Monday, June 22, 2009
Manufacturer’s offensive to enjoin an alleged exclusive distributor from using its trademark falls short on appeal when faced with a Law 75 claim
This case illustrates the risks of doing business in Puerto Rico without a formal written agreement defining the essential elements and scope of a distributorship. In Universal Manufacturing v. Ricardo Cruz Distributors, 2009 WL 728309 (TCA 27 Feb. 2009), a retailer of cleaning products sold under the brand name “Doctor Mecanico” sued the manufacturer and owner of the trademark in the local court for breach of an alleged verbal exclusive agreement under Law 75. The reseller alleged that the manufacturer impaired the relationship by selling the products to certain exclusive customers. While the manufacturer disputed the existence of exclusivity, it had authorized the retailer to sell the products to customers. Responding to the reseller’s motion for a preliminary injunction under Law 75, the manufacturer countered with an action for trademark infringement under Puerto Rico law. And, a local court of first instance (Bayamon Part) sided with the manufacturer and issued an injunction prohibiting the reseller from using the mark. The court of appeals reversed and remanded, holding that the lower court had failed to take into account the retailer’s prior commercial use of the mark and the competing interests and claims of the reseller for protection under Law 75.