Brands Update. October 2015

This month we look at the practice of administrative courts as to which intellectual property the State Fiscal Service of Ukraine can refuse to record with the Customs Registry of Intellectual Property Objects and new court practice on copyright protection.

PROTECTION ON THE BORDER. Not all utility models are utile for Customs Registry

The administrative court declared lawful the refusal by the State Fiscal Service of Ukraine to record four utility model patents with the Customs Registry of Intellectual Property Objects (the Registry) due to the inability to identify them in the course of customs clearance. The said decision establishes the practice enabling to record only the utility models registered as products (goods), rather than processes (methods) with the Registry. Recording of utility models with the Registry will now require thorough preparation.

In the said dispute, a legal entity (the Claimant) filed a claim with the court against the State Fiscal Service of Ukraine (the SFS) seeking the declaring unlawful the refusal of the SFS to record utility models with the Register and obligating the SFS to entry the data about them into the Registry.

According to the merits of the case, the Claimant applied to the SFS for recording of four utility model patents with the Registry. All four patents protect food packaging methods.

The SFS refused to record the utility models with the Registry. The SFS explained that those utility models, which lack specific characteristics that can be controlled by the customs authorities while clearing the goods containing the intellectual property are not afforded to recording. The same rule applies if there is no possibility to identify such specific characteristics using the methods suggested by the rights holder (inability to identify the intellectual property in a specific product).

The court found that the said utility model patents are granted for methods(processes) rather than for the products (goods). Therefore, such methods should be identified based on the chronology of using their characteristics according to the patent claims of these utility models.

Consequently, to identify these utility models in the course of customs clearance the customs officers should be in position to control (identify) all characteristics specified in the patent claims of the aforementioned utility models. However, such control (identification) is not feasible, because customs clearance of the goods is conducted within the customs control zone and could not trace all stages of utilizing the methods protected by the said patents.

The court also accepted as an admissible evidence information on other utility models recorded with the Registry. The court emphasized that objects of these utility models are products rather than processes (methods).

Considering the above, the court dismissed the claim and found the refusal of the SFS to be lawful.

COPYRIGHT. What is new for the rights holders, publishers, and printing offices?

The recent court practice in the sphere of copyright protection has been expanded to include remarkable court decisions, awareness about which would be important for the rights holders when protecting their rights and for other persons exploiting copyrighted works. Specifically, for rights holders it reinforces the importance of sending cease and decease letters to infringers, otherwise their actions may be declared by the court as abuse of rights. Another important issue raised again by the court practice is which evidence should be provided to the court to prove the fact of infringement by a particular infringer? As for printing offices, it becomes important to make sure that a publisher has proper rights to use copyrighted works. Another important position of the courts is that no contractual limitation and elimination of liability would be possible when it comes to copyright infringement.

• Abuse of rights. The commercial court of the first instance dismissed the claim of the rights holder seeking recovery of statutory damages for infringement of the copyright in a character of the audiovisual work (cartoon). As it was established by the court, the defendant has distributed the pocket-books bearing the image of the character from the audiovisual work. The fact of infringement was evidenced by the alleged sale of infringing goods by the defendant and sale receipts. While dismissing the claim, the court pointed out that the claimant (or its authorized representatives) failed to warn the defendant on its IP rights in the character as well as copyright infringement after first purchase of the pocket-books bearing the image of the character. Furthermore, according to the court, the claimant failed to demand ceasing any further distribution of the infringing goods, or failed to address other demands on ceasing the infringement. The court found that such failures evidence about abuse of rights enjoyed by the rights holder.

• Evidence of copyright infringement. The Higher Commercial Court of Ukraine dismissed the cassation of the holder of rights in an audiovisual work and agreed with position of the court of appeal on dismissing the claim on recovery of statutory damages for copyright infringement. The claimant argued that the defendant infringed its intellectual property rights in the character of the audiovisual work by selling a bag bearing the image of the character in the defendant’s store. The infringement was evidenced by the counterfeit bag and sale receipt. Having examined the merits of the case, the court concluded that the provided receipt proves the fact of sale of some bag for UAH 28.85 (EUR 1.1). The said receipt is not a sufficient evidence in the meaning of section 34 of the Commercial Procedure Court of Ukraine to prove the fact of sale of the bag bearing the image of the character. Consequently, the receipt does not prove the fact of copyright infringement by the defendant. The court also pointed out that the photo of the bag is not an admissible evidence, because it just displays the bag bearing the character and, therefore, proves nothing.

• More liability for printing offices. Until recently, it has been a common practice to consider that printing offices are not liable for copyright infringement, unless they exceeded the booked number of copies to be printed. It was explained by the fact that printing offices perform a purely technical function. However, recent court practice undermines the established practice. While reviewing the decision of the court of the first instance, the court of appeal concluded that printing offices are liable not only if they exceed the number of ordered copies, but also if they complete the order of the publisher without permission of the rights holder. In such case, the court applied general principle according to which a defendant in the copyright infringement case should be a person whose actions infringe the copyright. The court also disregarded the fact that according to the contract between the publisher and the printing office, the former is liable for the copyright infringement. The court emphasized that the liability for copyright infringement, as prescribed by law, shall not be limited or eliminated in a contract. Considering the foregoing, the court has not found any good reasons to release the printing office from liability in full; however, it reduced the amount of statutory damages that the printing office should recover.

For more information, please contact Oleksandr Padalka or Oleg Klymchuk.