The Supreme Court has confirmed that the use of another’s trademark to identify the prize in an advertising campaign constitutes an act of trademark infringement and ordered the infringer to pay compensation for damages.
A recent judgment from the Supreme Court has condemned Buongiorno for reproducing the ZARA trademark on a gift card offered as a prize in an advertising campaign of its services. This decision stems from the ruling issued by the Court of Justice of the European Union (CJEU) on January 11th, in response to a preliminary question (Case C-361/22) raised by the Supreme Court in the proceedings between Inditex and Buongiorno Myalert, S.A. regarding the use of the ZARA trademark, as previously discussed here.
The preliminary ruling had its origin in a limitation established in Article 37 of the Spanish Trademark Law 17/2001, by which the owner of a Spanish trademark cannot prevent a third party from using that trademark in the course of trade, among other cases, when such use (i) “is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts” and (ii) “is in accordance with honest practices in industrial or commercial matters”.
This wording is currently in force and corresponds to the transposition of Directive 2015/2436 of 16 December. However, the aforementioned article, in its previous version (corresponding to the transposition of Directive 89/104 of 21 December and Directive 2008/95 of 22 October), established the limitation in a substantially different manner, as follows: “The trade mark shall not entitle the proprietor to prohibit a third party from using [it] in the course of trade, provided that such use is in accordance with honest practices in industrial or commercial matters, where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts”.
The CJEU clarified that the use that could limit the effects of the trademark under the 2008 Directive now constitutes one of the cases of lawful use – which cannot be opposed by the owner of a trademark under the 2015 Directive-. In other words, the scope of the first wording of Article 37 was more limited, as it only referred to the use, in the course of trade, of the trademark when it was necessary to indicate the intended purpose of a product or service.
In view of the foregoing, the Supreme Court, in judgment 485/2024 of 10 April 2024, reversed its previous decision (judgment 725/2021 of 26 October), which declared it null and void, as well as those of Commercial Court No. 2 of Madrid (judgment 87/2016, of 15 March) and that of the Provincial Court of Madrid (judgment 289/2018, of 18 May), and convicted Buongiorno of trademark infringement, for having reproduced the ZARA trademark on a gift card offered as a prize for the promotion of its services.
The High Court argues that the wording of Article 37 in force at the time of the facts only covered the use of a third party’s trademark, in accordance with honest practices, when it was necessary to indicate the intended purpose of a product or service, which it considers not to be the case here.
Consequently, it declared that Inditex’s trademarks had been infringed and ordered Buongiorno to pay damages of 2,215.60 euros. This amount is the result of applying 9.03% to the defendant’s turnover (as a hypothetical royalty and without taking into account a hypothetical application of an entry fee, as the Court considers that, in view of the circumstances of the case, it would be “highly disproportionate”). Nevertheless, the defendant has not been ordered to pay additional compensation for the alleged harm caused to the reputation of the trademark, as it is argued that such harm is not automatic and must be justified.
On the other hand, the Supreme Court ordered Buongiorno to publish a note extracting the judgment “in a font size of at least 10 in the right-hand column of the header of the home page of the websites blinko.es and blinkogold.es, with a content link to the judgment in its entirety”. This publication, which should remain active for one month, must include an information note with a content that could be as follows:
By final court judgment, it has been declared that the use made by Buongiorno Myalert, S.A. of the trademark “ZARA” as a key element in the promotions of its service Club Blinko, in the year 2010, infringed upon the exclusive right that Inditex holds over the renowned trademark “ZARA”. Buongiorno Myalert, S.A. has been condemned to refrain from resuming such infringing conduct and to compensate Inditex for the damage suffered from the infringement, amounting to €2,215.60.
To sum up, the trademark infringement was upheld on the grounds that the use of the ZARA trademark was not covered by the wording of Article 37, and that it was “taking unfair advantage of the distinctive character and repute of that trademark”. It seems that, at last, after more than 13 years, the Supreme Court has put an end to a highly controversial issue that has given rise to a profuse legal debate.
