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The use of exclusive right of the commercial designation

March 28, 2019

According to Article 1539 of the Civil Code of the Russian Federation: “The right holder owns an exclusive right to use a commercial designation as a means of individualization of the enterprise belonging to him in any manner, which is not contrary to the law (the exclusive right to a commercial designation), including by indicating the commercial designation on billboards, letterheads, bills and other documentation, in announcements and advertisements, on the products or the packaging thereof, in the Internet, if such designation possesses sufficient distinctive features and its use by the right holder for the individualization of his enterprise is known within a certain territory.”

The legislation of the Russian Federation and the international legal acts recognize the existence of the exclusive right to the commercial designation. However, the bases for its emergence are not determined legislatively, namely, the issue on the conditions and the moment of the emergence of the exclusive right to this subject matter, what is one of the most controversial issues emerging at determining the legal regime of the commercial designations.

Unlike a company name and a trademark, the commercial designation shall subject to be neither included in the constituent documents of a legal entity and the Unified State Register of Legal Entities, nor registered in the Patent Office. In other words, the exclusive right emerges due to a registration procedure.

The legal community has different opinions to the moment of the commercial designation emergence. In particular, the moment of the emergence of the exclusive right to the commercial designation should be considered the moment of the actual introduction of such designation into the civil circulation, i.e. the first fact of the use of this designation in the entrepreneurial activities. In this case, for the emergence of the right to the commercial designation, the fact of its well-known status is necessary; consequently, a certain period of the use is necessary. Thus, if to take into account the criterion of the well-known status, then the moment of the emergence of the right to the commercial designation should be considered the fact of the recognition of the designation as well-known.

This statement is confirmed by a number of lawyers, believing that the right to the commercial designation may not emerge earlier than the certain known status of this designation is achieved in relation to some company, and it is terminated with the loss of such known status.

In view of the fact that the moment of the emergence and existence of the exclusive right to the commercial designation entails many controversial situations, the right holder has a possibility to prove the emergence and existence of the exclusive right to the commercial designation only through legal proceedings. Before the arbitration court makes an appropriate decision, the right holder, as well as the users under an agreement, can not be sure that the exclusive right has emerged and, at the same time, it does not violate the rights to other means of individualization, including the commercial designation.

To settle such situation, a number of assumptions have been expressed about the need to register this exclusive right. It seems necessary for the state to assume the function of tracing and recording the commercial designations. Besides, this function should be carried out not at the stage of using such commercial designation, but at the stage of its introduction into a commercial circulation. Such procedure for monitoring the correctness of the emergence and the use of the commercial designations facilitates substantially the task for those, who try to prevent the violation of the rights to, for example, the trademarks, the company names, even at the stage of the introduction into the circulation of the commercial designation that does not meet the established rules. In addition, the existence of the state monitoring for the lawfulness of the use of the commercial designations will facilitate the fullest serving the interests and the consumers.

The opinions were discussed on the need to entrust powers to the Federal Executive Authority for Intellectual Property, which has considerable experience in maintaining the registers of the intellectual property subject matters and the means equated to them, in maintaining a special register of the commercial designations. The possibility of including the information on the commercial designation in the register will also allow the consumers obtaining and checking this information.

 Thus, the basis for the emergence of the right to the commercial designation should become the registration of the commercial designation by the Federal Executive Authority for Intellectual Property.

Supping up, three points of view for the emergence of the exclusive right to the commercial designation may be highlighted:

– registering (subject to its further implementation);

– the first actual use. The proof of the emergence may be various kinds of promotional materials, payment orders, the samples of packaging of the products with the included commercial designation, etc.;

– a well-known status, i.e. a wide public use.

The above situation clearly demonstrates the existence of a number of the controversial issues relating to the commercial designations. Also, bearing in mind that the intellectual property market is developing rapidly, the means of individualization are used actively, including in the Internet. This basis causes, in turn, an increase in the violations related to the illegal use of the commercial designation, which makes it necessary to amend and clarify the legislation.

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Author of article

Natalya Nazarova

Natalya Nazarova

Agreement’s Lawyer