Trade Mark law Overhauled

12 October 2002

The forthcoming entry of Russia into the WTO was the reason for perfecting national legislation in the field of IP rights protection. On October 12 2002 the amended version of the Law on Competition and Monopolistic Activity Limitation on Commodity Markets (the Competition Law) took effect. In particular, the amendments enable the Ministry on Antimonopoly Policy and Support of Entrepreneurship (MAP) to forward to the Russian Patent Office the injunction to annul a trade mark registration if MAP declares such a registration an unfair competition act. This provision was supposed to work against pirates who, within several years, successfully registered in their own name trade marks of foreign companies. However, many attorneys assume that this provision may not be effective as the statutory interpretation of the term “unfair competition” contained in the Competition Law does not recognize piracy as unfair competition, given pirates are not involved in any economic activity and therefore are not competitors in the full sense of this term. MAP injunctions on cancellation of trade mark registrations may not be referred to the Russian Patent Office unless the Trademark Law is respectively amended. The new wording of the Competition Law entered into force before the amendments to the Trademark Law were adopted. Therefore, at present these two laws are simply inconsistent.

Nonetheless, on November 13 2002 the State Duma unanimously adopted in the third reading the new version of the Trademark Law. The draft law has been submitted to the Council of Federation for approval. The experts believe that, all going well, the amended Trademark Law may become effective before the end of 2002. The new version of the Law contains many significant changes to reinforce trade mark legal protection. In particular, the new Law entitles the Russian Patent Office to cancel trade mark registrations based on injunctions of MAP and also following court rulings.

The Law envisages cancellation of a trade mark if it reproduces “a sign which had been used in the Russian Federation by a different entity for homogeneous goods/services for a long period of time preceding filing of the contested trade mark registration”. In cases where an infringing trade mark registration is nevertheless executed in the pirates’ favour, the amendments to the Law stipulate that the trade mark proprietor has the right to prohibit its use to third parties only if such restriction does not violate the rights of other registered proprietors. Another amendment to the Law provides that using the trade marks of others in domain names is a violation of the rights of registered holders. The renewed Law does not only considerably limit the scope for piracy, it will primarily affect the manufacturers of goods who reproduce or imitate registered trade marks. The Law will now clearly define the notion “counterfeit product” (prior to this amendment, this term was contained only in the Criminal Law).

A significant provision of the amended Law is to oblige infringers to destroy seized counterfeit products at their own expense (the current wording of the Law provides only for removal of the disputed trade mark from the product packaging).

Moreover, instead of claiming losses the rights owner can demand from the violator compensation in the range of 1,000 to 50,000 minimum salary rates (1 minimum salary rate presently equals approximately $3); the court will determine the exact amount. The new version of the Law also enlarges the scope of protection of wellknown trade marks. At present a wellknown mark is protected only with respect of concrete goods. The amended Law will extend the legal protection of well-known marks to non-homogeneous goods on condition that consumers may consider that the owner of the wellknown mark may manufacture these products. For instance, if the trade mark BMW is recognized in Russia for automobiles, the scope of its protection may be extended to building technology, but hardly to foodstuffs.

The amendments also solve the problem of ‘grey market’. The exhaustion of rights based on a trade mark registration comes into effect only if the product is introduced into commercial use directly by the rights owner or by his approbation.

It is noteworthy that the new version of the Law does not allow registering a trade mark in the name of an agent or a representative without the owner’s consent if the trade mark is registered in a member state of the Paris Convention.

   Such disputes were previously referred to the court as the Russian Patent Office was purely administrative.

Finally, the two Rospatent entities – the Chamber of Appeals and the Supreme Patent Chamber (which considered trade mark disputes before the cases could be referred to court) – will be combined into the Chamber of Patent Disputes. This is supposed to significantly reduce the hearing of cases, which currently may take up to 18 months to pass through both chambers. The amended Law envisages the registration of confusingly similar trade marks by different entities on condition that they have reached an agreement. This possibility is provided by the EU Directive on the harmonization of trade mark legislation and also by the trade mark legislation of a number of countries, including the UK and Switzerland.

The adopted amendments into the Trademark Law bring it into line with the Constitution of the Russian Federation, the Civil Code, as well as with the Paris Convention and TRIPS Agreement, and gives hope that the new Law will become truly effective.