Patent Trolls in Ukraine


Activity of non-practicing entities, usually called patent trolls, is a big problem in many countries. Typically, business of patent trolls is based on earning money using innovative decisions invented by other people. In Ukraine strategy of patent trolls differs from other countries. It rests on patenting well-known objects, such as, hangers, toothpicks, wheels. The main purpose of non-practicing entities in Ukraine is not filing lawsuits like in other countries, but IP registration in Customs Register and block import and export of goods. In this article we will consider peculiarities of such companies, lapses of Ukrainian laws which make possible their activities and ways of how to secure from them.

In Ukraine the main activity of patent trolls is focused on patenting utility models and industrial designs. A utility model is called, sometimes, small invention that could be protected in certain countries. According to Article 1 of the Law of Ukraine "On the Protection of Rights to Inventions and Utility Models" an invention/utility model means a result of intellectual activity of a human being in any field of technology. According to Article 7 of the above mentioned law a utility model should be new and industrial applicable. Usually the term of protection of utility model is shorter than the term of protection of invention. For instance, in Ukraine, the term of protection of utility model is 10 years from the filing date, and for invention it is 20 years. Utility model patenting has many advantages:
- easy way of patenting;
- possibility of patenting in accelerated terms. In contrast with an invention which standard term of patenting is 1,5-3 years, standard patenting term of utility model is 6-9 months. Also it is possible to accelerate this process up to 2 months;
- low-cost of obtaining patent.

It is useful to patent objects, as utility models, with short-term using. For instance, IT products which can be relevant only for several years. This instrument of IP protection is used not only for IT solutions, but also for patent trolls. Let us consider how they use it.

The requirement of novelty and industrial applicability in Ukraine shall be met, however, there is no substantial examination. Application for utility model patenting will pass only a formal examination in which shall be defined the filing date and whether the claimed object belongs to technology. Hereafter, the application shall be examined for conformity with the formal requirements. So, every company could patent decision that is not new - well-known engine, cell, pharmaceutical composition etc. As long as patent gives its holder exclusive rights for permitting and prohibiting usage of patented object, it is possible to patent trolls block activity of real companies.

More over, in 2012 The Customs Code entered into force and this date we could call new era of Ukrainian patent trolls. This date facilitates significant growth of their activity, because according to the provisions of the Code it is possible to register in the Customs Register not only trademarks but inventions, utility models and industrial designs. In such way patent trolls could block export and import activity of companies.

The same situation is with industrial designs certificate which could be obtained without substantial examination. On one side to meet requirements of patentability design should be new and industrially applicable, but on the other side Patent Office is not authorized to examine it. As with utility model, it is possible to register industrial design into Customs Register. For instance, in Ukraine in order to manipulate legislation and to block import there had been patented such objects as automobile engine, glaves, tablets. Moreover, due to the Customs Code, in your application you can mention the goods of producers, whose rights are supposed to be violated.
In 2013 many entities try to register and block another companies and even whole industries. Also we must consider appearing companies that register approximately 200 industrial designs in automotive sphere. For instance, they patented buffers, clutches, bolts, buckets, gears. Some of such industrial designs are registered in Customs Register, what leads to industry threatening.

Next reason which facilitates activity of patent trolls is that according to Ukrainian legislation patent could be canceled only in court proceeding what means additional cost and time for invalidation. In many cases company could not wait court decision and have two ways for future actions:
- paying royalty for using intellectual property object;
- refusal of import such goods until obtaining decision of invalidation.

We should admit that royalty for patent trolls costs a lot. Usually it is 600-700 USD for each supply 'patented' good. This sum is lower than patent invalidation process, that is why many prefer to pay it. So, we could conclude that patent trolls activities are popular sphere of business. There is a number of natural persons and legal entities that have huge patent portfolio in order to earn money. It is worth mentioning that very often foreign companies suffer from patent trolls activities concerning utility models and industrial designs. Some think that it is difficult for foreign companies to monitor goods and protect their rights. Nevertheless, there are some possible ways to protect their rights from the said illegal deeds:
1) monitoring all patented utility models and industrial designs which could block activity;
2) monitoring all IP objects registered in Customs Register;
3) finding patented object that is not new you have some ways out:
- in a case of utility model according to Part 2 of Article 33 of the Law of Ukraine "On the Protection of Rights to Inventions and Utility Models" there is a possibility to apply to the Patent Office of Ukraine (Ukrpatent) to examine a utility model for meeting patentability requirements. However, according to Article 33 of the above mentioned Law, patent of utility model could be canceled only by court. But before filing to a court its` examination is desirable;
- in a case of industrial design there is no possibility to apply to the Patent Office of such examination. Although it is possible to invalidate such Certificate in court.

Certainly, the only way out from giving patents to patent trolls is making alterations in legislature. Meanwhile, to secure peculiar rights from patent trolls activity one should undertake such measures like, monitoring intellectual property objects registered in Customs Register and patented utility models and industrial designs which could block activity. Such actions will prevent you from excess payment in future.

See also:
Design registration in Ukraine
Patenting of invention(utility model) in Ukraine