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The Barcelona Provincial Court of Appeals has given a further twist to the lawsuit that has been ongoing for several years between the proprietors of the Schweppes brand in Spain and the distributors Red Paralela, SL, and Red Paralela BCN, S.L., (jointly, “Red Paralela”), regarding the importation of the well-known brand of tonic water from the United Kingdom, whose rights are held by Coca-Cola/Atlantic Industries (“Coca-Cola”).

The basis of the conflict revolves around assessing whether, despite using one same brand, the fact that the imported beverages are manufactured and marketed by Coca-Cola was sufficient to uphold that, in the eyes of the consumer, that different commercial origin prevented trademark right exhaustion and, ultimately, infringement of the trademark rights of Schweppes in Spain.

As we mentioned in this blog, the ECJ was requested in its day to provide a preliminary ruling on this matter, and it determined the existence of exhaustion of rights when the proprietor of the trademark, after assigning its rights in part of the EU territory, continued to “actively and deliberately promoting the appearance or the image of a single global trademark,” creating or exacerbating public confusion about the commercial origin of the products associated to the trademark, or when “there are economic links between the proprietor and that third party.”

On the basis of these premises of the ECJ, and in light of the evidence examined during the proceedings, the Barcelona Commercial Court no. 8 handed down a ruling on April 9, 2018 denying the existence of an infraction by considering that the proprietors of the trademark had created and promoted “an image of a single global trademark that generates consumer confusion about the commercial origin of the product […] whereby in these cases it may not argue the need to protect that function i to oppose the importation of identical products to which the same trademark is affixed from another Member State.”

In a strictly factual review of the ruling of the court of first instance, on July 22, 2019, Section 15 of the Barcelona Provincial Court of Appeals reversed the prior ruling to uphold the existence of infraction and ordered Red Paralela to pay the corresponding damages.

The appeal ruling  reviews the elements the judge considered  a quo to deny the infraction, (e.g., access to the advertising of British Schweppes products via the website of the proprietor of the Spanish brand;  minor differences in the appearance of the products; the preservation of references to its British origin and links to the United Kingdom and simultaneous brand action) and considers that there are insufficient elements to uphold the existence of a joint trademark that generates consumer confusion in terms of the commercial origin of the products.

This is undoubtedly a resolution with major ramifications for the distributors of Red Paralela for which, in keeping with the strictly factual underlying nature of the verdict, it will be difficult to reverse the situation by means of what is always a complicated appeal before the Spanish Supreme Court.

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Blog de Cuatrecasas, uno de los referentes en la abogacía de negocios en España y Portugal. Representamos a algunas de las principales empresas cotizadas de ambos países y asesoramos a nuestros clientes en operaciones estratégicas, así como a inversores extranjeros interesados en el mercado ibérico

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jean-yves.teindas@cuatrecasas.com

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