The judge punishes those who come too late: lack of trademark protection has dramatic consequences in the Künzli case
Issue June 2012
Practice area: Trademarks, Design and Advertising
In the past few years, Künzli SwissSchuh AG was embroiled in several trademark disputes with the US shoe manufacturer K-Swiss. K-Swiss was established in the 1960s by two Swiss who emigrated to Los Angeles (the original founders are no longer involved in the company). K-Swiss initially imported Künzli shoes to the US (while Künzli imported American sneakers to Switzerland), then started producing its own shoes and eventually became one of the leaders in the casual shoe sector.
Künzli shoes featured special shoe laces and five decorative stripes (Künzli sold the US patent for the shoe laces to K-Swiss in the 1970s). K-Swiss registered the five stripes in the US in 1974 and in Germany in 1990 as a shoe trademark, while Künzli itself neglected to register the five stripes as a trademark until 2011.
In 2012, the Düsseldorf appellate court confirmed K-Swiss’s right to use the five stripes for shoes in Germany. This judgement forced Künzli to remove the five stripes from its shoes and led to its decision to use five squares in a row in future.
In Germany, a trademark owner can prohibit a previous user of an unregistered mark from continuing to use this mark as soon as it has registered the mark. In Switzerland, this principle of first registration is weakened by the right of continued use under Art. 14 of the Trademark Protection Act. This right of continued use gives the previous user the right to continue to use a mark that was in use before the registration to the same extent as before (i.e. product diversification is excluded), even if the mark in question has since been registered as a trademark by someone else. This granting of legal privileges to the first user rather than the first applicant is unique to Switzerland and is not applied by other countries.
If there is no right of continued use, things can become difficult – like in the Künzli case – if a long-standing competitor is prohibited from continuing to use a well-established mark just because a third party registered the trademark many years later. The only defence against such an annexation of one’s own mark is to prove that the third party registered the trademark in bad faith, but it is relatively difficult to provide this proof. In the Lindt golden bunny case, the EU Court of Justice decided that bad faith should be dependent on whether the party registering the mark knew or should have known that the same or a similar mark is already being used as a trademark, whether the applicant was mainly interested in preventing third parties from continuing to use the mark, and what kind of protection the newly registered trademark enjoyed previously. Simply the fact that a company knew that someone else was already using the registered trademark does not automatically mean that the newly registered trademark is invalid because it was registered in bad faith.
The lesson to be learned from the Künzli case is that the early international registration of a trademark is essential. Swiss companies cannot rely on Art. 14 of the Trademark Protection Act, because it does not apply beyond the borders of Switzerland. Künzli seems to have also learnt its lesson, as the five squares were registered as a trademark for shoes in Germany.
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