Starting to carry out entrepreneurial activities, any person thinks first of all about a material component of his business, namely how to invest, what property to acquire in order to implement the plan, how to organize the manufacture. At the same time, entrepreneurs often postpone the registration of their rights to intellectual property subject matters that arise as a result of such activities.
Having organized the manufacture of products, the entrepreneurs have already solved many problems, and often only the next stage for the entrepreneur is registering and obtaining protection documents with respect to intellectual property subject matters. One of such subject matters is a trademark, which is a designation, which serves for the individualization of similar products and services of economic entities.
The person who has obtained the exclusive right to a trademark has the right to use it at his own discretion by any way that is not contrary to the law. The right holder may dispose of the exclusive right to a trademark, in particular, by concluding a license agreement with factories, sellers and other participants of the chain – from a manufacturer to a consumer.
When carrying out entrepreneurial activities, as well as when registering a trademark, conscientiousness is presumed. By registering his trademark, the entrepreneur first of all aims to protect himself from the claims of third parties. Also, the entrepreneur is interested in preventing the use of his designation by competitors.
As it is obvious, with the expansion of business, the manufacture volumes, the territory of the distribution of products, the distribution network are increasing, and thereby the recognizability of the trademark among consumers is increasing, which in turn leads to an increase in sales and revenue. The positive dynamics of the increase in sales and the increase in the rating of the product marked with a trademark evokes the competitors’ desire to take advantage of a well-deserved reputation and to promote their products using the registered trademark.
In this situation, the right holder is forced to undertake steps to protect his trademark, which being as such in separate branches of the manufacture is the fundamental means for the promotion of the product, rather than of the properties and characteristics of this product. The consumer often encounters a situation when the choice of the product is determined by a bright package, and not by the consumer properties of this product. This often happens with the products intended for the children, who choose the products, the products for bath and other products merely because their packages contain a favorite character of a book or animated cartoon film.
The violation can be expressed in any form, starting with the use of an identical or confusingly similar designation for marking the product, finishing with the promotion of the product, which is a complete clone of the right holder’s product.
Also, the cases of the illegal use of a trademark in the Internet often occur. The most common is the registration of a domain name, which is then used for addressing the Internet website, where along with the products of the trademark’s right holder, the products of other competitors, including the domain administrator, are promoted. The registration of a domain similar, which is confusingly similar to the trademark is applied for the purposes of promoting the own products, using the reputation and recognizability of the products of the trademark’s right holder.
Unfortunately, there are a lot of ways of the illegal use of a trademark both in domain names and in websites, when the product is offered for sale in contextual advertising in the Internet. To prevent the “dilution” of his trademark and to preserve its reputation as a guarantor of preserving his business, the right holder of the trademark must protect it. But it is not always obvious how to do this, and the most important thing is how to do it correctly, in order in future one could avoid getting claims, so that to exclude the effect of the boomerang. In this regard, first of all, it is necessary to know one’s rights and to be able to assess the risks of initiating any disputes.
According to Paragraph 1 of Article 1229 of the Civil Code of the Russian Federation “The right holder may at his discretion permit or prohibit other persons to use the result of intellectual activity or the means of individualization. The absence of a prohibition shall not be considered as a consent (permission).
Other persons shall not use the respective result of intellectual activity or the means of individualization without the consent of the right holder, except the cases stipulated by the Code. The use of the result of intellectual activity or the means of individualization (including their use by the ways stipulated by this Code), if this use is exercised without the consent of the right holder, shall be illegal and shall entail the responsibility stipulated by the this Code and other laws, except the cases when the use of the result of intellectual activity or the means of individualization by the persons other than the right holder without the consent of the latter shall be allowed by the this Code.”
According to Paragraph 3 of Article 1484 of the Civil Code of the Russian Federation “No one shall have the right to use without the permission of the right holder the designations being similar to his trademark with respect to the products for the individualization of which the trademark has been registered, or to the similar products, if as a result of such use the possibility of confusion appears.”
Thus, the use of a trademark on the similar products, when promoting the products, including through the Internet, without the consent of the legal right holder is illegal and entails the responsibility stipulated by the legislation.
The elements of the violations and the responsibility are stipulated by the Civil Code of the Russian Federation, the most common ones are the prohibition of the use and the recovery of compensation. The following is also stipulated by the Law of the Russian Federation “On Protection of Competition” and the Code of the Russian Federation on Administrative Offenses: confusing, creating confusion due to the illegal use of a trademark and/or the imitation of a product or package.
Thus, when seeking protection of the right, it is necessary to exclude the main risks.
A refusal to satisfy claims.
The following circumstances are included in the fact in proof with respect to the claim for protection of the exclusive right to a trademark: the fact that the said right belongs to a plaintiff and the fact of the violation of it by a defendant by way of using the trademark without the permission.
For the dispute of this category, it is necessary to collect the evidence confirming an illegal use. Before determining the evidentiary basis, it is necessary to understand clearly how and where the designation, which is identical/confusingly similar to the trademark, is used. Depending on the use, the evidence can be as follows
The documents obtained as a result of the purchase of the product – if the trademark is used on the product, that is imported, offered for sale, sold and otherwise introduced in civil law transactions on the territory of the Russian Federation, and also that is stored and transported for this purpose
A certificate on the domain name administrator – if the trademark is used in the domain.
A notarized protocol of inspection of the website – if the trademark is used in the domain and/or in the website.
It is important to determine correctly the circle of defendants and the jurisdiction of the dispute. For example, any person in the chain of the violations: a manufacturer, a seller, a supplier, an administrator of the domain name can be a defendant. If at least one of these persons is an individual, who does not have the status of an individual entrepreneur, then the statement of claim must be filed not to an arbitration court, but to a general jurisdiction court, what often complicates the procedure for considering this dispute, since in general jurisdiction courts the disputes on protection of the rights to a trademark are considered rather rarely.
If the right holder of the trademark becomes aware that the designation used by his competitors is registered as a trademark/industrial design, then even despite the obvious similarity, the satisfaction of the claims may be refused, because the rights of the competitors to the similar subject matter of intellectual property have not been challenged. This position has already found its confirmation in the judicial practice not only in respect of trademarks, but also in respect of technical solutions.
The reduction in the amount of compensation.
Special attention should also be paid to the compliance with the prejudicial dispute settlement procedure. So, if the right holder of the trademark, in addition to the claim for the prohibition of the use, intends to file a material claim, in particular, to recover compensation, then a claim letter must be filed thirty days before filing the statement of claim. The postal receipt on filing and a copy of the claim letter will serve as an evidence of the compliance with the prejudicial procedure of the dispute settlement.
The exhaustion of the rights.
According to Article 1487 of the Civil Code of the Russian Federation “The exclusive right to a trademark shall not be deemed violated, if this trademark is used by other persons with respect to the products 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.”
The defendant, as a rule, gives an argument about the exhaustion of the right in the situation, when the right holder of the trademark is a foreign company, which manufactures the product abroad and delivers the product to Russia for subsequent sale. Following the letter of the law, the deliveries are carried out under an agreement that regulates the relationships concerning the use of the trademark and stipulates the payment of an appropriate remuneration.
The foreign manufacturer, by combating the parallel imports, often fails to be always aware of what kind of product is before him: imported legally or by way of the parallel imports. Filing a claim to a possible gray importer, one should make sure that this product is really “gray” and there is no the exhaustion of the rights. Otherwise, the satisfaction of the filed claims may be refused.
Challenging the right to a trademark.
The right holder of a trademark, seeking for its protection in a court, proceeds from the fact, that he has an exclusive right, and the first thing that the defendant can do is to challenge the right to the trademark. The law stipulates several possible ways to challenge a trademark, and before initiating a lawsuit, the right holder should exclude the risk of declaring his trademark to be invalid.
The recognition of the legal protection of the trademark to be invalid.
According to Paragraph 1 of Article 1513 of the Civil Code of the Russian Federation “Granting the legal protection to a trademark may be challenged on the grounds and within the time periods, stipulated by Article 1512 of this Code by means of filing an objection against such granting with the federal executive authority on intellectual property.”
The conditions for the protectability of a trademark are given in Article 1483 of the Civil Code of the Russian Federation. If the right holder is aware of the possible grounds on which the legal protection of the trademark can be recognized to be invalid, then he may be recommended to “weigh” all pro and contra again and perhaps to refrain from filing claims.
An early termination of the legal protection of a trademark
According to Paragraph 1 of Article 1486 of the Civil Code of the Russian Federation “The legal protection of a trademark may be early terminated with respect to all products or the parts of the products, for the individualization of which the trademark has been registered, due to the non-use of the trademark continuously within any three years after its state registration.”
The use of a trademark means a certain liability of the right holder, and in case of filing a claim, the burden of proving the use lies with him. Thus, in fact, the use should take place at least once every three years to exclude the risk of an early termination of the legal protection.
An interested person, namely the person who carries out similar activities and has an intention to use a similar designation, can apply to a court. When justifying the interest, the principle of similarity of products shall be applied, and this principle shall not be applied to the right holder, who is forced to prove the use of each product/service.
The recognition of the acquisition and use of the trademark to be an unfair competition act.
According to Paragraph 1 of Article 14.4 of the Law of the Russian Federation “On Protection of Competition” “The unfair competition associated with the acquisition and use of the exclusive right to the means of individualization of a legal entity, the means of individualization of products, works or services (hereinafter referred to as the means of individualization) shall not be allowed.”
The unfair competition associated with the acquisition and use of the exclusive right to the means of individualization of a legal entity, the means of individualization of products, works or services, is only a set of actions for the acquisition and use of the exclusive rights to the means of individualization, and it is not one of them.
When qualifying the actions of an economic entity as an unfair competition act, the set of circumstances, which are investigated and assessed exclusively in the aggregate and interconnection, are subject to be taken into account and to be assessed.
So, an antimonopoly authority or a court can apply Article 14.4 of the Law of the Russian Federation “On Protection of Competition” in the case
if the person who has acquired the trademark knew at the moment of the registration of the trademark about the existence of third-party competitors, which were using that registered designation at that moment or prior to it;
if currently it actively restricts the rights of the competitors to use such designation;
the designation has gained popularity among the consumers at the expense of other persons, but not the one who has registered the trademark;
the applicant is a competitor (the person who has applied to the supervisory body), who has existed even prior to the registration of the trademark.
The described risks are far from being exhaustive, and there is also the risk of filing a claim to the right holder about the abuse of the right, which is intentionally not announced in this article, since special attention can be given to this ground.
When filing claims to the alleged violators of the exclusive right, the right holders of trademarks may be advised to be extremely prudent and attentive, if it is possible, to minimize the risks of getting a refusal to satisfy the claims or the risk of getting the claims, which are often recognized to be justified.