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3 August 2015

Brands Update. July 2015

In the July issue of Brand Update we address key questions of brand owners regarding the adopted procedure for disclosure of information about trademark applications (is expected to be in effect late this summer), analyze decision of the Supreme Court of Ukraine which IP disputes are no longer within the jurisdiction of the administrative courts, assess the impact of decision of the High Commercial Court of Ukraine on advertising market in terms of liability for copyright infringement, and introduce the first precedent of challenging registration of geographical indication in Ukraine.

TRADEMARKS. Data on trademark applications in Ukraine go public: answers to key questions of brand owners re the approved procedure

A free 24/7 access to trademark applications (“trademark application”) database will be provided very soon. The Ukrainian Patent and Trademark Office (UAPTO) has approved the Procedure for Making Data on Trademark Applications Publicly Available via Internet (“Procedure”).

The Procedure was adopted in light of harmonization of the Ukrainian trademark laws with acquis communautaire and to facilitate the exercise of the right to file an opposition against trademark registration by any interested person.

What data re trademark applications will become public?

According to the Procedure, data to be publicly available include general details of the trademark application (application number, filing date, applicant's name and address, representative’s name and address, information about priority, image of the trademark, goods and/or services for which registration is sought) and additional data, depending on specific trademark application (information about protectable colors, collective, 3D mark) (“Data”).

The Procedure sets out an exhaustive list of good reasons for not disclosing image of the trademark filed for registration. Specifically, good reasons include images which, according to the UAPTO, contain swear words and expressions, porn, saber-rattling, propaganda of national or religious enmity or discord, fascism or neofascism. If any such content is found, the image of the filed trademark will be replaced by a standard notification prescribed by the Procedure. It remains unclear so far whether the UAPTO will provide information about specific reasons for not disclosing a particular image. It should be noted that this provision of the Procedure is rather questionable in terms of its compliance with the Law of Ukraine “On Protection of Trademarks” (“Trademarks Law”), as it pertains to the issues to be resolved at the stage of substantive examination of the trademark application. We do not exclude that this provision may be amended or removed from the Procedure in its entirety.

At what point after filing of the trademark application will the UAPTO disclose the Data?

Though the Procedure is silent about the exact moment of such disclosure, complex understanding of provisions of the Procedure suggests that the Data will be made publicly available online after completion of formal examination of the trademark application. We do not exclude that this may be changed by the UAPTO while testing the service. It should be also noted that access to the hardcopies of the trademark applications will become actually available for anyone after the decision on establishing a filing date is made by the UAPTO, i.e., about 2 months prior to the date when the Data would appear on Internet. To obtain hardcopies of materials of a particular trademark application a respective request should be filed with the UAPTO and a small official fee should be paid.

It also remains unclear how the Data will become available in case of accelerated trademark registration procedure, when the trademark may be registered within 2-3 months after its filing.

Where could the data on trademark applications be found?

The Data will be publicly available at the web-portals of both the UAPTO and the State Intellectual Property Service of Ukraine.

Are there any grounds for the data to be removed?

The Procedure also sets out the grounds for removal of the Data from the abovementioned web-portals, specifically: (i) upon making a final decision with respect to the trademark application; (ii) upon receipt by the UAPTO of a request from an applicant for withdrawal of the application; (iii) upon sending of the UAPTO's notice on withdrawal of trademark application to the applicant.

The issue on whether the Data will be removed in their entirety or some details of the trademark application will stay on the web-portals remains open.

At what point will the data on trademark applications become available?

As reported, the Data are expected to be technically accessible late in August 2015.

What will happen with paid access to trademark applications?

We expect that the Ukrainian Centre of Innovations and Patent and Information Services (“Innovation Centre”), being the subsidiary of the UAPTO, will continue to provide paid services for searching of similar or identical marks, including in respect of trademark applications. The advantage of the Innovation Center is that it would get access to the trademark applications database and may run the respective search in relation to trademark applications far before a decision on establishing an application filing date is made (2-3 days after filing). Another advantage of the Innovation Centre service is that it identifies registered and filed trademarks which may be opposed to the filed trademark at the stage of substantive examination. The disadvantage of the Innovation Centre is the need to pay for such service.

Also it is reported that procedures for trademark availability searches conducted by the Innovation Centre may change.

TRADEMARKS. No more trademark invalidations by administrative courts

In the middle of June, the Judicial Chamber on the Administrative Cases of the Supreme Court of Ukraine (“SCU”) finally expressed its position with respect to jurisdiction of the administrative courts over the matters pertaining to the invalidation of trademark registration certificates. The SCU pointed out that disputes on challenging the exclusive rights in trademarks shall be resolved according to the rules of civil or commercial procedure as it is a civil law dispute.

The said SCU’s position is an important response for the longstanding administrative courts practice, which used to accept and resolve the claims filed against the State Intellectual Property Service of Ukraine on trademark certificate invalidation.

In the case reviewed by the SCU, the Ukrainian company (“Claimant”) brought a lawsuit with the administrative court on invalidation of decision of the State Intellectual Property Service of Ukraine (“Defendant”) on which basis a trademark (“Conflicting TM”) that is confusingly similar to the mark registered earlier in the name of the Claimant (“TM”) was registered. The owner of the Conflicting TM was brought into the proceedings as a third party without separate claims.

Having examined the evidences provided by the parties, the district administrative court satisfied the claim due to similarity of the TM and the Conflicting TM.

The administrative court of appeal disagreed with the decision of the court of the first instance and reversed the decision of the latter. The court of appeal pointed out that the facts to be proven in the case on invalidation of the Defendant’s decision is to establish unlawfulness of the latter rather than similarity of the trademarks. Further, the court of appeal noted that the trademark registration certificate is a document that certifies the title to a trademark, while title disputes are beyond jurisdiction of the administrative courts.

The High Administrative Court of Ukraine disagreed with the court of appeal, reversed its decision and upheld the decision of the court of the first instance. The court of cassation stated that on their merits the claims under the Claimant’s lawsuit are claims for declaring unlawful the omission of the Defendant which failed to properly conduct the substantial examination. Such omission resulted in making of the challenged decision and issuance of the trademark registration certificate. Therefore, argumentation of the Defendant that dispute is beyond jurisdiction of the administrative court is meritless.

The decision of the High Administrative Court of Ukraine was further challenged in the SCU.

Having reviewed the case, the SCU revoked the decisions of all lower courts and closed the proceedings in the case. The proceedings were closed because of improper qualification of the dispute as a public-law dispute and jurisdiction of the administrative courts by the lower courts. In the case concerned, the dispute pertains to the title to a trademark, i.e. civil law-based right. Therefore, the courts mistakenly decided that the dispute should be resolved in accordance with the administrative procedure. The SCU pointed out that if the public authority decides on registration of a trademark and the trademark applicant obtains a trademark registration certificate any further challenging of the title to the trademark should be made in accordance with rules of civil or commercial procedure, as there is a title dispute. To substantiate the lack of the administrative court’s jurisdiction over such disputes the SCU also referred to the ECHR judgment in Zand v. Austria case dated 12 October 1978.

ADVERTISING AND COPYRIGHT. Half million compensations and other challenges for advertising industry for copyright infringement

Never before compensation for infringement of copyright was adjudicated in such a way. In addition to adjudicating one of the biggest ever compensations for copyright infringement (UAH 493,201 (about EUR 20,600) in a dispute between Ukrainian exclusive licensee of musical composition and mobile operator, the decision of the High Commercial Court of Ukraine ("HCCU") contains some controversial legal positions, which can significantly affect further practice of cooperation between clients who order advertising (advertisers) and advertising producers, specifically producers of advertising video.

The Licensee ("Claimant") filed a lawsuit against the mobile operator ("Mobile Operator"), the content production company ("Production Company"), and the composer ("Composer") claiming for joint recovery of compensation in the amount of UAH 493,201 (about EUR 20,600) for copyright infringement.

The Claimant argued that the Mobile Operator unlawfully used the variation of the famous music piece "F**k you" (authors Lilly Allen and Greg Kurstin) ("Musical Work") in the sound track of the advertising video clip ("Advertising Clip") in course of advertising campaign on TV. The Claimant argued that the proprietary right to use the Musical Work on the territory of Ukraine belongs to him on the basis of the license agreement (exclusive license). The Claimant also argued that the Advertising Clip was screened more than 4,369 times on twenty TV channels.

In its turn, the Mobile Operator argued that the Musical Work was not used in the soundtrack of the Advertising Clip.  According to the Mobile Operator, the music used in the sound track of the Advertising Clip was created on its request under a contract with the Production Company, which, in its turn, contracted the Composer to create music for the Advertising Clip. Under the contract the Production Company guaranteed that the Advertising Clip shall not infringe rights of third parties, and the Mobile Operator in its turn guaranteed that information and materials provided to the Production Company for the purposes of the contract shall not infringe the rights of third parties.  Moreover, the aforementioned contract stipulated that the Production Company is liable for the work of third parties (if any) involved by it in the creation of the Advertising Clip.

The Mobile Operator also argued that the Claimant failed to prove that Emi Music Publishing Limited acquired the respective IP rights in the Musical Work from the authors. This became the reason for dismissal of the claim by the court of the first instance.

However, the court of appeal has cancelled the decision of the court of the first instance and satisfied the claim of the Claimant. The conclusion of the complex expert examination in the sphere of intellectual property and of examination of the audio-video recording were among the reasons for granting of the claim. In particular, the conclusion confirmed that variation of the Musical Work was used in the sound track of the Advertising Clip.

The HCCU upheld the position of the court of appeal. Also, the HCCU held that in aggregate actions of all defendants resulted in infringement of the Claimant's proprietary rights in the Musical Work and, consequently, all defendants are jointly liable to the Claimant.

The abovementioned decision of the HCCU suggests the following conclusions regarding its effect on the advertising market:

  1. To mitigate the risks of infringement of third parties intellectual property rights, it is important for advertisers to provide in the contract and later to demand from advert producers detailed information regarding materials which will be used for creation of advertising material. It would be reasonable to develop the respective internal procedures for selection and usage of copyrighted materials owned by third parties in the process of creation of advertising clips and other advertising materials.
  2. Though the decision to recover compensation for copyright infringement in relation to advertiser is quite controversial, it is expected that the courts will support this position regarding joint liability of the advertisers and advert producers, with reference to the fact that advertiser has the right of recourse. Currently, the courts overlook presence or absence of the fault of the advertiser. Courts focus mainly on identifying the presence or absence of the fact of infringement rather than the presence or absence of the fault.
  3. Argumentation of the HCCU regarding the proof of enjoying sufficient copyright by the Claimant is also controversial. The decision suggests that the HCCU did not investigate whether Emi Music Publishing Limited, as licensor under the licensing agreement with the Claimant, acquired rights from the authors of the Musical Work. The fact of validity of the licensing agreement between the Claimant and Emi Music Publishing Limited was sufficient for the HCCU to state that the Claimant enjoys sufficient copyright.

Though it is a good signal for rights holders, we are of the opinion that when filing a claim the rights holder should be ready to prove that all IP rights were properly assigned from authors to transferees of rights, including ultimate right holder (claimant).

GEOGRAPHICAL INDICATONS. First test on geographical indication registration validity

As of today, only 20 geographical indications are registered in Ukraine and only about half of them are of Ukrainian origin (pertains to the respective territories of Ukraine). However, it appears that even validity of these GIs may be challenged. Leaving aside the fact of questionable consideration of the case by administrative courts, a dispute between the owner of “BALAKLAVA” geographical indication and the owner of registered and filed trademarks raise a number of important issues to be considered by GI owners and those who plan to register GI.

In 2013, a distribution company (“Claimant”) filed a claim with the administrative court against the State Intellectual Property Service of Ukraine (“Defendant”) on cancelation of its decision on registration of “BALAKLAVA” geographical indication (“GI”). The Claimant argued that the GI violates his legitimate interests because the fact of GI registration prevents him from registration of “BALAKLAVA 2500” trademark.

The court of first instance and the court of appeal found that in 2005 the Claimant obtained trademark registration certificate for “BALAKLAVA” trademark (“Conflicting TM”) for goods in class 33 and services in classes 35 and 43. In December 2012, the Claimant filed a trademark application for “BALAKLAVA 2500” word mark. However, the application was opposed on the basis of alleged violation of rights in the GI.

Both the court of the first instance and the court of appeal dismissed the claim. Both instances pointed out that the Defendant acted within its power provided by law and duly conducted the examination. Therefore, there are no grounds for cancelation of such decision.

The Claimant disagreed with such decisions and applied to the cassation court in 2015. The cassation court reversed the decisions of the lower courts and remanded the case to the court of the first instance for reconsideration. Argumentation of the High Administrative Court of Ukraine (“HACU”) highlights a number of important issues which may appear obvious for Italian or French producers, but are worth attention of Ukrainian producers:

  1. The GI owners and users should diligently monitor and ensure that the territory of harvesting raw materials, their processing and production of goods marked with GI should be as defined in GI registration documents. In aforementioned case, the ground for doubts and challenging the lawfulness of registration was a label. The HACU held that the lower courts failed to consider whether the production facilities indicated on the label have any relation to the territory called ‘BALAKLAVA’. Also, the lower courts failed to consider whether raw materials were harvested and processed within the territory in relation to which the GI is registered.
  2. Prior to filing a GI for registration, it is necessary to run a trademark availability search to identify trademarks (if any) similar or identical to the GI. Any trademarks the rights to which arose earlier then the rights to GI, sooner or later may become a basis for claims against the GI owner. Moreover, it should be mentioned that not all trademarks expose GI registration to potential risks. According to the Law of Ukraine “On Protection of Geographical Indications” such trademarks should be not only similar or identical to GI, but has a certain reputation, be known and has a period of use. With reference to the latter regulation, the HACU pointed out in its decision that the lower courts failed to consider whether the Claimant used the Conflicting TM and whether the GI registration affected or would affect the use of the Conflicting TM.

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