25 May 2020

Cancellation action based on non-use in Russia

This article is describing specificity, procedure, and requirements for the trademark cancellation action due to the non-use in Russia.

Trademark being registered gives its owner corresponding proprietary rights. However, for example, the right to use a trademark is also an obligation designed to ensure the real functioning of trademarks in the stream of commerce.

This article is describing specificity, procedure, and requirements for the trademark cancellation action due to the non-use in Russia.

Russian legislation provides the possibility of a trademark cancellation if it has not been used in Russia fully or in a part regarding goods and services for which it was registered continuously within any three years from the registration date.

Mandatory pre-trial procedure

If someone is interested in trademark cancellation, Russian legislation establishes to try mandatory pre-trial procedure at first. In practice, the interested party is obliged to send a letter to the trademark owner suggesting to abandon the trademark before the Russian IP Office or to assign the trademark rights to the interested party. If there is no response from the trademark owner within 2 months and the requested abandonment has not been made, the interested person can file a lawsuit for the trademark cancellation action with the IP court within 30 days.

If the pre-trial procedure was not followed and there is no corresponding evidence – the lawsuit will be dismissed.

Legitimate interest of the plaintiff

According to the Russian Civil Code, only an interested person may file a lawsuit for a trademark cancellation on the non-use basis. The existence of the followed pre-trial procedure and interest are the only two circumstances that the plaintiff is obliged to prove before the IP court.

Russian Supreme Court states that to prove legitimate interest the plaintiff has to show that its interest is connected with the use of the sign which is identical or confusingly similar to the disputed trademark in relation to goods/services of the same kind. In practice, this means that plaintiff has to prove its interest regarding trademark separately for every group of homogeneous goods/services for which it was registered. And, consequently, the plaintiff may claim trademark cancellation only as to goods/services interest regarding which was supported adequately.

Legitimate interest is shown by demonstrating that plaintiff has:

  1. a pending application for a trademark (or subsequent designation of an international registration) which is identical or confusingly similar to the trademark being a subject to cancellation;
  2. in addition, for the legal entities and sole proprietors it is crucial to prove the intention to use the trademark for the goods/services of the same kind as a disputed trademark. The latter can be shown by such evidence: extract from the Unified State Register of Legal Entities, conformity certificate, supply agreement, etc (cases Nos. SIP-298/2019, SIP-513/2019).

In case No. SIP-385/2019 there was an obstacle for the plaintiff in the trademark “12 Evil Spectators” registration because of another trademark “13 Evil Spectators” being registered previously. To show its interest, the plaintiff claimed that for many years they had been broadcasting the show “12 Evil Spectators” through the cable channel “MTV Russia”, thus had an interest in trademark “12 Evil Spectators” registration. However, as was found by the court, the plaintiff was not the founder of the “MTV Russia” and did not have control over its owners. The plaintiff was simply their licensor, thus there were no corporate relations between the plaintiff and “MTV Russia”. The court stated that the plaintiff is failed to prove its interest and a pending application for a similar trademark is not enough evidence to prove the interest of the legal entities.

Who should use and how to save a trademark?

The trademark should be used by the owner or the other person, only if the owner provides control over the trademark use by such other person.

“Trademark owner control” means the presence of the license agreement, franchising agreement, presence of other corporate relations, according to which the owner could control the quality of goods/services marked with a trademark and other aspects of trademark use.

In case No. SIP-662/2016 defendant told that the trademark use was present through legal entity where he was a final beneficiary. The court stated that if corporate relations between the trademark owner and the other person using the trademark are present, this could indicate the existence of the trademark owner’s control over the trademark use by other person.

In case No. SIP-718/2018 defendant tried to reduce the non-use period and stated that most of its term of trademark non-use was during the period of the use by the previous owner. Thus, he is not liable for that period of time. The court stated that the acquisition of the trademark, which was not actually used by the previous trademark owner in stream of commerce, is a risk of the entrepreneurial activity of the owner. Thus, the court concluded that the defendant failed to show the trademark use by him, or by the previous owner during the disputed 3-year period.

What is considered genuine use and how to show it?

The use of a trademark is considered as:

  • applying the trademark on any goods for which the trademark is registered, the package containing the goods, the signboard connected with the goods, a label, tab, tag or other item attached to the goods;
  • using the trademark in business documentation or in advertising, and on the Internet including in domain names;
  • offering the goods for sale, import and export;
  • production of the goods in the form of the trademark;
  • using the trademark while offering or providing any service for which the trademark is registered.

Nevertheless, to consider a trademark used it should be used “genuinely” (Russian Supreme Court No. 10 as of 23.04.2019). Genuine use means that the trademark should be used in several of the mentioned above ways and that the goods or services under the trademark should be indeed put into stream of commerce.

Evidence of genuine use:

  • samples of the goods, which are branded by the trademark;
  • documents with the trademark being applied (catalogs, price lists with offer of services or delivery of goods, etc);
  • checks, receipts, invoices;
  • other documents that contain information about the goods, including name and place of purchase;
  • customs declarations and other customs documents can be confirmation of the export and the import of goods, which is particular interest for non-residents.

It should be noted that the burden of proof of the trademark use or existence of valid reasons for the non-use is put on the defendant in such case.

In case No. SIP-614/2015 court explained that introduction into stream of commerce should be understood as any action or combination of actions performed by the trademark owner or licensee, or jointly by them, through which the goods marked with the trademark are sold or offered for sale in favor of third parties.

In case No. SIP-557/2019 the plaintiff brought a lawsuit regarding “Коровка” (“Korovka”) trademark cancellation due to its non-use for ice-cream. The defendant admitted that the disputed trademark, in fact, wasn’t used regarding ice-cream. The court stated that the legal protection of a widely-known trademark is maintained if it has been applied to homogeneous goods. Despite the fact that the trademark “Korovka” was not used for ice-cream, the court stated that latter and confectionery goods are of the same kind. The defendant proved before the court the use of a trademark for confectionery goods, thus the lawsuit was dismissed.

In case No. C01-201/2017 court stated that the acquisition by the trademark owner of goods from third parties is not in itself the use of a trademark within the meaning of the Civil Code. The defendant failed to prove the introduction of the mentioned products into stream of commerce.

“Safe harbor” for the trademark owners

If a trademark owner could not use the trademark due to valid reasons, Russian legislation in such cases protects the interest of the owner.

Even if the trademark was not used for 3 years, it would not be cancelled when owner proves the existence of conditions blocking the use of a trademark independently of the owner’s will, such as the limitation of import of goods or other requirements for goods and services that are determined by the legislation.

Some examples of decisions where courts evaluating the validity of reasons are given below.

In case No. SIP-348/2018 court stated that financial difficulties that the trademark owner has experienced as a result of his economic downturn cannot be considered as justifying reasons for not using the trademark in question, as these types of difficulties form a natural part of doing business.

In case No. SIP-702/2015 defendant (legal entity, resident of Moldova, alcohol manufacturer) stated that they could not use a trademark because of the food import ban. Court did not accept mentioned explanations as a valid reason for the non-use, because no evidence was provided by the defendant in support (contracts for the supply of alcohol products with persons located on the territory of Moldova), including evidence of the preparatory actions for the supply of alcohol products from the specified territory to Russia.

In case No. SIP-601/2017 defendant (legal entity, resident of Germany) stated that they could not use a trademark registered for dairy products due to the governmental prohibition of the import of these goods. In this case, the court considered this as a valid reason.

In case No. А55-5711/2014 first instance court recognized the bankruptcy of the trademark owner as a valid reason for the non-use. This was normal court practice at that time. In turn, the cassation court stated that the trademark cancellation action would lay down against the interests of other creditors of the defendant, since the trademark is included in the defendant’s bankruptcy asset. Thus, cancellation action is premature.

As we can see it is rather complicated for the defendant in trademark cancellation cases to prove the valid reason for the non-use. To prove the trademark non-use was due to valid reasons, the trademark owner should show before the court that the reasons for the non-use are objective and do not depend on their will. Also, it is very important in such cases to bring relevant and considerable evidence of such objective reasons.

Lockdown during the pandemic as a valid reason for the non-use

Because of the world pandemic, the vast majority of the legal entities suspended their activity or made it possible remotely.

Such a forced suspension, in some cases, could cause reduction in services provision and goods production which might lead to the non-use of trademarks, and even bankruptcy. A pandemic and its bans are unlikely to cause a continuous three-year non-use period of the trademark. However, if the trademark has not been used for a certain period before the introduction of restrictions and quarantine, and further during the quarantine, in total for 3 years, then there are grounds for its cancellation.

As was shown in some cases above, court will usually consider governmental restrictions as a valid reason for the non-use. In any case, the trademark owner should bring the relevant evidence to prove that the pandemic caused the lockdown and it made impossible to use the trademark. Trademark owners should understand that such non-use should not depend on their will, rather some external, objective reasons.

To finish off

Trademark cancellation action is possible for all or some of the goods/services for which it is registered, initiated by the plaintiff’s claim filed with the court. Cancellation may take place when the plaintiff has a legitimate interest and the defendant did not provide the court with enough evidence on the trademark use or did not prove the valid reasons for the non-use.

If there are still questions to be answered, simply contact us at office@ipstyle.net.

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