Bridgestone v Panama: Denial of Justice in a Trade Mark Dispute and the Locus Standi of a Licensee in International Investment Arbitration

Abstract

This is the first publicly available arbitral award rendered by an ICSID tribunal addressing whether a judgment arising out of a dispute relating to trade marks constitutes a denial of justice. At issue is a Supreme Court decision holding the Claimants liable for having unsuccessfully opposed the registration of a competitor’s trade mark.4 The dispute is best understood against the backdrop of an international competition between two international tyre makers, the Chinese entity, the Luque Group on the one hand, and the Japanese entity the Bridgestone Group (‘BSJ’) on the other. Both companies manufacture and sell tyres under marks with the suffix ‘STONE’. When Muresa Intertrade S.A. (‘Muresa’), a subsidiary of the Chinese entity, applied in 2002 to register the mark ‘RIVERSTONE’ for tyres in Panama, the Japanese rival BSJ and its US subsidiary BSLS objected to the registration by claiming likelihood of confusion.5 BSLS are the holders of the registered Panamanian marks ‘BRIDGESTONE’ and ‘FIRESTONE’. The First Instance Court found the trade mark opposition without legal merit and the Bridgestone entities withdrew their appeal on 5 September 2006.6 Subsequently, the distributors of the RIVERSTONE tyres, Muresa and Tire Group of Factories Ltd. Inc. (TGFL), commenced tort proceedings against BSJ and BSLS. They argued that the trade mark opposition was wrong and had caused them to cease the sales of RIVERSTONE tyres out of fear that the inventory would be seized if the opposition succeeded.7 Muresa and TGFL alleged that this cease resulted in US$5 million losses. Their claim was initially dismissed at first instance and later by the Panamanian Court of Appeal. But, on a subsequent final appeal, the decision in favour of the Bridgestone entities was reversed by the Panamanian Supreme Court in its judgment of 2014.8 The Supreme Court found that the Bridgestone entities had initiated the opposition with the intent of harming their tyre rival. Thus, the Supreme Court held the Bridgestone entities liable for damages pursuant to article 217 of the Panamanian Judicial Code for reckless conduct in judicial proceedings. The Bridgestone entities were ordered to pay the Luque Group companies US$5 million in losses and US$431,000 in attorneys’ fees.9