The application of Paragraph 6 of Article 1252 of the Civil Code of the Russian Federation in the disputes on the defense of the exclusive right to the means of individualization.

According to the legal positions expressed in Resolution of the Presidium of the Intellectual Property Court of 28.03.2014 No. SP-21/4 “On the Approval of the Reference Regarding the Issues Arising During the Consideration of Domain Disputes,” the exclusive right to the use of a trademark as an absolute right shall be corresponded by the obligation of an indefinite number of third parties to prevent the use of the designations that are identical or confusingly similar to the right holder’s trademark in respect of the similar products.

When analyzing this legal approach of the Intellectual Property Court, then at first glance it may seem that the person having the exclusive right to the trademark has an “absolute power” over this designation.

For some reason, I immediately think of the Ring of Omnipotence, Gandalf, Sauron, Orcs, the All-Seeing Eye... Oh, it seems that I was carried away in a wrong direction.

So, according to Paragraph 1 of Article 1484 of the Civil Code of the Russian Federation (hereinafter referred as the C.C.R.F., the Code), the person, in whose name the trademark is registered (the right holder) has the exclusive right to the use of the trademark in accordance with Article 1229 of the C.C.R.F. in any way that is not contrary to the law (the exclusive right to the trademark). The right holder may dispose of the exclusive right to the trademark.

According to Paragraph 2 of Article 1484 of the C.C.R.F., the exclusive right to the trademark can be implemented for the individualization of the products, works or services, in respect of which the trademark is registered, in particular by placing the trademark: on the products, including on the labels, the packages of the products that are manufactured, offered for sale, sold, demonstrated at exhibitions and fairs or otherwise introduced into the civil circulation on the territory of the Russian Federation, or stored, or transported with this purpose, or imported into the territory of the Russian Federation; at performing works, rendering services; on the documentation related to the introduction of the products into the civil circulation; in the offers for sale of the products, for performing works, for rendering services, as well as in advertisements, on outdoor signs and in advertising; in the network Internet, including in a domain name, and by other ways of addressing.

No one shall be entitled to use without the right holder’s permission the designations that are similar to his trademark in respect of the products for the individualization of which the trademark is registered, or the similar products, if as a result of such use the possibility of confusion appears (Paragraph 3 of Article 1484 of the Code).

Thus, Article 1484 of the C.C.R.F. defines a list of the ways to use the trademark, under which the person, who uses without the right holder’s permission the designations that are identical or confusingly similar to his trademark in respect of the similar products or services for the individualization of which the trademark is registered, can be recognized as a violator.

Let us imagine the following situation:

An individual entrepreneur has been engaged in the commercial activities related to computer repairing since 2005 in the city of Tomsk under the commercial designation “Transistor.” This designation has not been registered by him as a trademark. In addition, the entrepreneur is an administrator of the domain name tranzzzistor.ru.

In 2018, in Nizhniy Novgorod, LLC Transistor was formed, which also began to carry out the computer repair activities and filed an application for the registration of the trademark of the same name in respect of the services of the 37th class of the ICGS.

In 2019, the company obtained the right to the trademark and filed a statement of claim to the court against the entrepreneur on prohibiting the use of the designation “Transistor,” as well as the designations derived from it, while carrying out the commercial activities for installing, maintaining and repairing computers. The company also asked the court to prohibit the entrepreneur to use those designations in the domain name and at the website, and claimed damages.

If to be guided exclusively by the legal position set out in Article 1484 of the C.C.R.F. and the explanations of the Intellectual Property Court, then, at first glance, the entrepreneur is in a tight corner, and most likely, he will have to say goodbye to the well-known by the natives of Tomsk designation, domain name, and some part of the funds earned as he will have to pay to their right holder as the damages for the illegal use of the trademark.

Meanwhile, if to take a close look at this situation, the entrepreneur has rather good chances of winning, and here is why.

As mentioned above, the entrepreneur started his activities under the disputable designation in 2005 and he has been doing it continuously since that time, while the company was formed only in 2018, so it turns out that the entrepreneur is the holder of the “senior” right to the use of the designation “Transistor” as a commercial designation.

At the same time, in my opinion, there is a certain analogy with the regulation of the rights to the patents, in respect of which the legal regime of the prior use right can be applied.

The prior use right is the right of the person, who is not the patent holder to the gratuitous use of the solution that is identical to the patented one. The prior use right does not refer to the intellectual rights, on the contrary, it acts as the restriction of someone else’s exclusive patent right. Accordingly, the prior user’s actions are not a violation of the rights of the patent holder: “the prior use right refers to the conditions that exclude liability for the use of the subject matters of the patent right.”

Although the legal norms regulating the relations related to the trademarks, unlike the patents, do not contain the concept of the prior use, but one should not forget about the provisions of Paragraph 6 of Article 1252 of the C.C.R.F., which regulate the legal relations under the conditions of the competition of various means of individualization.

Thus, in accordance with Paragraph 6 of Article 1252 of the C.C.R.F., if various means of individualization (a company name, a trademark, a service mark, a commercial designation) are identical or confusingly similar, and as a result of such identity or similarity, the consumers and (or) counterparts can be confused, the advantage shall belong to the means of individualization, the exclusive right to which has arisen earlier, or, in the cases of establishing a priority under the Convention or an exhibition priority, to the means of individualization, which has an earlier priority.

If there is such competition, the relevant dispute on the grounds of Paragraph 6 of Article 1252 of the C.C.R.F. shall be resolved in favor of the right holder of the means of individualization that has the earlier priority.

By virtue of Article 1480 of the C.C.R.F., the state registration of the trademark shall be carried out by the Federal Executive Authority on Intellectual Property in the State Register of Trademarks and Service Marks of the Russian Federation pursuant to the procedure established by Articles 1503 and 1505 of this Code.

It is stipulated by Paragraph 2 of Article 1481 of the C.C.R.F. that the certificate for the trademark shall certify the priority of the trademark and the exclusive right to the trademark in respect of the products indicated in the certificate.

In accordance with Paragraph 1 of Article 1494 of the C.C.R.F., the priority of the trademark shall be established on the date of filing the application for the trademark to the Federal Executive Authority on Intellectual Property.

By implication of Article 1538 of the C.C.R.F., both the word and figurative or the combined designations shall be protected as the commercial designations.

The exclusive right of the use of the commercial designation on the grounds of Paragraph 1 of Article 1539 of the C.C.R.F. shall belong to the right holder, if such designation has sufficient distinctive features and its use by the right holder for the individualization of his enterprise is well-known within some certain territory.

In this connection, the right to the commercial designation arises not earlier than the moment of the beginning of the actual use of such designation for the individualization of the enterprise (for example, a shop, a restaurant and so on) (Paragraph 177 of Resolution of the Plenum of the Supreme Court of the Russian Federation of 23.04.2019 No. 10 “On the Application of Part Four of the Civil Code of the Russian Federation.”

Thus, if the court finds that the actual continuous use of the commercial designation “Transistor” by the entrepreneur began in 2005, and also that this designation has acquired sufficient distinctiveness and popularity on some particular territory, the court can take into account the earlier date of the arise of the right to the entrepreneur’s commercial name than the company’s rights to the trademark, what may serve the grounds for the court’s conclusion that there are no grounds for satisfying the statement of claim.

The analysis of the judicial practice regarding the application of the provisions of Paragraph 6 of Article 1252 of the C.C.R.F. shows that the courts rather often apply this norm starting to defend the economic entities that are under the threat of being held liable for the illegal use of the trademark.

The similar legal position was reflected in Resolutions of the Intellectual Property Court of 31.05.2018 in case No. А27-5416/2017 and of 28.04.2018 in caseNo. A56-58258/2016.

At the beginning of the article, I cited the legal position indicated in the reference of the Intellectual Property Court, according to which the exclusive right to the use of the trademark as the absolute right is corresponded by the obligation of the indefinite number of third parties to prevent the use of the designations that are identical or confusingly similar to the right holder’s trademark in respect of the similar products.

However, if to compare this legal position with the provisions of Paragraph 6 of Article 1252 of the C.C.R.F., it is possible to conclude that the right to the trademark is not so absolute, since it may be restricted, due to the presence of another person's earlier right to the commercial designation.