“Luda kuća” (“Crazy House”, in English) is a well-known Chinese restaurant located in the center of Belgrade. The restaurant is owned by “Luda kuća i prijatelji” (“Crazy House and Friends”), a limited liability company. The company registered its trade name with the Serbian Business Registers Agency in April 2011. “Luda kuća 2011” (“Crazy House 2011”), a different company operating a Chinese food home-delivery service, registered its trade name with the Agency five months later, in September 2011.
“Luda kuća i prijatelji” also owns a trademark (no. 63294) registered with the Serbian Intellectual Property Bureau in October 2011 in six different classes, including Class 43 – provision of foods and drinks. The trademark is comprised of the words “Luda kuća”, written in stylized Cyrillic letters:
“Luda kuća 2011” has not registered any mark, but on the internet it has used the sign “Luda kuća 2011”, with the words “Luda kuća” written in the Latin alphabet and an addition of three Chinese letters:
In November 2011, “Luda kuća i prijatelji” sued “Luda kuća 2011” for infringement of trade name, trademark infringement, and unfair competition. In April 2012, the Belgrade Commercial Court found for the plaintiff. On June 14, 2012, the Serbian Commercial Appellate Court upheld the lower court’s findings concerning trade name and trademark infringement, but reversed (on a narrow jurisdictional point) on unfair competition. The case is helpful in elucidating the relationship between a trademark and a trade name, two related, and yet distinct, concepts. It also raises issues concerning the appropriate treatment of distinctiveness in the analysis of trade nameconfusion.
With regard to the trade name prong of the case, the Commercial Court and the Appellate Commercial Court invoked Article 17 of the Serbian Law on Commercial Societies (2004), the law in force at the time the complaint was filed (a new law became applicable in February 2012). Article 17 requires that a company’s registered name must be clearly distinguishable from the name of any other company and may not contain any information capable of misleading the public with respect to the business of the company. Both courts found that the defendant’s trade name was capable of misleading the public, given that the words “Luda kuća” were dominant and identical in both names, and that both parties were engaged in the provision of Chinese food.
The courts quickly dispensed with the defendant’s reliance on the fact that the Serbian Business Registers Agency had registered its trade name. The courts considered the administrative agency’s decision as irrelevant for the ruling, because the courts were only bound by the statutory provision against consumers’ confusion and by the fact that the plaintiff was the first in time to register the trade name. The courts’ reasoning in this regard is similar to the reasoning of the Court of Justice of the European Union, referred to in the previous BDK post (No registration for “U.S. Polo Assn.”, says European Court) – that the question whether a sign may be registered as a Community trademark must be assessed solely on the basis of E.U. legislation and not on the basis of a previous practice of the E.U. Office for Harmonization in the Internal Market (OHIM).
More open to critical examination, is the way in which the Belgrade Commercial Court and the Serbian Commercial Appellate Court rejected the defendant’s second argument – that there were other business entities, aside from the two parties in the proceedings, which also operated under the name “Luda kuća” in the same or similar field of activity. It is not entirely clear from the text of the two judgments exactly what “Luda kuća 2011” strove to achieve with the use of that argument, or indeed how many other market participants having the words “Luda kuća” in their name existed; but it is fair to presume that the defendant wanted to convince the court that the phrase “Luda kuća”, by virtue of wide use, has lost its distinctiveness. In that case, those words would cease to be distinctive parts of the trade names “Luda kuća i prijatelji” and “Luda kuća 2011”. The distinctive words would be “prijatelji” and “2011”, which clearly differ and thus make confusion unlikely.
One normally associates this sort of reasoning with an analysis concerning confusion between trademarks, but it is arguably applicable in a trade name dispute as well. Trade names and trademarks, of course, do differ: the former identify someone’s business (as a whole), while the latter identify and distinguish a company’s goods and services (authoritative pronouncements to this effect include the U.S. Court of Appeals for the Ninth Circuit’s Accuride International v. Accuride Corporation (1988), as well as National Cable Television Ass’n., Inc. v. American Cinema Editors, Inc. of the Court of Appeals for the Federal Circuit (1991)). At the same time, trademarks and trade names are closely related concepts. Like a trademark, a trade name is an intellectual property right. When, as in the Serbian case analyzed here, the trade name is a designation that distinguishes goods or services, identical standards of protection as those for trademarks should apply. That means that in the examination of the likelihood of confusion between two trade names, the factors determining the likelihood of confusion between two trademarks – including the strength (distinctiveness, or a lack thereof) of the sign (name) – should apply.
One cannot tell from the Commercial Court’s opinion whether it considered the defendant’s claim about the crowded trade name market uncorroborated by evidence or legally irrelevant. The Commercial Appellate Court was somewhat more explicit, although cursory: it stated that the defendant’s claim was immaterial, because “the plaintiff registered its trade name earlier, ‘Luda kuća’ is the dominant word [sic], and this can create confusion among average consumers”.
There is something wanting in the appellate court’s glossing over the argument by the defendant. In a standard trademark context, a registered mark can lose distinctiveness altogether (famous examples include aspirin and cellophane) and in that case a defendant using the same or similar mark does not infringe. In light of the virtual identity of a trademark and a trade name protection and analysis, a similar descent into genericness might befall a trade name, too. In the particular case, with respect to “Luda kuća”, it is unlikely that the implicit claim by the defendant that “Luda kuća” had become a generic term is supported by facts. However, there is nothing in either judgment to indicate that the courts even looked into the facts. The Commercial Appellate Court, instead, appears to have made a legally dubious argument – that a trade name registration offers an absolute protection as such. (It may simply be a matter of poor drafting.)
There is a decision of the French Court of Cassation, from 1988 (“Dourthe”), that appears to lay down a similar argument – that trade name owner’s tolerance of unauthorized uses by third parties does not weaken, or make disappear, the right to the name. But, the incidence of the unauthorized uses was in the French case far below the usual one in genericide, so even that case, on closer inspection, does not stand for a proposition that registration shields a trade name completely.
As to the trademark prong of the case, the defendant did not raise a defense similar to the one concerning the trade name – that there existed other marks containing the words “Luda kuća”. All the Commercial Court in Belgrade had to do was to compare the registered trademark held by the plaintiff and the sign used in commerce by the defendant. According to the court, the fact that plaintiff and defendant used different fonts to write “Luda kuća” did not affect the ultimate conclusion that the trademark and the sign were substantially similar. The court’s conclusion about the likelihood of confusion inevitably followed, because of the identity of services for which the trademark and the sign were used. The Commercial Appellate Court agreed.
The finding of a substantial similarity between the trademark and the accused sign is straightforward. It corresponds to decisions, such as LTJ Diffusion v. Sadas S.A of OHIM’s Board of Appeal (2002) and Sadas SA v. OHIM of the-then Court of First Instance (2005), in which the decision-making bodies took into consideration the difference in a typeface with which the dominant word was written, as well as the difference resulting from the presence of additional words in the plaintiff’s mark, only to conclude in the end that the marks as a whole were visually, phonetically and conceptually similar, mainly due to the strong similarity of the dominant components. The analysis by the Commercial Court and the Commercial Appellate Court falls within this line of cases, however without imitating the habit of the Board and the E.U. court to engage in detailed analysis.
