What kind of infringement lies behind the purchase of a labelled car?

Authors: Inga Lukauskiene, Associated Partner, Attorney-at-Law, Patent Attorney, Court Mediator; Monika Alisauske, Lawyer

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Many of us have probably noticed or met eye-catching ‘decorated’ cars on the road. In a bid to become noticed, companies ‘decorate’ their cars with company names, slogans, trademarks (logos), or a combination of the three. Although such moving billboards have become quite a common sight on the road, few stop to think that mobile ads like those can become an instrument of infringement of the trademark owners’ rights: cars bearing well-known trademarks can create confusion.

Company cars being the object of transactions is nothing short of customary to business entities, especially when the cars in question are transferred/sold to another company. However, when the deal is made and the company car is handed over to the other party (company), it is not always that its former owner makes sure that their trademarks are removed from the vehicle conceded. Sometimes the new owner will not take care of removing the trademarks either and will continue to use it even though it still bears the markings (name, slogan, trademarks (logos) of the former owner.

Although we might say that previous owners of cars can enjoy a spot of ‘free advertising,’ we never stop to think that this kind of publicity can damage both the reputation of the company, and its income. This is particularly relevant when vehicles that advertise for a company’s business or products are bought by other companies engaged in an identical/comparable line of business, producing identical/comparable products, or offering identical/comparable services.

As a case in point, let’s consider UPS, the famous delivery company whose vehicles can be spotted quite often in Lithuania’s major cities. The company routinely replaces its fleet with new vehicles, selling the old ones. But can you say for sure that, once a vehicle is sold, your parcel is being delivered by this, or some other company in a comparable line of business? Or you may be outraged in traffic by someone driving a vehicle bearing the company’s logo while the car in question actually belongs to a different company. A situation like that could both mislead the public with regard to the relationship between the UPS delivery company and the company that bought the vehicle, and damage the reputation and good name of the owner of the trademark.

The Trademark Law of the Republic of Lithuania stipulates that the owner of a registered trademark has the exclusive right to ban other persons and entities from using in their commercial operations both the trademark owned by that owner, and any other label that is identical to the registered mark or resembles that trademark in a misleading way with identical or comparable goods/services, thus creating a possibility to mislead the public. Therefore, if we look at the above example, we can see clearly that the actions by the company that bought the vehicle would infringe the exclusive rights of the trademark owner anchored in the law.

We should also note that whether a car bearing the symbols of a company, such as the company name, slogan, trademarks (logos), is bought from a company doing business in Lithuania or another European Union Member State is completely irrelevant; what matters is whether the protection of the trademark is valid in Lithuania on the basis of a national or EU trademark registration. Therefore, even if you import a car from another Member State and use it with the trademarks of another company still on it, you will infringe the exclusive rights of the owners of the trademarks, who will then be entitled to ban the illegal usage of their trademarks and demand compensation of damages caused by this kind of illegal usage.

On the other hand, to avoid potential disputes over infringement of the trademark owner’s rights, before they sell their ‘decorated’ cars, companies can take a variety of preventative steps such as:

  • by entering into car sale–purchase agreements, companies should include clauses regarding the removal of the owner’s symbols (the company name, slogan, trademarks (logos) from the car in question, committing the seller or the buyer to remove the symbols within the timeframe stipulated in the agreement;
  • to protect its rights as the trademark owner, the company selling the car can remove the symbols (the company name, slogan, trademarks (logos) from the car before it enters into a car sale–purchase agreement;
  • a company that has purchased a car bearing the symbols of its previous owner, can also take preventative precautions and remove all corporate symbols of the former owner (its company name, slogan, trademarks (logos) from the vehicle before it is put to use.

To sum up, the fact that a company has purchased a car bearing the trademarks of its former owner does not mean that that latter company gave the new owner permission to use the trademarks on the vehicle so bought. Therefore, in concluding car sale–purchase agreements, companies should see not only that the agreement is properly honoured, but that the rights and duties that have indirect bearing on the agreement are enforced as well. Of course, trademark protection is the duty of the owner of the trademark first and foremost; it is therefore worth remembering that selling a car bearing your trademarks creates a risk that your rights as the owner of the trademarks will be infringed. Buy and sell responsibly!

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