Intellectual Property - Spain

The Supreme Court has recently issued two judgments of interest with regard to compensation for damages in trademark infringement cases.

First Decision

The first judgment was issued on January 25 2007. The plaintiff sued a company and two individuals for infringement of its trademark. In particular, the plaintiff:

• alleged that the defendants' trademark was null on the grounds that there was a likelihood of confusion with the plaintiff's trademark;
• alleged that the defendants' industrial design was null;
• alleged infringement of its trademark; and
• claimed compensation for damages.

The Bilbao Court of Appeal reversed the first instance judgment (which had dismissed the plaintiff's claims) and declared that the defendants' trademark and industrial design were null. It also ordered the defendants to compensate the plaintiff for the damage caused by the infringement of its trademark.

The defendants appealed to the Supreme Court. With regard to compensation for damages, they alleged that (i) the court could not order the defendants to pay compensation for damages as the latter also owned a registered trademark (even though the defendants' trademark could be annulled subsequently), and (ii) in any case it had not been proven that the infringement of the plaintiff's trademark had caused damage to the plaintiff.

With regard to the first allegation, the Supreme Court stated that the nullity of the defendants' trademark implied that it had never been registered. Therefore, the court found that the plaintiff's trademark had been infringed.

However, with regard to the second allegation, the court considered that it had not been established that the plaintiff had suffered damages as a consequence of the infringement of its trademark. Consequently, the court of appeal decision was reversed in part and affirmed in part.

The criterion used by the Supreme Court with regard to the proof of damage contrasts with previous case law. Under the ex re ipsa doctrine, if the court found that a trademark had been infringed, it automatically presumed that the trademark owner had suffered damages.

Second Decision

The second judgment was issued on February 8 2007. In this case the plaintiff:

• alleged trademark infringement;
• alleged that the defendant's trademark was null; and
• claimed compensation for damages.

The Vizcaya Court of Appeal affirmed the judgment of the court of first instance and allowed the plaintiff's claims. The defendant appealed to the Supreme Court on the same grounds as those asserted in the aforementioned case.

With regard to the first allegation, the court stated that the retroactive effect of the cancellation of a trademark (as far as compensation for damages is concerned) depends on the bad faith of the trademark holder. According to the court, "in cases involving the cancellation of a trademark, compensation for damages is ordered only where the bad faith of the trademark holder has been demonstrated".

The court concluded that since the owner of the cancelled trademark did not register it in bad faith, he was not liable to pay damages for acts carried out before the cancellation of the trademark. Consequently, the court reversed the court of appeal judgment with regard to liability for damages. The court nevertheless examined the second allegation and concluded that in order to award compensation for damages, it must be demonstrated that the trademark owner suffered damages as a result of the infringement.

International Law Office