In view of recent developments of EU case law and doctrine, it seems increasingly important that registered trade marks fulfil their economic function of maintaining a market share for the goods covered through use on products actually sold on the market – otherwise they be vulnerable. The below case provides an example of this requirement.
In the 1970s and 80s Budapest’s streets were dominated by the sight of IKARUS buses of the 200 series. Public transportation in rural areas of Hungary was also unimaginable without these products of Hungarian industry. It is mainly through this series that the IKARUS brand achieved world-wide reputation even beyond the Council for Mutual Economic Assistance, the economic block comprising socialist countries. There has been no other bus model that ever sold in a larger number on the worldwide market. László Finta, the recently deceased designer of the series, is himself a true representative of the peculiar times he worked in: He obtained a teaching position at the renowned Budapest University of Technology and Economics without having a university degree himself, his university application being refused based on his bourgeois family background.
Although its past glory has since faded, the IKARUS brand has been making headlines across the Hungarian media once again in the past few months. This time, however, the news were not about business successes but a legal dispute: The current owner of the IKARUS trade mark, Műszertechnika Holding Zrt., initiated an infringement lawsuit against another legal entity called IKARUS Egyedi Kft.
Both companies are legal successors of the once state-owned IKARUS company, which was privatised in the early 1990s and then sold to Irisbus, a bus manufacturing joint venture of Iveco and Renault. In 2006, after Irisbus shut down most of the Hungarian business, the mass production branch was purchased back by Műszertechnika Holding, a company owned by Gábor Széles, Ikarus' one-time chairman and one of the wealthiest Hungarian industry magnates. The customized production branch, which had been demerged into a separate entity called IKARUS Egyedi Kft., however, was not part of this deal and was later acquired by a different group of investors.
In the current lawsuit, Műszertechnika Holding Zrt. claims that the use of the IKARUS trade mark by IKARUS Egyedi Kft. – even if only in its company name – is no longer lawful. The company's right to use the IKARUS trade mark in its name was allegedly limited to a 10-year period in connection with the Irisbus-Műszertechnika deal in 2006. At the same time, IKARUS Egyedi Kft. allegedly undertook not to market any buses under the IKARUS trade mark, an obligation which it seems to have complied with ever since.
Absent the contractual obligation, IKARUS Egyedi Kft. may have been entitled to continue having the word IKARUS in its name pursuant to the “own name defence” of Hungarian trade mark law, which still requires only that the use be in accordance with honest business practices. Due to the contractual limitation, however, IKARUS Egyedi Kft. apparently needed another defence in the lawsuit – which it found in the absence of genuine use.
IKARUS Egyedi Kft. pleaded that, in the past 5 years, the IKARUS trade mark has not been put to genuine use in Hungary in connection with the goods in respect of which it is registered. Accordingly, IKARUS Egyedi Kft. initiated proceedings in front of the Hungarian Intellectual Property Office (HIPO) for revocation of the IKARUS trade mark due to non-use and the court suspended the infringement lawsuit pending the revocation proceedings. Somewhat astonishingly for those whom the IKARUS brand still brings back the world-scale exports of the 1970s and 1980s, the HIPO partially granted the revocation request and in large part revoked the IKARUS trade mark.
The background of the decision is that the list of products covered by the IKARUS trade mark is very short: it almost exclusively comprises buses and trolleybuses. The original company, however, ceased to manufacture buses on a large scale a couple of years after it was sold to Irisbus. Mr Széles' company bought back the mass production branch with the purpose of saving this time-honoured Hungarian industry from ruin and made several attempts at securing orders and finding strategic partners to revive large-scale manufacturing. Despite repeated news stories from the past decade reporting that IKARUS would soon resume operations, however, Mr Széles has so far failed to achieve any major success.
IKARUS Egyedi Kft. claimed that, for all the media fanfare of the previous years, Műszertechnika Holding has not actually produced or marketed a single bus under the IKARUS brand in the past five years. The partial revocation of the trade mark by HIPO implies that they may be right. If no actual sale of an IKARUS branded bus occurred for five years, the maintenance of an IKARUS webpage showing, among others, models available for possible production, may be regarded as precisely the kind of "token use" serving “solely to preserve the rights conferred by the registration” which, according to the case law of the Court of Justice of the European Union, cannot be considered genuine use.
HIPO's decision implies that Mr Széles' decade-long efforts did not yield enough practical results even to maintain the IKARUS trade mark. It is no wonder that Műszertechnika Holding Zrt. appealed it. If upheld, however, the decision would put a sad end to the story of a once glorious Hungarian brand.
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