Trademark Safety in Russian Distribution: Key Aspects

The original title: Trademark related aspects of distribution in Russia. How to keep your trademark safe?

We are lucky to get acquainted with new trademarks, while world renowned brands are contemplating their future in Russia.  Eye-catching names and designs appear in various spheres: cosmetic, automotive, telecommunication, household, entertainment. When entering the new market, it is wise to think not only about profit that is supposed to be gained, but also about protection of the peculiar name which consumers will get familiar with and hopefully grow fond of. 

The acquaintance with a new product starts with its name. So, the first thing to do is to choose the name that will distinguish your goods among the wide range of similar ones of other market players. 

Russian legislation foresees that no legal protection shall be granted to marks that lack distinctiveness. The list of designations that are considered non-distinctive includes obvious positions such as commonly used symbols and signs, generic terms, marks that are descriptive of characteristics of the goods or their intended purpose, place of manufacture of the goods or whereabouts of producer. 

However, trademark regulations also prescribe that marks that represent simple letters and figures and and combination of letters that do not have word character or original graphical design are recognized as lacking distinctiveness. Generally, marks that face lack of distinctiveness objections represent combinations of consonant letters, for example BCD, or consonant letters with figures, for example BC4D.

Such marks may obtain protection through proving acquired distinctiveness that has resulted from long-lasting and intensive use of the designation for particular goods by the applicant or under his control in Russia before the application filing date. The use must be intensive and specific to the Russian market in order to create strong association between the mark and particular trader in the consumer’s mind.

As for marks that possess inherent distinctiveness it is also worth considering several points. 

Firstly, the overwhelming majority of the Russian consumers do not know the Chinese language; thus, designations made in the Chinese script are considered by the Russian PTO as graphical marks. Taking into account that in oral speech word marks are commonly used as they may be easily remembered and pronounced by the consumers, it is reasonable to apply for the Latin and/or Cyrillic version of the mark as well, so that the Russian consumers may recognize the brand. 

Secondly, when choosing the Latin or Cyrillic version of the mark it is imperative to verify whether such a mark is in compliance with public interests and principals of morality. The point is that pronunciation of some Chinese words resembles Russian vulgar words. For instance, the Latin transliteration of "会" – [huǐ] or [huì] – may face absolute ground objection as contradicting to the public interests and principles of morality being similar in sounding to the Russian swear-word. Probably, for such type of words it may be reasonable to choose their translation instead of transliteration for the Russian market. 

Once the the choice as to which mark should be used on the Russian market is made, trademark registration should be obtained. Use of an unregistered designation in Russia may pose risks to the trademark holder. Among such risks the following could be highlighted: 

Infringement of prior marks registered for similar goods in the name of third parties;

Stealing the mark by a brand squatter; 

Registering the mark by a distributor or a seller in its name.

Infringement of third parties’ trademarks may be eliminated to certain extent by way of conducting a trademark search, which may reveal current possible obstacles to use and registration of the proposed designation. However, this is not an ideal tool as it reflects the current state of affairs. For example, there may emerge applications with a convention priority claim that have not been revealed in the search results. Thus, to keep the pace with the fast-changing reality it will be prudent to monitor the registry constantly, which may be quite burdensome.  Anyway, to be on a safe side it would be strongly recommendable to secure trademark rights by way of registration before entering the Russian market in order to mitigate the infringement risks. 

As to brand squatters, the most efficient instrument to resist them is to obtain registaration timely. Clearly, brand squatting is a business pattern of dishonest individuals, which have the aim to get fast and easy profit taking advantage of the fame and reputation of a third party’s brand. Combatting them whether by means of legal actions or by way of negotiating monetary compensation for the trademark may cost a fortune. 

Legal issues may also arise, if the mark has been registered by a distributor in its name. Sometimes distributors are acting in the interests of the producer trying to protect the mark on the new market, if the owner of the brand is reluctant to do so. In some cases registered means of individualization (at least existing pending trademark application) is an integral part of business operations, since online market places may request confirmation of trademark rights before offering the goods for sale. However, entrusting the brand in distributors' hands is risky. The business relations with the distributor may be terminated, while the trademark will remain in the name of the distributor, which may subsequently create obstacles to use of the mark by a genuine trademark holder.  

Naturally, Russian legislation foresees the possibilities to oppose illegal actions in connection with obtaining trademark rights mentioned above without consent of the true owner. 

For example, according to the provisions of Part of IV of the Russian Civil Code, which regulates intellectual property issues, a registered trademark may be invalidated in full within the whole term of validity, if its legal protection was granted in the name of an agent or a representative of a person who is the owner of this exclusive right in one of the member states of the Paris Convention for the Protection of Industrial Property, in violation of the requirements of this Convention, specifically in violation of Article 6 septies. 

Further, a registered trademark may be invalidated in full or in part within the whole term of validity on the basis of possibility of misleading the consumers as to the manufacturer of the goods. 

However, it goes without saying, that timely obtaining exclusive right in the name of the rightful owner is the best avenue to secure time and money, especially taking into account that different options to achieve trademark registration in Russia exist.  

Currently, national and international trademark filing systems are applicable in Russia. In terms of trademark examination and registrability requirements both systems are basically the same. Trademark examination is carried out by the Russian PTO both on absolute and relative grounds ex-officio in respect of applications filed through national or international procedure. The applicable time period of trademark examination is 12 months from the date of acceptance of the application for consideration by the Russian PTO in case of national applications or from the date from which the time limit to notify the refusal starts for international filings.  

The obvious advantages of international filings include saving costs on filing, renewals and recordals. However, the main drawback is a five-year dependency on home (basic) application or registration and thus the risk of central attack. Besides, international filing system prohibits making amendments to the applied designation and adding new classes, should the need to transfer goods or services to a new class arise in course of examination of the mark at the Russian PTO.

National filing appears less attractive from a cost-saving perspective, but it may be more flexible in course of examination. For instance, it may be possible to introduce slight changes to the applied designation that do not affect the overall impression of the mark; it is also possible to open additional classes and transfer the objected items of goods or services to the proper classes. Moreover, accelerated examination procedure is available for national filings, which may cut down the trademark examination period to 2 months.  

Once the mark matures into registration, the trademark holder enjoys the exclusive right to:

Use the mark in any way not prohibited by the law;

Prevent the registration of identical or confusingly similar marks in respect of similar goods by third parties;

Grant licenses and dispose of the exclusive right in other ways including assignment and bail recording;

Record the mark in the IP Customs Register, thus preventing the unauthorized import of branded goods into Russia. 

Needless to say that apart from the rights arising from trademark registration a trademark holder has the obligation. This obligation is to use the registered mark. If the trademark is not in use within three consecutive years from the date of its registration, it may be terminated in full or in part based on decision of the IP Court upon request of an interested third party. 

Various questions as to proper use of the registered trademark often occur. For example, what happens if the mark is registered in black-and-white, but is used in another color or color combination? Does use of the mark with added or deleted non-protectable elements constitute genuine use of the registered mark? 

To that end, it should be noted that in Russia a trademark is protected exactly the way it is registered. Slight changes while using the mark are permissible as long as they do not affect distinctive features of the mark. However, there are no clear cut criteria as to how to distinguish between significant and insignificant changes. The question as to whether the alterations change the essence of the mark, or not is left to the discretion of the IP Court and is to be decided in each case separately. Thus, it is advisable to choose the designation wisely and apply for registration of the mark that is going to be used in Russia. 

To sum up the aforesaid in order to keep the trademark safe it is strongly advisable not to neglect timely registration of the trademark in the name of the genuine trademark holder. Use of the trademark for the registered goods is obligatory to secure it from early termination. 

Additionally, it should be particularly noted that there are no politically motivated approaches being applied to intellectual property, including trademarks, of foreign enterprises. The Russian legislation, regulations and statutory acts do not contain any restrictions in connection with prosecution and enforcement of intellectual property. Any overseas entity is free to obtain and dispose intellectual property rights in Russia as usual.