Czech Republic: Intellectual Property Update

In our practice we often deal with the question whether the decision of the State Institute for Drug Control pursuant to the Drug Act No.79/1997 Coll. can constitute an infringement of patent rights and whether the State Institute for Drug Control has the legal duty to take into consideration the potential existence of industrial property rights pertaining to the respective drug during the registration proceeding. This concerns mainly the situation where the drug is protected by a patent valid in the territory of the Czech Republic and an application for registration of another (generic) drug during the validity of the patent is pending/granted.

The Act No.129/2003 Coll. has changed the Drug Act No.79/1997 Coll. Pursuant to the new provision of Section 26 para 13 of the Drug Act, the decision on registration of a drug does not affect possible civil or criminal liability of the manufacturer or the holder of the registration decision. This provision further expressis verbis states that industrial property rights and other business rights are not considered in the registration proceeding and the fact that the respective drug was registered or the registration was changed cannot constitute any infringement of those rights by the respective state registration authority.

This provision thus excludes possible liability of the State Institute for Drug Control for infringement of industrial property rights, however,the issue of potential liability of the manufacturer and the holder of the registration decision for infringement of industrial property rights in connection with filing of the request for registration, or obtention of the registration decision, remains open.

The Act No.40/1995 Coll., Advertisement Act, has been amended by the Act No.132/2003 Coll.

This Act has substantially changed the current rules of advertising for tobacco products. Pursuant to the new wording of Section 3 para 1,the advertisement for tobacco products and the sponsoring with the purpose or with direct or indirect effect to promote tobacco products are prohibited, unless otherwise stipulated by the Act. The distribution of tobacco products for free with the purpose or effect of promotion of tobacco products is also considered as advertisement for tobacco products, as well as advertisement which does not expressly mention tobacco products, but which uses a trade mark or an emblem.

The use of a trade mark of a tobacco product registered or used for tobacco or other products or services before 1st July 2004 (the effective day of the new Act)for advertisement of products or services other than tobacco shall not be considered as advertisement for tobacco products. The way of advertisement in this case must clearly distinguish the respective product from information on tobacco products.

The prohibition of advertisement for tobacco products does not apply to

- communications aimed exclusively at professionals in the field of tobacco business; - advertisement in special tobacco shops or advertisement in shop windows and appropriate marking of such shops; - advertisement for tobacco products in shops where a wide range of goods or services are offered, if the advertisement is placed in the respective section where tobacco products are sold; - sponsoring of motor sport races and sponsor communication at the premises of the motor sport races; - sale of publications containing advertisement for tobacco products which are published in third countries, if such publications are not predominantly intended for the Czech market.

Where the advertisement for tobacco products is admissible, it has to contain a clear warning with the following wording: "The Ministry of Health warns: Smoking causes cancer ".This information must cover at least 20 per cent of the advertisement. In case of written advertisement, the text of the warning must be written on white background at the bottom of the advertisement covering at least 20 per cent of the surface and the text must printed in black bold capitalised letters so that it reaches at least 80 per cent of the height of the white background. The audiovisual advertisement must contain subtitles with the said warning. Where the advertisement is admissible, it must not be aimed at persons under the age of 18,be it mainly by showing such persons or by using figures, means or actions usually addressing such persons. The advertisement must not encourage to smoke verbally or by showing scenes with open cigarette packets or scenes in which people smoke or hold tobacco products in their hands.

The above-mentioned changes will become effective on 1st July 2004,so that the tobacco and advertisement industry should have enough time to adapt to them.

In August 2003,the United States of America deposited with the World Intellectual Property Organisation (WIPO)in Geneva the instrument accession to the Madrid Protocol Concerning the International Registration of Marks (the Madrid Protocol).The Madrid Protocol will enter into force with respect to the United States of America on 2nd November 2003.The United States has made declaration referred to in Article 5(2)(b)and (c) concerning the extension of the time limit for notification of a provisional refusal of protection to 18 months and a declaration referred to in Article 8(7)(a)of the Madrid Protocol concerning individual fees.The accession of the United States has been long awaited.The accession of the United States should facilitate obtaining of trade ark protection in the United States and make it more cost effective.

In our previous Intellectual Property Update we informed briefly on the Act No.150/2002 Coll., the Civil Administrative Procedure Code, which has been effective as from January 1,2003 and which represents basis for new legislation in the field of judicial review of decisions of administrative authorities.

In compliance with The Civil Administrative Procedure Code, The High Court of Prague (which used to be competent to review decisions of the Industrial Property Office according to the previous regulation but which has no competence in administrative proceedings according to the current regulation)referred the administrative actions which were not decided before December 31,2002 to the Supreme Administrative Court.

Recently, we received several resolutions of the Supreme Administrative Court refusing all administrative actions by which the decisions of the Czech Industrial Property Office in the matters of trademarks had been attacked.

The decisions were substantiated by the fact that according to the new civil administrative legislation, courts grant protection to public subjective rights of natural persons and legal entities. With respect to the above mentioned, the Supreme Administrative Court had to solve the question whether in the given cases the administrative body (i.e. the Industrial Property Office)decided in a private or public matter because this is substantial for setting the line of the subject-matter jurisdiction between general and administrative courts.

The Supreme Administrative Court came to the conclusion that the subject of the industrial property (i.e. special absolute rights with special legal protection)are inventions, utility and industrial models, layout designs of semiconductor products and plant varieties and further protective denominations –trademarks, appellations of origin, geographic denominations and trade names. With respect to the fact that a trademark is immaterial, it is possible to regard it as another property value. Under the provision of Section 118 Para.1 of the Civil Code, the subject of civil relationships are not only things but also rights and other property values if it is allowed by their character. These values are undoubtedly capable of being the subject of civil relationships. From the above mentioned, it is possible to conclude that relationships regulated by the industrial property law form a specific branch of civil relationships. The private character of industrial rights is not changed even by the fact that the mixing of public aspects is typical of the industrial property with respect to the fact that disposal with these rights is regulated by the regulations of public law and moreover they are protected by means of the private law but also of the public law. It results from this reasoning that the conclusions of The Supreme Administrative Court can be applied not only to decisions of the Industrial Property Office in trademark matters but probably to any decisions of the Industrial Property Office relating to industrial rights. It is worst noticing that the Supreme Administrative Court has not differentiated in its jurisprudence between contentious and non-contentious proceedings before the Industrial Property Office and therefore, it seems that it would refuse administrative actions for reviewing decisions of the Industrial Property Office e.g. in the matters of patent applications or applications for any other industrial rights.

In the matters when the Supreme Administrative Court refuses the administrative action with reference to Art.46 Para.2 of the Administrative Procedure Code, the plaintiff is allowed to file a civil action with the district court having local jurisdiction within 1 month from delivery of the resolution.

With respect to the recent decision practice of the Supreme Administrative Court, it is now obvious that decisions of the Industrial Property Office as decisions in private matters shall be subject to review pursuant to the amended Chapter five of the Civil Code.