Trademark Renewal and Sworn Declaration of Use: Bankruptcy Proceedings Are Not Force Majeure

In a recent decision which discussed the effects of bankruptcy proceedings in connection with the renewal of a trademark and the sworn declaration of use requested by Trademark Law 22,362, Division III of the Federal Court of Appeals on Civil and Commercial Matters ruled that the bankruptcy of the trademark owner is not considered force majeure as set forth in Section 26 of the Argentine Trademark Law (in re: Valydar S.R.L. v. Integración Hogar S.A. – Cancellation of trademark, Case No. 7288/03, and Integración Hogar S.A. v. Valydar S.R.L. –Cancellation of trademark based on non-use, Case No. 3.212/03).

The Argentine Trademark Law requires use of the mark in order to validly renew it, by means of a sworn declaration of use stating whether the trade mark has been used within the five years preceding each expiry date, or to maintain its validity (in the event the mark is challenged for non-use). As an exception, the trademark owner may allege force majeure to justify the lack of use.

For unknown reasons, two PANORAMIC trademarks co-existed in the Registry in class 9. On the one hand, on May 6, 2002, Valydar purchased the trademark PANORAMIC, Reg. No. 1.865.677, in class 9, from Mr. Julio Laurenzzo, who in turn had acquired it in a bankruptcy proceeding from its original owner, Newport S.A. On the other hand, Integración Hogar was the owner of the trademark PANORAMIC to cover all goods in class 9, and filed new trademark applications for PANORAMIC in classes 7, 8, 9, 11, 12 and 15. Said applications were opposed by Valydar on the basis of its PANORAMIC registration in class 9

Integración Hogar filed a lawsuit against Valydar seeking the cancellation of the PANORAMIC mark based on non-use and therefore seeking that  Valydar’s opposition be declared ill-founded, arguing that Valydar’s trademark had not been used by Valydar or by its prior owners –Laurenzzo and Newport S.A.– as required by Sections 5 and 26 of the Argentine Trademark Law.^[1]  Integración Hogar also questioned the renewal of the mark by Mr. Laurenzzo arguing that his sworn declaration of use did not meet the use requirements of Section 20 of the Argentine Trademark Law ^[2] as the PANORAMIC mark had not been in use.

In its reply to the Complaint, Valydar stated that Laurenzzo did not have to comply with the sworn declaration of use as he had acquired the trademark in Newport’s bankruptcy proceedings and, under such circumstances, Newport was impeded from using the mark as a consequence of its bankruptcy declaration. That is to say, Valydar argued that bankruptcy proceedings are tantamount to force majeure for the purposes of the Trademark Law.

The Federal Court of Appeals rejected Valydar’s arguments and considered that the bankruptcy of a company can not be compared to force majeure as force majeure is an unforeseeable and inevitable event, which is beyond the control of the debtor, whereas in this particular case the financial situation of Newport was by no means beyond its control. The Court ruled that the declaration of bankruptcy does not necessarily imply that the use of the trademarks is discontinued, as the assets of the company must be preserved, and the trademarks are part of the assets.

For all the above, the Court concluded that bankruptcy proceedings are not tantamount to force majeure for the purposes of the Trademark Law and it declared the cancellation due to non-use of the trademark “PANORAMIC”, Reg. No. 1.865.677, in class 9.

This decision is relevant since the Federal Court of Appeals sets the doctrine that the bankruptcy of the trademark owner is not a case of force majeure as set forth in Section 26 of the Argentine Trademark Law. However, prior decisions of Division B of the Commercial Court of Appeals, who hears bankruptcy cases, had ruled the opposite (i.e. that the bankruptcy of the trademark owner is a case of force majeure to avoid the cancellation of a trademark based on non-use) in two decisions of 1999 and 2007^[3].