Brands & Trends 2017, Issue III

TRADEMARKS: Two sagas on non-use trademark cancellation come to an end but set homework for trademark owners

The long-lasting dispute over "NULYOVKA" trademark cancellation in the case of Carlsberg Ukraine vs. First Private Brewery has long been on our radars. Apparently, by its recent decision, the High Commercial Court of Ukraine has put an end to the battle. A few months before the above decision in the NULYOVKA dispute, the high-profile MTS TeleSystems and MTS Ukraine vs. MTS LLC trademark cancellation case also ended.

These cases are an important message to brand owners to that effect that a diligently established evidence of a trademark use is critical for recognising its validity. Currently, the availability of an evidence of merchantability of trademarked goods (i.e. availability of trademarked goods in retail) seems to be determinative to courts. Both cases also illustrate perfectly well that the Ukrainian courts are wary of accepting an evidence of a trademark use, which gives reasons to believe that it was created after filing the trademark cancellation action.

Brief facts

Carlsberg Ukraine has brought a trademark cancellation action against First Private Brewery arguing that the latter was not using the "NULYOVKA" trademark for three consecutive years. The case has undergone several rounds of judicial consideration, and has been twice remanded by the cassation court. When the case returned to the cassation court for the third time, the latter decided to take the wheel and made a final decision in the case.

In the MTS case, initially the contested MTS trademark was used to attack trademark portfolio of the Ukrainian mobile operator. The trademark owner even managed to succeed in invalidating the portfolio in the court of first instance, though the position of the court appears to be controversial. Attacking the portfolio was a reason for filing a trademark cancellation action because of its non-use.

Proofs of putting on the market

In both cases, the parties have demonstrated an extraordinary inventiveness in sustaining their arguments and submitting an overwhelming variety of proofs, including market research reports, delivery notes, technical documentation for goods, trademark licensing agreements, etc. However, the courts of all three instances mainly narrowed their focus primarily on establishing whether the trademarked goods/services have been actually put on the market so that the end-consumers could buy them. An alleged application of the trademark in business documentation, technical specifications, and within B2B distribution channels seems to be of a significantly lesser importance in the courts' eyes.

In the NULYOVKA case, the court of first instance and the court of appeal, when establishing the trademarked goods' actual merchantability, have been mainly satisfied by two samples of the product bearing the disputed trademark and two payment receipts confirming the product's purchase in retail. However, the High Commercial Court of Ukraine disagreed with courts of first two instances. The cassation court pointed out that the provided product samples (branded beer bottles bearing the contested trademark) and the payment receipts allegedly confirming the fact of purchase of these products (beer) in retail are inadmissible as evidence because of the counter evidence in the case, in particular:

  • there is no reference to correct product specification for production of non-alcohol beer;
  • both bottles have the same bar code, although there are different SKUs and, consequently, they should have different bar codes;
  • the labels do not indicate the shelf life, although a reference to it is a must;
  • letters from Ukrainian Beer Industry Association, a reputable market research company and a mass-media market research company, confirm that during the verified three years period there was no beer on the market that would bear the contested mark.
Time is of essence

Generally, in both cases the courts, especially the cassation court, were sceptical about the evidence that could have been created by the defendant retroactively (e.g. a few bottles of the product bearing the mark and the payment receipts). In the highlighted MTS case, the High Commercial Court of Ukraine pointed out that:

  • the trademark license agreement, the office lease agreements, the non-residential premises sub-lease agreement, the telephone lines lease agreement do not prove the rendering of services in class 35 for which the contested trademark was registered. It was impossible to clearly identify when these agreements were made. The language of the payment terms suggests that payments were due after filing the lawsuit;
  • the protocols approving the outdoor advertising and the photos of ads do not prove that ads were placed before filing the lawsuit. Furthermore, the service completion certificates do not specify exactly the allegedly conducted promo campaigns and the content (or message) allegedly communicated to the consumers; 
  • the defendant failed to prove that the content of its website was available before filing the lawsuit. Moreover, the expert evidence provided by the claimant proves that the challenged trademark was not used on the website before filing the lawsuit.

For more information, please contact Oleksandr Padalka or Oleg Klymchuk

The information contained in this newsletter is for general information purposes only, a does not constitute legal or other professional advice, and should not be relied on as a substitute for specific professional advice tailored to particular circumstances.