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31 March 2016

Brands Update. March 2016

TRADEMARKS: Comedown of well-known trademarks?

Though it may be accompanied with some problems that we addressed in the previous issues of our newsletter (April 2015 and June 2015), recognizing a trademark as well-known is considered as virtually one of the most efficient strategies of trademark protection that ensures the broadest legal protection possible for a bona fide rights holder. A lack of the administrative procedure for cancelation of well-known trademark status (e.g., if the trademark is no longer popular among the customers) boosted popularity of such strategy. Known as spotless, the reputation of well-known trademark faded out in late 2015 when court decisions casting doubts on some well-known trademarks became public.

The Horseshoe case 
Two companies active in production of alcoholic beverages (“Producers”) filed a claim against the State Intellectual Property Service of Ukraine and an individual (applicant for registration a trademark for goods in classes 16 and 21), in which they requested to cease the infringement of IP rights and recognise the designation comprised of a horseshoe image (“Image”) as a well-known trademark in Ukraine for “vodka” (class 33) on the respective date.
The local court satisfied the claim and, among others, recognised the Image as well-known in Ukraine. Such decision of the local court was appealed by another alcohol beverages producer (“Competitor”) that was not a party to the first-instance court proceeding. The Competitor substantiated his right to file the appeal by the existence of the registered trademark authorising him to use the horseshoe, and two filed trademark applications for the horseshoes. Images of horseshoes owned by the Competitor visually differ from the Image recognised as well-known trademark. Notably, the date of the Competitor’s filing for the said registered trademark is earlier than the date of recognising the Image as well-known mark. 
Having reviewed the case, the appeal court accepted the Competitor’s arguments and overturned the decision of the first instance court thus actually cancelling the recognition of the Image as well-known. In particular, the appeal court did not accept the proofs provided by the Producers that would evidence of the Image fame and, among others, referred to the following:
  • As follows from the supply and service agreements provided by the Producers, not all products are distributed in the bottles featuring the Image. The presented advertising agreements relate to vodka with specific name which bottles featuring the Image rather than the Image itself.
  • Numerous proofs provided to the court to prove the Image to be a well-known trademark (in particular, advertising in printed media, Internet publication “Vodka market overview”, publication “Most popular brands in Ukraine: top 50”) cover vodka with specific name rather than the Image under dispute. Further, a number of overviews (ratings) had been published earlier than the Producers started using the Image.
  • The marketing research of the “Horseshoe” trademark awareness was conducted 10 months after the date as of which the Producers requested to recognise the trademark as well-known. Also, the court referred to other defects of this research, specifically its geographical coverage.
  • The decorative appearance of the bottle featuring the Image, which is published on the web-site, does not fully correspond to the decorative image of the products distributed via the wholesale and retail chains. In particular, the Image on the bottle cap is not visible because of the excise stamp on it; the image on the bottom of the bottle is not clearly visible for the customers either.
  • The eight-month period of Image use is not sufficient to recognise the trademark as well-known.
  • Likely impact and trends
The horseshoe case is a good example of the need for the rights holders to diligently develop the strategy of recognising the trademark as well-known, especially through court proceedings that involve or may involve a third party which is not interested in recognizing a mark as well-known. We believe that the horseshoe case will be a catalyst of elimination or, at least, minimisation of the practice of abusing the recognition of the trademark as well-known.
Currently, courts consider another case, in which the well-known status of one famous brand is challenged. We will address the case upon its completion and issuance of the final decision on it. However, at the moment we may say that the case highlights an important aspect to be taken into account by owners of well-known trademarks. The said case demonstrates exposure of well-known trademark to the risk of existence of the third-party intellectual property rights granted earlier date than the date of recognising the trademark as well-known. It is obvious that currently recognising the trademark as well-known should be considered within the context of a large-scale IPR protection strategy, in particular in terms of evaluation and mitigation of risks related to other trademarks and IP objects, which may be a basis for attacks on the well-known trademark. In this context, it seems that ignoring such risks may cost much more than mitigating them. 
For more information, please contact Oleksandr Padalka or Oleg Klymchuk.

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