Court rules on conflict between a trademark and an indication of origin arising from licence agreement

An appeal was brought before the Russian IP Court on 29 April 2022 after Rospatent rejected an application made by the owner of an existing word mark, RUSSIAN STEEL, to use said mark for an unrelated product category, vodka (Case N A40-35976/2021).

The owner applied to Rospantent for the exclusive right to use their mark in this differing context on the basis of a licence agreement. In rejecting the application, Rospatent cited the fact that the licensee did not have the right to use the appellation of origin (NMPT) ‘Russian vodka’, which was confusingly similar to the applied-for mark.

The owner appealed and the requirements were satisfied in full. In response, Rospatent pointed out that:

• granting the right to use a trademark that is similar to an NMPT to a person who does not have the right to use such an NMPT can mislead consumers as to the place of origin and special properties of the goods; and
• it is only permissible to grant the right to use a trademark that includes an NMPT to a person who is entitled to use the NMPT.

The IP Court indicated that the trademark was registered subject to the legal protection of the NMPT and that the specified name was not opposed to it at the time of registration. Therefore, the legal protection of the named trademark has not been invalidated or challenged.

The court noted that Rospatent applied Article 1489(3) of the Civil Code of the Russian Federation (Part Four, 18 December 2006, N 230-FZ) to circumstances that were irrelevant to the legislation. According to these provisions, the prohibition to grant the right to use a trademark due to the licensee lacking the exclusive right to an NMPT applies only to cases where such an NMPT is included in the trademark as an unprotected element.

The court also confirmed that although Paragraph 3(i) of the Rules for the Registration of Disposition of the Exclusive Right (approved decree of the government of the Russian Federation, 24 December 2015, N 1416), establishes that the registration of the disposal of the exclusive right is carried out when the alienation of the right to a trademark is not the reason for misleading the consumer. But in the disputed act at hand, it is not clear how granting the right to use the trademark could cause a misrepresentation of the product or its manufacturer, which might influence consumers.

Moreover, the court also questioned the degree of similarity between the designations, referring to case A40-58488/2020 (Resolutions of the Ninth Arbitration Court of Appeal 12 July 2021, N 09AP-30469/2021, 09AP-30470/2021, IP Court 17 November 2021, N С01-1848/2020), in which the similarity between the same designations was established but not identified. In this case, the courts pointed out that the designations are not similar. Since the NMPT is a single designation ‘Russian vodka’, the individual words ‘Russian’ and ‘vodka’ did not become known as an NPMT in the territory of Russia, and the combined designation placed on product labels – ‘vodka Russian steel real’ did not contain the phrase ‘Russian vodka’.

Thus, the court emphasised that Rospatent’s application of the provisions of Article 1489(3) of the Civil Code in the case of the alleged similarity of the trademark and the NMPT constituted an unacceptably broad interpretation of the norm.

Originally published in World Trademark Review