Review of recent court practice in e-commerce trademark infringement cases
Companies providing e-commerce services present themselves to users, and thus consumers, through websites accessible under domain names in such a way that the domain name, which typically also appears as the name of the website accessible under the domain, effectively distinguishes the company’s service from other similar services. Such businesses spend a significant part of their marketing budget on communicating the designation of their e-commerce service, its domain availability, to consumers and users to make their service as widely known as possible and thus more widely used. This makes it important for such businesses to protect the domain name of their e-commerce services and the designation of the website accessible under the domain. Some of the e-commerce-related trademark infringement litigation arises from the basic situation where there are websites operating under a domain similar in name to the designation of an established trademarked website. These infringing websites generally offer consumers or users the same or similar services as the website whose name they have used, as they can increase the number of visitors and users without having to engage in serious marketing activities to raise the profile of their website. In this respect, the said infringing use of domains and website names is not only unlawful, but also harmful to the providers of the original website protected by the trade mark, since the infringing sites also benefit indirectly from the effect of their marketing expenditure by being able to offer some consumers and users the option of visiting the main page of the infringing website instead of the original website, which in turn may reduce the value of the advertising fees for the banner advertisements placed on the home page of the original website.
E-commerce in Hungary has been developing steadily, as shown by the increasing number of Hungarian court judgments in recent years that have settled disputes in this area, including trademark infringement cases. With the development of e-commerce, a number of new practical questions have arisen which have been answered by recent court judgments and which help e-commerce businesses to make more effective use of the rights conferred by their trademarks protecting their services. This article reviews these Hungarian court judgments, summarising the issues raised in the disputes underlying the judgments and the answers given by the courts.
1. Protection afforded by a combined trademark in respect of domain names:
The decision of the Metropolitan Court of Appeal No. Pf.20089/2020/7. was issued in a dispute arising from a dispute concerning an infringing website. The background to the case was, in short, that the plaintiff owned a colourful, figurative combined trademark, which contained the name of the domain (“Plaintiff’s Domain”) under which the classified advertising website using the trademark appeared. The Plaintiff used the Plaintiff’s Domain at issue in such a way that, upon opening it, users could access the Plaintiff’s classified advertising service operating under another domain, “J….s”. In practice, therefore, the plaintiff used its combined trademark in such a way as to display to users only the word combination which formed the dominant part of the combined trade mark. Defendant took advantage of this by launching a website offering classified advertising services that differed from Plaintiff’s domain by only one character, and used as a logo on the website a graphic whose dominant word combination was the name of Defendant’s domain. The two domains or trademarks and the Respondent’s designation can be illustrated as follows:
|Plaintiff’s domain: a…n.hu||Defendant’s domain: a…d.hu|
|The dominant word element in the plaintiff’s mark is the word combination a…n.hu.||The dominant word element in the defendant’s mark is the word combination a…d.hu.|
The plaintiff’s trademark was protected, inter alia, in respect of Section 35 of the Nice Agreement. Given that both the plaintiff and the defendant provided classified advertising services on their websites, the services of ‘advertising, online advertising, operation of online marketplaces for the purchase, sale and/or exchange of goods and/or services and/or real estate, compilation of online searchable databases; provision of information relating to the foregoing’ in Class 35 were relevant to the infringement. The Defendant did not register as a trademark the word combination used by it as the name of the domain and as its classified advertising website.
According to the plaintiff, the defendant infringed its trademark by providing classified advertising services under a domain name and a website image whose name and dominant word combination differed by one character from the dominant word combination of the plaintiff’s combined trade mark and the plaintiff’s domain name.
Plaintiff won its action at both the trial and appellate levels. The reasoning of the judgments may provide a basis of reference for the following issues in other trademark litigation on similar issues:
a./ The dominant word combination in a figurative mark may provide trademark protection for the domain name corresponding to the word combination.
The word combination constituting the Plaintiff’s Domain Name was not protected independently but was only included as the dominant element of the Plaintiff’s colored figurative mark. The plaintiff claimed infringement of the defendant’s use of this word combination on the basis of Article 12(2)(b) and (3)(c) of Act XI of 1997 on the Protection of Trademarks and Geographical Indications (“Trademark Act”), which provides as follows:
Article 12(2)(b) Without prejudice to the rights acquired by others before the filing date or the priority date of the trade mark, on the basis of the exclusive right of use, the holder of the trade mark shall be entitled to prevent any person not having his consent from using in the course of trade, for goods or services any sign where, because of its identity with or similarity to the trade mark and the identity or similarity of the goods or services, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark.
Article (3)(c) The following may be prohibited under paragraph (2): supplying or offering services under that sign.
In connection to the infringement of the Articles 12(2)(b) and (3)(c) of the Trademark Act, the court made the following main findings:
– The dominant elements of the plaintiff’s trademark and the defendant’s signs are the word combinations “a…d.hu” and “a…n.hu”, because the figurative and textual elements are interpretative and descriptive respectively.
– Visually, the two signs are identical except for one letter, and the use of the words with or without accents is not relevant in this context. When these terms are pronounced, the one-letter difference disappears, leading to a significant degree of similarity. The only difference between the representation of the mark and the representation of the sign is conceptual, but this difference is not sufficient to provide sufficient distinction for the average consumer, who is part of the relevant consumer group to be taken into account in the classified advertising market. In assessing this, the overall impact of the signs on the average consumer is the benchmark. In the case of complex signs containing both word and figurative elements, the word element is generally the most important. The average consumer, when looking for a product or service, does not describe the ornamental graphics or slogans contained in the signs which designate it, but at most recalls them as a vague memory. The average consumer is practical, tends to simplify and abbreviate, concentrates on the essentials, and thus selects the element of the combined sign which is appropriate to designate the goods or services. For this reason, it has become the practice of the courts that in trademark infringement cases, it is primarily the dominant elements that must be compared, since these are the distinctive elements and embody the origin or origin marking function of the trademark.
– The defendant’s classified advertising service falls within the scope of protection of the trademark and is essentially identical to the services listed in the list of goods and services ‘operation of online marketplaces for the buying, selling and/or exchanging of goods and/or services and/or real estate, compilation of online searchable databases’. Such a high degree of similarity of services increases the likelihood of confusion between the signs. It is not necessary for there to be actual confusion on the part of the consumer for there to be infringement, it is sufficient that there be a real likelihood of confusion, which was established in the present case by the high degree of similarity of the signs and the identity of the services.
By the above reasoning, the court granted in practice trademark protection to the combination of words corresponding to the Plaintiff’s Domain Name by classifying as dominant in respect of the combined figurative mark the combination of words “a…d.hu”, which was identical to the Plaintiff’s Domain Name. The effect of this is that, if a person has trademark protection only in respect of a word or word combination which is the dominant element of a combined mark, he can, based on the above reasoning of the court, take action against another undertaking which unlawfully uses the protected word combination for infringement of the trademark in respect of that word combination.
b./ The proprietor of a combined trademark is entitled to protection against an infringing website even if the services of the trademark proprietor are available to consumers on a website with a name different from the one under which the word combination forming the dominant part of the combined trademark is registered.
Article 18. (1) of the Trademark Act provides as follows: “If, within a period of five years following the date of registration, the holder has not put the trade mark to genuine use in the country in connection with the goods or services for which it is registered, or if such use has been suspended during an uninterrupted period of five years, trade mark protection shall be subject to the legal consequences provided for in this Act, unless non-use is duly justified by the holder of the trade mark.” Thus, the trademark proprietor is not entitled to protection of his trademark if he has failed to use it continuously for five years, and the trademark proprietor must prove, in the event of an objection, that he has used his trademark continuously for five years. The court examined the applicability of the objection of non-use under Article 18(1) of the Trademark Act in connection to the plaintiff’s mark, as the defendant claimed that the plaintiff’s domain “a…d.hu” is used to access another website operated by the plaintiff, “j…..s.hu”, but that the word element, figure and slogan of the trademark do not appear on this website.
According to the court, the plaintiff had adequately justified the use of the trademark “a…d.hu” by showing that the plaintiff’s classified ad service “J….s” was available under the plaintiff’s domain “a…d,hu”. In its reasoning, the court explained that, according to settled case-law, it is not primarily continuity that must be proved, but that the use was such as to enable consumers to perceive the trademark and the presence of the goods or services which it designates on the market. Isolated use on a single occasion or on a few occasions is not sufficient to establish that the sign has acted as a trademark in the course of trade. The screenshots extracted from the site under the domain “a…d.hu” using the waybackmachine.com service showed that the site was available for classified advertising, that is to say, for the services included in the list of goods covered by the trade mark, during the period in question, and that such use, which is widespread over a period of years because of the specific nature of the internet, goes beyond use for the mere purpose of maintaining rights. The redirection to another website is therefore admissible as an active activity, as trademark use conduct. It is part of the trademark proprietor’s commercial policy how it uses its trademark, its dominant element, and in doing so it may decide to use the domain identifying it under the trademark to make the content of another website, which also belongs to it, available, thereby providing users with more ways to access its own service. Thus, the use constituted genuine use of the mark subject to Article 18(4) of the Trademark Act.
This finding of the court is favourable to companies that have the right to use several domain names, each of which is registered separately, but for reasons of economy and reasonableness, a website with a different name from the domain name opened is opened from the domains with different names, as they do not lose the trademark protection due to lack of use. Thus, for example, if an undertaking offers advertising services on the website “aprohirdetes.hu”, but the same undertaking owns the domain “hirdetes.hu”, from which the website “aprohirdetes.hu” is loaded, the trademark protection for the domain name “hirdetes.hu” in relation to advertising services is not lost for lack of use.
c./ The relevant user of a sign from the point of view of trademark law is the person who provides a classified advertising service under the domain name in the course of trade, not the user of the domain name registered in the whois record.
In general, there is a distinction between the whois record user of a domain and the person who uses the same term as the domain in the course of trade. In this case, however, the two persons were different, but both had the same name, being a father and son, and the defendant tried to plead a false claim.
The court held that, for the purposes of determining whether a trade mark has been infringed, it is irrelevant who is the owner of the domain name, i.e. the user registered in the whois record, but the question is who is actually engaged in an economic activity, who publishes content on the website opened under the domain, because users can link the information published and the service provided to him, and through this he is identified by the domain name and the website accessible underneath it.
2. The issue of use as a trade name for domain and website:
The precedent-setting judgment of the Curia Pfv.20700/2018/10, which was issued in a case of trademark infringement, dealt with the issue of use as a trade name in relation to a domain and a website.
In this case, the plaintiff operated an online classified ad service for used cars with a word sign that appeared both in the domain name and in the name of the website accessible under the domain name. The plaintiff also protected the sign for its service in a figurative and word mark in respect of Class 35, which provided protection in the field of advertising services. The dispute arose because the defendant had also launched an online car advertising service under a domain name and website name identical to the sign protected by the plaintiff’s trademarks, but with the addition of the word ‘for sale’. This use by the defendant was found by the courts of first and second instance, as well as by the Curia, to be in breach of Article 12(3)(c) of the Trademark Act.
Given that the sign used by the plaintiff provided information on the service of trading in second-hand cars, the use of which cannot be prohibited, the defendant claimed damages under Articles 15(1)(b) of the Trademark Act in relation to the use of the sign. Under that provision, the proprietor of a trademark may not, in the course of trade, prohibit another person from using, in accordance with honest practices in business, an indication concerning the kind, quality, quantity, intended purpose, value, geographical origin, time of production or of rendering of the service, or other characteristic of the goods or service.
In connection to the interpretation of Article 15(1)(b) of the Trademark Act, the Curia concluded that if a sign constitutes goods or information about a service provided via an internet website, such use does not exceed the bounds of business propriety and therefore the defendant may include the plaintiff’s sign on its website.
However, with regard to the use of the plaintiff’s sign in the domain name, the Curia concluded that the use in the domain name is not intended to indicate the characteristic of the defendant’s services, but to distinguish the defendant from other service providers, to identify the defendant on the Internet, and as such constitutes a use of the name. In view of the above, the defendant cannot validly invoke the protection of the trademark in the context of the use of the domain name under Article 15(1)(b) of the Trademark Act.
The judgments of the courts of first and second instance found that the defendant had infringed the trademark by using the plaintiff’s sign as a trade name in the name of the domain it used and the website it operated under it in the course of providing and advertising its classified ad sales service. According to the Curia, the interpretation of ‘use as a trade name’ in the operative part of the final judgment could give rise to uncertainty in enforcement and the Curia therefore held only that the defendant infringed the plaintiff’s trade marks by using the plaintiff’s sign as a domain name.
According to the Curia, a textual sign, whether or not with or without accents, whether or not written separately or in a single line according to the rules of spelling, whether or not accompanied by a graphic or alone, constitutes a trade mark in respect of the services provided by an undertaking on its website for the publication of advertising information concerning the sale of motor vehicles and for the provision of services enabling the public to search for motor vehicles for sale, information about the service provided, and therefore the use of such a sign does not exceed the bounds of commercial decency and may therefore be freely used in the name of the website, but this does not apply to the domain name, which is a use of a name. In relation to this reasoning of the Curia, it is not entirely clear why the use of a sign on the internet only constitutes a use of a name if it is used as a domain name, since in internet commerce it is not only the domain name that distinguishes a business from its competitors, but typically the name used in the domain name or its dominant element appears as the name of the website accessible under the domain in the form of a logo, thus serving as a brand of the website, otherwise consumers would have difficulty in identifying the website that opens under the domain. The defendant has displayed on its website the word designation of the infringer with the addition of a stylised image of a car, which in my view constitutes a trademark in relation to the website. On this basis, the defendant has used the plaintiff’s word sign displayed on the website as a trademark to identify the services available on the website and this calls into question the Curia’s view that this use constitutes information about the service.
It is also not entirely clear from the reasoning of the Curia why the trade name may cause uncertainty in enforcement. The trade name is part of the Hungarian legal system, since Article 8 of Decree-Law No. 18 of 1978, which promulgated the Paris Union Convention (hereinafter: PUC), states that “a trade name shall be protected in each country of the Union, without any obligation to apply for registration or to register, whether or not it is part of a trademark or a design.” In the light of Article 8 of the PUC, it would have been appropriate for the Curia to define the concept of trade name in its judgment, rather than to have stated that this concept raises questions of interpretation in the implementation. Such a definition by the Curia would have been necessary also because the reference to the trade name had already appeared in several previous judgments (FÍT 8.Pkf.25.737/2010/5.; LB Pfv.IV.21.311/1994; BH 1994/21; BDT2008/1740; FT 1.Pk.22.915/2012/6). In addition, the legal literature has already dealt with this concept (See Dr. Görög Márta in A Védjegytörvény magyarázata, edited by Gábor Faludi and Péter Lukácsi, HVG ORAC, 2014; 580-592), where an attempt has already been made to define the trade name on the basis of previous court decisions. If it is clear what use can be considered a trade name, then in my view the reference to use as a trade name should not cause uncertainty in enforcement.
Despite the fact that the reasoning of the Curia may be disputed, in practice it may not cause problems for e-commerce trademark owners to take action against infringers, as the use of an underlying domain is essential for the operation of websites, so if the court finds that the domain is being used in an infringing way, the infringer is obliged to stop the unlawful use of the domain, which will lead to the termination of the service provided under the domain.
3. Application of the rules of acquiescence in a trademark infringement case involving domain names:
In its precedent-setting decision No.Pfv.21575/2018/8, the Curia made the following statement of principle in a trademark infringement case related to the use of domain names. “Article 17(1) of the Trademark Act imposes a time limit on the action of the proprietor of an earlier trademark who asserts a claim for infringement. By virtue of the referring provision in Articles 17(5) and 5(2)(a) of the Trademark Act, the infringement action is not subject to the assessment of whether the application for registration or the application for a declaration of invalidity of a trade mark is in accordance with the provisions of the Trademark Act. In the application of Article 5(2)(a) as a sui generis rule, it is sufficient to establish that the defendant could successfully rely on its own earlier use of the sign prior to the priority of the mark, and only that the proprietor of the earlier right has a realistic possibility of bringing an action.“
In order to understand and interpret the content of the above statement of principle, it is useful to briefly review the dispute giving rise to the action. Both parties used the same word mark to register their domain names, but with different extensions. Both parties used the domain names to provide an online service for used cars. The plaintiff had been providing an online car advertising service under the domain registered by the defendant since August 2001 and the defendant since October 2001. The parties initially cooperated with each other, but in 2004 and 2005 the plaintiff registered its domain name as a figurative and word mark in Class 35, which protected the plaintiff, inter alia, in respect of online advertising services. In 2017, the plaintiff brought an action against the defendant for trademark infringement.
In opposition to the action, the defendant invoked Article 17 of the Trademark Act providing the rules of acquiescence. According to Article 17(1) of the Trademark Act, where the proprietor of a trademark has acquiesced in the use of a later trademark in the country without interruption for five years, even though he was aware of such use, he may no longer oppose the use of that later trademark in the country, nor may he invoke his earlier trademark to have the later trade mark cancelled. According to Article 17(5) of the Trademark Act, the provisions of paragraphs (1) to (4) shall apply mutatis mutandis to the earlier trademark with a reputation, to the trademark which has become well known in the country and to the earlier rights referred to in Article 5(1) and (2)(a). The provisions of Article 5(2)(a) of the Trademark Act shall constitute grounds for refusal or invalidity of registration in respect of a sign previously used by another person where the use of the sign without the consent of the prior user would be contrary to law.
In the grounds of its decision, the Curia referred to the decision of the Supreme Court of Justice No. Pfv.IV.21.187/2011/4, published under No. BH2012.67. According to the referred decision, subject to the provision of the Article 17(5) of the Trademark Act, it is not a matter for the court to determine whether, in the application of Article 5(2)(a) as a sui generis rule, the defendant could successfully rely on its own prior use which precedes the priority.
In the case at hand, it was necessary to assess whether, by virtue of the referential rule in Article 17(5) of the Trademark Act the defendant had legal grounds to refer to Article 17(1) of the Trademark Act, which precluded the trademark proprietor from asserting a claim. In that connection, the Curia made the following findings:
- It is clear from the facts of the case that the defendant has been using the plaintiff’s mark since before the priority date of the marks at issue, by registering the domain name and providing advertising services with the mark. Consequently, the defendant’s opposing sign is a sign used earlier than the date of priority of the marks in the position ‘later mark’, subject to Articles 17(1) and (5) of the Trademark Act.
- Curia could not accept the view that the defendant had not used the sign in its own right because the plaintiff had consented to that use ‘by inducement’. Consent to the use of a trademark, i.e. authorisation to use a trade mark within the meaning of the Trademark Act (Article 23 of the Trademark Act), must be an express statement of contractual intent. There is no evidence in the case that the plaintiff expressly stated that it consented to the defendant’s use of its trademarks by using its own trademarks or that it authorised the use of its trademarks.
- On the basis of the facts of the case, the Court of First Instance concluded that the defendant could not validly claim that its own rights as a competitor or the interests of consumers had been infringed and therefore subject to Articles 5(2)(a) of the Trademark Act, the defendant could not have brought an effective action against the registration of the plaintiff’s trademarks or for their cancellation. This would in fact have the effect that the plaintiff could effectively assert infringement of its trademarks in an infringement action based on the earlier use of its trademarks prior to the priority date. However, according to the Curia, a claim of infringement cannot be based on the use of an unregistered sign prior to the date of priority of the trademark.
- In an action for infringement, the trademark proprietor may assert a claim on the basis of its protected trademark. Article 5(2)(a) of the Trademark Act provides for the possibility for the proprietor of the earlier right to oppose the trademark applied for or the protected trademark in the application for registration or cancellation proceedings. It follows from the foregoing that the “proper application” of the Article 17(1) of the Trademark Act. as defined in Article 17(5) of the Trademark Act also means, that in the case of an earlier right within the meaning of Article 5(2)(a), it is sufficient only to establish the real possibility of action on the part of the proprietor of the earlier right, but the establishment of the possible outcome of that action is beyond the scope of the action for infringement. For the purposes of applying Article 17(1) and (5) of the Trademark Act, the infringement action relevant in trademark application or invalidity proceedings does not need to be subject to the procedure.
- The provisions of Article17(1) of the Trademark Act imposes a time limit on the proprietor of an earlier trademark who asserts a claim for infringement of a trademark.
In the above judgment, the Curia confirmed of the previous case law on the right holder’s right to object to the use of trademarks for commercial purposes. The result for providers of e-commerce services is that they should exercise caution when registering a domain name when starting a business and should take steps to register the domain name they wish to use as a trademark as soon as possible and take legal action against competitors for possible trademark infringement as soon as possible.
 BH2005/145; EBH2009/1962; FÍT 8.Pf.20.966/2009/4; FÍT 8.Pf.20.758/2008; FÍT 8.Pf.20.237/2009/6.