12.  The applicant is an American public company whose registered office is in Saint Louis, Missouri (United States of America). It produces and sells beer under the brand name “Budweiser” in a number of countries around the world. 13.  The applicant company has sold beer in the United States under the “Budweiser” mark since at least 1876. It broke into the European markets in the 1980s and says that it began to sell “Budweiser” beer in Portugal in July 1986. 14.  The applicant company’s decision to extend the sale of its beers to Europe led to a dispute with a Czechoslovak – now Czech – company called Budějovický Budvar. Budějovický Budvar produces a beer in the town of České Budějovice in Bohemia (Czech Republic) which is also called “Budweiser”. The term comes from Budweis, the German name for the town. The applicant company alleges that Budějovický Budvar has only been marketing beer under the “Budweiser” name since 1895, whereas Budějovický Budvar says that it has been entitled to use that appellation since 1265, when King Ottakar II of Bohemia conferred the right to produce the beer on a number of independent brewers in České Budějovice (Budweis in German). The brewers used a special technique and beers produced by this method became known by the term “Budweiser”, just as beers produced using the methods of another Czech town, Plzeň (Pilsen in German), became known as “Pilsner”. 15.  According to the information before the Court, the applicant company concluded two agreements in 1911 and 1939 with Budějovický Budvar concerning the distribution and sale of “Budweiser” beer in the United States. However, these agreements did not deal with the question of the right to use the “Budweiser” name in Europe. As a result, the two companies became embroiled in a series of legal proceedings over the right to use the term “Budweiser” in various European countries, including Portugal. 16.  On 19 May 1981 the applicant company applied to the National Institute for Industrial Property (NIIP) to register “Budweiser” as a trade mark on the industrial-property register. The NIIP did not grant the application immediately because it was opposed by Budějovický Budvar, which alleged that “Budweiser Bier” had been registered in its name as an appellation of origin since 1968. Budějovický Budvar had effected the registration under the terms of the Lisbon Agreement of 31 October 1958 for the Protection of Appellations of Origin and their International Registration (see paragraph 33 below). 17.  Negotiations took place throughout the 1980s with a view to resolving the dispute between the applicant company and Budějovický Budvar. According to the applicant company, in 1982 the negotiations even led to an agreement being drawn up concerning the use of the “Budweiser” trade mark in Portugal and other European countries. However, the talks eventually broke down and in June 1989 the applicant company instructed lawyers in Portugal to commence court proceedings. 18.  The applicant company then applied to the Lisbon Court of First Instance on 10 November 1989 for an order cancelling Budějovický Budvar’s registration. A summons was served on Budějovický Budvar, but it did not file a defence. In a judgment of 8 March 1995 (which, in the absence of an appeal, became final), the Lisbon Court of First Instance granted the applicant company’s application on the ground that the product to which the registration referred, namely the beer known as “Budweiser Bier”, was not an appellation of origin or indication of source. The Court of First Instance noted that under the terms of the Lisbon Agreement of 31 October 1958 such protection was reserved to the geographical name of a country, region, or locality, which served to designate a product originating therein, the quality and characteristics of which were due exclusively or essentially to the geographical environment, including natural and human factors. “Budweiser” did not come within this category. The registration was therefore cancelled. 19.  Following the cancellation of the appellation of origin, and despite the fact that Budějovický Budvar had challenged the application for registration under the opposition procedure, the NIIP registered the “Budweiser” trade mark in the applicant company’s name on 20 June 1995 in a decision that was published on 8 November 1995. 20.  On 8 February 1996 Budějovický Budvar appealed to the Lisbon Court of First Instance against the NIIP’s decision on the strength of an agreement between the governments of the Portuguese Republic and the Czechoslovak Socialist Republic on the Protection of Indications of Source, Appellations of Origin and Other Geographical and Similar Designations (“the Bilateral Agreement”), which was signed in Lisbon on 10 January 1986 and which came into force on 7 March 1987, after publication in the Official Gazette. As required by law, the applicant company was invited by the court to take part in the proceedings as an interested party. In June 1996 it was served with the originating summons that had been lodged by Budějovický Budvar. 21.  In a judgment of 18 July 1998, the Lisbon Court of First Instance dismissed the appeal. It found that the only intellectual property eligible for protection under Portuguese law and the Bilateral Agreement (which, according to the court was no longer in force, owing to the disappearance of one of the contracting parties, Czechoslovakia) was the “Českobudějovický Budvar” appellation of origin, not the “Budweiser” trade mark. In addition, it found that there was no risk of confusion between the appellation of origin and the applicant company’s trade mark, which the vast majority of consumers tended to think of as an American beer. 22.  Budějovický Budvar appealed against that decision to the Lisbon Court of Appeal, alleging, inter alia, a breach of Article 189 § 1, sub-paragraphs (l) and (j), of the Code of Industrial Property. In a judgment of 21 October 1999, the Lisbon Court of Appeal overturned the impugned judgment and ordered the NIIP to refuse to register “Budweiser” as a trade mark. The Court of Appeal did not consider that there had been a breach of Article 189 § 1 (l) of the Code of Industrial Property, as the expression “Budweiser” was incapable of misleading the Portuguese public as to the origin of the beer concerned. However, it found that such a registration would infringe the Bilateral Agreement and, consequently, Article 189 § 1 (j) of the Code of Industrial Property. In that connection, it noted that the Bilateral Agreement had remained in force, following an exchange of notes between the Czech and Portuguese governments (see paragraph 25 below) and had been incorporated into domestic law by virtue of Article 8 of the Constitution, which contained a clause providing for international law to take effect in the Portuguese legal system. 23.  The applicant company appealed on points of law to the Supreme Court alleging, inter alia, that the impugned decision contravened the Agreement of 15 April 1994 on the Trade-Related Aspects of Intellectual Property Rights (“the TRIPs Agreement”), which establishes the rule that registration confers priority, and in particular its Articles 2 and 24 § 5. The applicant company also alleged that, in any event, the protected appellation of origin “Českobudějovický Budvar” did not correspond to the German expression “Budweiser”, so that the Bilateral Agreement could not be used to challenge its application for registration. The applicant company argued that, even supposing that the German expression “Budweiser” was an accurate translation of the Czech appellation of origin, the Bilateral Agreement applied only to translations between Portuguese and Czech, not to translations into other languages. It submitted, lastly, that the Bilateral Agreement was unconstitutional owing to a formal defect in that it had been adopted by the government, not Parliament, in breach of Articles 161 and 165 of the Constitution governing parliamentary sovereignty. 24.  The Supreme Court dismissed the appeal on points of law in a judgment of 23 January 2001, which came to the applicant company’s attention on 30 January 2001.
With regard to the TRIPs Agreement, the Supreme Court began by noting that the provision on which the applicant company relied required it to have acted in good faith before going on to say that the applicant company had not referred in its application for registration to any factual information that demonstrated its good faith. In any event, the effect of Article 65 of the TRIPs Agreement was that it had not become binding under Portuguese law until 1 January 1996, that is to say after the entry into force of the 1986 Bilateral Agreement. The Supreme Court therefore found that the TRIPs Agreement could not take precedence over the Bilateral Agreement.
As regards the interpretation of the Bilateral Agreement, the Supreme Court considered that the intention of the two contracting States in entering into it had incontestably been to protect through reciprocal arrangements their respective national products, including when translations of a name were used. The appellation of origin “Českobudějovický Budvar”, which became “Budweis” or “Budweiss” in German, indicated a product from the České Budějovice region in Bohemia. It was therefore protected by the Bilateral Agreement.
Lastly, the procedure whereby the Agreement had been adopted did not contravene Articles 161 and 165 of the Constitution, since it did not concern a sphere for which Parliament had exclusive competence.