Federal Court of Appeal Reaffirms that Declaratory Actions are not Acceptable for Recognizing the Fame of Marks

During the year 2008, the Federal Court of Appeal of the 2nd Region (FCA) issued some decisions that indicate that trademarks may not be recognized as famous based on legal declaratory actions. Rather, this must occur in administrative channels, as set forth in Brazilian Patent and Trademark Office (BPTO) Resolution No. 121/2005.

This was the Court’s stand when it (a) considered justified the rescissory actions proposed by the BPTO against court decisions that, accepting declaratory actions filed for the purpose, had recognized as famous the marks DAKOTA and ABSOLUT; (b) allowed the BPTO’s appeal against the first instance decision, which judged that the mark CASTROL’s application for recognition as famous did have grounds; and (c) dismissed the appeals filed against first instance decisions that judged that the declaratory actions related to the fame of the marks TIGRE and CONTINI did not have grounds.

Famous marks are those that due to a combination of factors, for example heavy marketing investments and continuous use, built outstanding fame and thus merit special protection extending to all fields of activity.

However, although Article 125 of the Industrial Property Law (IPL) contemplates special protection for famous marks, it did not establish procedures for obtaining this recognition. Given this apparent legal gap, on January 27, 2004, the BPTO published its Resolution No. 110/2004. The Office subsequently revoked it and substituted it with Resolution No. 121, of September 6, 2005, which remains in effect.

This Resolution established procedures for obtaining recognition as famous and made it possible to request it through administrative channels, in pleas of defense in opposition or administrative nullity proceedings against third party marks in conflict with those for which recognition of fame is sought.

Since Resolution 121/05 limited recognition of a mark’s fame to the context of incidental claims and the administrative sphere, and for a time the IPL’s Article 125 was not regulated, what actually occurred was that many companies turned to the Courts through declaratory actions as an alternative for recognizing their marks’ fame. This procedure may seem reasonable given that marks may become considerably famous without third parties trying to register similar marks, giving owners of allegedly famous marks no opportunity to claim the marks’ fame.

However, as seen above, the Federal Court of Appeal has been reaffirming its understanding that declaratory actions are not acceptable for establishing the fame of marks. It argues the following:

(i) Declaration of fame is not supported by the hypotheses under Article 4 of Brazil’s Code of Civil Procedure;

(ii) famous marks may not be the objects of legal decisions, because this would grant them permanent and inalterable certification, which conflicts with the transitory nature of famous marks’ status.

The first argument is strictly procedural and is consistent with the Court’s current interpretation of the legal provision cited, in that declaratory actions are not for merely documenting facts, like a mark’s fame.

The second argument underscores the fact that court decisions, by making what is judged material, become inalterable. They are not, therefore, the appropriate means to seek recognition of a mark’s fame, because this condition is based on diverse phatic circumstances, which may change and even cause fame to be lost.

The Court, then, considers that legal opinions may give lasting certification of fame to a mark, while this strictly phatic condition may be lost. For this reason, the FCA has been indicating that the acceptable channel for recognizing fame is the procedures defined in BPTO Resolution 121/05, holding that this Office may follow the phatic circumstances that determine or remove a mark’s fame.

The FCA raised another argument when it judged as justified the BPTO’s rescissory action on the Dakota Calçados Ltda. company, revoking the declaration of fame awarded the mark DAKOTA by a declaratory action: that there was no divergence of positions between the company and the BPTO, which was the defendant in this case. However, the BPTO did not argue against the DAKOTA mark’s fame, indeed it lacked opportunity to recognize it, and the owner company had no interest in filing legal action.

These decisions limit companies’ prospects for obtaining recognition for famous marks through legal channels. They must then turn to procedures established in Resolution 121/05, which does not provide specific procedures for doing this. Thus they may find themselves unable to establish the fame of their marks, if no incidental opportunity arises for them to do so in the administrative sphere. For this reason the resolution in discussion continues to be the subject of debate.

* co-authored with Ariel Barcelos M. Pereira