Judicial Precedent – Trademark Infringement Based on Prior Use and Evidence of Bad Faith

Subject Matter and Grounds of the Case

The plaintiff filed its claim before the Commercial Court in Dammam, seeking to prohibit the defendant from selling or importing any products bearing the plaintiff’s trademark or any similar mark.

The plaintiff based its claim on the fact that it has prior use of the trademark in the local market, and that the defendant, who had previously acted as a distributor of its products, exploited that prior commercial relationship by using the identical mark unlawfully, with the intent to deceive consumers and to obtain unlawful gains from the plaintiff’s reputation, thereby constituting an infringement of its rights and acts contrary to the principles of fair competition, in accordance with the provisions of the Trademark Law.

The plaintiff further relied on a final judgment previously rendered in its favor, ordering the cancellation of the defendant’s trademark registration on the grounds of similarity with the plaintiff’s commercially used mark. The continued use of the cancelled mark, in defiance of that judgment, was presented as clear evidence of the defendant’s bad faith.

Facts of the Case

• The defendant continued to use the cancelled mark and to market counterfeit products bearing the plaintiff’s trademark, which were imported from China, falsely claiming that the products originated from the plaintiff’s home country.
• Consequently, the plaintiff filed the present infringement lawsuit seeking to compel the defendant to cease using and imitating the plaintiff’s mark, prohibit it from selling or importing products bearing the plaintiff’s or any similar mark, and withdraw the infringing products from the market.
• The Second Commercial Circuit issued a first-instance judgment dated 18/12/1444H, ruling to prohibit the defendant from selling or importing products bearing the disputed mark and to withdraw the infringing products from the market.
• The defendant appealed the judgment before the Second Appellate Circuit of the Commercial Court in Dammam, alleging that the mark was not registered and that its use was made in good faith.
• The defendant also denied the existence of any prior business relationship with the plaintiff or having ever acted as its distributor.
• The plaintiff, in turn, submitted evidence of prior commercial dealings, including correspondence and trade documents proving that the defendant was aware of the plaintiff’s mark and its use in the market, asserting that the defendant’s denial of this relationship constituted an attempt to evade liability and a clear indication of bad faith.

Case Background

After reviewing the case file and the evidence presented by both parties, the Appellate Circuit concluded the following:

1. The plaintiff proved prior use of its trademark within the Kingdom, supported by invoices, export certificates, and official trade correspondence.
2. The defendant was aware of the disputed trademark due to the prior commercial relationship with the plaintiff, as evidenced by the submitted documents and communications.
3. The defendant’s denial of the prior relationship, despite documentary evidence, established a presumption of bad faith and confirmed that the defendant deliberately imitated the mark to exploit its reputation.
4. The Trademark Law affords protection to marks based on prior use, not only registration, when the other party’s use is proven to be in bad faith or with intent to mislead consumers.
5. The first-instance judgment was legally sound and well-founded, leaving no grounds for its reversal or amendment.

Ruling

The Second Appellate Circuit of the Commercial Court in Dammam ruled as follows:

• To uphold the first-instance judgment dated 18/12/1444H, which ruled to:
  • Prohibit the defendant from selling or importing any products bearing the disputed mark or any similar mark.
  • Require the defendant to withdraw all infringing products from the market.
• The judgment is final and enforceable, duly endorsed with the execution formula, and directed to the competent authorities for enforcement through all legal means, including compulsory execution if necessary.

Enforcement Phase

1. A request for enforcement was filed before the Execution Court in Dammam, pursuant to Article (34) of the Enforcement Law, which obliges the debtor to comply with the judgment within five days from notification.
2. The court conducted an on-site inspection of the defendant’s premises and ordered the withdrawal of infringing products and prohibition of their sale or importation.
3. Upon the defendant’s failure to comply within the prescribed period, the court issued an order for compulsory execution pursuant to Article (68) of the same law.
4. Due to continued non-compliance, the court further imposed a daily fine of SAR 200 for each day of delay, in accordance with Article (69) of the Enforcement Law.

Conclusion

This judicial precedent established an important principle that prior use of a trademark grants legal protection even in the absence of formal registration, when it is proven that the opposing party used the mark in bad faith and with prior knowledge.

It further reaffirmed that denial of a prior business relationship does not negate bad faith when evidence of prior dealings exists. 

The ruling highlighted the role of the Execution Court in safeguarding intellectual property rights through compulsory enforcement and the imposition of statutory penalties, ensuring effective implementations of judgments and promoting fairness in commercial practices.