Good Old Brands: Consider Enforceable Succession of Non-Registered Brand

Wine brands may have a long history that usually contributes to their strength, consumer loyalty and recognition. The recent high-profile wine brand dispute proves both the necessity of ensuring proper acquisition (succession) of non-registered brands while corporate succession and reinforces the importance of "first-to-file" principle applicable to trademarks.

Recently, one wine producer (the "Applicant") brought a lawsuit against Cyprus-based TM holder ("Respondent") that is affiliated to another wine producer to recognize its right of prior use to "СТАРИЙ НЕКТАР" (standard type, to be spelled as "STARYI NEKTAR") registered wine brand name (the "Brand"). The brought lawsuit is the extension of the earlier pending trademark litigation initiated by the Respondent with respect to the invalidation of the Applicant's registered TM (illustrated above).

The Applicant asserted that the right of prior use to the Brand was allegedly acquired through corporate succession from two legal entities – former users of the production facilities where wine labeled with the Brand was produced. The Applicant's position was based on the fact of lease of stated-owned production facilities by predecessors and various wine production-related documents that might evidence the Brand use such as manufacturing specifications, quality certificates, and awards.

However, the commercial court found the above evidence and arguments of the Applicant not sufficient and dismissed the suit. While justifying the dismissal of the suit the commercial court has given an important judgment on preconditions to be met to acquire the right of prior use from predecessor: (i) good standing of the predecessor in the past; (ii) the fact of the Brand use by the predecessor; and (iii) the fact of acquisition of the right of prior use by the predecessor.

The discussed brand litigation reassures the importance of timely detection of non-registered brands and their proper succession from predecessor to successor when the succession or other transfer (acquisition) of business takes place. Late registration of the non-registered brand may expose initial brand owner to extra risks pertaining to invalidation of such brand registration by an owner of a trademark registered earlier.

Upcoming Changes to Design Law. Opposition Mechanism for Third Parties

Currently the public discussion of a draft law on amendments to the Design Law is taking place. The expected amendments are related to implementing an opportunity for third parties to oppose a filed design application within two months as of an e-publication on its filing. Good reasons for opposition are expected to be (i) failure to ensure novelty and (ii) infringement of rights in a trademark/well-known trademark. It is suggested to implement the opposition procedure for both domestic and international design registration.

Finally, the draft law sets up a legal instrument to recover statutory damages (one-time penalty) within 10 to 50,000 minimum statutory salaries (currently minimum statutory salary is UAH 1,218) instead of actual damages.

The adoption of the draft law should improve legal protection of designs affected by patent trolling.

Temporary Occupied Territory and IP Rights Protection: Current Status Quo

At the end of July, the State Intellectual Property Service of Ukraine held a round table dedicated to problems and solutions for intellectual property protection on the temporary occupied Ukrainian territory (the Republic of Crimea). The following issues have been discussed while the round table:

(i) On 27 April 2014, the law "On Guaranteeing Citizens' Rights and Freedoms and Legal Regime in the Temporarily Occupied Territory of Ukraine" (the "Law") became effective. According to the Law, the Crimea remains a part of the Ukrainian territory, which has been temporarily occupied where, both Ukrainian Constitution and Ukrainian laws (Sayenko Kharenko note: actually cover IP laws) remain applicable.

(ii) Irrespective of the above, Ukrainian IP laws are currently hardly enforceable on the Crimean territory. Specifically, participants of the round table have discussed the following obstacles:

  • Correspondence & Communication.  Ensuring correspondence between Ukrainian Patent and Trademark Office (UPO) and IP holders/applicants; payment of public duties and charges by IP holders/applicants; using of postal indexes and applicability of WIPO ST. 3.
  • Trademarks.  The right of prior use issue in case of use of a mark on the Crimean territory only; use of trademarks on the temporary occupied territory and its conflicting with the use of similar trademarks by third parties; making social surveys within the Crimea peninsula for the purpose of recognizing a trademark as well-known; jurisdiction and applying Madrid system within the Crimea.
  • Legal protection of Designations of Origin originated from the Crimea.

Finally, it worth noting that the Ukrainian Parliament adopted the draft law "On Tax and Customs Control in the Crimea's Free Economic Zone and Peculiarities of Commercial Activity on the Temporary Occupied Territory" in the first reading. It is expected that adoption of this draft law should improve regulation of the trade activity between the occupied Crimea and continental Ukraine. One may expect that it will also help in solving IP-related issues.

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