13 December 2007 Presidium of the Supreme Arbitration Court of the Russian Federation approved Information letter No. 122 "Review of the court practice of consideration by arbitrazh court of cases, relating to the application of the legislation on intellectual property"1. In accordance with the legal position stated in clause 13, the question of designations confusing similarity is an issue of fact and the general rule is that it can be settled by court without appointment of an examination.
Judicial practice precedent to this information letter on claim seeking the prohibition of illegal use of a trademark came down to the fact that in many cases the courts appointed an examination proceeding on the similarity of the trademark of the plaintiff with the designation of the respondent, this appointment dragged out trials for a year or more, thus the judicial restraint of illegal use of a trademark became an extremely ineffective method of exclusive rights protection.
Realizing the complexity and duration of the legal proceeding, until 2008 the rights holders together with the filing of a complaint, also applied regularly to the police to create more problems for the offender.
With the approval of the Information letter, the number of such applications has decreased; the number of proceeding has increased.
Six years have passed since the approval of the Information letter and a certain judicial practice has been formed, in this article the result of this practice will be discussed.Analysing court adjudication on claim seeking the prohibition of illegal use of a trademark and comparing such decisions with court adjudications on contestation of the decisions of Rospatent that considered objections to granting legal protection to a similar trademark, the following conclusion can be made:
When approving information letter No. 122 "Review of the court practice of consideration by arbitrazh court of cases, relating to the application of the legislation on intellectual property", the Supreme Arbitration Court of RF stated in clause 13 that "Examination is appointed only for the resolution of the issues arising during the investigation when special knowledge is required. The question of confusing similarity of the two verbal designations used on the goods of the plaintiff and the respondent can be resolved by court from the point of view of an ordinary consumer and does not require special knowledge".
Does this position mean that when comparing trademarks, it is not necessary to be guided by any normative acts establishing the criteria for similarity of compared designations, for example, the Rules for the preparation, application and examination of an application for the registration of a trademark and a service mark (approved by Rospatent Order No. 32 dd. 05.03.2003)?2 - No, it doesn't.
In the same clause 13 of information letter the Supreme Arbitration Court of RF states that according to the sixth sub-paragraph of clause 14.4.2 of the Rules for the preparation, application and examination of an application for the registration of a trademark and a service mark (approved by Rospatent Order No. 32 dd. 05.03.2003) (hereinafter referred to as the Rules), a designation shall be interpreted as confusingly similar to another designation , if it becomes associated with it in general despite their individual differences.
Thus, after analysing position of the Supreme Arbitration Court of RF stated in clause 13 of information letter No. 122, it's apparent that the Supreme Arbitration Court of RF pointed at the fact that establishment of the similarity of a trademark with a disputable designation does not require special knowledge; i.e. examination procedure; at the same time, when establishing the similarity, it is necessary to apply the Rules.
These Rules are applied by Rospatent in the process of registration of trademarks and of consideration of objections against granting protection to a trademark.
These Rules should be applied by courts in the process of comparing a trademark with the designation used by the respondent.
However, the analysis of court adjudications shows that the courts, guided by clause 13 of information letter of the Supreme Arbitration Court of RF No. 122, come to a conclusion about the similarity/dissimilarity of the compared designations "from the point of view of an ordinary consumer", i.e. they express in their court adjudication their own subjective point of view as if the point of view of the consumer. Practically in all analyzed judicial acts, reference is made to the comparison of designations in accordance with the three criteria of similarity established by the Rules; however, in all court adjudications and decisions, the above analysis of the similarity of the compared designations is not fully completed, there are no comparisons for one or two criteria of similarity: phonetic, semantic or graphic.
In subclauses (a) - (c) of clause 22.214.171.124 of the Rules, the signs of similarity of the compared designations are indicated: sound, graphic and semantic.
In subclause (d) of clause 126.96.36.199 of the Rules it is stated that: The characteristics listed in subclauses (a) - (c) of this subclause may be taken into account, either individually or in various combinations.
This means that the similarity of the compared designations can be on any of the signs of similarity. The absence of a comparison on any of the marks in a judicial act indicates an incomplete judicial act.
Very often for the past 2-3 years court adjudications and decisions where there is no comparison of designations for any of the similarity criteria, or for two of similarity criteria are published.
I would like to explain this opinion by example of decree of Ninth Arbitration Appeal Court on case А40-187101/20133 concerning the suit of Aleksandrovy Pogreba LLC to EL-GRAND LLC, ELITTORG LLC, LeoLit LLC, FudProm LLC and Top-Servis LLC.
In this case the plaintiff addressed the respondents with a claim seeking the prohibition of illegal use of a trademark Challenge No. 3806114 and recovery of compensation.
Trademark of the Russian Federation №380611 Cigar GURKHA Royal Challenge 5
Moscow City Court of Arbitration decision dated Moscow City Court of Arbitration, which was upheld by decree of Ninth Arbitration Appeal Court dated 25.06.2014 and Intellectual Property Court decision dated 26.09.2014 dismissed the claim.
Below the text of the decree of Ninth Arbitration Appeal Court is provided, also comments are given, the text of the judicial act is italicized:
Based on these provisions of the Rules, resolving the issue of confusing similarity of the verbal designation GURKHA or GURKHA Royal Challenge with the trademark CHALLENGE according to Certificate No. 380611 the Court of Appeal comes to the conclusion that there is no confusing similarity of the indicated designations and the trademark of the plaintiff according to all the criteria.
Such conclusion on "absence or presence of similarity in all criteria" is given in almost all decrees establishing the similarity or dissimilarity of the comparative designations. There is no analysis by all similarity criteria.
As can be seen from the case materials the design of cigars GURKHA is a combined designation, the combined designation of cigars GURKHA includes verbal elements "GURKHA" and "royal challenge". The Court of Appeal believes, that compared designations GURKHA or GURKHA Royal Challenge do not match in all elements and that is why they shall not be interpreted as identical.
An analysis of the similarity of the compared designations by the three criteria established by the Rules is not given in the decree.
Herewith the verbal element GURKHA Occupies a dominant position with respect to the verbal element of the "royal challenge", since it is located in the centre and is made with a larger font.
There may be several trademarks / designations on a product. Pursuant to clause 188.8.131.52 of the Rules "Verbal designations are compared with combined designations whose compositions include verbal elements".
The Rules do not provide for similarity absence due to the dominance of one of the elements, which should not even be taken into account when comparing the verbal designations "Royal Challenge" and "Challenge". The court should compare and analyse the similarity of designations "Royal Challenge" and "Challenge". Why should it? Because this would be done by Rospatent in case the combined designation "GURKHA Royal Challenge" would be applied for registration as a trademark. Because courts verify the correctness of Rospatent's decisions, when challenging Rospatent's decisions in which such arguments are given.
This approach correctness is reflcted in the decree of the Supreme Arbitration Court of RF on case А40-2569/20116 (Lina LLC to MacDonald’s LLC) "Meanwhile, the courts unreasonably assessed the font size of a designation, a place of its location on a package, the presence on a package of designations and trademarks of other right holders, since the above mentioned has no legal significance in establishing the opposable designations' identity and does not affect the conclusion on law infringement availability in the respondent's actions through using someone else's trademark, but rather is subject to investigation in case of the designations similarity to determine whether they can be confused".
So, namely the verbal element of GURKHA performs the primary function of goods individualization (cigars) of a legal entity.
Verbal element royal challenge is a descriptive characteristic of the goods both as to a position in a combined designation and as to semantic meaning, consequently by virtue of subclause 3 of clause 1 of article 1483 of the Civil Code of the Russian Federation it does not possess of a distinctive ability.
Is a court entitled to make conclusions on a distinctive ability absence of a trademark in a suit on prohibition to use such a trademark? The same decree of the Supreme Arbitration Court of RF with regard to case А40-2569/2011 (Lina LLC to MacDonald’s LLC) states:
"The courts have unlawfully rejected a suit on the grounds of a distinctive ability absence of a trademark "S PYLU S ZHARU", as well as due to the fact that a designation is composed of the elements characterizing quality and properties of the goods, since a legal protection granting to a trademark is not disputed in accordance with the procedure established by the law. Clause 62 of decree dd. 26.03.2009 No. 5/297 also states that a person in whose name a trademark is registered may not be rejected his/her protection (even if proofs of unlawfulness of a trademark registration are provided to court) prior to declare invalid a legal protection granting to such a trademark in accordance with the procedure established by article 1512 of the Code or legal protections cancellation of a trademark in accordance with the procedure established by article 1514 of the Code".
So, a court can't make a conclusion on a distinctive ability absence of a trademark at a suit on unlawful use prohibition of such a trademark.
The Court of Appeal also believes it is necessary to specify that thee is a threat of confusion if one trademark is perceived as the other one or if a consumer understands that it is referred not to the same trademark, but believes that both trademarks belong to the same enterprise. Such a threat depends on several circumstances: firstly, on a distinctive ability of a trademark with an earlier priority; secondly, on similarity of opposable trademarks; thirdly, on homogeneity evaluation of goods and services designated by a trademark.
Such a position complies with the legal position of the Supreme Arbitration Court of the Russian Federation outlined in Decree of the Presidium dd. 18.07.2006 No. 2979/06 with regard to case No. А40-63533/04-67-642, order dd. 30.05.2011 No. ВАС-5661/11 with regard to case No. А40-39536/10-12-240.
However, a plaintiff has not provided an evidence that as a result of use by the respondents of disputable designation Challenge, the consumers believed or could have believed that a disputable designation personalized the plaintiff's activities as a right holder of a trademark CHALLENGE under evidence No. 380611.
Materials in the case don't contain a proof providing evidence that the products – cigarillos of CHALLENGE trademark mentioned in a statement of claim, are in actual turnover.
Prrof absence of trademark CHALLENGE use by the plaintiff under evidence No. 380611 is estimated by the Court of Appeal as a circumstance preconditioning an actual impossibility of the plaintiff's trademark confusion CHALLENGE" under evidence No. 380611 in the consumer's eyes with the disputable designation "Challenge used by the respondents".
In recent time the courts reject a suit very often due to lack of evidence of a trademark confusion with a designation used by a respondent. But, on basis of what rule of law do courts reject a suit due to lack of evidence of use? Article 1515 of the Civil Code of RF sets forth two criteria for establishing the exclusive right breach for a registered trademark and prohibition on a similar designation use:
When registering trademarks Rospatent rejects a a requested designation registration even having established probability of confusion on basis of similarity of the compared designations. Courts, when considering suits on unlawful use prohibition and claims of proving a fact of confusion, seem to proceed from the requirements of article 65 of the Arbitration Procedure Code of the Russian Federation on a party's duty to prove those circumstances that are referred to by a party, fall beyond the scope of the requirements of article 1515 of the Civil Code of RF. Proving namely of the actual confusion is not required by article 1515 of the Civil Code of RF.
Moreover, the exclusive right for a trademark arises out of a trademark state registration, a right holder doesn't have a duty to use its trademark for at least 3 years as from a date of its registration. If a lawsuit is filed by a right holder who has not started using its trademark and who can't provide an evidence of use and, accordingly, of the actual confusion, a court will reject a suit due to lack of evidence of an actual confusion? Or whether a right holder files a lawsuit on prohibition of a trademark use after registration of which 3 years have passed, will court reject a suit due to evidence absence of the actual confusion, having actually taken a decision on premature termination of a trademark due to non-use?
On the basis of the foregoing, the courts when considering suits on unlawful use of a designation that is similar to trademark shall carry out an analysis of comparison of a trademark and designation according to the criteria of the Rules. Such disputes are considered at all Arbitration Courts by specialized constitutions of the court and judges possess of special knowledge to carry out such analysis.
If a court considering such case does not possess of knowledge for independent carrying out of analysis of the comparable designations according to the Rules, or a statement of claim and/or recalls don't contain a similar analysis carried out by the parties, that can be assessed by a court and taken as basis for a judicial act, - a court shall commission a legal expertise to evaluate similarity because it itself does not have any respective special knowledge. The current judicial practice leads to the fact that courts reject a suit on unlawful use prohibition of a trademark, recognizing the designations that could never have been registered as a trademark, as not similar.
Having looked through the court adjudications for the last half year one can provide the following examples -
For all that one should pay a special attention to the fact that in a series of cases the right holders, when dealing with such statements of motivation of court adjudications, dispute court adjudications neither to the Court of Appeal nor to Court of Cassation. Despite the fact that a complaint filing against an adjudication – is a party's right, the parties - right holders don't see an opportunity to change the existing practice, don't want to bear attorney's fees, even despite the fact that they can collect legal costs in case of winning a case. Such statement of motivation of court adjudications compromises respect of right holders to the judicial system.
Adoption of such decisions results in the fact that the persons using similar designations don't register the designations used by them as trademarks but just use them. Having received a suit on unlawful use prohibition, the breakers convince the court in proofs absence of the confusion fact and, having gained a suit at law continue using a similar designation without a trademark registration.
In this connection it is worth discussing separately one more consequence of application by courts of clause 13 of information letter No. 122 of the Presidium of the Supreme Arbitration Court of RF, according to which an issue on similarity to a degree of the designations confusion is an issue of fact and as a general rule can be permitted by court without an examination commissioning.
Analysis of the current judicial practice at the suits on unlawful use prohibition of a trademark shows that courts when prohibiting unlawful use of a trademark or when rejecting such a suit, segregate a trademark similarity with a disputable designation from unfair practices and/or unfair competition on part of a respondent.
However, premised on the system analysis of the provisions of the Civil Code of RF as to the trademarks as well as the rich judicial practice, it is clear that the goal of a designation use being similar to a confusion degree is use of somebody else's reputation, a reputation that is created by a right holder, obtaining of unjustified advantages for account of a right holder.
Use of somebody else's reputation for promotion of one's goods is an element of unfair competition.
Courts probably believing that unfair competition – is a separate breach of article 14 of the Law of RF "Concerning the Protection of Competition" do not examine the confusing similarity from the point of view of unfair practices.
Such approach results in the fact that a respondent (breaker) can not infringe the rights for a trademark but will breach the anti-monopoly legislation, when the Federal Anti-Monopoly Service of RF recognizes the respondent's acts to be unfair competition.
It is more than likely that somebody having read this article, will think that the proposed approach on necessity of availability, in judicial acts at the suits on unlawful use prohibition, of trademarks of an analysis of the comparable designations according to the criteria of the Rules, is needless and not well-reasoned.
In this case, the goal of this article is a necessity of a similar approach use both at the suits on unlawful use prohibition of a trademark and when registering designations as trademarks.
If confusing similarity is an issue of fact that should be evaluated by court from the perspective of an ordinary consumer and does not need a full analysis according to the Rules, - then in registering of designations that are requested for registration, the same approach should be applied: Rospatent's experts shall compare a designation requested for registration from the point of view of an ordinary consumer. And the court, when considering applications on Rospatent's decisions contestation regarding the trademarks' similarity, shall not claim a full analysis of the similarity criteria regulated by the Rules. The article is published in internet journal of the Court for the intellectual rights.