12 October 2012

How to protect one's rights if infringing merchandise has emerged on the market under your trademark

The European Union's bureaucrats raise alarm: Russia takes the second place in the world as to the volumes of production and infringing merchandise sale, yielding on these indicators only to China. Mass media and bureaucrats keep speaking that clandestine goods cause severe damage to the budget and consumers, but for some reason hardly anybody bears in mind losses suffered by the good faith domestic and foreign manufacturers of goods. It is almost impossible to count how much is lost by the domestic business due to counterfeit products, but it is evident that this sum is very formidable.

Counterfeit  products can be different: sometimes infringing merchandise doesn't resemble absolutely, on the outside, the goods of a right holder and are made improperly, but there is also such  infringing merchandise that is difficult to distinguish from an original at first sight. Nevertheless, all infringing merchandises have common feature – poor quality. Indeed the main objective of the underworld manufactures  - is to derive the maximum benefit saving on materials and technologies. And of course there is no question of infringing merchandise to comply with any GOSTs or demands placed on this group of the goods. Quality of the infringing merchandise does much bigger harm to a company-right holder of a trademark it is marked with, than the material losses: an enterprise's prestige drops and therewith confidence level to it on part of the buyers reduces.

If you have come across with the fact that infringing merchandise of your products have emerged in the market – start gathering an evidence and try to find a guilty person. As a rule, the main problem of any infringing merchandise case consists in a necessity of proving that namely that company which you have claims against, infringes your rights and uses unlawfully a trademark owned by you. Samples of counterfeit products, any papers confirming the fact of sale, a notarized protocol of a website inspection (in case if the infringing merchandise is sold via Internet) can be an evidence of a respondent's fault.

It is not less important to assess competently the opportunities of one's company, in particular, to verify how registration of a mark was carried out, that is used as applied to infringing merchandise. Whether any mistakes were made or legislation was broken? Whether a registration is valid? Only in case you are sure that your rights are valid, one can go on, otherwise prior to start a struggle with infringing merchandise it is necessary to eliminate all inaccuracies and ensure 100% protection to one's trademark.

The modern legislation proposes to a right holder several variants of own trademark protection, but in any case one should initiate proceedings with a prejudicial claim dispatch to a respondent. It is often enough to at least start negotiations with a breaker of your rights in case a situation is not settled. In a claim you should demand from a company-respondent to stop using a mark owned by you, having stated that its' actions are unlawful, and you should attach documents to a paper that confirms your rights. If a breaker neglects your address and continues using a trademark, it provides an evidence of malicious intent of its' actions and intended use of an image owned by you. Naturally, a right holder in this case does not have to rely upon an amicable resolution of a situation.

The second variant of own rights protection – is  appeal to police with a respective application under which the law enforcement authorities will have to initiate a case on an administrative or criminal offence. In the first case a breaker can be penalized even one deals with a large breach (over RUB 1,5 mln), the sanctions will be also more serious. The police is entitled to seize or destroy the infringing merchandise, but it is unfortunately not entitled just to prohibit a breaker to use it. Only court may pronounce such a judgment.

One can appeal to a court  both after carrying out an investigation by the law enforcement authorities and in parallel to a police investigation. In the first case, if the fact of breaches is confirmed by police, a right holder won't even need to prove anything to court: it will be enough to file an application on prohibition rendering to use a trademark and on a compensation collection in the amount up to RUB 5 mln or a double cost of the counterfeit products. In the second case it is necessary to submit to court every proof of a respondent's fault.

There is one more variant – an application filing to the Federal Anti-Monopoly Service (FAMS) with a claim to recognize the breaker's actions to be an act of unfair competition. One can address both to the federal department of the service and to its regional offices. The main advantage of addressing to the employees of the anti-monopoly service over addressing to court consists in the fact that the FAMS representatives can themselves claim documents from a respondent, confirming the fact of a breach while when addressing to court an evidentiary burden is fully borne by a right holder.

If the Federal Anti-Monopoly Service recognizes that a company-breaker is guilty of unfair competition, it can be collected a penalty from which amount ranges from 1 to 10% of the turnover of the entire goods of one group being sold by the company. For example, if counterfeit product is alcohol and, in particular, vodka, and a company-breaker sells 15 different marks of it, then a penalty sum will be calculated from the turnover of all the goods of this group.

The fact where to address primarily and how to plan one's actions so that to stand up for one's own rights quickly and with minimal losses, depends on a concrete case. In certain situations it can be advantageous to address just to one of the above mentioned authorities, in other situations – to file applications to several authorities at once. An expert will advise how to act best of all in your concrete  case.

Managing Partner / Patent Attorney of the Russian Federation / Eurasian Patent Attorney