Background of the case

The entity Sedes Holding Anonim Sirketi Türkiye Cumhuriyeti filed a lawsuit against the entities Gratis Shops Spain S.L., Rosa Crema S.L., Blanco Limón S.L., and Ezequias (hereinafter the defendants), requesting, among other claims, the declaration of the existence of bad faith when filing a trademark application, the nullity of the trademark at stake and the recognition of acts of unfair competition based on the following facts.

The plaintiff is the owner of several trademarks registered in Turkey, which have been used only in such country extensively. In 2011, the defendants filed a trademark application before the Spanish Trademark Office for “GRATIS! SHOPS LAS TIENDAS DONDE TU MONERA VALE MÁS” in Class 35, used by the well-known PRIMOR (a perfumery chain), very similar to the plaintiff’s trademark (GRATIS).

Judgement of the Supreme Court (Tribunal Supremo)

The lawsuit was at first instance dismissed in its entirety as well as in the Appeal proceedings before the Regional Court of Granada. An extraordinary Appeal was then filed based on procedural infringement and cassation. The grounds of the appeal are based on:

– Infringement of the right to effective judicial protection set out in Article 24 of the Spanish Constitution. Rejected in its entirety.

– Infringement of Article 51.1.b) of the Spanish Trademark Act (nullity of the trademark based on the bad faith of the applicant).  The appellants claim that the doctrine of the Supreme Court, where it is established that bad faith in the application must be assessed globally, taking into account all relevant factors of each case, has been disregarded. In particular, it is claimed that some relevant facts have not been duly considered: the trademarks of which the applicant is the owner in Turkey were not registered in Spain, and the Spanish office refused the trademark application filed by the plaintiff “GRATIS” based on the lack of distinctiveness.

The grounds upon which the Appeal is rejected are, in short:

The case law of European courts already indicates that the fact that the applicant knows or should know that a third party is using a trademark abroad, when filing a similar trademark application that may lead to confusion in a third country, is not sufficient per se, to prove the existence of bad faith at the time of the application. In this particular case, the facts taken into consideration for the determination of bad faith have been the following: the Spanish trademark applied for is similar to the earlier Turkish trademark, the plaintiff has trademarks registered and used in Turkey (it has not been proved that we are dealing with well-known trademarks), the defendant was aware of the applicant’s trademarks due to certain commercial transactions, which in no case were assimilated to that of a stable agent or supplier, it has not been proven that the application in Spain was made to hinder the applicant’s possible entry into the Spanish market, nor for its speculation.

In short, neither the fact that the applicant knew about the Turkish trademarks nor the mere similarity of the signs is sufficient to argue the bad faith, and there must be an element of devaluation to prove it, at the time when the trademark was filed. It cannot be concluded that the trademark in question did not have as target to participate loyally in the competitive process, since it was not applied for with the purpose of taking advantage of the prestige of the applicant (the plaintiff has no reputation in Spain) nor to hinder the activity of the applicant in the Spanish market. Therefore, it is concluded that “the possible or eventual harm to the interests of the applicant, would have been carried out in accordance with fair practices”.

Consequently, the grounds of the Appeal are entirely rejected.

Judgement nº 625/2020 of the Supreme Court (Civil Chamber) of November 23, 2020.