Star Wars in Switzerland

The Swiss Supreme Court recently (12 January 2011) finally settled a five year battle over the right to award stars to hotels between Schweizer Hotelier-Verein (SHV; incumbent, ranking hotels using stars since 1979) and Gastrosuisse (challenger, filed its own "stars" trade marks in 2005).

SHV sued promptly and obtained a preliminary injunction by the Commercial Court of Zurich barring Gastrosuisse from using stars to rank hotel quality. But from then onwards, it all went downhill for SHW: both the Commercial Court of Zurich in the proceedings on the merits and the Federal Supreme Court on appeal held that the use of stars for hotel rankings could not be monopolized, as the public would perceive the stars not as an indication of origin, but rather as a (generic) description of quality. There was no equivalent alternative to the use of stars for hotel rankings; using other signs - such as coins, circles, or hats - was not equivalent because of the meaning of "quality indication" attached to the star sign in the mind of the relevant public. Therefore, even if they had acquired distinctiveness (which was left open, because not decisive), they could not be protected, as they were barred absolutely from trade mark protection.

The case is legally interesting mainly because the marks SHV based its claim on (pictured below left the one for a three star hotel) are so called "guarantee marks" in the sense of art. 21 Swiss Trade Mark Act, and these are rare beasts and rarely litigated. Not to be confused with collective marks (see art. 66 Council Regulation 207/2009 for the Community Trade Mark definition of a collective mark), guarantee marks may be used by any third party that meets the criteria laid down in a regulation submitted by the trade mark owner to the Trade Mark Office. The owner may not refuse to grant permission of use under "FRAND" terms; however, he may request the payment of a fee for use.

SHV argued that the marks should be held valid because as guarantee marks, they could still be used by third parties as long as they met the published criteria and were therefore not removed from use by competitors. The Supreme Court's reasoning on this point is a bit muddy (para. 3.4 of the judgment), but essentially boils down to the fact that awarding stars for hotel quality has a subjective component, because the criteria cannot be laid down with sufficient precision, giving the trade mark owner in essence a veto right on anyone's use of the guarantee mark. In this sense, the stars were monopolized, and that was, because of their dominant meaning as indications of quality, not permissible. The Supreme Court also pointed out that SHV could only grant rights of use in the sign as registered (see below), but sought to enjoin any use of stars for hotels rankings (such as the one below right).

Tourists travelling to Switzerland will therefore have to be aware that there are two competing systems for awarding stars to hotels in Switzerland, and the criteria are not equivalent. Not every 3 star hotel is created equal.

This Kat wonders whether in the age of the internet, these "star systems" are all that relevant anymore. He usually checks the ratings of any hotel prior to booking on the relevant travel sites and finds these ratings more informative than any stars awarded by some organization (admittedly, the user generated rankings sometimes put too much emphasis on friendliness and not enough on infrastructure - if your room sucks, being nice won't make it a good room - but the star systems of established organizations tend to suffer from the opposite; i.e. over-reliance on measurements of infrastructure to the detriment of atmosphere). The image at the top of this post is of the Badrutt Palace Hotel in St. Moritz, btw, which would rank as five star in any ranking system. And as expensive in any social circle, unless you're a Russian oligarch.

Link to summary of decision; link to full text of decision of 12 January 2011 (both in German). If my memory serves me right, similar cases have been decided in other jurisdictions; if any reader has any information, feel free to post it in the comments.