Finnish Supreme Court had to intervene in the Market Court’s incorrect application of EU law and annulled the decision in its judgment KKO:2026:30.
The case concerned whether the proprietor of a registered mark can prohibit the use of an unregistered trademark, even though both marks had been used in parallel for decades. The Supreme Court described the background as follows. Based on an application filed on 29 August 2003, Company A’s trademark DRACULA was registered on 14 August 2009 and covered, among other things, confectionery. A used the mark in the importation and sale of confectionery in Finland. Company X and its predecessors had, since the 1980s, imported and sold confectionery in Finland using Dracula identifiers. After purchasing X’s business on 31 October 2019, Company B continued that activity. A sought an injunction to prevent B from continuing the trademark infringement. B argued that because A had at no point prohibited X from using the Dracula identifiers in its business, general private-law principles meant that A had, through its passivity, lost the right to bring claims against B based on that conduct.
On 21 December 2022 the Market Court held that B’s conduct in principle fell within A’s right to prohibit: the word Dracula was identical to the registered trademark and it was used on the same goods (confectionery), and the devices also gave rise to a likelihood of confusion.
Longstanding concurrent use does not affect the assessment of likelihood of confusion
Longstanding concurrent use did not remove the likelihood of confusion nor the fact that the use affected the essential functions of the trademark, even though the parties and their predecessors had used Dracula identifiers in Finland from the 1980s onwards and continued doing so after A applied for the trademark in 2003 and obtained registration in 2009.
Nonetheless the claim was dismissed because A had lost the right to invoke the infringement due to its “national” passivity. The Market Court applied a national private-law principle according to which an action must be brought within a reasonable time from when the rightsholder has obtained, or ought to have obtained, knowledge of the infringement. A had not intervened in X’s activities in time and had not presented an acceptable justification for its passivity; it was irrelevant that B later continued the activity, since it concerned the same importation and sale of confectionery. Thus, the claim could be dismissed despite the fact that EU trademark rules are largely harmonized and that infringement and likelihood of confusion were otherwise present, because the national principle on acting within a reasonable time was considered to displace the application of the directive and the national Trademark Act in this situation.
Supreme Court: under Union law mere passivity cannot result in loss of trademark rights
The case proceeded to the Supreme Court, which requested a preliminary ruling, observing that, based on the Court of Justice of the European Union’s case law to date, it was not clear whether the substance of the rights conferred by a trademark — including permitted use and its consequences — is harmonized to the extent that a trademark owner could lose the right to prohibit use by reason of passivity only in situations covered by Article 18(1) and Article 9(1) or (2) of the Trademark Directive.
However, in its preliminary ruling of 1 August 2025 the Court of Justice held that such a national approach is entirely contrary to Union law: the Trademark Directive (notably Articles 10 and 18) is fully harmonizing in this respect, and a Member State may not apply a general national principle that leads to loss of trademark rights in situations other than those expressly provided for in the directive, such as statutory acquiescence. In other words, mere “exceeding a reasonable time” cannot extinguish the right to bring an action. The matter was considered so clear in this respect that an Advocate General’s opinion was not issued.
It should be noted that in the situation at hand the limitations of trademark rights are exhaustively harmonized in Union legislation. The directive explicitly sets out the circumstances in which the mark owner may lose the right to oppose use — essentially acquiescence situations, which require, among other things, five years of conscious passivity towards a later mark registered in good faith. The Court’s case law has also firmly established that this is a concept of Union law to be interpreted and applied uniformly in all Member States, including Finland. Case law and legislation further show that exceptions to the proprietor’s right to prohibit are confined to situations in which the use of the sign does not affect the functions of the trademark.
Despite this, the Market Court sidestepped the harmonized legal framework and based its decision purely on a national private-law passivity principle. This approach is not merely questionable but clearly contrary to Union law, because it introduces an additional restriction that the directive does not envisage or allow.
The fact that harmonization primarily concerns registered rights rather than unregistered signs does not alter the assessment here. The dispute concerned the right of the owner of a registered trademark to prohibit use of a sign that was found to affect the essential functions of that trademark. In such a situation the applicable legal framework is determined by the registered right, and the opponent’s sign being unregistered does not open the door to the application of additional national limitations.
Trademark rights cannot be curtailed by a national passivity principle
It is also noteworthy that the preliminary reference did not concern the status of unregistered rights or the functions of trademarks. The question was solely whether the rights of the proprietor of a registered trademark may be curtailed by a national passivity principle outside the directive. In this light, it is difficult to avoid the conclusion that the Market Court’s decision represented a manifestly erroneous application of the law.
The Supreme Court’s referral for a preliminary ruling also appears largely unnecessary: it was already reasonably clear from the Court of Justice’s case law that the national “bring the action within a reasonable time” principle cannot be used to circumvent the directive’s exhaustive regulation. The preliminary ruling mainly confirmed what should have been evident from the outset.
The dispute nevertheless placed the Supreme Court in a difficult position, since the issue before it was solely a legal question for which a preliminary ruling was sought. Moreover, the appeals system influenced the handling of the case: because an appeal from a Market Court decision requires leave to appeal, the legal question is easily limited to the specific point on which leave was sought.
The Supreme Court thus stated: “The Court of Justice’s preliminary ruling implies that A cannot be regarded as having lost, solely by reason of its passivity, the right to prohibit B from using the Dracula identifiers. Accordingly, the Market Court should not have dismissed the claim on the ground that A had, through its passivity, lost the right to assert claims based on its trademark exclusive rights.” The Supreme Court further noted: “The Supreme Court is not seized of other grounds on which B has asserted that the matter does not amount to an infringement of A’s trademark rights.” Consequently, B was prohibited from using the disputed trademarks for confectionery, and the case was remitted to the Market Court as necessary.
The decision demonstrates the importance of registering key trademarks and the problems associated with unregistered signs. It also indirectly highlights problems in the appeals system: if only one party is granted leave to appeal, the examination easily becomes confined to the single question for which leave was granted. A more effective system would allow a Market Court judgment to be appealed first, for example, to a court of appeal.