PROTECTING TRADEMARKS IN THE BALTICS

By Daniel Q. Greif
Trademark Counsel
The Coca-Cola Company
October 26, 2000

Introduction

It will be hardly earth-shattering to you, but The Coca-Cola Company spends a lot of time and money every year making sure its trademarks retain their prestige and continue to grow in value. Recently, the trademark "COCA-COLA" was estimated to have a value in excess of seventy billion dollars. Yes, that is seventy billion with a "B." It has been said that, if tomorrow, all of the physical assets burned to the ground - the buildings, the trucks, the bottling companies, everything - the trademark "COCA-COLA" would comprise all of the collateral necessary to allow our Company to borrow the money needed to start up again immediately.

Considering the value of The Coca-Cola Company’s trademarks, we take very seriously infringements of "COCA-COLA," as well as infringements of our other primary trademarks such as "COKE," "FANTA," and "SPRITE." We take great efforts to keep others from using imitations of those products to cheapen our trademarks and harm the value of our Company. That Herculean effort, I assure you, is a trademark attorney’s dream come true and his worst nightmare, all wrapped up in one. Owning such well-known trademarks makes us a perfect target for anyone who seeks to capitalize on the bigness and reputation of The Coca-Cola Company. In the Baltics, as well as in other newly emerging markets, we have faced many trademark infringements, presenting us with many new and unique challenges.

New Trademark Challenges in Estonia, Latvia, and Lithuania

Immediately after Estonia, Latvia, and Lithuania became independent, the very notion of trademark litigation between private parties - before an Estonian, Latvian, or Lithuanian Court - was utterly novel. The mentality - a hallmark of theSoviet days - was to have recourse to the State (excluding the judiciary). During Soviet times, no sense of private enterprise existed so all factories were owned by the State and trademarks were only being used by State enterprises. Also, all enterprises being State - owned, local infringers were also State enterprises. The remedy, therefore, was to complain to the Ministry to which the infringing enterprise was responsible. Furthermore, because during the Soviet days all Ministries were located in Moscow, local authorities did not have an opportunity to consider trademark issues.

After Estonia, Latvia, and Lithuania became independent, private companies and individuals found themselves - for the first time - in a position to own companies and keep third parties from using their trademarks in the Baltics. Of course, this dramatic change in the concept of corporate ownership and trademark law presented unfamiliar and unique challenges for the new Baltic legal systems. At that time, the Estonian, Latvian, and Lithuanian Governments set out to design legal systems that would effectively protect the legitimate rights of trademark owners. This process began by creating written trademark laws that could be effectively implemented. Upon completion, those laws - on their face - largely met the needs of corporations and individuals to effectively protect their trademark rights. However, the greatest challenge for trademark owners to protect their trademarks in the Baltics was the necessity to identify effective means of implementing the written laws.

At first, these challenges were extreme, with the courts andother authorities being unfamiliar with concepts of private property and how to implement laws related to the protection of trademarks. Quickly though, the courts and authorities in the Baltics made great strides in consistently and effectively implementing laws to protect trademark owners. Challenges remain, but the great strides made in the Baltics in creating and implementing legal systems that effectively and consistently implement trademark laws bode well for continued progress and positive development of those legal systems.

Consistent with The Coca-Cola Company’s experiences in other emerging markets, protecting our trademarks presented significant challenges. The following case studies, which were among The Coca-Cola Company’s first trademark infringement matters in the Baltics, illustrate the types of infringements The Coca-Cola Company has confronted and the legal avenues we have used to meet those challenges.

Case Studies

The "Fana" label presented what, in the opinion of The Coca-Cola Company, created a clear infringement of the "FANTA" trademark. First, the word trademark "FANA" was likely to create consumer confusion with our word trademark "FANTA." Second, the trade dress of the "FANA" label borrowed various elements from the "FANTA" trade dress in use at the time of the infringements. Among the "borrowed" trade dress elements were (1) the three balls and leaf design; (2) the lettering style; (3) the label color scheme; and (4) the placement of the word "orange"and the depiction of the orange.

When we began looking at this matter in 1994, there had only been - to our knowledge - one trademark case brought under Latvian Trademark Law. Thus, Latvian trademark agents and lawyers were uncertain as to the practical procedures to initiate and litigate trademark litigation. For instance, at first, it was not clear in which court to bring the action and what kind of reaction the courts would have to considering this new area of law. Further, we could not be certain whether it would be possible to get a preliminary injunction or a preliminary seizure, or both. In addition, we were told it was unclear we would be able to get a permanent injunction.

We identified the location of the manufacturer, which was located inside of a Russian military base. While in theory the Latvian Authorities had civil jurisdiction over the base, in practice they were reluctant to interfere with the activities occurring within the base. Thus, we were uncertain whether there was any avenue for us to stop the manufacturer of the infringing products. Considering the difficulties with attempting to challenge the infringing manufacturer, we decided to challenge certain retailers and the wholesaler. Thus, warning letters were sent to those retailers and the wholesaler.

After sending out the cease and desist letters, we brought a case for trademark infringement against two of the infringing retailers before The Commercial Court of Latvia. After considering the papers and considering the arguments presented at a hearing, the Court stated:

"The label FANA of the bottles of soft drink completely imitates the trademark registered by the claimant in Latvia. The only difference is the absence of the letter ‘T.’ It must be undoubtedly concluded that the label FANA is so similar to registered FANTA label that there is the possibility of the confusion of these labels."

The Court went on to rule against the infringing retailers and ordered the retailers to pay the applicable Court costs. Also, the Court ruled against a wholesaler which was not named by our Company in the complaint. The Court went on to require the wholesaler to ascertain from whom they had bought the infringing "FANA" products and to inform the Court within one month of the Judgement information related to such purchases. After the litigation, the infringement stopped.

Needless to say, the challenges presented in attempting to stop this infringement were unique. However, after entering the unknown and new territory of trademark law protection in the Baltics, The Coca-Cola Company’s trademark rights were effectively upheld by the Latvian Commercial Court and we have been able to effectively protect our trademark rights on a number of subsequent occasions.

The following illustrates a few additional situations whereThe Coca-Cola Company has successfully stopped trademark infringements. Given the time-estraints, I will not discuss these in detail.

We became aware the infringer had produced a number of these "COLA" labels and planned to begin selling beverage products using these labels. After becoming aware of this information, we had our Local Counsel send a cease and desist letter and make an oral warning to the infringer. In spite of these warnings, the infringer began production and sale of beverage products using the infringing labels. Thus, we brought an action before the Regional Court in Riga. After considering the facts and the law, the Court found the existence of confusion and that "by selling such a product for a considerably lower price, the [infringer] also causes danger to the total sale of The Coca-Cola Company. Further, the court ordered:

• Cessation of sales using the infringing labels.
• Destruction of the infringing labels.
• The Coca-Cola Company’s losses be compensated.

The infringement was identified in Lithuania. However, because the infringer was identified as a Polish company, we sent a cease and desist letter to the infringer in Poland. We received a reply in which the infringer indicated that, while it did not agree it was infringing our trademark rights, it agreed to modify its labels so they were no longer infringing.

We identified a Latvian distributor selling this product, which had bought the product in Poland. Similar infringements, originating from a producer in China, had been identified throughout the world. A cease and desist letter was sent to the Latvian distributor, which agreed to no longer sell the infringing product.

Conclusion

Since independence in Estonia, Latvia, and Lithuania, trademark infringements have presented difficult and unique challenges in the Baltics. Although there exist further opportunities to develop and improve mechanisms for protecting trademarks in the Baltics, much progress has been made and effective mechanisms do exist for enforcing trademark rights. The Case Studies discussed above illustrate this point.