The Commercial Code & Trademarks Act
In this article we delve into Maltese Commercial Law; specifically, we examine registered trademarks. How do we maintain fair competition in Malta? Furthermore, what are the safeguards against dishonest practices? We look closely at the Maltese Commercial Code and Article 32, as well as the Trademarks Act and instances in Maltese case law that take on divergent views on trademarks and what constitutes market competition in Malta.
Maltese law aims to deter from unfair competition by granting legal protection to well-known marks who have prior use and registered trademarks. The law of unfair competition within Maltese commercial law determines the limits on competition between traders; it is concerned with acts overseeing whether a trader through dishonest practices takes an unfair advantage over another. Act XXX (1927) enacted sections 32-37 of the Commercial Code, which specifically targets unfair competition with provisions containing an exhaustive list of acts of unfair competition.
Article 32 specifically mentions “obtaining clients from competitors by using confusingly similar names or marks” as a specific act of unfair competition. Prior to the enactment of provisions 32-37 however, the notion of prior use was already present in Maltese law. This notion confers the right of use of a name, a mark, or a device to the person who first made use of it. Hence “prior in tempore, potior in jure” as the law grants them exclusive use, and the ability to exclude others from using, the name/mark/device in question, even if it is yet to be registered trademark.
This is specifically evidenced by landmark judgements, such as Somerville vs Schembri (1887) in Maltese Case Law. In this case, the Civil Code’s provisions were applied as civil law, and were considered as a source of commercial law. Despite Maltese law lacking legislation surrounding registered trademarks, the general principles of commercial law were followed. Consequently, the Court came to the conclusion that as soon as a trademark has been introduced to a market, it becomes the exclusive property of that firm, thus employing the principle of prior use.
The House of Lords on appeal in fact held that:
“As soon therefore as a trademark has been so employed in the market […] it becomes to that extent the exclusive property of the firm and no one else has a right to copy it or to appropriate any part of it. If by such appropriation, unwary purchasers may be induced to believe that they are getting goods which were made by the firm to whom the trademark belongs”.
Furthermore, Article 32 of the Commercial Code states that:
“Traders shall not make use of any name, mark or distinctive device capable of creating confusion with any other name, mark or distinctive device lawfully used by others, even though such other name, mark or distinctive device be not registered in terms of the Trademarks Act, nor may they make use of any firm name or fictitious name capable of misleading others as to the real importance of the firm.”
The law itself shows us the interplay between the notion of prior use and registered trademarks. For a name/mark/distinctive device to be protected by law, it must first be “lawfully used by others”. If such is the case, then they do not need to be trademarked to benefit from this protection.
Registration does not create a new right of property, but rather further protects it. Therefore, registration gives the person who has a registered mark a prima facie proof of use. Hence, a registered trademarks enjoys protection both under Article 32 of the Commercial Code and the Trademarks Act. Furthermore, a mark that may not be registrable in terms of the Trademarks Act, may still be entitled to protection in terms of Section 32.
In Mamo nomine vs Kontrollur tal-Propjeta’ Industrijali, the Court of Appeal ruled that the principles underpinning trademark registration were different from those which applied to Article 32 actions. The case involved a Maltese trader who registered a name which was already being used by an Italian company, and the subsequent cancellation of such a trademark. The court held that registration of trademarks should not be reduced to a race in which the first person to register acquired the rights in the trademark, thus prioritising the Italian company’s prior use of such name.
Article 32 contemplates a name or mark which has a reputation in Malta using the phrase “well-known”, but a situation arises when a trader owning a well-known mark has no place of business in Malta and does not trade in Malta. There are two different schools of thought on this matter: the
A chronological study of case law shows that Courts have upheld either approach at different times.
Maltese Case Law
French company ‘Club Mediterranea’ (plaintiff) was well-known across Europe in the tourism industry, but had no place of business within, and did not trade in, Malta. The defendant operated a Maltese company in the same industry, with a very similar name to the plaintiff’s. The defence sustained that the plaintiff did not carry out business, nor competed commercially in Malta; and thus Article 32 should not be applicable. However, both the Commercial Court and the Court of Appeal held in favour of the plaintiff. The court held that the name of the plaintiff company had an international reputation, and their trademark was given importance despite their absence from Maltese jurisdiction. Furthermore, since both plaintiff and defence companies were both in the tourism business, they were both competing in the same international market, according to the judgement.
‘The Body Shop International P.L.C.’ (plaintiff) filed an action against the defendant who owned a shop in Valletta named ‘The Body Shop’. The plaintiff company was established prior to the defendant’s but did not operate in Malta; however, both sold the same types of products, arguably causing confusion with customers when the plaintiff company eventually opened in Malta. The court found the defendant to have knowingly made use of the plaintiff’s name to usurp customers and create confusion; thereby prohibiting them from further using such name. It held that the name ‘The Body Shop’ was well known internationally, including in Malta, thus the defendant’s actions were in breach of Article 32. Crucially, this ruling gave importance to the international branch despite its lack of presence in Malta at the time.
Maltese Case Law
‘McDonald’s’ (plaintiff) did not operate in Malta at the time, whilst the defendant was using the plaintiff company’s name and the exact logo in their business in Malta. The Commercial Court ruled that the defendant’s actions amounted to the use of a firm name, capable of misleading others, thus in breach of the second limb of Section 32. While the soft-line approach was taken initially, the Court of Appeal reversed the decision, ruling that competition means that the commercial activities are taking place within the same sphere of space and time.
In a second case instituted by the same plaintiff, the defendant was operating a snack bar and using the term ‘Big Mac’ – a name trademarked by the plaintiff. However, the hard-line approach was once again taken; upholding the fact that since the plaintiff company was not conducting business in Malta then it could never enter into the merit of competition, let alone into whether the competition was unfair.
The Commercial Code and the Trademarks Act underpin a set of rules. However, is any brand protected from being copied? Well, the courts have stood behind either a soft-line approach or a hard-line approach. Legally, one cannot know in advance on how the courts will decide, but by using references to previous court rulings and with corporate and commercial expertise, a good team of lawyers can guide your entity in the right direction. It truly takes more than the knowledge of the law to make a case. Need some legal advice for your brand? Get a free consultation today: infomalta@kyprianou.com
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The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact infomalta@kyprianou.com or telephone +356 2016 1010.