Cancellation action based on non-use in Ukraine

2020-05-17

Trademark owner has several proprietary rights regarding its trademark, such as the right to use a trademark, an exclusive right to permit the use and prohibit unlawful use of a trademark. Nevertheless, it is not obvious that in some cases the right to use a trademark can be seen as an obligation. Obligation to use – as a safeguard to not lose a trademark completely.

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

Ukrainian legislation provides the possibility of a trademark cancellation if it has not been used in Ukraine fully or in a part regarding goods and services listed in the certificate within any five years from the registration date.

 

Term of non-use

The Law of Ukraine On Trademarks requires a three-year period of non-use of a trademark, for such to become a subject of cancellation action. Nevertheless, according to the Association Agreement between the European Union, its Member States and Ukraine, which entered into force as of September 01, 2017, the mentioned period was increased up to five years. Regarding this conflict between the national law and international agreement, the Supreme Court holds the position to apply the five-year period.

Namely, the Supreme Court has shown in its several decisions that Association Agreement after its ratification is a part of national legislation and should be applicable because of international law principle “pacta sunt servanda” and the Civil Code of Ukraine general rule. According to the mentioned rule if the effective international agreement of Ukraine entered into force and includes the rules other than those established by the appropriate national legislation, the rules of the appropriate international agreement shall be applied (decisions in cases Nos. 910/14972/17, 910/6307/18, 910/4947/18).

 

Who may and how to cancel?

According to the Law of Ukraine On Trademarks, any person may file a lawsuit with the court for a trademark cancellation on the non-use basis. According to the Civil Code of Ukraine, each person shall be entitled to apply to the court for the protection of their non-proprietary or proprietary rights and interests. Civil Procedure and Commercial Procedure Codes of Ukraine also state that everyone has the right to apply to the court for the protection of their infringed, unrecognized or contested rights or legitimate interests.

“Any person” in this case means the person having a legitimate interest or rights infringed because of a trademark being not cancelled due to the non-use. Plaintiff in trademark cancellation cases has to prove its legitimate interest for cancellation.

Legitimate interest usually is shown by establishing that plaintiff has:

  1. a pending application for a trademark (or request for subsequent designation of an international registration) which is identical or confusingly similar to the trademark being a subject to cancellation;
  2. the provisional refusal of the IP office regarding the trademark registration.

 

When does non-use term begin?

Non-use term starts from the registration date. However, the trademark can not be cancelled if it was put into genuine use or such use was resumed. This means that, if the trademark owner had not used the trademark for 5 years but after that period started to use it genuinely, the cancellation action is no longer available. Nevertheless, resumption of use during 3 months period preceding the cancellation action filing shall be disregarded if the owner started to use a trademark because of the awareness of the cancellation action.

 

Who should use and how to save a trademark?

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

In case No. 21/357 defendant 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. Supreme Court stated that the current legislation of Ukraine does not put the possibility of trademark cancellation in dependence with the owner change. “Cancellation” is tied only to the period of non-use and absence of proper non-use reasons.

 

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;
  • storing such goods with the mentioned trademark for the further offering for sale;
  • offering the goods for sale, import and export;
  • using the trademark while offering or providing any service for which the trademark is registered;
  • using the trademark in business documentation or in advertising, and on the Internet.

Nevertheless, to consider a trademark used, it should be used “genuinely” (Supreme Court decisions in cases Nos. 910/9768/16, 910/11186/16). 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 available on the Ukrainian market.

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 cases (Supreme Court decision in case No. 760/9576/16-ц). But there is a general procedural rule, which states that the case party has to prove the circumstances to which it refers. Thus, to prove the non-use of the trademark, the following evidence of non-use could be used by the plaintiff as well:

  • official document of the state authority (e.g. absence of the certificate on the product registration, or certificate of conformity) (cases Nos. 910/1546/18, 910/6497/18);
  • information (letters, statements, etc) of non-governmental legal entities regarding absence of the product on the market (case No. 910/10398/15).

Courts in trademark cancellation cases will analyze every evidence on the trademark use for each good/service the trademark is registered for.

In case No. 910/22544/17 defendant to prove the genuine use of the product provided an application for entering the trademark into the state customs register. The court did not take this evidence into consideration since the presence of the product marked with a trademark on the market of Ukraine was not confirmed by such application.

In case No. 910/1359/16 defendant to prove the genuine use of the product under the trademark (drug “ФЕРОЦИН” (“FEROCIN”)) provided the evidence on the Internet, in medical books, scientific articles, drug catalogs of different years. The court stated that such evidence could not on its own prove the presence of the product on the market of Ukraine, i.e. absence of genuine use.

In case No. 39/202 defendant tried to show the trademark use in the domain name ‘www.autogrill.com’. The court ruled that in order to consider trademark use in the domain name as the use on the territory of Ukraine, the website address should contain a domain name in ‘.ua’ zone. The Supreme Court in this case additionally stated that genuine use both in the ‘.com’ and even in the ‘.ua’ domain zones could not be on its own regarded as use of a trademark without proving the availability of the goods and services on the market of Ukraine in connection to the domain name. Thus the court, in examining the evidence provided by the parties, considers the actual use of the trademark, confirmed by the presence in the stream of commerce of goods marked with a trademark.

 

“Safe harbor” for the trademark owners

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

Even if the trademark was not used for 5 years, it would not be cancelled when owner proves:

  1. 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; or
  2. the possibility of misrepresentation regarding the manufacturer of the goods or services provider, while the person that appealed to the court or other person uses the trademark for the goods and services in connection with which the demand for cancellation was made.

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

In case No. 910/12181/16 defendant (non-resident, producer of tobacco and cigarettes) stated that they could not use the trademark because of the harsh anticompetitive conditions that have developed in the tobacco market in Ukraine which made it virtually impossible for the defendant to enter the Ukrainian market. The defendant tried to prove his statement by the decision of the Antimonopoly Committee of Ukraine. In the mentioned decision it was stated that Tedis Ukraine LLC was a distributor of all tobacco products from big foreign producers, including the defendant. However, the court stated that conclusion of contracts with different distributors was an exclusive right of the producer who is not limited to the single distributor. The defendant failed to prove that they were limited to the conclusion of the contract only with Tedis Ukraine LLC.

In case No. 910/1359/16 defendant mentioned that they could not enter to the state register and put drug into stream of commerce because of the reconstruction of its laboratory. However, the court did not consider this reason as valid, because the mentioned reconstruction depended on the defendant’s will.

In case No. 910/6307/18 defendant stated that he could not use his trademark because of the economical crisis in 2008. Court of Appeal did not consider such reasons as valid for the non-use.

In the other case No. 910/12341/16 defendant (pharmaceutical company, resident of the Republic of Serbia) stated as a valid reason for the non-use of a trademark its bankruptcy. Bankruptcy according to the legislation of the Republic of Serbia means that all of the employment contracts should be terminated, consequently the legal entity did not have any employees. Also, because of the bankruptcy, the Ministry of Health of the Republic of Serbia prohibited the production of drugs by the defendant. Court of Appeal stated that the bankruptcy of the defendant, which led to a prohibition of the production of drugs marked with the disputed trademark and supplied to the territory of Ukraine, was a valid reason for the non-use of the trademark.

Thus, as we can see it is rather complicated for the defendant in trademark cancellation cases to prove the valid reason for the non-use. Courts usually consider valid reasons as reasons out of the control of the trademark owner and it made them impossible to use a trademark. Additionally, it is very important in such cases to demonstrate adequate evidence to prove that the trademark owner could not use the trademark due to valid 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 a 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 five-year non-use period of the trademark. However, if the trademark has not been used for a certain period before the introduction of restrictions/quarantine, and further during the quarantine, in total for 5 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 right evidence to prove that the pandemic caused the lockdown and it made impossible to use its trademark. Trademark owners should understand that such non-use should not be connected and depend on their will, rather some external, objective reasons.

 

“Lifehack” in a trademark cancellation action

It is crucial to point out that under Ukrainian legislation owner is granted an exclusive right for 3 years to file another application for an identical to its trademark if he abandoned it previously. This means that, when someone is involved in the cancellation action of its trademark, the latter could abandon it, and will still have the right to file an application for the identical trademark. In such cases, it is possible to apply for the preliminary injunction with the court.

 

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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