Boungiorno Myalert S.A. (hereinafter Boungiorno) is a company which in 2010 provided information services via the internet and mobile telephone network. At that time it launched a campaign for subscription to the SMS multimedia content delivery service which it marketed under the name “Club Blinko”, in which it “offered, on certain web pages accessed via banners with the ZARA sign inserted in other web pages, on Facebook and Hotmail, participation in a prize draw in which the prize was a ZARA gift card for the sum of 1000 euros”. Specifically, the following was stated:

“Club Blinko subscribe and participate now in this fantastic raffle and win 1000 euros in cash. I would like to spend it like this: 1000 euros ZARA gift card. Your mobile number to get your card”.

On the screen displayed after clicking on the banner, the ZARA sign appeared in all cases highlighted and framed in a rectangle, evoking the format of the cards usually issued by banks, department stores and other commercial entities. Participation in the prize draw was conditional upon subscription to the paid service and maintenance of the subscription for a minimum period of 30 days, as stated in the informative text finally displayed on the screen, which also referred to the service provider and the terms and conditions of the service. Subscription to the service could be carried out via the same screen.

The owner of the trade mark ZARA (Inditex), on 20 December 2010, sent a formal injunction to Boungiorno to cease the use of its trademark in these promotional campaigns and announced that it was going to claim compensation for the damages caused. Boungiorno replied to the injunction to deny that it had infringed Inditex’s rights, although it also announced that it had withdrawn the campaigns.

In July 2013, Inditex filed an action against Boungiorno for his use of the ZARA sign in the aforementioned advertising campaigns. The lawsuit brought trademark actions, on the grounds that the exclusive rights of the ZARA trademark had been infringed, under both art. 34.2.b) of the Spanish Trademark Law, for likelihood of confusion, and art. 34.2.c) of the Spanish Trademark Law, for taking advantage of the reputation of the trademark and detriment to that reputation. In the alternative, the plaintiff also brought an action for unfair competition, because the aforementioned facts constituted conduct typified in arts. 4, 12 and 22.6.b) Spanish Unfair Competition Law.

The defendant denied that there had been any infringement of the applicant’s rights in the ZARA trademark, since the use of that sign had not been for the purposes of a trademark, but fell within the lawful uses of other people’s distinctive signs. In particular, the ZARA trademark was used as an indication of one of the gifts offered in the event of winning the prize draw held among those who subscribed to the multimedia content supply service offered by the defendant. It also denied that any damage had been caused to the applicant.

The first instance judgment dismissed the claim. It first reasoned why the defendant’s use of the trademark ZARA was a descriptive use covered by art. 37 TM, which regulates the limits of trademark rights. The court understood that it was a use with due cause and in accordance with the customs of the trade, insofar as it was necessary for the identification of the prize, and was therefore within the limits of the trademark right provided for in art. 37 of the Spanish Trademark Law. It then went on to analyse the requirements set out in letters b) and c) of art. 34 TM for trademark infringement, and concluded that the use made by the defendant did not affect any of the functions of the trademark. It also concluded that there had been no harm to the notoriety of the trademark, nor had there been any undue advantage taken of its reputation. The unfair competition actions were also dismissed on the grounds that they were time-barred.

The first instance judgment was appealed by Inditex. In relation to the trademark actions, the appeal focused on the validity of the trademark infringement, under the special protection afforded to well-known trademarks by art. 34.2.c) of the Spanish Trademark Law. The appeal also challenged the dismissal of the unfair competition actions.

The Court, after disregarding the objection raised by the other party of unfair delay in the exercise of the right, analysed whether there had been infringement of the well-known trade mark ZARA and concluded that there had not been. It also dismissed the challenge relating to the dismissal of the unfair competition actions, which was definite as it had not been the subject of an appeal in cassation and was not affected by the extraordinary appeal for procedural infringement.

Inditex lodged an extraordinary appeal for breach of procedure and an appeal in cassation against the judgment on appeal.


Extraordinary appeal for breach of procedure

The plea is raised under the fourth paragraph of art. 469.1 LEC, “for erroneous assessment of the evidence, given that the judgment under appeal clearly errs in confirming the ruling of the lower court judgment that the prize of the commercial promotion was a 1,000 euro ZARA card, when in fact cash prizes were drawn”.

In this case, the error complained of is not strictly speaking a notorious or obvious error, since the notarial act itself, which notarises the terms and conditions of the promotion, when describing the prizes, includes the following warning: ‘the prizes indicated here may vary depending on the advertising through which the winning user’s participation has taken place’. Therefore, the contradiction noted in the plea is not obvious or obvious that the courts of first instance should have found that one of the gifts in the promotion was a gift card for the sum of 1,000 euros from ZARA, and that this promotional gift did not exist. The terms and conditions of the promotion stated that the gifts could change depending on the advertising through which the user’s participation took place. In the present case, the gift consisting of a ZARA gift card worth EUR 1 000 was introduced by means of the advertising which the applicant claims constituted an infringement of its trade mark ZARA.

Appeal in cassation

Article 34(2)(c) of the Spanish Trademark Law confers on the proprietor of the registered trade mark the power to ‘prohibit third parties, without his consent, from using in the course of trade: (….) (c) any sign which is identical or confusingly similar to a trade mark, or which is identical or confusingly similar to a trade mark, or ) c) Any identical or similar sign for goods or services which are not similar to those for which the trademark is registered, when the trademark is well known or renowned in Spain and the use of the sign without due cause may indicate a connection between those goods or services and the owner of the trademark or, in general, when such use may imply an undue advantage or a detriment to the distinctive character or to the reputation or renown of the registered trademark”.

In this case, there is no doubt that the applicant’s trade mark ZARA has a reputation. At the same time, it is established at first instance that the defendant used this sign in the promotional campaign for its services in 2010, by advertising that the promotional gift for one of the services offered was a prize draw for 1,000 euros which could be spent on a 1,000 euro ZARA gift card. The requirement of having used a sign identical to that of the well-known trade mark ZARA was thus fulfilled, although not to offer goods or services under that trade mark, but to illustrate one of the prizes in the prize draw for which the contracting of the services offered by the defendant gave the right to participate. If it were not for the fact that the use made of the ZARA sign was considered descriptive, the defendant’s conduct could have been covered by art. 34.2.c) of the Spanish Trademark Law, provided that it was proven that such use of the ZARA sign took unfair advantage of the distinctive character or reputation of the mark, or that it was detrimental to its distinctiveness or reputation.

The first and main reason given by the court to deny trademark infringement is the consideration that the defendant’s use of the ZARA trademark was a descriptive use covered by art. 37 TM. Then, furthermore, the court denied that the requirements of art. 34.2.b) and c) were met for there to be infringement of the trademark.

Law 17/2001, of 7 December, on Trademarks, when regulating the effects of trademark registration, refers firstly, in Art. 34, to the rights conferred by the trademark, and specifically in paragraph 2 to the ius prohibendi. And, further on, art. 37 TM establishes a list of limitations of the trade mark right, cases in which a trade mark will not allow its owner to prohibit a third party from using it in the course of trade, albeit in accordance with honest practices in industrial or commercial matters. One of these cases, in the original wording of the law, which is the one applicable to the case, is when the use of that trade mark is necessary to indicate the intended purpose of a product or service (letter c). This case should be understood to include, as the Law now makes explicit after the reform introduced by Royal Decree Law 23/2018, of 21 December, the use of the trademark to “designate goods or services as corresponding to the owner of that trademark or to refer to them”. This is what the court of appeal understands that the defendant has done by using the sign ZARA to advertise that one of the prizes in the prize draw in which the purchase of the service offered by the defendant was entered was a gift card worth €1,000 from ZARA.

Therefore, the extraordinary appeal for procedural infringement and the appeal in cassation brought by Inditex S.A. must be dismissed.