Current practice of IP Court on challenging the agent trademark registration of a foreign right holder

According to Art. 6.septies of the Paris Convention for the Protection of Industrial Property, if an agent or representative of a trademark owned in one of the Union countries files, without the owner’s permission, an application for this trademark registration on their own behalf in another Union country, the owner has the right to demand the cancellation of such registration, if the agent or representative fails to provide evidence, justifying their action.

It should be noted that in some cases such registrations are the result of simple ignorance - it is not immediately obvious whether the consent of a person to use their trademark under a distribution agreement is consent to filing an application for registration of this trademark in the name of an agent (distributor). However, often the acquisition of the exclusive right to such a trademark pursues parasitic goals - the means of individualization is already recognizable, has a certain reputation, there is no need to invest in its “promotion”.

In practice, the qualification of legal relations as agency relations often causes difficulties due to the ambiguity of the corresponding concept, but difficulties also arise with other issues.

For example, in case No. SIP-244/2020, the Rospatent refused to satisfy an objection to the legal protection of a trademark on the grounds that the agency relationship between the applicant and the owner of the Russian trademark "ABC Design" N 350373 was not proven. The application for the Russian trademark was filed by a person potentially having an agency relationship with a foreign copyright holder, but subsequently the exclusive right to the trademark was repeatedly transferred. The Administrative Authority considered that there were no grounds for examining the agency relationship between the foreign right holder and the original applicant, noting that the filing of a trademark application by an agent or representative of such a person has no legal significance if the rights subsequently transferred to another person.

However, the Intellectual Property Court indicated that in order to invalidate the legal protection of such trademarks, the relationship between the principal and the applicant at the time of filing the application is important. In this connection, it is necessary to establish the following conditions in the aggregate:

• the objector must be the owner of the earlier trademark;
• the applicant must be or must have previously been an agent or representative of the trademark owner;
• the application for registration should have been filed in the name of an agent or representative without the consent of the copyright holder, without justifying reasons;
• the application must concern designations that are identical or similar in essence to the original trademark.

Since these conditions were not established by the court in full, the case was sent for a new trial.

Recently, by a ruling of the Supreme Court of the Russian Federation, it was refused to transfer a cassation appeal in case No. SIP-224/2020 for consideration in a judicial session of the Judicial Collegium for Economic Disputes - in a judicial act, the Supreme Court of the Russian Federation confirmed the position of the IP Court, which was as follows:

The company challenged the decision of Rospatent to satisfy the objection to the granting of legal protection to its trademark N 691175 “MAGYARICA”.

The objection came from the Hungarian company Horizon Food Kft. and individual Bajaki Ferenc and was motivated by the inconsistency of the trademark registration with the requirements of paragraphs. 5 p.2 art. 1512 Civil Code of the Russian Federation, Art. 6. septies of the Paris Convention.

The IP Court in two instances recognized the conclusions of Rospatent as justified, refusing to satisfy the application.

In the name Bajaki Ferenc, a trademark was registered with the word element “Magyarica” under the laws of Hungary with an earlier priority in the same class of the Nice Classification, in respect of which the disputed mark was registered in the Russian Federation. Moreover, Bajaki Ferenc was a founder of the applicant company Horizon Food Kft and entered into a trademark license agreement with his company. All this made it possible to recognize persons as affiliated, having the same business goals and acting in the common interest.

As for the confirmation of agency relations, between Horizon Food Kft. and the owner of the disputed trademark entered into a distribution agreement and a contract for the supply of goods, on the basis of which the court concluded that the company acted as a distributor for the “Madjarica brand” before the priority date of the disputed trademark.

However, the company denied the existence of agency relations and referred to the fact that relations with the company were not based on an agency agreement. In response to this argument, the IP Court considered it possible to give a broad interpretation of the agency and representative relations between the right holder of the disputed trademark and the trademark in the state party to the Paris Convention and noted that in such a case such relations include any contractual relations for the sale of goods on the territory of the Russian Federation, labeled with a controversial designation.

The company also challenged the application of the considered grounds for recognizing the grant of legal protection as invalid on the basis of the following:

• Bajaki Ferenc ceased its status as a member of the company from a certain date and at the time of filing an application for registration of a trademark in Hungary was no longer such;
• the license agreement for the right to use the Hungarian trademark was concluded on the day of filing an application for its registration and was not registered in the prescribed manner.

Rejecting the arguments of the society, the court proceeded from the fact that on the priority date of the disputed trademark Bajaki Ferenc and the company were in any case affiliated persons: until 05/09/2017, this person was the sole participant of the company, and after that date, his wife became the owner of the company.

The IP Court also came to the conclusion that the norms of the Hungarian Law XI of 1997 “On the Protection of Trademarks and Geographical Indications” do not contain a prohibition on concluding a license agreement for the use of a designation after the filing of an application, but before its registration as a trademark, as well as not providing for a mandatory procedure for registering a license agreement.

Thus, IP Court acknowledged the presence of the entire set of circumstances that are the basis for the application of the provisions of Article. 6.septies of the Paris Convention and paras.5 p.2 art. 1512 of the Civil Code of the Russian Federation.

A similar case with the same participants recently passed the first instance of the IP Court. Rospatent also satisfied the objection on the same grounds in relation to the trademark N 690394 ”МАДЬЯРИЦА” (“Mad’yarica”), and the IP Court sided with Rospatent.

As can be concluded, disputes over contesting the legal protection of trademarks due to the inconsistency of Art. 6.septies of the Paris Convention seem to be quite complex - one may encounter ambiguity in the legal qualification of relations between applicants and copyright holders of Russian trademarks, and the need to analyze foreign legislation, and with a multi-link chain of copyright holders as a result of the transfer of the exclusive right to a disputed mark. Also, in practice, there are cases in which the ultimate trademark owner is liquidated (according to the IP Court position, this should not prevent the consideration of objections).

Originally published in Trademark Lawyer Magazine (Issue 4, 2022)