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21 April 2008
Ukraine's economic development and its accession to the World Trade Organization (WTO) have encouraged foreign franchisors to enter the Ukrainian market. Some have had the unpleasant surprise of finding that their trademarks have already been registered in Ukraine by Ukrainian parties and are in active use, infringing the foreign franchisors' IP rights. Are remedies available in such cases?
The Civil Code provides that any party may apply to a court to protect its IP rights. This provision covers applications to:
The courts may issue orders and decisions for:
A franchisor and rights holder must base its action on a statement that its trademark is well known and that a Ukrainian infringer had no right to register the mark in question in Ukraine, as national law, the Paris Convention for the Protection of Industrial Property and the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement prohibit the registration of well-known marks.
Article 25 of the Trademark Law provides for the protection of well-known marks and establishes basic principles for the recognition of trademarks as well known. The protection of well-known marks in Ukraine is based on Article 6(2) of the Paris Convention and is predicated on the recognition of a trademark as well known under the law by an appropriate court or the Appellate Chamber of the State Department of Intellectual Property.
Article 6(2) of the convention provides for the protection of trademarks in relation to products only. The provision of the Paris Convention on protection of well-known service marks is vested by Article 16(2) of the TRIPs Agreement. Although Article 25 of the law contains no direct reference to the TRIPs Agreement, the procedure for recognizing a trademark as well known in Ukraine applies equally to service marks.
In 2005 a procedure was developed for use by the appellate chamber for the recognition of a trademark as well known in Ukraine. The procedure specifies the factors to be considered in the assessment of a mark, which are generally enumerated in Article 25 of the law. Among other things, the procedure (i) contains requirements in relation to the number and geographical distribution of respondents to surveys, and (ii) specifies the facts that may be considered evidence of use, promotion and advertising of the mark, including the scope, degree and duration of such use.
The procedure notes that the registration or other recognition of a mark as being well known in another territory and the use of the mark in a country with well-established economic links with Ukraine may be considered as indicators of well-known status.
However, the criteria in the law and the procedure are not exhaustive; a party seeking recognition of a trademark as well known may submit any other document as evidence as necessary. Article 25 of the law provides that the factors mentioned above may be considered by the appellate chamber, which implies that compliance or non-compliance with any single criterion cannot in itself be regarded as conclusive in determining whether a mark is well known.
From the moment that a trademark is recognized as well known in Ukraine, it is granted protection as if it were registered in accordance with the relevant procedure under Ukrainian law. The Trademark Law extends the protection given to well-known marks to cover use of an infringing mark in connection with goods and services other than those in respect of which the mark is recognized as well known, provided that (i) the use of the mark for other goods and services by any other person would appear to indicate a connection between the mark and the owner of the well-known mark, and (ii) the interests of the owner of the well-known mark would be likely to be damaged by such use.
The law allows an appellate chamber decision on a trademark's well-known status to be challenged in judicial proceedings. This is a relatively progressive provision, but no cases challenging such a decision have been contested in court since 2003. Taken in conjunction with the provision allowing a mark to be recognized as well known by a court ruling, the rule on judicial challenge has prompted confusion in the courts, as the law does not prescribe a special form of court procedure in dealing with well-known marks. Consequently, the courts have determined the issues arising from the recognition of well-known marks on a case-by-case basis.
In Bulgartabak Holding v Bulprom-Ukraine LCC the first instance decision was based on the provisions of the Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, adopted by the Paris Union for the Protection of Industrial Property. In reversing the decision, the Court of Appeals emphasized that the provisions of the joint recommendations could not be taken into account by the court, as they are not binding in Ukraine. Moreover, the Court of Appeals stated that Article 6(2) of the convention provides that the issue of whether a trademark is well known must be resolved before the court considers the case.
In Kabushiki Kaisha Sega Enterprises Ltd v Flash LLC and Nintendo Co Ltd v Flash LLC an injunction was sought against a defendant that had registered the trademarks “SEGA” and “NINTENDO” in its name in Ukraine. The plaintiff also sought recognition of the trademarks as well known. The court ordered expert research to establish whether the marks were well known. The respondent appealed against this decision, arguing that:
“[N]o special knowledge should be needed to decide whether a trademark is well known... Moreover, under Article 6(2) of the [c]onvention, the question of whether a trademark is well known should be considered by a special body or by the court itself, not by an expert.”
As a result of the appeal, the expert research was cancelled. The court considered the case and found in the plaintiffs' favour, recognizing the trademarks as well known in Ukraine and annulling the respondent's registration of the trademarks.
In Europa Plus Kiev LLC v Europa Plus France SA the Kiev Commercial Court recognized the trademark “EUROPA PLUS” (in the Cyrillic and Roman alphabets) as a well-known mark belonging to the television and radio broadcaster Europa Plus Kiev and terminated the international registration of the trademark “EUROPA PLUS” in the territory of Ukraine. The court held that the defendant had not undertaken any activity in Ukraine since the trademark was registered in January 1 1995, whereas the trademark had long been associated with the plaintiff's activities. In McDonald’s Corporation v Rosy Bukovyny OJSC the same court recognized the trademarks registered by the plaintiff as well known and cancelled the defendant's trademark registration; expert reports established that the infringing mark imitated significant elements of the well-known mark. Both findings were upheld on appeal by the Higher Commercial Court in 2004.
In Podravka Prehrambena Industrija dd v Vitana AS the Kiev Commercial Court held that:
“[T]he issue of the recognition of a trademark as well known is within the competence of the Appellate Chamber of the State Department of Intellectual Property. Th[is] court will consider the question of a mark's status as well-known in appellate proceedings commenced to reverse a decision of the chamber on the matter. Therefore, a plaintiff [bringing a case] to have its mark recognized as well known must apply to the appellate chamber... not to th[is] court.”
However, this view of the court's position did not prevent it from recognizing marks as well known in the Europa Plus Case and the Rosy Bukovyny Case.
Although the protection of well-known marks in Ukraine is now governed by national legislation, recent case law shows that problems remain. In order to fulfil Ukraine's international obligations under the Paris Convention and as a WTO member, the legislature has copied the provisions on the protection of well-known marks from international treaties and the joint recommendations, but the notion of protecting well-known marks remains insufficiently developed in national legislation.
The number of cases relating to the recognition of marks as well known is small; in 15 years the Ukrainian courts have considered only around 25 of them. The issue is complicated and judges considering the case must be highly competent in resolving IP cases.
The other problematic issue is the absence of a state registry of well-known marks. Although the Ukrainian Institute of Intellectual Property has started to maintain a database on a voluntary basis, it is far from complete - for example, the marks in dispute in the McDonald’s Case and the Europa Plus Case were not listed.
Therefore, the legislature must provide a system whereby cases can be resolved in a designated court by judges with specialist knowledge of the subject.
The complexity of resolving disputes by litigation may encourage foreign franchisors and other rights holders to negotiate with an infringer out of court - for example, by executing a franchising agreement and thereby transforming an infringer into a legitimate franchisee.
For further information on this topic please contact Anna Tsirat or Taras Kulbaba at Law Firm Jurvneshservice by telephone (+380 44 227 2390) or by fax (+380 44 227 2054) or by email (firstname.lastname@example.org or email@example.com).
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Anna V Tsirat