The Voice of the International Trademark Association, Vol. 74 No. 9, 15.05.2019

Author: Ganna Prokhorova, senior associate, member of the INTA Bulletin Committee 2018-2019

Relative simplicity, transparency, and the low cost of obtaining a trademark registration make the Ukraine an attractive forum for both domestic and foreign companies with sufficiently large intellectual property (IP) portfolios. A trademark registration gives the owner a perpetual right, provided that the mark is renewed every 10 years, to prohibit others from using the mark without the owner’s permission. However, registration is not a panacea, and in cases where the trademark has not been used within the specified period of time under Ukrainian law, any person has the right to apply to the court for cancellation of the trademark registration in full or in part. According to the data of the open court register, during 2017, more than 50 judgments were issued by the Ukrainian courts in cases dealing with non-use cancellation of marks.

According to the case law, the relevant legal factors are as follows: (1) duration of non-use of the mark; (2) the fact of use (by the owner and/or another party under his or her control) or non-use of the trademark for goods and/or services for which it was registered; and (3) reasons for non-use. These factors are considered in more detail below.

Duration of Non-Use

Since 1993, the Ukrainian legislation has provided that, in cases in which a mark has not been used in Ukraine for a period of three years after the date of registration (that is, the date the mark is published/granted) or for a period of three years prior to an action being filed, any person may apply for full or partial cancellation of the registration to a court. Para. 4, art. 18 of the Law of Ukraine “On the Protection of Rights to Marks for Goods and Services,” hereinafter referred to as “Trademark Law.”

On September 1, 2017, after a long ratification process, the Association Agreement between Ukraine and the European Union and the European Atomic Energy Community and their member states (the Association Agreement) entered into force in full scope. Article 198 of the Association Agreement contains a provision under which a trademark registration is subject to cancellation if it has not been used in the relevant territory for the goods or services with respect to which it is registered within a continuous five-year period and there are no proper reasons for non-use.

Quite expectedly, immediately after the Association Agreement came into force, the Ukrainian professional community lacked certainty as to which non-use grace period applied. Today, it is still premature to speak of any clear court practice regarding this issue; however, a certain trend in application of the provisions of the Association Agreement by the courts can be detected. 

In particular, in a case regarding the cancellation of the registration for the CRYSTAL & device trademark bio, the Kiev City Commercial Court found that the Association Agreement forms part of the Ukrainian legislation and its provisions do not contradict the Constitution of Ukraine; on the contrary, the court said that the norms of the international treaty shall take precedence over the norms established by the laws of Ukraine. Thus, Article 198 of the Association Agreement may be applied as a directly applicable norm, as it sets new standards of IP protection. In light of this, the court concluded that, pursuant to the provisions of Article 198 of the Association Agreement, for cancellation of the trademark registration the plaintiff is required to provide evidence of non-use of the mark by the owner during five consecutive years. Since at the time of consideration of the case on the merits the mentioned five-year period had not yet expired, the court concluded that the plaintiff’s request for termination of the Ukrainian trademark registration was premature and dismissed the lawsuit. Case No. 910/14972/17, Zentiva, k.s. v. The Private Enterprise “Alians Krasy” and the PTO.

The case was appealed through the court system, ultimately ending with the Supreme Court’s ruling of July 17, 2018, in which it dismissed the plaintiff’s appeal and upheld the judgments of the courts of first and appellate instances. The Court’s ruling stated that the plaintiff did not provide any reasoning in support of the statement that the application of the norms of the Association Agreement in relation to disputable legal relationships was beyond the jurisdiction of the commercial court. 

The Supreme Court also rebutted the plaintiff’s arguments that the Agreement did not have an immediate direct effect, since the Association Agreement did not contain such a provision. In this respect, the Supreme Court ruled that the fact that the Agreement had not yet been implemented was not an obstacle to the application of the Agreement by courts in the course of consideration of the case. Therefore, the Supreme Court held that the cassation appeal filed by the plaintiff should be dismissed and the lower court judgments should be upheld as being issued in compliance with the rules of procedure. Thus, according to the current case law, the five-year non-use period appears to have taken precedence over the national three-year period.

How to Use It So You Don’t Lose It

In a non-use cancellation action, the plaintiff has the initial burden of proof to provide evidence of non-use of the contested mark. Only after this initial burden is satisfied and the case is commenced for proceedings by a judge is the burden shifted to the defendant to prove either use of its mark or to provide an acceptable reason for non-use.

The legislature has clearly defined what constitutes use of a mark. The use of a trademark is established by its application on any goods, their packaging, signboards related to the goods, labels, tabs, tags or any other subjects fixed to the goods, storing goods for the purpose of offering for sale, offering the goods for sale, sale, importation and exportation of the goods; its use in relation to offering any service, and its use in business papers or advertising, as well as on the Internet. Para. 4, art. 16 of the Trademark Law. 

The Supreme Commercial Court of Ukraine (SCC) has provided guidance on proper evidence of use. The SCC’s decisions and recommendations promote uniformity in the interpretation and application of statutory authority and are followed by the lower courts on a quasi-mandatory basis, despite the fact that Ukraine is a civil law country and court decisions formally do not constitute binding precedents. In particular, the SCC ruled that, in confirmation of the fact of the use of the mark, the owner of the registration must provide the court with the evidence of taking at least some of the actions envisaged in Paragraph 4, Article 16 of the Trademark Law; in particular, the samples of goods bearing the respective mark or documents with the representation of the mark (catalogs, price lists with offers of services or goods, etc.). Circulation of goods under the trademark in the territory of Ukraine may be confirmed by cashier’s checks, receipts, invoices, other documents containing information about the name of the goods and place of their purchase, and, in cases in which the owner of the mark is a nonresident, such documents may include customs declarations and documents confirming the import of goods to Ukraine. At the same time, the SCC noted that a mere execution of contracts (including license contracts) regarding the disposal of property rights to a mark cannot be considered as trademark use. Resolution of the Plenum of the SCC, Oct. 17, 2012, no. 12 “On certain issues of practice of resolution of disputes relating to the protection of intellectual property rights.”

1. Use Must Be Real

In a case regarding a cancellation action against the PYROCOOL trademark, the court found that “for the proper resolution of the dispute, it is essential to establish the actual circumstances related to the availability in the market of goods of Classes 9 and 11 of the International Classification of Goods and Services bearing the trademark ‘PYROCOOL.’” Resolution of the SCC No. 20/441, Mar. 3, 2009, in the case Pyrocool UK, LLC v. SANEX s.r.o. and the PTO. This position is almost unanimously applied across courts in Ukraine.

At the same time, in case No. 5011-72/18927-2012, Guerlain Société Anonyme v. Brocard Parfums GmbH, despite providing two samples of the goods bearing the trademark, the Kiev City Commercial Court of Appeal upheld the decision of the court of first instance and did not accept the samples as material evidence of use of the mark, since the defendant had not provided documentary evidence regarding the actual distribution of goods in the territory of Ukraine by way of their import or sale, in particular cashier’s checks, receipts, invoices, or any customs documents. 

In another case, the court found that the evidence submitted by the defendant to show its use of the contested mark, including an executed license agreement, did not refer to the actual production of goods or their distribution. Furthermore, the defendant failed to provide the court with the documentation based on which products were to be manufactured, such as a sample or a layout of the packaging, etc. The court also noted that a mere mentioning of the disputed marks in the text of the documents provided by the defendant did not constitute their use in business papers, since it was not related to the introduction of goods and services into commercial circulation. As a result, in its decision, the court recognized the evidence filed by the defendant as artificially created and canceled the trademark registration (decision of the Solomyansky District Court of Kiev, case No. 2-1900/11, Apr. 6, 2011, An individual v. PJSC “Kiev Vitamin Factory” and the PTO).

Consequently, based on the latest trends in the Ukrainian court practice, it may be concluded that the courts primarily consider evidence proving actual, physical use, namely, that the relevant goods bearing a particular trademark are in commercial circulation.

2. Use of the Trademark in a Domain Name

In spite of the fact that Paragraph 4, Article 16 of the Trademark Law sets forth that the use of the trademark includes its use on the Internet, the court practice tends to follow the principle that a mere use of a trademark on the Internet or as a domain name without manufacturing of the respective goods or rendering of the services shall not be considered as sufficient use of a mark.

In particular, in Observations issued by the SCC on January 22, 2007, No. 01-8/24, the SCC noted that “[I]nclusion of the word mark ‘W…’ yet in the domain .ua and on the webpages of websites without the production of goods or supply of services by the Company for which the contested trademark is registered cannot result in association of this sign with the plaintiff’s goods and services by the consumers.” 

In the case regarding a cancellation action against the trademark registration for the ANSON’S mark covering services in International Class 35 of the Nice Classification of Goods, the defendant provided the court with a printout of Internet webpages to confirm the use of the disputed sign on the Internet and in the domain name www.ansons.ua, from which the users were redirected to the main website of the defendant at www.ansons.de. At the same time, the court found that the above-mentioned website indeed allowed ordering goods online; however, Ukraine is not mentioned among the countries to which products may be delivered; thus, in practice, consumers were unable to order goods to be delivered to Ukraine, and this, in the court’s opinion, was not sufficient to prove actual use of the mark. Consequently, since the defendant failed to provide any other evidence of the use of the disputed trademark, the court canceled the trademark registration. Case No. 910/15833/15, ASOS plc v. Anson’s Herrenhaus KG and the PTO.

In another case, the court ruled that the defendant’s mere registration of the www.autogrill.com domain name and the availability of the disputed trademarks  (IR no. 528522),  (IR no. 659003), and  (IR no. 659004) on the website www.autogrill.com only was not a sufficient ground to prove use of these marks on the territory of Ukraine for allowing the claims asserted in the cassation appeal. The court ruled that no relevant goods and services of Autogrill SPA were offered in the market (territory) of Ukraine, which eliminated the possibility of likelihood of confusion by Ukrainian consumers between the disputed trademarks and the defendant’s goods and services. Resolution of SCC in case No. 39/202, July, 1, 2008, Myslyvets LLC v. Autogrill S.P.A. and the PTO.

Thus, the courts’ unambiguous position is that the mere fact of registering a domain name containing a trademark is not enough to prove the use of that mark, since such use may not be deemed to identify goods and services.

3. Use of the Mark Under a License Agreement

The issue of submitting license agreements by a trademark owner as proof of use has been repeatedly raised in Ukrainian courts. At the same time, the Plenum of the SCC clarified that the use of the trademark may also be confirmed by factual data on the use of the mark by another entity subject to control by the owner. Resolution of the Plenum of the Supreme Commercial Court of Ukraine, Oct. 17, 2012, no. 12, “On certain issues of resolution of disputes related to the protection of intellectual property rights.” Notably, in Ukraine, the registration of a license agreement is not mandatory and is carried out at the discretion of the parties to the agreement. In a number of cases, a license agreement has become a key factor in judgments issued in favor of the owner of a disputed registration.

In particular, despite the fact that in case No. 910/11414/17, MTA S.p.A v. “MTA” LLC and the PTO, the plaintiff provided evidence proving the lack of registration of a license agreement, the Kiev City Commercial Court found that the defendant exercised control over the third party’s use of disputed marks on the basis of the licensing agreement. Under the terms of the agreement, the licensor had the right to visit the licensee’s production premises at any time during the working day in order to obtain samples of the goods and to check the quality of the goods and services offered for sale with the use of the marks for goods and services. In addition to the license agreement, other evidence was submitted including a copy of the cargo customs declaration concerning the import of goods bearing the MTA trademark, an expenditure invoice confirming the sale of goods in the territory of Ukraine, and samples of goods manufactured with the use of disputable marks, all of which, in the opinion of the court, confirmed the use of the trademark in the territory of Ukraine.

Other courts have adopted a similar approach where the mere availability of a license agreement was considered insufficient to confirm the use of the sign. It may be safe to assume that there is a certain unification of this approach. 

Good Reasons for Non-Use: A Chance to Keep One’s Registration Valid

Ukrainian law provides trademark owners with a potential escape hatch for avoiding cancellation of their trademark registrations due to non-use: the chance to submit good reasons for the non-use. Such good reasons include, in particular, the following: circumstances preventing the use of the mark outside the owner’s control, such as restrictions on imports or other requirements to goods and services, established by law; and, the likelihood of misleading as to the manufacturer of goods or a person rendering services during the use of the mark by the person applying to the court or by another person in relation to the goods and services with respect to which the demand for cancellation has been made. At the same time, the burden of proving the existence of good reasons for non-use lies with the trademark owner.

Good reasons for non-use are usually understood as obstacles directly affecting the use of the mark, making its use impossible or unreasonable, and do not depend on the trademark owner.

For example, the court did not accept, as proof of a good reason for non-use of a mark, letters from potential distributors rejecting the defendant’s offer to sell products bearing the mark, noting that the defendant was not deprived of the right to independently sell its products itself or through other distribution channels throughout the territory of Ukraine. The judgment of the Kiev City Commercial Court in case No. 20/146, Sept. 29, 2009, Henkel Ukraine, LLC v. Amalgam Lux, LLC and the PTO.

However, in another case, the court found that the defendant’s involvement in a bankruptcy that resulted in the impossibility to produce medicines pursuant to bankruptcy proceedings was a good reason for non-use of the disputed BARALGETAS and БАРАГЛЕТАС marks. Case No. 910/12341/16, Neo Pass, LLC v. Jugoremedija, Fabrika Lekova A.D. and the PTO.

Thus, the court practice demonstrates that the reasons for non-use of a trademark must be objective and relate to its non-use during the prescribed period.

To conclude, despite the relatively small number of court judgments in cases regarding the cancellation of trademark registrations due to non-use, the court practice is quite diverse as the result of non-uniform application and ambiguity of the relevant legislation.

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