark to its owner. However, does this exclusivity need to be contained within a territory to prevent the trademark from being canceled due to lack of use? Can we, in the digital era, deny the character of use to who carried out without spatial constraints, in these times where everything is interconnected?
If the answer were affirmative, we would be denying reality.
Today, the digital realm makes the limits marked by borders obsolete. Traditionally, use has been translated into presence or availability in the market. However, we cannot assume that this availability should be restricted to the physical presence of the product or service. There are nuances.
Always the circumstances of the case must be taken into account, from the prestige obtained by the brand to the characteristics of the consumer. This does not mean going against the rationale of the law, nor that – because of this — the registration of speculative brands is encouraged.
Concretely, the traditional concept of use should be expanded to include the presence in the minds of consumers as a legitimate variable for the protection of a brand, even when there is no physical commercialization of products or services in a given country.
Place of Use vs. Place of Provision. The Standard and Delta Cases
As seen, our law requires the use of the trademark in Argentina to repel a cancellation action. However, we do not believe that spatial limits should be applied strictly, especially when talking about the extinction of an acquired right – as long as the owner is in good faith.
On July 13, 2022, the Ninth Chamber of Appeal of the General Court of the European Union (GCEU) reversed the cancellation request of THE STANDARD, a trademark known for
identifying, among other services, hospitality, challenging the traditional concept of the spatial requirement of use. This is the case we will henceforth call Standard10.
Before this decision, European courts adhered to the concept of the use of the trademark within the territory of the European Union. This requirement did not necessarily have to extend to the entire territory of the Union; it was enough that the sign had a presence in one country or a small geographical area; thus, the spatial requirement of use was fulfilled.
Standard requested before the EUIPO the annulment of the cancellation due to non-use decided by the Fifth Chamber11 against its trademark with the design THE STANDARD12. The Fifth Chamber had declared the extinction of the registration, considering that the trademark had not been effectively used in the European Union.
It was only at the appeal stage that the trademark owner managed to convince the authorities that its trademark had been effectively used, targeting the European Union, even without offering hospitality services there but in the United States of America.
The owner provided advertising campaigns aimed at clients located in the EU, reservations made directly by clients and/or through travel agencies located in the EU, invoices addressed to clients residing in the EU, a reservation portal accessible to EU clients on Standard’s website, and even numbers issued by the Google Analytics computer program regarding traffic on the plaintiff’s website.
In its decision, the Court considered that the Trademark Office had confused the lack of use of the trademark with the place of service.
In other words, from the Court’s perspective, for a trademark to be used in the European Union, it is not necessary that the products and services identified are strictly offered in European territory.
Contrario sensu, for a trademark to be worthy of protection in the EU, what is important is that the consumer public is aware of its existence and that there has been a connection between the trademark and the product/service beyond the place where the product/service is offered.
In cases like these, in which the disputed trademark has a wide trajectory in the market (Standard has hotels in emblematic cities of the United States of America such as New York and Miami), if one were to enforce spatial requirements, the rights of the owner, who managed to transcend the borders of their registrations, would be infringed.
As we just mentioned, the Court held that “the Board of Appeal made a mistake by not distinguishing between the place where the services were provided and the place of use of the trademark. Only the last one is relevant for the examination of the effective use of a European Union trademark.”
Moreover, it noted that “it is sufficient to assert that there is effective use of a trademark when it is used in accordance with its essential function, which is to guarantee the identity of the origin of the products and services for which it has been registered, in order to create or preserve a market for such products or services. Even if the applicant supplies products or provides services outside the European Union, it is conceivable that the use of such a trademark serves to create or preserve a market for such products and services in the European Union.“
This decision is supported by the guidelines of the EUIPO, as they state that when the products or services designated by the trademark are provided abroad – such as accommodation services – advertising alone may suffice to constitute effective use (referring to the EUIPO Guidelines for the examination of European Union trademarks, Part C Opposition, Section 6 Proof of use, subsection 2.3.3.3 – use in advertising).
For the Fifth Chamber, evidence related to advertisements or sales offers could not be accepted, as the trademark THE STANDARD was not registered to identify advertising, reservation, travel agency, or sales services. This point was also contested by the General Court of the European Union (GCEU), because advertising and sales offers constitute acts of use of a trademark, being relevant to demonstrate the use in connection with the services or products for which the disputed trademark is registered, insofar as such services or products are the subject of advertising and sales offers.
In the same vein, on May 30, 2023, the EUIPO Board of Appeal in another decision, revoked the annulment against the trademark THE STANDARD13, re-evaluating the evidence and applying the same criteria as the GCEU in the aforementioned case.
The territorial scope of use is not an autonomous requirement that contributes to effective use, but one of the determining factors of that use that must be included in a global analysis and examined at the same time as other factors, to define the geographical market that serves as a reference for any analysis. In other words, there is a geographical market that may extend beyond the territory where the trademark provides its services. This allows us to raise the point of the relevance of distinguishing between the place where the services are provided and the place of use of the trademark. Indeed, the use should not be confined only to the place of use, but the place of provision plays a key role in accrediting use.
Similar examples to the trademark THE STANDARD, whose physical facilities are located in a particular country but have customers from all over the world, are the trademarks that identify department stores such as Macy’s, Bloomingdale’s, Saks Fifth Avenue, Target, El Corte Inglés, Galeries Lafayette, Tienda Paris. In all these cases, the prestige and recognition by the public exceed the territory of effective use.
It is worth mentioning that the Standard case is not isolated and has generated a certain tendency to break down spatial barriers: on August 15, 2023, in the Delta case14, the EUIPO Board of Appeal cited Standard in extenso, as a precedent in the matter of global services.
The EU trademark Delta Sky Club (Design), registered to identify “Air transport services with transit lounge facilities for passenger relaxation” in Class 39, had received a request for cancellation due to lack of use by Ontro, as no effective use had been found within the five years prior to the action.
The Cancellation Division declared the partial expiration for “air transport services,” leaving the trademark valid for the rest of its coverage. According to this Division, all the evidence provided only demonstrated the use of the trademark for transit lounge services for passenger relaxation.
Consequently, Ontro filed an appeal against the decision for not having declared the expiration for “VIP lounges” services. The appellant considered that Delta had not demonstrated effective use for those services.
The appeal was dismissed by the Board of Appeal, as mere advertising in this type of global services was sufficient evidence to constitute effective use – diminishing the importance of the spatial requirement.
According to the Chamber, to appreciate the effective use of a trademark, it is necessary to take into account the nature of the products or services involved and the characteristics of the market. These lounges are offered in airports and therefore, the facilities for passenger relaxation have a global nature, as they meet the needs of international travelers who may fly to different destinations around the world. It is undeniable that airports are major transit hubs where passengers of different nationalities converge.
Rejecting the use of this trademark for relaxation lounges would have been detrimental to the characteristics of this service and the type of consumers it targets.
In this sense, the Chamber cites Standard and states that “in relation to services, it is pointed out that the place of provision of services must be distinguished from the place of use of the trademark, which is the relevant place to examine the effective use (…).”
These cases show a trend that cannot be ignored. We believe it absurd to pretend that a trademark can be annulled because the product or service is not offered – in traditional terms – in Argentina.
Moreover, the Federal Civil and Commercial Chamber of the jurisdiction has been maintaining for years that the term “use” corresponds to “all the ways in which a trademark can be made noticeable in the market”15. That is to say, what must be captured by the public is the “staging” of the trademark, and not the product/service itself. The criteria that should be applied in terms of use should be broad, without leaving unprotected a trademark that did not strictly comply with the spatial limits established by the law.
Signs that are in the minds of consumers. Zombie trademarks and fans of foreign brands.
With the aim of continuing to update ourselves and incorporate modern concepts that can change the fate of a trademark that is being attacked for lack of use, we will delve into the world of trademarks that are in the minds of consumers.
- Zombie trademarks
These are those that, due to economic reasons or business or commercial decisions, are withdrawn from the market, but resist dying. Having acquired a notoriety – or not necessarily -, they fall into disuse and yet remain in the memory of consumers.
These are generally companies that went bankrupt or decided to leave a particular country abandoning that or all their markets, or their products or services became obsolete. There are many examples, and we can mention brands such as PUMPER NIC, HARRODS, PANAM, ENCARTA OF MICROSOFT, BLOCKBUSTER, PIZZA HUT, FALCON – the mythical car from FORD. As long as there is a significant group of people who remember them, they will be alive. Here, it is not only former consumers of the brand, but also followers, admirers, fans, or collectors.
We must keep them safe from any attack/clash because, what would happen if the BLOCKBUSTER trademark is canceled for lack of use and then the new owner launches a streaming platform with the BLOCKBUSTER brand? Probably, consumers would believe that the well-known movie rental chain decided to reinvent itself in the market and come back to life.
Allowing its expiration and subsequent registration of an identical or similar trademark by a third party would cause undue exploitation of another’s prestige by the new owner and clearly an act of unfair competition, even with the rest of the competitors in the field in question; but much more devaluing, would generate confusion in the market, in such a way that a significant group of consumers would be deceived as to the origin of the brand in question. In addition, it would take away from its true owner, the creator of the brand, the possibility of returning to the market.
A case we noticed in kiosks is GRAFFITI chocolates, whose origin dates back to 1985, was discontinued at the end of the ’90s and reappeared in 2017. It also happened with the Suchard alfajor (Argentinian sweet), which returned to the ring in 2013.
In this line, could someone tomorrow claim to register Twitter as their own, taking advantage of the fact that this brand mutated to X? It would not be valid to maintain that in a few years the brand could be canceled for lack of use. TWITTER and its bird have become signs that will transcend time, and although they are zombie trademarks, they will remain in our memory forever and we must protect them.
Given that the ultimate goal of IP legislation is to prevent confusion or deception in the consumer public, in fifteen years, who would not think when seeing Twitter back on the market that it is a resurgence of the social network directly linked to the company that Elon Musk bought today?
As Andrés O. Cacciali Puga16 relates, this issue was debated in Spain in the year 201417 by the original brand FAMOBIL (which later became PLAYMOBIL). A third party not only accessed the registration of the FAMOBIL trademark, but then began to commercialize servile imitations of the well-known PLAYMOBIL toys.
Thus, the Court made an analysis of the durability over time of the renown of a trademark, such as FAMOBIL, which was expired due to lack of use, but undoubtedly retained its prestige.
The First Instance ruling declared that FAMOBIL and PLAYMOBIL were two signs associated by consumers as synonyms and that the use of one of them generated a high risk of confusion and especially a direct association with the original brand. It concluded that it cannot be understood that FAMOBIL incurred in an “abandonment of its right” for not registering it, since, even if it had been registered, it would have expired because it ceased to be used. In any case, this did not imply that a third party could appropriate what was then a well-known sign.
We understand that the prestige and recognition by the consumer public last over time and should not undermine the right of the owner due to the disuse of a trademark that has managed to position itself in the market. Although it is not available in commerce, it continues and endures in the mind of the consumer.
If protection were denied to these trademarks, it would cause serious harm to the rights of consumers, who would logically and easily be confused, expecting the same quality of product or service they obtained from the original brand. Moreover, it would be a clear violation of fair commercial practices and therefore an act of unfair competition, due to the exploitation of the prestige of others.
In the market, the existence of competition to attract customers is inevitable, but it must follow certain rules. That is, the search to capture and get the attention of the consumer public must be achieved in a way that adapts both to morality and the current regulations on competition, in view of fair commercial practices.
In our country, the Competition Defense Law, the Consumer Protection Law, as well as the Trademark Law, open a path to determine the appropriate behaviors to act in the market. This, aimed at protecting the rights of those who “cleanly” manage to impose themselves in the market, being thus recognized by consumers. On the contrary, the law does not endorse those who, to establish themselves in the market, take advantage of the achievements of others through unfair acts.
In this sense, taking advantage of the effort of others by trying to appropriate the registration of a trademark that, although it does not currently offer its products or services in the market, but has achieved recognition by the consumer public (so that it lives in their minds), constitutes unfair conduct and an act of bad faith. And this type of action should not be endorsed when extinguishing a trademark.
Zombie trademarks are a clear example of how the traditional concept of use can be questioned, but they are not the only ones.
- Fans of foreign brands
In addition to thinking about brands that remain in the minds of consumers despite falling into disuse, we must consider the importance of another interesting concept: the fans or followers of the brands. These are a clear example of how brands can not only reach the minds of consumers, even before their effective commercialization in the local market, but can also capture their attention beyond traditional borders. These passionate followers are those who, even if a product or service is not available in their country, know, admire, and even fervently defend the fame and prestige of a brand and/or a company.
There are many examples in the hospitality and gastronomy sectors. The average Argentine is – or used to be – a traveled citizen and knows hotel or restaurant brands, even though they do not physically exist in the country. Such is the cas
RIU, CLUB MED, or well-known restaurants such as KATZ’S DELICATESSEN, HOFBRÄUHAUS MÜNCHEN, PETER LUGER, LE PROCOPE, LA BODEGUITA DEL MEDIO, and many others.
Another case may be Elon Musk’s TESLA brand. Although these cars are not sold in Argentina, a significant portion of our population is familiar with the brand and recognizes it for its reputation in the industry. Indeed, TESLA cars are not available in Latin America – they only crossed the border to Mexico – but such is the knowledge of this brand, that there was a great repercussion after the announcement that electric vehicles would land here. Although the cars would be brought by order, TESLA will have its own showroom for the delight of its fans.18
In view of the above, we understand that the media and the Internet allow for indirect use of the brand, since even without being able to access the products or services, these fans know everything and more about their characteristics, functions, availability of colors, new and previous models, and any other information that may come to mind.
The reason behind this loyalty to brands that are not locally available can be multifaceted: from admiration for innovation and the quality of products to identifying with the values and vision of the brand.
Fans break geographic borders and today are part of the global consumer culture. There are phenomena that transcend territories and nationalities. The role of the Internet and social networks, in this dynamic, cannot and should not be underestimated. Global connectivity has allowed consumers around the world to become virtual fans of brands that, although they are beyond their physical reach, are within their virtual reach.
Through social networks, followers can share their enthusiasm, participate in discussions, and access content related to the brand. This level of online participation and recognition creates a global presence for the brand.
For a traditionalist view, this would not be strictly use in those places where the products are not available. For this reason, this phenomenon not only has implications in the culture of consumption but also in the legal field.
In an interconnected world, the traditional concept of trademark use must adapt to modernity and extend beyond conservative logic. Fans or followers are merely witnesses to how a brand’s presence and influence transcend borders, breaking the imposed limits. Their active online participation and commitment to the brand are clear indications that the concept of trademark use has evolved in the global-digital era.
In short, denying virtuality to the aforementioned phenomena would not be wise. Whether it’s due to the positioning and place they have achieved – even if it’s in the consumer’s mind – or the fandom that some brands generate, these are brands deserving of protection, regardless of whether or not there is current use in a specific territory.
As a closing, and with the aim of preserving the consumer and fair commercial practices, we believe that as long as traditional concepts remain the only guide or valid rule to determine whether or not there has been use for trademark purposes, we will be ignoring the nuances imposed by the current market.
As we have seen, decisions are already being made in the European Union that align more with modern concepts than traditional ones. This is happening.
Technology, globalization, and the evolution of commercial practices compel a revision of what we take for valid. They have challenged and continue to expand the understanding and true definition of legal concepts, making the protection of trademarks, for those of us who oversee it, a dynamic and far from dull task.
Conclusions
In the fascinating and constantly changing world of IP, we still use traditional concepts that try to cling to and resist the modern era. We cannot ignore phenomena/matters that the regulations have not anticipated.
Nor can we underestimate the importance of the use of a trademark in the real market, and we must recognize that the current market has expanded the borders of what should constitute valid use in trademark terms.
In the modern era, where brands can be recognized and appreciated by consumers worldwide, even when products or services are not locally available, it is important to adapt our legal and conceptual approaches. We must consider new perspectives and recognize that the power of a brand extends beyond borders and can even be housed in the minds of consumers.
Ultimately, the modernization of concepts in trademark law is essential to keep up with the changing dynamics of global commerce and remain true to the constantly evolving consumer culture. It is a reminder that in an increasingly interconnected world, brands have the potential to influence and be appreciated everywhere.
Therefore, it is imperative to rethink whether it makes legal or market sense for any brand to be at the mercy of cancellation by applying a traditional concept without flexibility.
The first and immediate step will be to set local precedents that move away from traditional legal concepts and echo the phenomena presented by reality.
Quotes:
1 Art. 26 of the Trademark Law: “At the request of a party, the expiration of a trademark that has not been used in the country within the five (5) years prior to the date of initiation of the action will be declared, except in cases of force majeure. (…)”. For the purposes of this article, the requirement of use in the country will be referred to as the spatial requirement.
2 Law 22.362, Art. 4: “The ownership of a trademark and the exclusivity of its use are obtained with its registration. (...).”
3 Law 3.975, Trademarks for Manufacturing, Commerce, and Agriculture. Official Gazette 27/11/1900, repealed by Law 22.362.
4 Law 3.975, Art. 7: The use of the trademark is optional. However, it may become mandatory when required by public convenience needs.
5 Trademark and Designation Law, 26/12/1980.
6 DNU 27/2018, Law 27.444 for Simplification and Deregulation for the Productive Development of the Nation, Official Gazette 18/6/2018.
7 Art. 26 of the Trademark Law: At the request of a party, the expiration of a trademark that has not been used in the country within the five (5) years prior to the date of initiation of the action will be declared, except in cases of force majeure. (…)
8 Standard International Management LLC – plaintiff – v. European Union Intellectual Property Office (EUIPO) – defendant –, and Asia Standard Management Services Ltd – another party before EUIPO Board of Appeal –, Case T-768/20.
9 Case R828/2020-5, 27/11/2020.
10 Trademark registered on July 8, 2011, to protect products and services in classes 18, 25, 38, 39, 41, 43, and 44.
11 Standard International Management, LLC – appellant – v. Asia Standard Management Services Limited – defendant. Resolution of the 4th EUIPO Board of Appeal (R 361/2023-4), which, in the same vein as the General Court of the European Union (GCEU), revokes the decision of the Cancellation Division of March 2, 2020, No. 28 401 C.
12 Ontro Limited – cancellation applicant – v. Delta Air Lines, Inc. – defendant –, 15/8/23, R-361/2023-4.
13 Case 4671/2006 – “El Trust Joyero Relojero S.A. v. Carvallo, Gustavo Sergio and another on cessation of use of trademarks. Damages” – CNCIV AND COMFED – CHAMBER II – 06/10/2011 (elDial.com – AA706D)
14 “Dead Trademarks”. The exploitation of others’ prestige. RYD Republic and Law Magazine, ISSN-L 2525–1937, Volume III (2018), Law Faculty Articles. National University of Cuyo, Mendoza, Argentina – section 6. a-.
15 PROVINCIAL COURT OF ALICANTE (Community Trademark Court), Ordinary Trial Procedure No. 688/12. Famobil Case. Judgment of January 10, 2014.
16 Tesla arrives in Argentina with a new “Frank Sinatra dollar,” by BAE Negocios.
