Trademark rights protection can be enforced be realized in various ways, benefiting from the rules of civil law, criminal prosecution or administrative proceedings, one of the latter being the proceedings before the Bulgarian Commission for Protection of Competition (CPC).
The proceedings before the CPC are administrative in nature - its purpose is to cease using the trademark under a state of unfair competition (among other violations of competition law provisions), in which case the law provides for administrative sanctions. Demand for administrative liability due to trademark infringement can be combined with a civil case before court in separate proceedings to ensure compensation of damages , thus ensuring full satisfaction of the trademark holder with regard to the injurious effects from the misuse of their trademark.
I. The infringement in Art. 35, para. 2 of the CPA
Art. 35, para. 1 titled "Imitation" of the Bulgarian Competition Protection Act (CPA) formulates a common breach which falls under Chapter VII - Prohibition of unfair competition: "The offering of goods or services whose appearance, packaging, marking, name or other features deceive or may lead to deception in respect of their origin, manufacturer, seller, method and place of manufacture, the source and manner of acquisition or purpose, the quantity, quality, nature, consumer properties and other substantial characteristics of the goods or services, shall be prohibited." The general provision is supplemented with the following paragraph of the same article, which covers the special case of breach of para. 1: “(2) The use of trading name, trade mark or geographical indication identical or similar to those of other persons, in a manner that may lead to injuring the interests of competitors shall be prohibited”.
The trademark individualizes a product but also affects market share and therefore revenue and profit respectively and the viability of the company as a whole, whereby majorly influencing its identity. The trademark is a guarantee for quality and simplified consumer choice, reducing the risk of an unsatisfactory purchase. Due to the large-scale impact that the brand has on economic operators and the market as a whole, its imitation is subject to special legal protection. (Decision № 5199 of 3.05.2016, SAC on adm. Case № 931/2015, decision № 10871 of 22.07.2011, SAC on adm. case № 11788/2010, VII division)
In their interpretations of the CPA, bulgarian courts have derived the following cumulative conditions for a breach of Art. 35, para. 2 of the CPA:
a) the imitation should be carried out in relation to similar in nature and purpose goods or services;
b) the product being imitated should have been introduced on the market before the imitating product;
c) there should be a use of the trademark in a way that could harm competition.
The court in Bulgaria does not interpret the provisions of Art. 35, para. 2 literally, it expands the requirements for infringement - the product being imitated should be have been introduced on the market before the imitating product. This corresponds to the logic of prohibiting imitation.
Of particular importance is for the product to have certain popularity on the market for which protection is sought - i.e. a German product protected under a German/EU trademark, or in general a trademark that enjoys protection in Bulgaria, should enjoy the protection of that rule, if the same product or service has popularity in the Bulgarian market. Of particular importance is the requirement for deception or possibility of deception, which seeks to extract favorable effects for the imitator, which requirement bulgarian case law has exalted in the applicability of Art. 35, para. 2. The main constituent element of this provision is whether the offered product could lead to deception - users gain the impression that they would purchase a specific product/will benefit from a particular service, while actually being offered something else, in which case this provision protects the interests of competitors who can be harmed only if there is an objective possibility of deception for consumers. To establish a violation of this prescription, it is enough to that there is a potential hazard to damage the interests of competitors, and it is not necessary for such damage to actually be incurred. Parallels are drawn between the general trademark law provisions and the rules governing competitive behavior in the market.
In order for there to be deception within the meaning of the CPA, it is necessary to have “competitive enterprises". (A separate issue is the incosistent use of the term "enterprise" in Bulgarian legislation. The Labor Code, Commercial Code, CPA, etc. give different definitions of the term.)
For the purposes of the CPA, an "enterprise" is any natural or legal person or unincorporated entity conducting business activity, regardless of its legal and organizational form. Enterprises should be in competition - i.e. perform similar or identical activities within a market. One main indication for competitiveness can be derived from the business activity of the company as entered and noted in the Commercial Register (Decision № 7396 of 2.06.2014, SAC on adm. case № 10603/2013).
As regards the other substantive legal prerequisites - even though the law as it is does not require the trademark being imitated to be registered, the common interpretation of the trade mark legislation (both under the Trademarks and Geographical Indications Act and European law) leads to the conclusion that even if a trademark is not registered, it must be protected.
Practice shows that protection against imitation is requested by registered brands, which in turn is also an independent argument for any business that is looking for added value of its products and services, in order to benefit from the registration of a trademark for these products and services - this way it can benefit from the proceedings before the CPC against the imitation of the trademark.
Of particular interest are violations of the discussed provision on the web. The bulgarian law makes no distinction between a violation done in the digital realm or a real tangible violation, and we unconditionally agree with the opinion expressed by the court (Decision № 7396 of 2.06.2014, SAC on adm. case № 10603/2013) that the numerous technical features provided by the web to its users do not preclude the application and compliance with the existing legal norms and fair trade practice. This is because improper behavior in the web becomes increasingly practiced among competitors because of the increased role of the Internet as a successful medium for commerce and communication. The attack on a particular brand creates deception among consumers who are accustomed to perceiving the respective domain or appearance of the website as a business identifier of an undertaking and thereby causes clients to perceive the website of the unfair competitor as a place offering the goods or services of the first undertaking. In its decision SAC reviews a violation of the provisions of the CPA by using AdWords for sponsored advertising by including the trademark/a substantial part of the trademark in the keywords, which, combined with the layout of the web page built by the infringer, the total market and competitive services could lead to confusion and deception of the consumers as to which web page they have actually accessed. The reasoning of the decision of the CPC contested before SAC describes the cycle of Internet searches: the user enters words or phrases and once the detection software finds matching words, generic results are displayed and the matches are sought among the key words added to the meta tags of any website or in its programming source code. In this particular case, Google's AdWords allows advertisers to specify keywords and if a search matches those keywords the advertising application displays the results differently from those of a regular search - separated in color and positioned differently from the regular results - top side or bottom. The CPC carefully and consistently explored the reasons why when performing a search using keyword that was a part of the word element of the trademark the screen displays completely different content that has no connection with the indicated name. CPC concludes as confirmed by the court that the only reason for a company to use the trademark of a competing company as a keyword, is to benefit from the traffic and consumer behavior that may be misled as to which competitor they encounter.
The above decision suggests that in future such practices on the web will be increasingly subject to disputes in Bulgaria, especially those concerning the not-so-visible parts of the Internet that actually shape the behavior of the information being displayed to users. The court, and especially the CPC, show a willingness to recognize these effects of online business and to apply the rules of competition law to these mechanisms as well.
II. Proceedings and measures under the CPA
Invoking administrative penalties for trademark imitation under competition law is carried out before the CPC. The infringement proceedings are initiated on the basis of a decision of the Commission or at the request of the persons whose interests are affected or threatened by a violation under this law. This claim must be in Bulgarian and contain:
- name/title and data related to the registration/personal identification number of the claimant and the person the claim was filed against;
- address/seat and management address of the claimant and that of the person the claim was filed against;
- description of the circumstances underlying the claim and alleged infringement;
- the nature of the claim;
- evidence in support of the claim;
- the signature of the person who submitted the claim, or that of their representative;
- document certifying that the state fee has been paid.
The claim is filed by submitting a standard form approved by the Commission, which is available on the website of the Commission.
The Commission conducts an investigation and has the right within this investigation to require information as well as material, written, digital and electronic evidence, regardless of the medium on which it is stored; collect oral or written statements; assign an expertise performed by independent experts. All legal entities are obliged to cooperate fully with the Commission and the working group.
After the investigation is completed, the working group prepares a report to be submitted to the supervising member of the Commission. The Chairman issues a resolution to schedule the consideration of the report at an open meeting of the Commission, where both parties to the proceedings are heard. The Commission at its discretion may hear other parties as well. Particularly important is the fact that the law provides for short deadlines to conduct the proceedings - the investigation under this chapter ends within two months from the initiation of the proceedings, which period may be extended by 30 days. It is concluded with a decision, which either establishes the existence of an infringement and imposes penalties or establishes that no infringement has been committed, and the law expressly provides that this decision does not preclude the filing of a civil action. The Commission’s decisions are subject to appeal under the so-called “special clause” before the Supreme Administrative Court in Bulgaria.
One of the main arguments for the effectiveness of the proceedings before the CPC are the penalty amounts imposed by the Commission - for violation of Chapter VII (Prohibition of unfair competition) the Commission imposes a pecuniary penalty up to 10 percent of the total turnover for the previous financial year of the enterprise or association of enterprises. In determining the amount of the pecuniary penalty the Commission takes into account the severity and duration of the infringement as well as the mitigating and aggravating circumstances. The specific amount of the penalty is determined by the Commission in accordance with a methodology published on its website. It should be borne in mind that this pecuniary penalty does not fulfil the purpose of a compensatory payment, such payment should be sought before a civil court, but a declaratory decision by the Commission for an infringement is a serious argument for a positive decision by the court. The final decision of the Supreme Administrative Court, which confirms the decision of the Commission to establish a violation under the law is binding for the civil court regarding whether the Commission's decision is valid and lawful. Also binding on the civil court as valid and lawful is a Commission decision which has not been appealed or the claim filed against such decision has been withdrawn. In these cases, the limitation period to invoke the right to claim damages is five years of entry into force of the decision of the Supreme Administrative Court or the decision of the Commission.
In summary, it can be concluded that the proceedings before the Bulgarian Commission for Protection of Competition is an effective method to protect the interests of the holder of a Bulgarian trademark, an EU-trademark or international trademark with effect in the territory of the Republic of Bulgaria. This administrative procedure provides a good framework for exercising fast penalties against disloyal competitors and suspending any actions which could seriously harm the interests of the holder of a trademark. The proceedings hold into account the confidential information of the parties, are to a good degree less formal than civil procedures and completed within a relatively short timeframe.
In view of the above arguments, law firm "Ruskov and Colleagues" offers companies an analysis of the applicability of the proceedings, in order to better protect their interests in Bulgaria as regards prevention against poor competitive practices as well as litigation before the CPC in relation to any disputes.