The Right of Prior User and Local Reach

9. 6. 2017

It often happens that business undertakings use marks for their goods that are not formally registered at the Industrial Property Office. Possible reasons for this include an effort to save money on registration fees, administration costs or the cost of legal services, even though the sums involved are not significant.

Although such marks are not registered, they still enjoy a certain level of legal protection. The holder, therefore, can, for example, protect himself from competitors trying to use the mark in question for their own products and “free-ride” on its good repute.

A problem arises when another person decides to register the same or a similar mark as a trade mark. In order to resolve the conflict to arise in such case, the issue of the local reach of the unregistered mark is decisive. A mark has “local reach only” when it is used for products and services that only have a negligible share of the relevant market segment (the term market relates to the Czech Republic as a whole).

The holder of a mark which has “local reach only” only has the right to continue using its mark to the same extent. The owner of the new trade mark must tolerate this, but its trade mark “takes precedence” on the remainder of the market.  Therefore, for example, the owner of a small-town restaurant need not change its name if a major fast-food chain decides to register a similar name.

On the contrary, if an unregistered mark has a more prominent position on the market, its holder earns another right – it may actually prohibit another person from registering a similar or identical trade mark.  

The rights enjoyed by the holder of a mark with local reach only were unclear among experts for some considerable time – the view often prevailed that an unregistered mark must have reach which is at least broader than local; otherwise its owner has no defence against the new owner of the trade mark. In a recent decision (23 Cdo 3782/2015), however, the Supreme Court adopted the clear view that if an unregistered mark has broader reach, its holder retains at least the right to demand that the owner of the new trade mark tolerate its use.

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