Trademark revocation proceeding in Ukraine: is it strategy for victory or failure?
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“Use it or lose it” – is an aphorism which expresses the principle of bona fide trademark holding. In other words, the principle “Use it or lose it” means that the trademark owner undertakes to use a trademark during the term of its legal protection.
In case of its non-use during a certain period established by law, anyone can initiate revocation proceeding basing on the trademark non-use without proper reasons .
Trademark revocation, due to its non-use without proper reasons, varies in each particular country. These particularities are determined by legislation as well as by court practice .
For example, in the USA, if the owner of a federal trademark registration does not provide the Declaration on the trademark use before the expiration of 6 years from the trademark registration date, such registration will be terminated.
Another example is China, where trademark can be revoked on the ground of non-use by filing the application to the Patent Office of China. In other words, it can be revoked administratively.
While considering the issues of trademark early termination, the special attention should firstly be paid to the following aspects:
1) The term “non-use/use” within the contex of revocation proceeding;
2) The trademark non-use period required for initiating the procedure;
3) The proper reasons for non-use and its legal rationale.
1. Trademark use : qualification problems and evidences.
According to the paragraph 4 of an Article 18 of The Law of Ukraine “On the Protection of Trademark Rights”,
If a trademark is not used in Ukraine fully or partly for goods and services listed in the trademark certificate within three years from the publication date or from another date after the publication, any person has the right to bring a court action for fully or partial trademark cancellation.
Thus, the first question that requires the interpretation on the basis of the aforesaid rule, is what does 'trademark use' for the legislator mean.
In this aspect, it is better to address to paragraph 3 of the Article 16 of the cited Law, which defines
'use as the the marking of goods, packaging, signs or another object attached to a product, storage of goods in order to get an offer for sale, import (export); trademark use for services offering, trademark use in business documents, advertisments, on the Internet'.
According to the latest trends of Ukrainian court practice, the concept of “real use” is traced in most decisions of the recent years.
The essence of this concept lies in fact that the Court, while examinating the evidences submitted by the parties, proceed from the actual use of the trademark, that is confirmed by the availability of goods with such trademark in the civil turnover. The essence of this concept is that the Court, while examinating the evidences submitted by the parties, proceed from the real use of a trademark. The actual trademark use is confirmed by the availability of goods with such trademark in the civil turnover.
For example, in the case on revocation of trademarks “VIDEIN/VYDEIN” registered for pharmaceutical and vitamin preparations, which belong to Kiev Vitamin Factory (the Decision of Solomenskiy District Court of Kiev on the case № 2-1900/11) the Court ruled for Plaintiff concerning early termination of trademark registration, stating the following: «The facts of the case, connected with the availability of the goods of Class 5 of The Nice Classification, and marked with controversial trademarks for goods and services, have an essential value for the correct settlement of a dispute».
While confirming the trademark use, the issue of proof is the most important.
In this matter it is better to refer to the Resolution of the Plenum of the Supreme Economic Court of Ukraine 'Some Issues of Dispute Resolutions Related to Intellectual Property Rights' № 12 from 17.10.2012.
Paragraph 71 of the Resolution specifies that the examples of products, documents (catalogs, price-lists, etc.) with trademark image can be provided as the evidences of trademark use in revocation proceeding.
In turn, the distribution of goods with an image of trademark on the territory can be confirmed by cash checks, receipts, invoices, in which the name of a product and a place of purchase are listed.
Speaking about evidential basis in revocation proceeding, the decision on revocation of verbal and combined trademarks “Drevnokyivska” (The Resolution of the Dnepropetrovsk District Administrative Court), registered for the goods of 33, 35 and 43 classes of the Nice Classification can be a good example.
Despite the fact that the Defendant and the licensee provided contracts, invoices, certificates of acceptance and transmission, information from the Internet, the Court made the conclusion that the assets transfer in the manufacturing process hadn’t been proved, as well as the actual movement of goods, which allegedly were produced and offered for sale under the specified trademark, and the facts of sale of these products to third parties.
The interpretation issue of the concept “trademark use” was raised not only in Ukraine.
The European Court of Justice faced the same issue regarding term “genuine use”, which was used in the Trademark Directive (Directive 2008/95/EC to approximate the laws of the Member States relating to trade marks).
According to the Articles 10 and 12 of the Directive, if, within 5 years from the registration procedure fullfilment, the owner does not put the trademark into effect on the territory of the EU Member, and there are no any proper reasons for non-use, the trademark registration should be terminated.
The concept “genuine use” was interpreted by the first time in regard to the case Ansul BV v. Ajax Brandbeveiliging BV (Case C-40/01). According to the case circumstances, the trademark “MINIMAX”, registered in the Benelux countries for the extinguishers and associated products, has belonged to Ansul Company since 1971. May 2, 1988 the trademark proprietor discontinued its use and carried out only activities, related to maintenance, checking, repairing of already sold extinguishers until 1994. At the same time, in 1994, Ajax Company and Minimax GmbH, which had been the owners of the “Minimax” brand for more than 50 years, began the use of the trademark in the Benelux countries.
The proceeding about early termination of the trademark registration for Ansul company has reached the Supreme Court, which appealed to the Court of Justice for clarification of the term 'genuine use'. In turn, the Court of Justice came to the following conclusuions:
'While assessing whether trademark use is genuine, all the facts and circumstances relevant to establishing, whether the commercial exploitation of the mark is real, should be considered, particularly whether such use is viewed as warranted in the economic sector concerned to maintain or create a share in the market for the goods or services protected by the mark, taking into the account the nature of the goods or services, the characteristics of the market, the scale and frequency of trademark use'.
A year after rendering of the decision on the Ansul BV v. Ajax Brandbeveiliging BV case, The European Court of Justice also issued another clarifying injunction that also applies to the concept of “genuine use” in the case of La Mer Technology Inc. v. Laboratoires Goemar SA. This injunction wasn’t intended to change or to supply the above-mentioned position, but only clarify what has been already pointed in the Ansul BV case.
As for the circumstances of the case of La Mer Technology Inc. v. Laboratoires Goemar SA, the Laboratoires Goemar company was the proprietor of the trademark "Laboratoire de la mer" for the products of Class 5 of the Nice Classification (in the list of goods it was indicated that these products include the marine substances) since 1988, and in 1989 trademark "Laboratoire de la mer" obtained the legal protection for goods of Class 3 of the Nice Classification, namely perfumes and cosmetics, which contain the marine substances.
In 1998, La Mer Technology Company filed two applications concerning revocation of the trademark "Laboratoire de la mer", owned by the Laboratoires Goemar company, on grounds of its non-use. The decision was handed down in favor of the trademark cancellation and was appealed by Laboratoires Goemar in terms of registration for cosmetics of Class 3 on the basis that the Laboratoires Goemar company has authorized the company Health Scope Direct Ltd, established in Scotland, to sell cosmetics throughout the United Kingdom, but sales have had little success, and the turnover amounted only a few hundred pounds sterling.
The High Court turned to the Court of Justice for clarification of what factors should be taken into the account while making decisions about whether a mark has been “put to genuine use” in a Member State within the meaning of Articles 10(1) and 12(1) of the Directive.
Thus, the key question was whether there is some quantitative measure of how many goods should be sold in order to 'preserve or create market share for the goods or services protected by the mark'.
Responding to this question, the Court of Justice pointed out that
'it is not possible to determine a priori and in the abstract, what quantitative threshold should be chosen in order to determine whether use is genuine or not. A de minimis rule, which would not allow the national court to appraise all the circumstances of the dispute before it, cannot therefore be laid down'. Upon that, the Court stated: 'When a real commercial purpose is pursued, in the circumstances cited above, even minimal trademark use or its use by only a single importer in the Member State can be sufficient for establishment genuine use within the meaning of the Directive.'
In Ukrainian legal practice the issue of the license agreement, provided by trademark holder as evidence of use, was brought up repeatedly. Such strategy of trademark protection is linked to the last paragraph of Part 4 of Article 18 of the Act, which states that use of the mark by another person under control of the trademark’s holder is deemed the trademark use by its owner. The license agreement was a key aspect when making decisions in favor of the defendant in a number of cases. At the same time the courts were not especially wondering about the execution of the license agreement and about the legal relationship between the parties. In this regard, an item in the above-mentioned Resolution of the Plenum of the Supreme Economic Court of Ukraine from 17.10.2012 № 12, was introduced, which states that
'only a single signing of contracts (including licensed) concerning disposal of trademark rights cannot be considered as the trademark use'.
In such a manner, the Supreme Economic Court of Ukraine offers the trademarks proprietors to provide evidences of contract execution such as 'sale and purchase agreements of goods or supply agreements under the trademark, advertising contracts in appropriate formats, etc'.
Due to the foregoing, we conclude that the licensing should have its ultimate goal - "genuine use" by licensee. At the same time, in my opinion, not only the issue of the contract execution has a great importance, but also the issue of the control of trademark use, due to the contract. For example, in some countries, such as Canada, the lack of direct or indirect control of trademark use by the licensor would not be equivalent to the trademark use by the licensor and, thus, would lead to the termination of the trademark registration.
As for the evidences of trademark use for goods and services, the issue of burden of the proof in such cases is important. According to the general civil law principle, the absence of guilt should be proved by the person who breached the obligation. This position, according to which it is the trademark holder, who has to prove that the trademark has been used in the course of the commercial activity for applied goods and services, was confirmed by the Supreme Economic Court of Ukraine in above-mentioned Resolution of the Plenum number 12 from 17.10.2012 . However, the procedural law says that both plaintiff and defendant should prove the circumstances to which they refer as to the basis for satisfying their claims. Thus, most often it is a plaintiff who provides "the evidences of non-use" in cases of trademark revocation. These evidences depend on the specific circumstances of the case. However, particular features of products and the commercial activities of the Respondent are taken into the account firstly.
The plaintiff must consider whether the activities and products (for which the mark is registered) require the certain permitions from state authorities. It is also important to pay attention to whether the advertising of goods was carried, whether there is a mention of the product on the Internet and whether there are records about the trade items marked by the trademark, which were assigned with numbers GS1. At the same time, concerning early termination of the trademark «Buoncaffe» registration for the products of class 30 of the Nice Classification, Court stated that "the absence of certificates of conformity for a coffee under the trademark «Buoncaffe» can only indicate that the defendant didn’t carry out the certification of coffee with the use of the trademark, but it can not be the evidence of non-use of the controversial mark for class 30 of the Nice Classification during this period by the Defendant "
Trademark non-use period for revocation
One of the aspects of revocation proceeding, to which the attention should be payed - is the period, after which any person may request for the trademark revocation. Actually, the 3-year period from the date of publication or from another date after the publication, as provided by law, which entitle to initiate revocation proceeding, can be called 'a period of a good faith trademark use'. In most countries this period is 3 years (Ukraine, Russian Federation, Canada) or 5 years (Norway, Ireland, Great Britain) from the date of completion of the trademark registration procedure in a particular country.
Thus, for early termination of the trademark certificate on the ground of non-use in Ukraine, you need 3 or more years have been passed from the publication date. For example, if the registration date is the 1st January 2015, so you can bring the court action for trademark revocation on the basis of non-use without proper reasons not earlier than 1 January 2018.
At the same time there is an interesting point in the provision of the law that allows a cancellation "from another date after such publication. On this point, the decision of Supreme Economic Court of Ukraine in case on designations 'ТАРАС'/'TARAS' for goods of 21, 30, 32, 35 classes according to Nice Classification can be mentionned. These designations were registered in 2004. In 2010 beer and nonalcoholic enterprise Slavutich turned to court, requesting trademarks revocation. The defendant (LLC 'Getman Holding') presented confirmation of using the sign for vodka and kvass (rye beer) from 1997 to 2006. On this basis, trial court and appeal court made their judgements for the defendant. At that time the court of cassation stated that
'evidences, which can confirm non-use of trademarks for services and goods should be restricted by 3-year term before access to court'.Thereby, court directly pointed that evidences should confirm trademarks using by defendant from 2006 to 2010.
Also there is an interesting issue on the limitation period in cases on trademark revocation. Sometimes there are situations, when the total refusal in trademark registration is granted to the Plaintiff’s trademark on the basis of the identical or confusingly similar Defendant’s trademark existing.
At the same time, the plaintiff brings the court action for trademark revocation on the basis of its non-use without proper reasons after more than 3 years from the date of granting the refusal of trademark registration.
In this case, the references to the fact that the plaintiff knew about the existence of the contraversial trademark by more than 3 years (the general limitation period) are not sufficient to terminate the proceeding.
The courts, in this case, base on the fact that it does not matter whether plaintiff knew about the trademarkюThe important thing is whether he knew that the trademark is not used for 3 years from the date of publication or from another date.
Proper reasons for a trademark non-use - is it a chance to preserve a trademark?
According to the paragraph 2 of a Part 4 of an Article 18 of the Law 'On the Protection of Trademarks Rights', the trademark registration may be terminated fully or partly only in case the trademark holder does not specify the proper reasons of non-use. According to Ukrainian legislation, there are two possible proper reasons: :
1. The circumstances that prevent the trademark use without depending on the will of the trademark owner, such as import restrictions or other requirements for goods or services, established by law;
2. The possibility of deception with respect to a person manufacturing goods or rendering services, while trademark using by a person, who brings the court action or another person, relatively to goods and services, in connection with which the demand for terminating the certificate validity was made.
Thus, proper reasons for non-use explain the non-use of the trademark during a specified period of time (in our legislation it is 3 year term from the publication date or any other date after publication). These reasons must be objective. And it's quite difficult to comply with the requirement. That is why, in practice, the cases, when proper reasons non-use play a decisive role in decision making for the Defendant, are rare.
Regarding the interpretation of proper reasons for trademark non-use, it is better refer to the European Court of Justice in Armin Haupl v. Lidl Stiftung & Co. KG. According to the case circumstances , the Lidl company is the holder of the trademark «Le Chef DE CUISINE», which obtained the legal protection in Austria (October 12, 1993). The first supermarket under the brand name «Le Chef DE CUISINE» was opened only on November, 1998.
The plaintiff (Armin Haupl) appealed to the court for trademark revocation on the basis of a trademark non-use in Austria. In his turn, the defendant explained that the trademark Le Chef DE CUISINE, which is registered for selling ready-made meals under it, must be sold exclusively in Defendant’s sales outlets. At the same time, opening of the supermarket in Austria, where the food under the trademark Le Chef DE CUISINE should be sold, was delayed because of "bureaucratic obstacles." The plaintiff, however, thought that the reason for a trademark non-use is not proper, because, according to the Complainant, the Respondent could sell the food in other stores too, not just in their own, and objectively he could avoid non-use of the trademark. In its turn, the court, came to conclusion that the reason is considered as proper not only when the trademark use is impossible, but if such use is unreasonable.
The court also ruled the following:
" the proprietor of a trademark cannot reasonably be required to sell its goods in the sales outlets of its competitors. In such cases, it does not appear reasonable to require the proprietor of a trademark to change its corporate strategy in order to make the use of that mark none the less possible."..
In general, the Court came to this conclusion: '…obstacles directly relative to a trademark, making its use impossible or unreasonable, and which are independent of the trademark proprietor's will, constitute ‘proper reasons for non-use’ of the trademark'.
As the Ukrainian legal practice shows, the issue of a proper reasons for non-use of the trademark brought up not very often in revocation proceedings. However, there are court decisions, in which a proper reason for non-use was considered.
In fact, the issue of a proper reason for trademark non-use can be very interesting due to the circumstances in which some regions of our country are. First of all it is about such regions as the Autonomous Republic of Crimea and the zone of the antiterrorist operation.