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Exhaustion of Exclusive Right to Trademark

March 26, 2018

Among the appeals of our clients there are cases when companies or individual entrepreneurs carrying out retail trade in goods under well-known brands face problems on the part of tax or law enforcement bodies on the problem of the lack of legal justifications for the use of subject-matters of intellectual property.

 

In particular, the actual problem is that in carrying out trade, it is necessary to have licensing agreements with the right holders of these trademarks.

 

Let us get it all sorted out – are these requirements justified?

In accordance with Article 1484 of the Civil Code of the Russian Federation, the person in whose name the trademark has been registered (the right holder), owns an exclusive right to use the trademark in any manner not conflicting with the law. The right holder may dispose of the exclusive right to the trademark. The exclusive right to a trademark may be exercised for the individualization of goods, works or services for which the trademark has been registered, in particular by placing the trademark: on goods including on labels, the packaging of goods which are manufactured, offered for sale, are sold, exhibited at exhibitions and fairs or are otherwise introduced in civil-law transactions on the territory of the Russian Federation or are stored or transported for that purpose or are imported into the territory of the Russian Federation. Nobody has the right without the right holder's permission to use the designations which are similar to his/its trademark for the goods for the individualization of which the trademark has been registered, or for homogeneous goods if such use might result in confusion.

In accordance with Article 1515 of the Civil Code of the Russian Federation the goods, labels, packaging of goods on which the trademark or the designation similar thereto to the extent of confusion has been illegally placed shall be counterfeit.

However, according to Article 1487 of the Civil Code of the Russian Federation: The Exhaustion of the Exclusive Right to a Trademark “The exclusive right to a trademark shall not be deemed infringed if the trademark is used by other persons in respect of the goods that have been introduced in civil-law transactions on the territory of the Russian Federation directly by the right holder or with the consent thereof.”

In accordance with this article, the legislator implies the use of a trademark by other persons, not the right holder personally, with respect to the labeled goods introduced in civil-law transactions, on which the trademark under the effective legal protection was used. Proceeding from this, the subsequent use of the same trademark on the same goods shall not be deemed the infringement of exclusive rights even without obtaining the right holder’s permission.

Additional permission from the right holder to sell these goods is not required, since the goods have been labeled by the manufacturer, they have been legitimately introduced in civil-law transactions on the territory of the country in accordance with the law. That is, the legislator implies that the right to the goods which have been labeled with the trademark, which is under the effective legal protection, is deemed to have been exhausted.

The interpretation of this rule is reflected in the extensive judicial practice, which confirms the above arguments.

If the acquisition of goods: clothes, shoes or perfume products under well-known brands is carried out on the basis of the supply agreements concluded with authorized importers and suppliers, this fact indicates that the goods labeled with the trademarks are being introduced by the seller in civil-law transactions on the territory of the Russian Federation with the consent and under the supervision of the right holders of the trademarks.

Thus, the acquisition of goods in the manner indicated above and the subsequent introduction of them in civil-law transactions shall not be deemed the infringement of exclusive rights of the right holder of the trademarks and does not require the conclusion of additional licensing agreements with them.

Taking into account the above mentioned, we believe that the problem under consideration concerning the need to conclude licensing agreements by sellers does not have any legal basis, as it does not meet the current Russian legislation.

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Author of article

Natalya Nazarova

Natalya Nazarova

Agreement’s Lawyer