Case number: C04436111 (PAC-0822/2013)
Court: The Chamber of Civil Cases of the Supreme Court of the Republic of Latvia
Parties: AS „Latvijas balzams” v. SIA „Mājas alus”
Date: 2 April 2013
IP RIGHT(S) Trade marks
Arts. 3, 4(1), 4(6), 4(7), 4(8), 8(3), 24(3), 27(1), 28(1), 28(4), 281 Latvian Law on Trade Marks and Indications of Geographical Origin (1999), Arts. 1635(2), 1771, 1772 Latvian Civil Law, Arts. 18, 21 Latvian Competition Law, Arts. 44(2), 44(3), 93(1), 110, 25017 Latvian Civil Procedure Law, Recital 26, Art. 13(1)(a) D 2004/48/EC.
The claimant owns many registered and well-known word, shape and combined trade marks with a word sign „BLACK BALSAM” in them for alcoholic and non-alcoholic beverages, confectioneries, restaurant, bar and coffee-house services, furniture and retail trade services. „RIGA BLACK BALSAM” is the most widely used and the most well-known registered trade mark. The word sign „BLACK BALSAM” was not registered separately at the time of the infringement, but it had become a well-known unregistered trade mark of the claimant.
The defendant offered for sale, sold and stored essence in 25 ml and 1000 ml bottles with a label similar to the claimant’s label where the word sign „BLACK BALSAM” was incorporated, in a shop in Riga and on the Internet. The essence was intended for making balsam by diluting the essence with water in a certain proportion and adding some sugar.
The claimant brought a claim to the court for termination of the infringement.
DAMAGES AWARDED 3600 LVL (5122,34 EUR)
The Court had to deal with many issues in this case, from which the most interesting were the following.
1.One of the issues concerned the similarity of goods. The defendant argued that the goods are not similar, because the claimant’s trade mark was registered for alcoholic beverages, but the defendants goods were not alcoholic beverages.
The Court found that the goods (an alcoholic balsam and an essence for making an alcoholic balsam) are similar. The defendant’s essence was intended for use by mixing it with alcohol, thus obtaining a product similar to the claimant’s goods. The relevant public is the same: people who consume alcoholic drinks. Therefore there is the likelihood of confusion on the part of the public and the likelihood of association with the claimant’s trade mark. Moreover, the well-known trade marks are entitled to a wider protection, and the use of them on other goods may also be prohibited.
2. The claimant requested a reasonable royalty as a method of calculation of the incurred real damages. The Court dismissed this claim, because the claimant had not reasoned and had not proved the grounds for application of this method. However, the Court explained the nature of the reasonable royalty method and the preconditions for its application.
The reasonable royalty is a method for compensation of the amount of royalties which would have been due if the infringer had requested authorisation to use the intellectual property right in question and had not infringed the trade mark proprietor’s rights. If a claimant has not lost anything, there is no real damage and he is not entitled to a compensation of damages. In order to apply this method and to assess the amount of damages as a reasonable royalty, the claimant has to show that the conditions, according to which the other licensees pay the claimed royalty, are identical or similar to the conditions, according to which the trade mark proprietor as a licensor and the infringer as a licensee would conclude the contract. If the conditions are not comparable or if the defendant would not have gained a license from the claimant, then it is necessary to establish a notional royalty what a willing licensee and a willing licensor would have agreed to, taking into account the actual conditions of the real parties and the actual market. Therefore the Court dismissed the claimant’s argument that he could ask for a reasonable royalty as big as he wants without a proper reasoning.
3. The most important issue of the case was whether a legal entity was entitled to a moral damages award. Article 281(1) of the Latvian Law on Trade Marks and Indications of Geographical Origin (in wording that was effective till 31 December 2015, at the time of the infringement and the litigation, respectively) provided for a trade mark proprietor’s rights to a compensation for a moral damage in the case of an infringement. However, Article 281(2) specified that the amount of a compensation for moral damage should be determined in accordance with the Civil Law, and Article 1635(2) defines moral damage as pain and suffering, but pain and suffering can be felt only by natural persons.
The Court held that Article 281(1) of the Latvian Law on Trade Marks and Indications of Geographical Origin, according to the objectives and the spirit of this law and the requirements of the Directive 2004/48/EC, should be interpreted in such way that a moral damage in this norm is a nonmaterial damage in a broader sense, also including damage to a reputation of a legal person. The abovementioned legal norms must not be interpreted so narrowly that they would deprive the biggest part of the trade mark proprietors – legal entities – of the right to this kind of compensation at all. The Court awarded the claimant damages at the amount of 3600 LVL.
The Court also stated the prerequisites for apportionment of moral damages – the duration of the infringement, the graveness of the infringement, the nature of the infringement, the consequences of the infringement and the level of the infringer’s guilt. The Court also took into considerationthe fact that the claimant had notified the defendant about the infringement, but the defendant had not stopped the infringing activities. Therefore the Court set a bigger sum for the period after the notification than for the period before the notification.
The Court in the judgment ordered the defendant to publish the judgement at his expense in the newspaper „Dienas Bizness” and on the internet portal www.delfi.lv in one month time starting from the date the judgment comes into force. After the judgment came into force, it became clear that the costs of the publication in the newspaper were so high that it hampered the enforcement of the judgement. Therefore the Chamber of Civil Cases of the Supreme Court of the Republic of Latvia on 10 September 2015 made a decision on modification of the procedure of the enforcement and ruled that the judgment had to be published in full on the internet portal, but in the newspaper – only the introductory part and the operative part of the judgement (the abbreviated judgement). The Courts, taking note of the principle of proportionality, usually order such procedure of publication.