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6 April 2018

Brands & Trends 2018, Issue I

TRADEMARKS: CLASH OF NON-EXISTING YEARS

The case we address below in more detail may become a precedent setter since for the first time a court has resolved the issue that was subject to heated debate: whether the EU-Ukraine Association Agreement (the “Association Agreement”) is directly enforceable and whether its trademark-specific provisions prevail over Ukrainian trademark laws. At various conferences and round tables, judges voiced the idea of direct applicability of the trademark protection provisions of the Association Agreement. With some degree of skepticism, the litigants and litigators expected that judges would focus more on the domestic law than on groundbreaking ideas. However, they did not.

Background

Zentiva k.s. (the “Claimant”) filed a trademark application for Crystal mark. Later on, the Ukrainian Patent and Trademark Office issued a notice of provisional refusal arguing that the filed mark is confusingly similar to the registered trademark – “bio CRYSTAL”. The Claimant brought an action against the owner of “bio CRYSTAL” trademark seeking early termination of the trademark due to its non-usage during three consecutive years, as explicitly provided for by the Ukrainian Trademark Law.

In turn, having provided evidence of trademark use, the defendant also argued that the Claimant brought an action earlier than he had the right to do. In particular, according to the defendant, in this event instead of a three-year period of non-usage as prescribed by the Ukrainian Trademark Law, a five-year period of non-usage under Article 187 of the Association Agreement should apply. To support his position, the defendant also provided the court with a letter from the Ministry of Economic Development and Trade of Ukraine addressing the direct applicability of provisions of the Association Agreement.

By the time of the action, the three-year period had expired while the five-year period had not. Therefore, answering the question on whether Article 187 of the Association Agreement is applicable directly and prevails over the provisions of the Ukrainian Trademark Law requires shifting the calculus in favor of either party. That day, the calculus shifted in favor of the defendant.

The court of the first instance agreed with the defendant, applied Article 187 of the Association Agreement and dismissed the claim. The court held that Article 187 of the Association Agreement, which establishes new trademark protection standards, should apply directly and prevails over the respective provisions of the Ukrainian Trademark Law. Moreover, according to the court, the intellectual property chapter does not provide for any terms of implementation. The court also disagreed with the Claimant’s arguments that the Association Agreement stipulates gradual harmonization of the Ukrainian laws with EU laws.

What to expect?

The position of the court in this case is crystal clear. The Ukrainian legislation stipulates priority of ratified international treaties over national laws. However, the main question now is whether this decision will be appealed and whether the courts of higher instances will uphold the position of the court of the first instance. Even in case of a negative scenario, it would be interesting to see and test whether this position would survive in other trademark non-use invalidation actions. At this point, it seems that not all arguments have been tried (e.g. retroactive effect of the Association Agreement for trademarks registered before its effective date, incorporation of Article 187 of the Association Agreement in the implementation plans of the Ukrainian authorities and draft laws to amend the Ukrainian Trademark Law, etc).

When preparing to file a trademark invalidation claim due to non-usage of a trademark, a claimant should now:

  • collect and be prepared to provide the evidence of non-usage for five consecutive years;
  • consider relevant alternative grounds for trademark invalidation (e.g. likelihood of confusion, trade name or copyright infringement); and
  • consider other provisions of the Association Agreement, which, potentially, may prevail over the provisions of the Ukrainian Trademark Law.

We will further monitor the development in this court dispute and similar disputes and we will keep you updated.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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