Informed Client

By Vinh, Le Quang - Senior Partners (vinh@bross.vn)

Prior Use of “Red Cup” Defeated by Later Registered Trademark

In 2006 Société des Produits Nestlé S.A. (“Nestlé”) accused Gold Roast Viet Nam Co., Ltd (“Gold Roast”) of infringing its registered device trademark of “red cup” as depicted below:

The case originated from international registration no. 824804 dated April 27, 2004 filed by Nestlé seeking protection in Vietnam, amongst other countries, of a mark containing a device of red cup (no verbal element is included in the mark) used for coffee in class 30. The mark is initially rejected by NOIP by reason of lack of distinctive characters but the rejection was subsequently withdrawn upon appeal by applicant together with the proof of acquiring secondary meaning.

In finding the use of a red cup on coffee package by Gold Roast, Nestlé filed a request with  Inspectorate of Ministry of Science and Technology (MoST) for handling infringement of its trademark along with National Office of Intellectual Property’s (NOIP) October 2006 expert opinion. MoST subsequently transmitted the case to Binh Duong province’s Department of Science and Technology’s Inspectorate (DoST) where Gold Roast’s principal address is based to be duly competent. March 6, 2008, DoST issued Decision 653/QD-XPHC imposing a sanction of VND100,000,000 (roughly $6,200) against Gold Roast because of a violation of registered trademark and in the meantime forcing Gold Roast to remove infringing elements.

Unsatisfied with the penalty, upon obtaining written appraisal by the Intellectual Property Research Institute (IPRI), a subsidiary under Vietnam Union of Science and Technology Associations (VUSTA), Gold Roast brought an administrative action before Binh Duong province’s People’s Court against Decision 653/QD-XPHC arguing that the sanction based on NOIP’s expert opinion is not accurate in nature as Gold Roast’s appearance of red cup is different from that of Nestlé and more particularly Gold Roast also proves the product consisting of such red cup had been imported into Vietnam since 1996, until the establishment of its factory in Vietnam in 2001, it had continued using that product while Nestlé is just granted protection since 2004. It is likely that the court held that both of NOIP’s expert opinion and IPRI’s appraisal conclusion were not assessment conclusion thus they are not accepted as evidence because the court by itself sought for expert opinion to Binh Duong Provincial Police’s Criminal Technical Division but was rejected by it due to its absence of expertise. Next, Criminal Scientific Institute (under Ministry of Security) when being asked for the same, already refused because the subject matter is lack of its own expertise. No assessment bodies while the appraisal and expert opinion included in the dossier are contrary ultimately forced the court to affirm DoST’s decision on Gold Roast’s infringement of use of red cup and declined Gold Roast’s lawsuit.

Comments

In addition to the legal matter of expert opinion by NOIP on which the court decided the above case that is subject to our insight article titled Several Legal Issues Regarding Intellectual Property Appraisal Viewed from Theoretics to Reality and Completion Solution Therefor published on LinkedIN or website bross.vn or link:

https://www.linkedin.com/pulse/several-legal-issues-regarding-intellectual-property-appraisal-le?trk=v-feed&lipi=urn%3Ali%3Apage%3Ad_flagship3_profile_view_base_recent_activity_details_all%3BFzkIX0vsN81fuuwxT%2BR71Q%3D%3D or http://bross.vn/en/ip-practices/Several-Legal-Issues-Regarding-Intellectual-Property--Appraisal-Viewed-from-Theoretics-to-Reality-and-Completion-Solution-Therefor-1240, the main issue in this case are whether (1) fair or unfair if a trademark right established later may defeat another’s earlier used trademark similar thereto, and (2) first to file first to right rule is absolute one in civil law jurisdictions including Vietnam?

As a civil law country that adopts first to file principle regarding the protection of IPR subject matters, Vietnam just recognizes partially right of prior use. In particularly, it merely acknowledges that prior user right regarding invention and industrial design are deemed as a fair use defense against the exclusive right that is granted to patentees of invention or design by Section 134 of IP Law as revised 2009 providing for

(a) In case a person has, before the filing date or priority date (if any) of an invention or industrial design registration application, used or prepared necessary conditions for using an invention or industrial design identical with the protected invention or industrial design stated in that registration application but created independently (below referred to as prior use right holder), then after a protection title is granted, he/she may continue using such invention or industrial design within the scope and volume of use or use preparations without having to obtain permission of or paying compensations to the owner of the protected invention or industrial design. The exercise of the right of prior users of inventions or industrial designs is not regarded as an infringement upon the right of invention or industrial design owners.

(b) Holders of prior use right to inventions or industrial designs may not assign such right to others, unless that right is assigned together with the transfer of business or production establishments which have used or are prepared to use the inventions or industrial designs. Prior use right holders may not expand the use scope and volume unless it is so permitted by invention or industrial design owners

As stipulated above, no trademark prior use is accepted as a limitation to the exclusivity granted in favor of a trademark even if the latter had never been registered until the former had been using. In other words, does it seem that first to file rule is operated in an absolute manner in Vietnam? If so correct, assuming first to file rule is duly supreme then why Vietnam accepts the prior user right as a fair use defense against a patented invention or design based infringement claim while trademark, invention or design, among others, are protectable IPR subject matters that are inherently treated equally. On another legal aspect, for example, looking into Section 74(2)(g) of IP Law that sets out an applied-for mark is not registered if it is in conflict with to another person's mark which has been widely used and recognized for similar or identical goods or services before the filing date or the priority date, as applicable. Such provision has proved that first to file is not absolute rule, ie. as long as the existence of a unregistered mark that is deemed widely used and recognized, an applied-for mark, whether is identified is first filer, shall be rejected by reason of such unregistered mark.

Conclusion and Suggestion

From the above case, it seems that disregarding IPRI’s appraisal conclusion that disclosing the long and continuous use of red cup on the package by Gold Roast since 1996 might be not really fair for Gold Roast. It is pity that no express statutory provision incorporated into IP Law might support Gold Roast’s defense at that time.

For the purpose of fair treatment and promoting free competition amongst business operators, it is highly recommended that Vietnam incorporate prior use of a trademark as fair use defense against infringement claim if such prior use meets some conditions, for instance, Article 59 paragraph 3 of Chinese Trademark Law of 2013 provides for “where, before a trademark registrant applies for registration of a trademark, another party has used a trademark that is of certain influence and is identical with or similar to the registered trademark on the same kind of goods or similar goods, the holder of the exclusive right to use the registered trademark shall have no right to prohibit the said party from continued use of the trademark within the original scope of use, however, the holder may require the latter to add a proper mark for distinguishment.