Filing an application for registration of trademark for individual in Russia: opportunities or risks?

On June 29, 2023, changes regarding the procedure for registering a trademark in Russia came into force, namely: now the applicant for the registration of a trademark (service mark) can be an individual, in addition to individual entrepreneurs and legal entities.

A high level of interest and desire for such a change on the part of the applicants was observed for a long time, while until June 29, 2023, in accordance with Art. 1478 of the Civil Code of the Russian Federation - the owner of the exclusive right to a trademark could be exclusively a legal entity or an individual entrepreneur [1]. This article is now invalid.

At the same time, the practice of trademark registration shows that trademarks were previously registered in the name of foreign individuals. As an example, we can cite the trademark "MONACO" according to certificate No. 783076, the copyright holder is Vladimir BANKO, "Le Roque Fleuri" 1 ru du Tenao, MC 98000 Monaco, MONACO (MC) [2].

Thus, Russian individuals who do not have the status of an individual entrepreneur were limited in comparison with foreign individuals in terms of law. The entry into force of the respective amendment equalizes the position of applicants from Russia and foreign states, providing equal opportunities for both groups of applicants.

In terms of requirements for filing a trademark application, there have been minor changes, which are as follows. If the applicant is an individual, it is necessary to indicate the SNILS (insurance number of individual personal account) number when submitting the application in the appropriate field. The ability to specify SNILS appeared in the application form after the entry into force of the relevant changes. The full name and address of the applicant must be indicated as in the passport of a citizen of the Russian Federation. The requirement to indicate the TIN when applying remains in force, since it is assigned to each individual. Previously, when only individual entrepreneurs or legal entities could be an applicant, it was necessary to indicate PSRN (primary state registration number) and KPP (registration reason code). When applying for an individual who does not have the status of an individual entrepreneur, the required number of zeros must be filled in the indicated fields. The rest of the application requirements remain unchanged.

At the same time, in addition to formal changes, I would like to analyze and try to predict the trends that may occur in the field of trademark registration in connection with these changes.

The imposition of sanctions against Russia in 2022 led to significant changes in the structure of the economy and the market: many foreign participants in the Russian market left our country, while others, on the contrary, appeared as new players. The mechanism of parallel imports was launched, and trade intermediation became a very popular and profitable business. At the same time, nothing has changed from the point of view of the effective exclusive rights to the trademarks of the right holders that have left the Russian market, the marks continue to be protected on the territory of Russia.

Structural changes in the economy and the market stimulated the development of small and medium-sized enterprises (hereinafter referred to as SMEs), which were able to satisfy the needs of consumers with goods, the supply of which to Russia decreased or stopped completely due to the decision of their manufacturers. SMEs are the group of entrepreneurs most capable of responding to crises and stimulating the economy in these situations. Thanks to SMEs, it was possible to maintain supply on the Russian market in the current unstable conditions. Therefore, expanding the circle of applicants in terms of registering trademarks for individuals is an additional tool for another important group - self-employed persons.

In 2019, the State Duma of the Russian Federation adopted amendments to the law “On the procurement of goods, works, services by certain types of legal entities” (223-FZ), which equate self-employed citizens with small and medium-sized businesses in the procurement of state-owned companies [3].

Self-employment is a special tax regime with a reduced rate. It is also called the Professional Income Tax (PIT). From income received from individual entrepreneurs and legal entities, the self-employed pay 6%, and from income from individuals - 4%. Taxes are paid only upon receipt of income [4].

Thus, it is more profitable from a tax point of view to carry out commercial activities, acting as an individual with the status of self-employed , and now the possibility for the specified group of persons to register trademarks makes it possible to protect the designation used and makes it possible to protect their exclusive rights if necessary.

According to the main performance indicators of Rospatent for the first quarter of 2023 [5]: “In the first quarter of 2023, the number of applications to Rospatent from the commercial sector increased by almost 10% compared to the same period last year. The number of applications from the SME sector increased by 14%. The growth of indicators is also observed in the marketing promotion of Russian businesses of their own goods and services. In the first quarter, Rospatent received almost 29,000 applications for the registration of Russian and foreign trademarks, which is almost 20% more than last year. This was announced on April 27 by the head of Rospatent Yuri Zubov during the plenary session of the XV International Forum "Intellectual Property - XXI Century", organized by the Chamber of Commerce and Industry of the Russian Federation (CCI RF).".

That is, even before the changes in the part of trademark applicants, there was an upward trend in the number of trademark applications, in particular, the growth shows the SME sector as an applicant. Of course, innovations will lead to an increase in the number of applications, as well as an increase in the share of SMEs as applicants, which include self-employed individuals.

At the same time, the aspect of increasing the load on Rospatent and FIPS, which carry out the examination of applications and the subsequent registration of trademarks, is interesting. So, if we consider the indicators for 2022, then according to the main performance indicators of Rospatent for 2022 [6], “For 2022, compared to 2021, the overall indicator of the average duration of consideration of applications for trademarks remained at the level of no more than 4 months and amounted to 3.88 months, and compared to the indicator for 2020, it decreased by 1.12 months. The algorithm for calculating the duration of consideration of applications, as in the previous year 2021, in the reporting year 2022 was based on the calculation of the period of time between the submission of a decision based on the results of a formal examination on the acceptance of an application for consideration and the first action of the examination, i.e. sending the first document based on the results of the examination of the declared designation. The period of the first validity of the examination of applications for trademarks for 2022 was: according to the national procedure - 4.5 months. In the plans for 2023, measures are outlined to maintain the achieved indicators of the average duration of consideration of applications for trademarks at the same level and even to reduce them.”.

But in practice, the terms for consideration of applications for trademarks still differ from the statistical data and in most cases are 5-6 months from the date of sending a decision based on the results of a formal examination on accepting an application for consideration. In this connection, there are certain fears that the additional "layer" of applicants-individuals will increase the burden on the Office, which has certainly significantly reduced the time for consideration of applications in recent years. Perhaps Rospatent will resolve this issue by expanding the staff of experts, but in any case, it is very interesting to see the results of Rospatent's work for the 3rd and 4th quarters of 2023.

Every year it becomes more difficult to register trademarks, because every year more trademarks are registered, which means that there is less space for registration of new ones. At the same time, applicants make a number of mistakes that prevent successful registration of a trademark. First, a number of applicants do not conduct pre-filing searches, which greatly increases the risk of being notified at the examination stage. Conducting searches is an important and necessary step that allows you to assess the chances of registration and predict possible problems, as well as financial costs in the registration process. Based on the results of the search, the expediency of filing an application becomes clear. This is especially important for representatives of SMEs, since the size of current assets of this group is less than that of large businesses, and incurring financial losses in case of refusal to register becomes more tangible.

Secondly, the reluctance of applicants to get creative with the development of a trademark, because sometimes they are set on a completely standard designation, which is most likely already registered by a third party, or they want to register a designation that, in principle, will not pass the registration procedure, for example, on absolute grounds. In such a situation, applicants either listen to the opinion of patent attorneys and change the designation, or file an application and receive a notification with the relevant examination comments. Such applications put a heavy burden on the Office.

Of course, like any legal area, trademarks are somewhat limited in terms of legislation and the scope of existing exclusive rights to them, which causes disputes between interested parties. An individual applicant needs to be prepared for conflicts of interest with other rights holders. Negotiations in the field of trademarks are becoming a very frequent stage of the registration procedure, and, given the increase in the number of registered marks every year, it is advisable to agree and subsequently coexist in the market without violating each other's rights.

The adopted changes will affect the area of trademarks in Russia, stimulate the scope of registration by a new group of applicants more strongly, and thereby increase the flow of state fees to the budget. But due to competition, which will certainly increase, we must not forget about the possible risks described in this article. In this regard, a new group of individual applicants must approach the registration procedure responsibly and thoughtfully, because it is with the trademark that the consumer associates the activities of the person engaged in the production of goods or the provision of services on the market, which means that the trademark is your business card, which should be original and memorable.

Sources:

1. Civil Code of the Russian Federation (Part Four) dated December 18, 2006 N 230-FZ (as amended on December 5, 2022), Article 1478 [Electronic resource]. Access mode: https://rulaws.ru/gk-rf-chast-4/Razdel-VII/Glava-76/paragraph-2/Statya-1478/ (accessed 07/09/2023).

2.Federal Institute of Industrial Property. Register of trademarks and service marks of the Russian Federation [Electronic resource]. Access mode: https://www1.fips.ru/registers-doc-view/fips_servlet (accessed 07/09/2023).

3.Interfax. The State Duma adopted a law on equating the self-employed with SMEs in the procurement of state-owned companies [Electronic resource]. Access mode: https://prozakupki.interfax.ru/articles/1580 (accessed 07/09/2023).

4.Kommersant. IP and self-employment 2023: what is the difference and what is better [Electronic resource]. Access mode: https://www.kommersant.ru/doc/4804622 (accessed 07/14/2023).

5.Rospatent in facts and figures. Annual report for 2022 [Electronic resource]. Access mode: https://rospatent.gov.ru/content/uploadfiles/annual-report-2022-short-version.pdf (accessed 07/14/2023).

6.Key performance indicators of Rospatent for 2022 [Electronic resource]. Access mode: https://rospatent.gov.ru/ru/about/stat/osnovnye-pokazateli-2022 (accessed 07/14/2023).