Who would have ever thought that your first coffee of the day could be subject to controversy and even judicial proceedings? Well, everything these days seems to be.

US giant Starbucks Corporation initiated proceedings in Malta against Strabuono Coffee International Limited. The former ascertained to be the owner of rights to the international coffeehouse chain called STARBUCKS/STARBUCKS COFFEE which has been in existence in most EU member states since the 2000s. It sells various of its trademarked products (including the sale in Malta of coffee products bearing its trademark), with all relevant trademarks (including figurative trademarks) enjoying an enormous reputation and goodwill in connection with the coffeehouse chain and its related products.

Starbucks claimed that the defendant, without its consent, had started the management and operation of a coffeehouse in Malta, including the advertising of the same, using, in the course of its trade, various signs − including figurative signs − consisting of the expressions ‘STRABUONO’ or ‘Strabuono’, and ‘STRABUONO COFFEE’ or ‘Strabuono Coffee’, alone and/or combined with other elements, all of which were all too obviously inspired and copied from its relevant trademarks.

It sued for unlawful competition, requesting an order for the defendant company to pay by way of penalty not less than €465.87, nor more than €4,658.75, as prescribed by law for each violation. It also requested that the defendant be permanently prohibited from making any use in its business in connection with the operation of a coffeehouse or other similar establishment, of any kind of name, mark and distinctive sign in breach of its rights.

The defendant argued that there existed no similarity between the name, mark or distinctive sign it used and those indicated by the plaintiff and, consequently, there resulted absolutely no abuse and/or prejudice to the plaintiff.

The court, presided by Chief Justice Mark Chetcuti, opined that what the law wanted to punish was the theft of customers by means of speculation on the confusion of competing products; the legislator wanted no trader to conduct its business in a way that induces customers to confuse its own goods, or its business, with the goods or business of others.

The court further noted that whether the deception is fraudulent, or simply accidental, or due to error, made no difference. Malice, the court argued, had an influence only in determining the penalty. The rights of traders in such matters were rooted in the general right to property. A trader, the court noted, has the right to use all legal means to defend itself against the usurpation of its property by a claim based on unfair competition.

The defendant’s conduct exceeded the limits of competition

In such cases, for the action to be successful, the trader must prove that it was the first in the open market to adopt such distinctive name, sign or mark and that the similarity between the name, mark or a disputed sign is such that there is a likelihood of confusion on the market. It must also be proven that there is a similarity between the marks in dispute and that this similarity is such that there is a likelihood of confusion on the part of the public.

The court further noted that a likelihood of confusion must be appreciated globally, taking account of all relevant factors; the matter must be judged through the eyes of the average consumer, of the goods or services in question, who is deemed to be reasonably well-informed and reasonably circumspect and observant – but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind (a concept known as imperfect recollection).

The average consumer normally perceives a mark as a whole and does not proceed to analyse its various details. The visual, aural and conceptual similarities of the marks must, therefore, be assessed by reference to the overall impression created by the marks bearing in mind their distinctive and domi­nant components.

The two logos under contention.

A lesser degree of similarity between the marks may be offset by a greater similarity between the goods or services, and vice versa, there being a greater likelihood of confusion where the earlier trademark has a highly distinctive character, either per se or because of the use that has been made of it.

Noting that the core services and goods offered by the parties were virtually identical from the perspective of the consumer, it was clear to the court that the marks utilised by the defendant were similar in comparison to those utilised by the plaintiff. There was indeed a mimicking of the “look and feel” of the famous brand without using the same word mark or primary device feature.

In the court’s view, the defendant’s use of marks and names similar to those of the plaintiff created confusion and unfair competition; a consumer may indeed be confused and incorrectly assume that there is a broad economic connection bet­ween the plaintiff and the defendant. The defendant’s conduct did exceed the limits of competition.

The court, in its judgment of January 12, decided the case by upholding all the plaintiff’s claims and ordered the defendant to pay a penalty of €2,000. It further ordered that within one month, the defendant was to destroy any material in its possession or under its control containing a distinctive name, mark or sign with the words ‘Strabuono’ and ‘Strabuono Coffee’.

Shall we discuss this over a coffee?

Keith Borg is a partner at Azzopardi, Borg & Associates Advocates.