| MAIN FEATURE >
Czech trademarks: conflicts increase
as brands gain value
Written by: René Jakl & Klára Smolová
Photo by: Vojtěch Vlk
There have been notable cases worldwide
of those who try to imitate or otherwise misuse well-known brands.
Likewise, in this country the number of disputes concerning trademarks
is on the rise.
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Protecting ideas
Trademarks are essentially included in a
broader group designated as "intellectual
property". The range of ways for ensuring
the exclusive use of new or unique ideas is as
follows:
· Invention: a new, as yet unpublished solution
of a technical problem can be patented. A condition
for patenting an invention is its direct technical
utility. This sets it apart from a discovery, which
is of a theoretical nature. For example, the existence
of radioactivity is a discovery, while the schematic
for a nuclear power plant is an invention. A patent
is valid for 20 years after the date of approval,
and only in the territory where the patent was applied
for. An exception is a patent awarded in a European
Union state, which is automatically valid throughout
the EU. An international patent can also be applied
for according to the international Patent Cooperation
Treaty.
· Utility design: unlike an invention, this protects
the specific arrangement of given technical equipment.
This is why it is sometimes designated as a "small
patent". It is valid for four years, and it
can be extended twice for three-year periods. Roughly
forty countries provide protection for utility designs.
· Industrial model: just another designation for
a design. A single application can cover up to twenty
partial solutions of external appearance. These solutions
are new in terms of both form and function. Protection
is valid for five years following the application,
and can be extended twice by the same period.
· Typography of integrated circuits: a way to protect
the method of connecting components in a single integrated
circuit. The law and international treaties protect
series of "mutually interconnected depictions
that model in three dimensions the permanent arrangement
of layers that create an integrated circuit," or
chip. This depiction is entered into a register of
topographies.
· Works as per copyright law: These are unique creative
works of art and science in the form of literature,
music, sculpture, photography, architecture, cartography
- and computer programs. They do not need to be registered;
they are automatically protected as of the moment
of their creation for the creator's lifespan and
seventy years thereafter. |
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IN THE MID-90S the entrepreneur Marek Němec
went into the trademarks "business" in grand style, thus
irreversibly writing himself into the history of trademarks in
the Czech Republic. This brother of then-minister Igor Němec gradually
applied for the registration of about a hundred trademarks that
were well known and used around the world. For example Toyota,
which Němec registered as a trademark for sewing machines. He then
demanded high compensation from the importers of the Toyota brand.
However, the court ruled that this activity was speculative; it
refused to recognize any compensation for Němec, and the trademark
was expunged from the register of trademarks. This case was far
from unique. "The counterfeiting or theft of successful brands
is encountered everywhere in the world, but in this country it
became excessive after the revolution," says attorney Michal
Růžička of Rott, Růžička & Guttman, one of the leading Czech
patent firms. "There is very low awareness of the protection
of intellectual property here," Růžička observes.
Disputes over former state enterprises' trademark rights are the
specific heritage of the era of state-owned companies, branch plants,
and detached workplaces. "In the past Czech attitudes towards
trademarks were lax, in keeping with the regime. Companies were
told what to do by the state and there was no competition, so why
bother registering a trademark? A trademark makes sense only in
a competitive environment, where its value rises," explains
Zuzana de Korver, the head of the adversarial proceedings department
at the Industrial Property Office (ÚPV). After state-owned firms
were broken down into several divisions and subsequently privatized,
it wasn't always clear who would benefit from the trademark windfall.
This is the case with the traditional manufacturer of Prim watches
or Apetito processed cheeses. Neither dispute has been settled
yet.
Marek Němec wasn't the only one to realize the value of trademarks
in the mid-90s. According to ÚPV statistical data published regularly
in its annual yearbook, in 1995 a total of 10,476 trademark applications
were submitted, a record that still stands. But what is rising
significantly is the confrontational nature of new registrations.
While in 1993 less than 1% of all registrations were rejected,
last year this figure was up by a factor of ten. According to Jan
Hák, a patent agent and chairman of the board of directors of Patentservis,
this is the logical consequence of rising competition. "The
high number of trademark applications bears out the fact that business
is paying attention to the value of its intellectual property," says
Hák. "As the number of trademarks grows, the market becomes
denser and space for possible collisions arises."
Sometimes a trademark is more valuable than the rest of the company.
According to patent agent Dana Lukajová of the law and patent offices
of Vyskočil, Krošlák and Co., sometimes the value of a trademark
reaches 90% of a company's value. However, determining the value
of a trademark in the Czech Republic is an assignment for specialized
experts, whose official estimates can differ significantly from
the book value.
Rankings of brand power provide a general picture, but they don't
measure the value of brands, just the level of awareness among
the public. Names like Čedok, ETA, Mattoni, Opavia, Škoda, and
Vitana appear regularly at the top of domestic brand rankings,
which are compiled on the basis of public research conducted by,
for example, AISA. In the US, where ten of the world's most valuable
trademarks are concentrated, respected rankings with their estimated
values are published regularly. Marlboro ranks first, with a value
of USD 39 billion, followed by Coca-Cola, at USD 33 billion.
(Un)protected internet
The internet and the protection of domains associated therewith
is a separate matter. The internet's development outpaced the
development of laws that should regulate the internet jungle.
At first the courts didn't know what to do with cases when people
registered trademarks or even unregistered but well established,
and thus protected names of products or services as domain names. "No
particular state-guaranteed rights to designation pertained to
domain names. That's because the internet works on a private
basis and the principle of first-come, first-served," Růžička
comments.
However, attorneys who deal with this issue claim that it's not
necessary to create any special legislation for the internet. They
say that in commerce the existing provisions of the Commercial
Code on unfair competition and the criminal law on violation of
trademark rights are sufficient. According to attorney Jiří Janeba
of the epravo.cz web site, an unauthorized user of a domain name,
depending on the specific situation, commits misleading designation
of goods and services or causes the danger of confusion.
Made in an open-air market
Along with grocery and pharmaceutical firms, producers of sporting
goods and clothing are among the most frequent victims of trademark
misuse. Petr Kožuch, the brand protection manager for the Czech
branch of Adidas, says, "In 2002 alone about 120,000 fake
Adidas products were seized in the Czech Republic, which represents
theoretical damage on the order of CZK 100 million." Not surprisingly,
the problem in the Czech Republic is merely representative of a
greater worldwide phenomenon. According to European Commissioner
Frits Bolkestein, trade in falsified goods accounts for five to
seven percent of international trade. Bolkestein estimates the
damages thus caused in the EU at two billion euros a year. For
this reason the European Commission is tightening legislation and
giving greater authority to customs officials in seizing goods.
The growing importance that is being placed on trademarks is manifest
in the Czech Republic by amendments making the criminal law stricter.
While earlier violators of rights to trademarks, trade names, or
protected designations of provenance faced no more than six months
in jail, a recent amendment raised the maximum sentence to two
years. Moreover, the threat of prosecution now faces not only the
person who puts falsely marked goods into circulation, but the
importer or exporter as well. Vigilance regarding such infringements
has also increased. "There are world-wide monitoring services
that track whether anyone is violating their clients' trademark
rights," Růžička explains, adding that in the Czech Republic
such services are carried out by specialized law firms and patent
agents who also work on trademarks.
If you were unable to protect your trademark and have to take the
matter to court, you'll need patience and money. Růžička estimates
the usual duration of court proceedings at about five years, and
the situation in other countries isn't said to be much better. "As
far as costs go, (in the Czech Republic) the company pays tens
of thousands of crowns on such lawsuits. Czech firms don't defend
their brands abroad very strongly, as it's too expensive for them.
They do so only when the situation is very grave, as is the case
with Budějovický Budvar," Růžička concludes.
| Impuls & Impuls
Is it possible that two media with nationwide impact
could use the same name without the risk of confusion?
Representatives of Radio Impuls and
a daily paper with the same name have diametrically
opposed views of the matter. "According to research,
40% of the respondents associate Radio Impuls with
the daily. That's alarming," says Milan Vacík
of AMI Communications, the media representative of
Londa, which owns the license for Radio Impuls broadcasts.
However, Jiří Slavíček of the law firm Nipl, Žák,
Slavíček & Co., which represents Mediaprint & Kapa
Pressegrosso, does not agree: "We know from
experience that there is no confusion. Neither of
the companies share services or products."
In 1997 the distribution company Mediaprint & Kapa
Pressegrosso began publishing the monthly Impuls
for its business partners, but it did not register
the name as its trademark. Londa, which has been
operating Radio Impuls broadcasting since February
1999, registered "Radio Impuls" as its
trademark in September 2001. When Mediaprint, whose
co-owner Ivan Kaufmann also co-owns the publishing
company Vydavatelství Impuls, later applied for the
registration of Impuls, the Industrial Property Office
expressed concern that confusion could arise. But
Slavíček defends the name: "the register contains
trademarks (for the printed materials as well), such
as the the Impuls trademark of T-Mobile Czech Republic,
with preferential treatment dating back to 1997."
In an effort to prevent the publication and distribution
of the daily, Londa went to court to request preliminary
measures. But both proposals were rejected, so in
May 2003 the daily could be published under the name
Impuls. There followed a complaint demanding a halt
to publication and satisfaction for damages caused
to the radio station in the amount of CZK 10 million.
Mediaprint, which in the mean time filed a complaint
against Londa's unfair competitive behavior, is prepared
to settle out of court, but Radio Impuls representatives
are opposed to compromise: "Further steps will
undoubtedly follow," says Slavíček. "But
first the publication of the daily must be halted.
That's the number one priority."
Anita Lišková
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| Dvořák
vs. Chopin
THE TALE OF Belvedere, the company founded in Prague at
the beginning of the 1990s by the Frenchman Jean-Pierre Hottinger,
a wine and spirit trader in central and eastern Europe, began
in 1993. At that time Belvedere agreed with the Polish company
Podlaska Wytwórnia Wódek "Polmos", with which it cooperated
in the production and distribution of brandy-type drinks, to
launch a new luxury product, Chopin vodka. Based on Belvedere's
instructions, the bottle was created in the style of a perfume
flask with a window, frosting, and calligraphy. "One day
we presented the idea in Polmos, and the next day the director
registered it with the patent office," says Hottinger.
Polmos began producing Chopin vodka, and Belvedere distributed
it in Poland, Europe, and overseas. In the Czech Republic,
Hottinger closed a contract with spirit maker Kord Ptáčník,
and produced and sold Dvořák vodka intended for the Czech Republic
in bottles of the same design. In 1994 he registered that trademark
with the Industrial Property Office (ÚPV) in Prague.
Both vodkas were enormously successful, with hundreds of thousands
of bottles produced each year. According to Hottinger, Polmos
decided to cut Belvedere out of the game and created counterfeit
bottles in which it started distributing Chopin vodka itself.
Thus began a war between the two companies. Court cases were
conducted in Germany, Poland, France, and the US. Belvedere
won all of them except for the one in the US. However, in the
Czech Republic the dispute took on unpleasant overtones. In
1998 Polmos took Belvedere to court for violating the law on
trademark protection and unfair competition. Its main argument
was the registration of the trademarks on the bottles with
the Polish patent office. Based on a proposal by Polmos's legal
representatives, ÚPV also registered the trademark in the Czech
Republic. They claimed that "because Belvedere sells Dvořák vodka in the Czech
Republic, Polmos cannot penetrate the market with Chopin vodka.
But they never even shipped any Chopin vodka to the Czech Republic," says
Radim Marušák, an attorney with Hottinger. Accordingly, the
Prague Municipal Court issued a preliminary injunction ordering
a halt in the production and distribution of Dvořák vodka.
Belvedere objected to this decision and demanded that Polmos
brands be expunged. According to Marušák, not only were these
brands not used in the CR, but the condition of distinguishability
was also not met. Two years later the trademarks were expunged.
Although in 2001 Belvedere had already won its suits abroad,
during which it proved that it was the owner of the original
bottle design, the Prague Municipal Court didn't take this into
consideration, so the case was drawn out. This year Belvedere
submitted a complaint to the justice ministry with respect to
the Municipal Court's procedure and to the judge's prejudice.
The Municipal Court finally canceled its preliminary injunction.
The main issue of the ungoing law suit between Belvedere and
Polmos is now compensation for damages that Hottinger claims
have reached about CZK 100 million. But the final hurdle in this
complex dispute could be the unenforceability of a Czech court
decision in Poland. Perhaps this will result in another international
arbitrage against the Czech Republic.(ed note: as of press time,
we had not received any statement from Polmos.) Klára Smolová |
| Two
Oskars
Click on www.oskar.cz and you wind up at the web site
of the well-known mobile phone operator. But three years of
complicated negotiations preceded this result.
In January 2000, when the mobile phone operator Český Mobil made
public its new Oskar trademark for its mobile communications
services, the oskar.cz domain name had already been registered
for nearly three years by a company of the same name that traded
in computer technology. Český Mobil was aware of this and claimed
that it had reached a preliminary agreement with the original
owner of the domain name (i.e., Oskar, s.r.o.) to the effect
that the operator would be able to use it as soon as it launched
its brand. But Comfor, which in 1998 purchased Oskar s.r.o. and
with it the disputed domain name, took a different stance. In
a statement to the Czech Press Agency in 2000, its then-director
Petr Bříza stated that he was negotiating with Český Mobil, but
that the operator declined the offers he had submitted, which
included a guarantee of business contracts during the construction
of the IT infrastructure.
Comfor, a computer company, then began using the oskar.cz domain
for selling mobile phones and accessories, and in the ensuing
tug-of-war demanded CZK 10 million for it. In the meantime,
the operator used the oskarmobil.cz domain for its presentation,
but it had no intention of giving up the web address. "The
www.oskarmobil.cz address was well established, but we wanted
to prevent a situation where someone else owned the www.oskar.cz
domain," explains Igor Přerovský, Český Mobil's spokesman
and vice-president for brand and communications.
So Český Mobil decided to take the entire matter to court, lodging
a complaint against Comfor for the manner in which it used the
Oskar brand on its web site. But before the case could be decided,
a bilateral agreement was reached and the entire matter was settled
out of court. In April of this year Český Mobil became the owner
of the oskar.cz domain under conditions that were not specified
in greater detail. Anita Lišková |
| What does a trademark protect?
Pilsner beer was the very first product to be trademarked
in this country - by an imperial patent as "Pilsner
Bier" in 1858. Today trademarks are registered with
the Industrial Property Office (ÚPV). Following registration,
the trademark holder has the exclusive right to use it in
the designated region and area of business. The basic administrative
fee is CZK 4,000 for three classes of goods or services,
according to patent attorney Dana Lukajová of the the law
and patent offices Vyskočil, Kršlák and Co. The protection
is good for ten years, and it can be extended for another
ten (each additional class costs CZK 500). To register a
trademark in Europe, including the UK, Lukajová estimates
the registration price at about 2,300 Swiss francs. The holder
of a registered trademark may denote this with the internationally
recognized small R in a small circle, but protection is not
contingent upon it. The TM designation is recognized only
in the US.
According to Zuzana de Korver, head of the adversarial proceedings
department at ÚPV, it is possible to contest the unjustified
application of a trademark either during or after the registration
period. "Three months after the publication of a proposal
it is possible to submit a so-called objection against the
registration of a trademark, prior to its registration," de
Korver says. But this requires regular monitoring of the
ÚPV bulletin, where all trademark applications are published
under conditions given by the law. If the registration of
an improperly used trademark has already taken place, the
justified person can demand that it be canceled. De Korver
notes that each year for every 10,000 trademark registration
applications in the Czech Republic, about 1,000 justified
subjects object, and there are about 200 cancellation demands. René Jakl |
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To whom does Prim belong?
When former state enterprises were broken up during
privatization, the trademarks of major products were often
overlooked. Today the courts are resolving disputes among
private firms that were subsequently established. Such is
the fate of the Czech watchmaker Prim.
Chronotechna registered the Prim trademark for its timepieces
in the 1950s, in the Czech town of Šternberk. In 1969 the
Elton plant in Nové Město nad Metují was entitled to manufacture
wrist watches under the same trademark. After 1989 the firms
were separated during privatization, resulting in two independent
subjects ?- the joint-stock Eutech as the successor of Chronotechna,
and Elton hodinářská, a.s.
When in the mid-90s Elton hodinářská wanted to register the
Prim trademark for its wrist watches, the Industrial Ownership
Office (ÚPV) did not permit it, as there was already a registration
in that name. It belonged to Eutech, which had taken over
all Chronotechna trademarks. "We settled to our own
benefit with Eutech, and we agreed on acquisition of the
license for 99 years for a symbolic fee of CZK 99," says
Jiří Helikar, chairman of the board of Elton hodinářská.
Sanctions for failure to adhere to the contract was agreed
at CZK 10 million. But Eutech, which has seven trademarks
using the word "Prim" registered with ÚPV, provided
licensing rights for one of them to Hanhart Trade, which
imports watches and clocks into the Czech Republic. This
resulted in a dispute between Eutech and Elton, which led
to a contract on the sale of the trademark for CZK 10 million.
But Elton eradicated this debt by clearing the sanction for
the failure to adhere to the earlier contract. Eutech did
not recognize the transaction. "Eutech did not breach
the contract, so Elton has no claim for the payment of the
sanction," insists Clarence Vítámvás, head of Eutech's
legal department. The company withdrew from the contract
and sold the trademark to another firm, MPM-Quality.
Elton hodinářská is dissatisfied with this development, because
it believes that the law is on its side. "We can prove
that we have been the trademark for wrist watches uninterruptedly
since 1969," Helikar says. But the ÚPV register sides
with Eutech. Since 2000 many court cases on several levels
have been ongoing between the two firms, who claim their
costs have already reached a million crowns. Elton estimates
its indirect damages at CZK 10-15 million. Klára Smolová |
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