Cancellation of a trademark registration due to loss of distinctive power

Published byMarcela Escobar

One of the requirements that any sign must comply to be registered as trademark is to be distinctive. Distinctiveness is the capability of a trademark to identify products and/or services in the market, differentiating them from those of the competitors.

For that reason, signs lacking distinctiveness, including those which are generic, descriptive or usual, will not be able to comply with the trademark function neither will they be able to obtain registration, as stipulated in Article 135 of Decision 486, which establishes the lack of distinctiveness as a specific cause of irregistrability (paragraph b).

Notwithstanding the abovementioned, it can happen that a sign which has been initially non-distinctive acquires later distinctiveness due to its continuous use in the market as a sign identifying a certain business origin.  Signs which acquire distinctiveness due to their use, also called acquired or supervened distinctiveness, or in English “secondary meaning”, can be granted registration as established in the last paragraph of Article 135 of Decision 486. Examples of trademarks with acquired distinctiveness are the following: (i) FESTIVAL DE LIMA. ENCUENTRO LATINOAMERICANO DE CINE; (ii) CAMARA DE COMERCIO – LIMA; and (iii) CAMARA DE COMERCIO PERUANO AMERICANA PERUVIAN AMERICAN CHAMBER OF COMMERCE.

The same way that a sign can acquire distinctiveness due to its constant use as identifier of a business origin, the reverse event can also happen, that is, that an originally distinctive trademark loses said distinctiveness through the years. This phenomenon, known as vulgarization, leads to the loss of the trademark’s distinctive power, originated by the use of said sign as a reference to the product itself. The trademark loses its initial meaning as identifier of a business origin, thus becoming perceived in the market as the designation or name of the products or services that it initially distinguished.

A clear example of this phenomenon is trademark TOMATODO. Although at present most people perceive said denomination as the name of a product (type of portable bottle for carrying liquids), the fact is that TOMATODO was a registered trademark until some years ago.

Trademark TOMATODO was registered since 2001 in favor of SMP Distribuciones S.A.C., with Certificate No. 72013, to distinguish “containers for liquids in any material” in class 21 of the International Classification. Nevertheless, in 2014 Cencosud Retail Perú S.A. requested the cancellation of the registration of said trademark under the protection of Article 169 of Decision 486.

Said rule expressly establishes the following:

“Article 169 - Where the owner of the trademark has caused or allowed that trademark to become a common or generic sign to identify or denote one or several or the goods or services for which it was registered, the competent national office shall order, ex officio or at the request of a party, the cancellation of the trademark or the limitation of its scope. 

A trademark shall be considered to have become a common or generic sign if, in commercial circles and for the public, it has lost its distinctive character as an indication of the corporate source of the product or service to which it is applied. In order for this to occur, the following elements shall exist in relation to the trademark: 

a) the need of competitors, given the absence of any other appropriate name or sign for designating or identifying in their trade the good or service in question, to use the sign to carry out their business activities;

b) widespread use of the trademark by the general public and among commercial circles as the common or generic indication of the good or service in question; and

c) ignorance or limited knowledge by the public that the trademark denotes a specific corporate origin.” 

Article 169 of Decision 486 establishes the possibility of cancelling, whether ex-officio or by request of the interested party, the registration of a trademark when it has lost distinctiveness. 

The loss of distinctive power of the trademark can be caused by the owner itself (for example, if the owner uses or promotes the use of its trademark as synonym of the name of the product) or can be due to the owner’s inaction (for example, if the owner does not take action against the improper use of its trademark by third parties, originating in the long run that it becomes a usual or generic sign). 

Nevertheless, it is worth mentioning that it is not sufficient that a trademark loses its distinctive power to be cancelled, but it is required the concurrence of the suppositions established in the aforementioned rule, that is:

1. That there does not exist other adequate name or sign to designate the product or service and, therefore, the competitors are in the need of using the trademarks for developing their activities;

2. That the public and the commercial media use the trademark as the common or generic name of the product or service; and,

3. That the public is unaware or has low knowledge of the trademark as identifier of a certain business origin.

In the case of the aforementioned trademark TOMATODO, the Intellectual Property Specialized Court established, in the non-use cancellation action brought by Cencosud Retail Perú S.A., that “although the Real Academia Española Dictionary does not include the denomination “tomatodo” as such, from all the evidence provided both by the plaintiff and by the defendant, it is noticed that said term is commonly used in the national market to identify the products bearing the trademark subject matter of cancellation, that is, liquid containers made of any material; being verified that said denomination is of necessary use on the part of competitors to refer to the products they offer or promote in their premises, which are accompanied in most cases by several trademarks that provide information of their corporate origin; not having been verified any sector (consumers and/or competitors) that, on the contrary, identifies the denomination “tomatodo” as the trademark of a product of certain corporate origin, but rather as the product itself”. (Resolution No. 402-2016/TPI-INDECOPI of February 11, 2016, issued in connection with File No. 576119-2014).

In that sense, the cancellation action was declared grounded and the registration of trademark TOMATODO was canceled. 

It is worth mentioning that the concept of cancellation due to loss of distinctiveness is not a concept much used in our country. Based on information provided by INDECOPI, we have that in the last five years, in the first instance, only one cancellation action of this type has been decided, namely, the action prosecuted under File No. 766142-2018.

In said case file, the Commission of Distinctive Signs declared grounded the cancellation action filed by the Superintendency of the Stock Market (SMV) against the registration of service mark FIBRA in the name of Empresas Reunidas de Capital de Eccequiel Rey de Castro e Hijos S.A.C. – ERCAPITAL, which distinguished financial services in class 36 of the International Classification.

The Commission expressly established that “it is concluded from the evidence included in the case file that the mark FIBRA has been effectively used in the Peruvian market by several agents such as in the case of Administradora PRIMER S.A., a company engaged in the field of real estate, having the support of BBVA Continental as structurer, as well as by specialized entities involved in the capital market sector such as the Stock Exchange of Lima (BVL) and Governmental entities such as the Ministry of Economy and Finance (MEF), to distinguish a type of financial service, namely, “Fideicomiso de Titulización para Inversión en Renta de Bienes Raíces - FIBRA”; so it results to be a denomination known by financial and/or stock market agents to designate “the service identified by the mark at issue. In that sense, the loss of distinctive capability of service mark FIBRA has been demonstrated in our country”. (Resolution No. 2539-2019/CSD-INDECOPI of June 4, 2019, issued in connection with File No. 766142-2019). 

Although the owner of the referred service mark filed an appeal against said decision, the appeal was declared groundless by the Division Specialized in Intellectual Property of the INDECOPI Court, by means of Resolution No. 0189-2020/TPI-INDECOPI of February 3, 2020. In this resolution, the Court established that the use of denomination FIBRA in several legal provisions and advertising, as identifier of a type of trust, supports the loss of distinctiveness of the service mark, as concluded in the first instance.

Now then, there are certain actions that the owner of a trademark may adopt to prevent the loss of distinctive power of its trademark. For example:

1. To use the trademark together with ® or the phase “Registered Trademark” or similar indications, although the use thereof is not compulsory in our country.

2. To use the trademark together with the description of the product or service it identifies (for example, “diapers PAMPERS ®”).

3. To send notarial letters to those persons using the trademark without the owner’s consent requesting that they stop using it.

4. To use the trademark with the first letter in uppercase letter, as a proper noun and not as the name of a product or service (for example, “wax crayon Crayola”).

5. Not to use the trademark as a verb (for example, do not use “to Google”)

It is advisable that the owner adopts said actions to prevent its trademark from losing distinctive power in the market, namely in the case of trademarks identifying products which are new for consumers, such as the case of the tablet IPAD ® (the name of the product is “tablet”, whereas IPAD ® is the trademark identifying it).