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The recently adopted Moldovan Competition Act no.°183, dated July 11, 2012 (the “Competition Act”) aims to transpose the provisions of  Council Regulation (EC) No.1/2003 of December 16, 2002 “on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty” and, partially, of  Council Regulation (EC) No.139/2004 of January 20, 2004 “on the control of concentration between undertakings”, regarding, inter alia, the rules of notification for operations of economic concentrations (the “Operations”). 

Notification Thresholds

The Competition Act provides for the mandatory notification to the Competition Council of Moldova of Operations where the combined turnover of the parties involved (excluding the seller) exceeds MDL 25 million (approximately EUR 1.5 million, or USD 1.9 million) world-wide; and each of at least two of the parties (excluding the seller) has revenues exceeding MDL 10 million (approximately EUR 600,000 or USD 750,000) in Moldova. The combined turnover is the sum of turnovers of the individual undertakings concerned in the Operation, in case of mergers, whereas in cases of acquisition of control, the turnover is the sum of the turnovers of the acquirer and the target undertakings.

Turnover Calculation

General

Under the general rule, the concept of total turnover refers to the amounts obtained by a concerned undertaking in the previous calendar year from the sale of goods as part of the undertaking’s normal activity, less applicable discounts, value-added tax, and other direct taxes. Any state aid granted by the public authorities to the undertaking is to be included within the total turnover, where the undertaking is the beneficiary of the state aid and the state aid is directly connected with the undertaking’s sale of goods.

Groups of Undertakings

The total turnover of the concerned group of undertakings does not include transactions concluded between the relevant undertaking and other undertakings in the same group. Only the amounts arising from concluded transactions between the group of undertakings, on one side, and third parties, on the other side, are to be taken into consideration for the purpose of the total turnover calculation. Consequently, where a concerned undertaking is part of a group, the mere calculation of the total turnover of the undertaking concerned in an Operation may be not sufficient for notification purposes. In such cases, the total turnover is computed as a sum of the total turnover:

• of the undertaking;
• of  any undertakings in which that undertaking, directly or indirectly:
  • holds more than half of the share capital; or
  • has the right to exercise more than half of the voting rights;
  • has the right to appoint more than half of the members of the council, executive board, or other bodies legally representing it; or
  • has the right to manage its activities
• of any undertakings which hold the rights or competences indicated in (ii) above in it;
• of any undertakings in which the undertaking(s) indicated at (iii) above hold the rights or competences indicated at (ii) above;
• of any undertakings in which two or more undertakings indicated at (i) – (iv) above hold together the rights or competences indicated at (ii) above.

Industry Specific Turnover Calculation Rules

Different and specific provisions on calculating turnover apply to mergers in the Banking, Financial (non-banking), and Insurance sectors.

The turnover of banks and other institutions granting loans consists of the amount of both earnings arising from interest and other earnings, less any state taxes paid on such earnings. When calculating the turnover of undertakings effecting financial leasing as the main domain of activity, all leasing rates (as applied) are to be taken into consideration for the purpose of calculation.

The total turnover of insurance companies consists of the total amount of gross insurance premiums provided by insurance agreements concluded by or on behalf of the companies, including the premiums paid to reinsurers, less state taxes related to those premiums. The premiums that are to be taken into consideration refer to both the insurance agreements concluded in the respective year and the premiums arising out of the insurance agreements concluded in the previous years and that continue to be executed in the reference period.

The rules on turnover calculation under the Competition Act, including its secondary legislation, appear to be more transparent than under previous competition legislation. At this stage, however, it is not clear whether the implementation of these rules will succeed. Time will tell. Until then, to avoid unnecessary risks, companies are advised to keep consultants close by their side. Inaccurate computation may incur fines up to 4% of turnover.     

By Vladimir Iurkovski, Managing Attorney, and Andrian Guzun, Associate, Schoenherr

This Article was originally published in Issue 2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Women in Austria make up only 15% of all partnership positions at ranked law firms – the lowest percentage in CEE. Women in Romania, by contrast, make up 45% of partners in that country – the highest in the region.

What percentage of partners are women in the other countries of CEE? Which firms have the highest percentage of women partners, and which the lowest? What about associates? Which firms have large number of male partners – but no women? Do any firms have large numbers of women partners – but no men? How many?

The next issues of CEE Legal Matters provides the answers. In the first part of a special two-part report, we provide comprehensive data regarding the numbers and percentages of women working in leading law firms in Central and Eastern Europe. Learn where your firm ranks, and your country.

Make sure you get the fodder you need for discussion, argument, and policy. Subscribe to CEE Legal Matters today, to make sure the magazine lands directly on your desk. Female or male – CEE Legal Matters should matter to you.

Trademark infringement cases are becoming more and more frequent in the Intellectual Property Chamber of the Supreme Court of the Republic of Belarus, which started operating in March 2000. This Chamber is the only court in Belarus empowered to consider disputes relating to intellectual property, irrespective of the subject and parties involved. And as of 2012, patent attorneys have been entitled to represent clients there. The Chamber’s decisions come into force immediately after their announcement and are not subject to appeal. They may be reviewed only by way of supervision, upon protests of higher officials of the Supreme Court or the Prosecutor’s Office.

More than 36,000 domains were registered with a .BY domain name in 2013. Belarus has taken a leading position in national Internet segment development. There are 5 domain registrars, and it is possible to check a domain name’s availability at each registrar’s site.

Domain names are not protected as intellectual property in Belarus. Information about the owner of the infringing domain can be obtained via Whois service. And although some domain owners choose to have their identities concealed, Whois provides allows for messages to be sent to them. This option helps trademark owners forward cease and desist letters. And from our experience we know that  unauthorized trademark users who receive such messages often choose to assign infringing domain names to legitimate trademark owners. 

Domains with a .BY domain name have already been involved in several court cases. One of the published decisions regarded the domain “kosht.by”. The plaintiff in the case was the owner of the trademark for services of class 35 of the International Classification of Goods and Services. The defendant, a Belarusian natural person, had registered the domain name “kosht.by” in his name before the date of trademark registration, however – and had himself applied to trademark the name “kosht.by” for the services of class 43 of the International Classification of Goods and Services. The defendant was using the “kosht.by” domain name on the Internet as an additional domain name for the sites sushi.by and pizza.by that offered food delivery services (mainly sushi and pizzas). When the action was filed and the defendant learned there was a case against him, however, the kosht.by site was deleted.

Nonetheless, the plaintiff asked the court to prohibit the defendant’s use of the domain kosht.by. The Chamber acknowledged the infringement of trademark rights, although Trademark Law does not expressly list “use in domain name” among potentially infringing actions, but only among forms of trademark use by the owner.

The Chamber’s decision was based on the similarity of services in the  trademark registration (class 35) and those offered at the websites sushi.by and pizza.by to which domain kosht.by redirected, as the services coincided in purpose and use and were meant for the same consumers.

One of the most distinctive features of Belarusian trademark protection concerns registration of a domain name after it has been eliminated from the domain register. In these circumstances a domain name can be registered in the name of a  new owner only after a charity auction is conducted by the technical administrator of the national domain zone (since 2012 the technical administrator in Belarus has been “Reliable Software, Inc.”). If nobody is interested in the domain name after 2 auctions, the technical administrator returns it to the register, making it available for registration on general grounds. The first such charity auction commenced in 2012.

The technical administrator has the right not to put domain names identical or confusingly similar to registered trademarks up for auction. These domains can be registered in the name of the trademark owner who proves the exclusive right to the trademark.    

By Darya Lando, Head of Legal Department, LexPatent, Minsk

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

On May 31, 2013, the Criminal Division of the Bulgarian Supreme Court of Cassation passed Interpretative Decision No. 1 on the application of Art. 172b of the Penal Code (the “Decision”). Article 172b is one of the few IP crime provisions in the Bulgarian Code, and it penalizes the infringement of rights involving trademarks, industrial designs, plant varieties, animal breeds, or geographical indications. More specifically, Art. 172b provides that a person who uses one of the aforementioned objects of intellectual property in his or her business activity without the consent of its holder shall be penalized by a period of imprisonment of between 2 to 5 years and a fine of between BGN 2,000 and BGN 5,000 (roughly between EUR 1,000 and EUR 2,500).

In its Decision the Supreme Court reached several important conclusions in relation to  criminal trademark infringement. Below is an outline of the Court’s main points and conclusions:

• The Supreme Court expressly confirmed that the term “use of trade mark” shall have the same definition as in the Bulgarian Marks and Geographical Indications Act. The latter definition closely follows the well-known definition of “trade mark use” under the EU Trade Marks Directive. 

With regard to  cases of counterfeit goods in transit, the Supreme Court clarified that use of trade mark for such purposes shall occur only if the goods are subject to commercial transactions ultimately targeting  consumers in the European Union (i.e. in principle transits to countries outside the EU are excluded).

• It was further clarified that the use of signs which are similar to other trade marks shall also be punishable as trade mark infringement offenses under Art. 172b, i.e. criminal penalties are not limited only to cases involving signs that are identical to registered trade marks.
• No trade mark infringement crime shall be committed when dealing in genuine products (e.g. in cases of parallel imports). 
• The judges clarified that use in the course of “business activity” shall exist in cases where the perpetrator has used the trade mark with the aim to obtain economic benefit from such use. The perpetrator does not necessarily need to be a registered merchant or act through registered business entity as long as the purpose of use is economic benefit.
• Another very important clarification from a practical perspective involved the question of who should be held criminally liable for trade mark infringement in cases where the use (e.g. the import of counterfeit goods) was performed through a corporate entity. The Supreme Court stated that perpetrator of trade mark infringement crime in the cases where the trade mark was used by an entity shall be the natural person who has acted on behalf of the entity in a way to perform the illegal use.

The final two points made by the Supreme Court of Cassation are probably the most important conclusions in the Decision, as they are related to two major problems which trade mark holders have faced in seeking protection of their intellectual property rights in criminal cases – namely, to prove that they have suffered material damages as a result of the crime and to justify their participation in a criminal trial as civil plaintiffs. In these respects the Supreme Court of Cassation stated that:

• Trade mark holders as a rule may suffer damages as a result of the trade mark infringement and such damages are subject to compensation. Thus, the questionable position taken by some law enforcement authorities and judges that companies should in each and every case prove actual damages as a result of the crime should no longer apply; and 
• It is the trademark holder who is the injured natural / legal person and who has suffered damages as a result of the trade mark infringement offense, and therefore it is the trade mark holder who shall be entitled to participate in criminal proceedings as a civil plaintiff.

The Interpretative Decision gives mandatory guidance for application of the trade mark crime provision by law enforcement authorities and criminal judges. The issuance of that Interpretative Decision brings high expectations for improvement in the speed and results of IP crime prosecution in Bulgaria. 

By Nikolay Zisov, Senior Associate, Boyanov Law Firm

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Disputes between owners of intellectual property rights and potential infringers of those rights often involve the need on the part of the IP rights-holders to take swift actions to stop potential infringement as soon as possible in order to minimize the harm that may result. But litigation proceedings can drag on for several years before a final judgment is adopted on whether infringement of the rights of the IP owner has indeed taken place. Therefore, to ensure that right-holders can achieve immediate termination of infringement without awaiting a decision on the substance of the case, legislators in Latvia have allowed them to seek interim injunctions, whereby IP rights-holders can apply to have the court order alleged infringers to cease the alleged infringement on a provisional basis.

In Latvia, the legal concept of interim injunctions in IP cases was introduced into Latvian Civil Procedure in 2007 as part of the implementation of EU Directive 2004/48/EC into Latvian law. This law authorizes a court to apply provisional safeguard measures (interim injunctions) upon a request from a rights-holder, where there are sufficient grounds to believe that infringement has occurred or is likely. The following provisional safeguard measures are available to the rights-holding claimant:

1. the seizure of movable property that has been used allegedly in infringement of the claimant’s rights;
2. the obligation of the alleged infringer to recall all goods that are allegedly infringing the claimant’s rights; and
3. an injunction against the respondent and/or intermediaries whose services are used to infringe the claimant’s rights or whose services make it possible to infringe the claimant’s rights.

After some initial confusion as to the conditions under which interim injunctions could be granted, the Supreme Court in 2012 introduced a cumulative four-step test for assessing whether requested interim injunction in IP cases are justified:

1. whether sufficient grounds exist to believe that the claimant owns the relevant intellectual property right;
2. whether sufficient grounds exist to believe that the claimant’s owned intellectual property right is being infringed or will be infringed;
3. whether sufficient grounds exist to believe that the relevant infringement will cause significant harm to the claimant in case the requested interim injunction is not applied; and
4. whether the balance of interests weigh in favour of or against the application of the requested interim injunction. 

Based on subsequent Latvian case law, all four limbs of the four-step test have to be answered in the affirmative for the court to issue the requested interim injunction. The first two limbs are assessed in accordance with the prima facie standard, whereby the courts apply a somewhat higher threshold of assessment than that applied in reviewing the case on the merits. In other words, if on a preliminary basis of assessment it is unclear whether either of the first two limbs is satisfied, the courts will refuse the request for interim injunction. For instance, a claimant may have trouble obtaining an interim injunction if the request is based solely on ownership of a non-registered well-known trademark, if the status of the trademark as well-known is ambiguous. Similar difficulties may arise if there is ambiguity as to who has earlier rights – claimant or defendant – or if the defendant has challenged the validity of the claimant’s IP rights.

In relation to the third limb, the Supreme Court explained that “significant harm” means harm which is unavoidable and irreparable. Thus, if the potential harm is insignificant or arguably can be remedied by the defendant in case the claim is satisfied on the merits, this limb may be not be satisfied.

Finally, if the first three limbs have been answered in the affirmative, the fourth limb requires the courts to balance the interests of the parties and society in general. This assessment may involve taking into account the effect of the interim relief on the business of the parties, the availability of the relevant product to consumers in the market, etc. 

Overall, the introduction of the four-step test for assessing whether to satisfy a request for application of interim injunction in IP cases provides a reliable tool for Latvian courts to balance the pros and cons of interim relief on case-to-case basis. 

By Martins Gails, Senior Associate/IP Team Leader, Lawin

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In the course of continued efforts to join the European Union and the related necessity of harmonizing its legislation with EU law, Bosnia and Herzegovina (BiH) has, since the execution of the Stabilization and Association Agreement with the EU on June 16, 2008, adopted a set of new laws. One of these laws is the Trademark Law (in force as of January 1, 2011). Prior to the adoption of the Trademark Law, trademark and other industrial property issues were regulated by the BiH Law on Industrial Property, which was not wholly consistent with EU law. One of the main novelties of the Trademark Law compared to the Law on Industrial Property was the introduction of complaints in the course of trademark registration procedures.

Accordingly, once it receives a trademark application, the Institute examines whether it fulfills all formal requirements and whether there are Absolute Reasons for refusal of the trademark application. If the Institute finds that the trademark application fulfills all formal requirements and that there are no Absolute Reasons, the application shall be published in the official gazette of the Institute. At that point any interested party (e.g., a holder of a previously registered trademark, etc.) may submit a written opinion, arguing why the trademark application triggers Absolute Reasons, and thus should not be registered. This right expires 3 months from the day of publication of the trademark application in the official gazette. If it receives an opinion from a third party within that time, however, the Institute may forward it to the applicant and ask for a response to it. After the receipt of the trademark applicant’s answer, the Institute decides on its own discretion on registration or refusal of the trademark application.

The Trademark Law also grants a right to interested parties to object to the registration of a new trademark on Relative Reasons. Hence, an interested party has a right to submit a complaint (prigovor) within the same 3 month period as that applicable to Absolute Reasons. In this case, an interested party may submit a written complaint to the Institute containing an explanation – and supporting evidence, if any – why a trademark application triggers Relative Reasons. Subsequently, the Institute shall examine whether the complaint fulfills all formal requirements set out by the law. If the complaint does not fulfill these requirements the Institute shall reject the complaint. If the formal requirements are met, the Institute forwards the complaint to the trademark applicant, which must submit its response within 60 days as of the day of receipt of the complaint. Should the trademark applicant fail to submit its response, the Institute shall reject its trademark application. If the trademark applicable does respond, however, the Institute decides the matter by registering the trademark, rejecting the complaint (partially or in whole), or rejecting the trademark application. In any case, any interested party may file an appeal of the decision within 15 days from the day of receipt of the decision. Appeals are submitted to the Institute’s Board of Appeal. 

In addition to the increasing the legal protection for trademark-holders, these developments, which also prevail in most EU countries, have led to a decrease in the amount of time needed for processing trademark applications. This system of complaints is already common in EU countries, and these newly-introduced rules are in compliance with applicable EU trademark regulations. Although it is too soon to fully analyze impacts of the complaint system in BiH, it appears that this system has led to a decrease in the amount of time needed for registration of a trademark. Due to the increase in the number of complaints filed with the Institute in recent years, this may lead to fewer civil court disputes related to trademarks, and thus increased legal protection for trademark-holders.

It is worth noting that, besides the described complaint procedure, the Trademark Law also introduced some other advances, such as provisions related to “disclaimers” (voluntary limitation of the scope of protection of the trademark), more detailed regulations on the international registration of a trademark,  the procedure of registration changes, transfers, licenses, pledges, and so on.    

By Amar Bajramovic, Partner, Law Office Bajramovic

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Most applications for the granting of trademarks filed in the State Office for Industrial Property in the Republic of Macedonia are for words. Generic concepts are words which do not merely distinguish one producer or performer of a product or service from another but actually describe the product or service itself, and therefore are not entitled to trademark protection.

• Folic Acid is a term in Class 5 of the International Classification of Goods and Services. The State Office for Industrial Property rejected the application for trademark because it signifies only the kind of the product and is the generic term for folic acid. Decision No. 10-6477/3, on November 11, 1999.
• Plastelin is a word in Class 1 of the International Classification of Goods and Services. The State Office for Industrial Property rejected a request to trademark Plastelin because it is a generic term and serves to designate the kind of product and does not in any way differentiate the goods and services in trade. Decision No. 10-3206/3, on August 20, 2001.
• Cream Plus is a term in Class 29 of the International Classification of Goods and Services. The State Office for Industrial Property found that this term is indistinctive and insufficient for trademark. The word Cream is a descriptive word and is not eligible for differentiating goods in the market, and the appended Plus by itself is not sufficient as a distinctive character of the mark, as it merely implies addition. Decision No. 10-547/3 on May 26, 2004. 
• Yogurt Plus is a term in Class 29 of the International Classification of Goods and Services. An attempt to trademark this term was rejected by the State Office for Industrial Property because it could create confusion in the market. The appended Plus, by itself, is not sufficient as a distinctive character of the mark because it is unclear whether it refers to the fact that the products for which the protection is being requested contain more yogurt than usual or to the addition of other ingredients besides yogurt. Decision No. 10-3115/4 on May 27, 2004. 
• Sirup Od Belog Sleza in Class 5 was denied trademark protection by the State Office for Industrial Property as this mark defines the type of product and is usual for designation of this category of products. It could not be accepted because of a lack of distinctive graphic elements for differentiation in the trade. Decision No. 10-5279/3 on 23/09/2002.

In Macedonia, a word can be registered as a trademark and offered protection of the law only if the application satisfies Article 124 of the Macedonian Law on Industrial Property (itself in compliance with Article 15(1) of the TRIPS Agreement). This law states that: Each mark or combination of marks which serves to differentiate the goods and services of one trade company from the goods and services of another may be registered as a trademark.

This definition applies to words such as personal names, numbers, figurative elements and combination of colors, as well as each combination of those marks. All of these terms can be registered as trademarks in Macedonia.

However, in Macedonia as elsewhere, terms which initially are distinctive can themselves become “generic” if they become the usual or scientific name of one product, rather than of one particular maker of that product. For instance, the famous example of Bayer’s “Aspirin”, in which the United States trademark authority withdrew protection from the mark on the ground that Aspirin had become synonymous for a particular form of pain medicine, and therefore had become “generic.”

Following world trends and developments, Macedonian legislation has provided for the dispute of some trademarks to be resolved in administrative procedures, without formal Court involvement. If it is established that a disputed mark is “generic”, that mark becomes a “free mark” or “freizechen” and is no longer entitled to legal protection.     

By Biljana Joanidis Velickovska, Partner, JOANIDIS Law & Patent Office

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

With the new Croatian Criminal Code that entered into force on January 1, 2013, enforcement of IP rights, primarily copyright and related rights, seems to be even more difficult than it was under the previous Code.

This has been substantially changed in the 2013 Criminal Code. Now, in order for an act to constitute a criminal violation the amount of damage caused to the IP-right holder or the benefit acquired by the right infringer must be “considerable”. The Criminal Code does not define the term “considerable”, but the Supreme Court in December 2012 ruled that “considerable” means any damage or benefit which exceeding USD 10,000.

This change has far-reaching consequences for enforcement of copyright in Croatia. A great number of copyright infringement cases are now un-prosecuted under the Criminal Code that once would have been, as they no longer qualify as criminal acts, but only as misdemeanors. In particular, infringers in virtual environments are now no longer in danger of criminal charges, as in most instances their violations do not generate a benefit or cause damage in excess of USD 10,000. And the result of this interpretation affects the prosecution of these activities in another way as well: As search warrants are not issuable for misdemeanor offenses, in order for a warrant to be issued to search the premises of suspected infringers, the courts must now be presented with evidence that the infringement meets the “considerable” standard. The experience of IP practitioners and the police is that infringers, usually individuals, keep minimal stock of infringed goods on hand. As a result courts are increasingly reluctant even to issue search warrants in these types of cases. And as a result, Croatia has witnessed the rapid growth of online ads and sales offering infringing goods via e-commerce sites.

This unfortunate change in legislation comes as a surprise, especially if we look at the statistics of IP violations in 2012. The number of IP violations reported by IP-right holders is constantly rising, while IP enforcement before judicial, administrative and government bodies is in free fall. In 2012 the Croatian Ministry of the Interior pressed penal charges against 164 individuals for infringement of IP rights (out of which 89% were for infringement of copyright), compared to 181 individuals charged in 2011; a drop of 9.3%. 

At the same time, the total number of reported violations is constantly rising, and in 2012 alone it increased by 23%. And the Customs Office in the Croatian Ministry of Finance records a marked increase of IP infringement cases. In 2011 there were 645 cases, but in 2012 there were 2,071 –  an increase of a staggering 221%. The number of cases the Customs Office delivered to the courts for trial increased by 195%.

With the new Criminal Code, however, we expect to experience a significant drop-off in IP enforcement cases, as cases with damage less than USD 10,000 are no longer covered by the Code. Infringers of IP rights causing less than USD 10,000 in damage will in the worst case be fined between USD 878 and USD 8,786.

The change in legislation has been heavily criticized by IP right holders, IP practitioners, and other stake holders. Voices of criticism are even stronger if we take into account the  initiative to review EU copyright rules launched by the European Commission in December 2013, which is currently undergoing public consultations. Does the change in the Criminal Code in Croatia fit into the European Commission initiative under which enforcement remains appropriate and is adapted to the new environment?  We believe the answer is negative.

The Croatian State Intellectual Property Office and the Ministry of Justice are discussing effective solutions to this issue. Proposals so far include lowering the requested limit of IP crimes to well below USD 10,000, allowing the amounts associated with the acts of one infringer over a certain period of time to constitute one “act” for purposes of the law,  and including the loss of goodwill resulting from the sale of infringing goods in calculating whether or not the damage exceeds the USD 10,000 barrier.

It is not yet clear what will be decided as a solution to this issue. However, IP owners are very concerned, and should insist that a solution be found to the situation as soon as possible.    

By Marija Musec, Lawyer, Bardek Lisac Musec Skoko

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In Lithuania, a trademark registration may be invalidated based on Article 7 part 3 of the Law on Trademarks of the Republic of Lithuania, which provides that a trademark registration should be declared invalid when it becomes evident that the application for the registration of a mark was made in bad faith by the applicant.

Based on the practice of the European Court of Justice (ECJ June 11, 2009 judgment in Case C-529/07 Chocoladefabriken Lindt and Sprüngli AG), when assessing the bad faith of an applicant all factors relevant to the circumstances of the case concerned prevailing at the moment of submitting the application should be taken into account, including:

1) the fact that the applicant knows or should know about a third person’s prior right to an identical or similar sign for identical or similar goods;

2) the intention of the applicant to prevent this third person from using the sign; and 

3) the degree of legal protection used for the sign of the third person and by the sign for which registration is sought. 

The first factor can be presumed from use of an identical or similar mark in a particular economic sector, and  knowledge of that use can be inferred from the duration of such use, the degree of fame and/or reputation of the earlier mark, and a possible association of the applied-for sign with the earlier mark.  

Such fame and reputation of earlier opponent’s mark was established by the Appellate Division of the State Patent Bureau in considering an opposition to the registration of the “GILLETTE” mark. The Appellate Division concluded that the requested GILLETTE  trademark was essentially identical to the opponents’ existing community mark, which had established a reputation, thus the applicant’s goods would benefit from the possible association with the earlier mark. The same findings were made in opposition cases regarding BRAUN / BRAUN and MAX FACTOR / MAXI color & device marks. 

In the “GILLETTE” opposition the Appellate Division also took into account the fact that the applicant had registered and used other well-known marks before; therefore its actions contrary to law were of a systemic nature. 

The factor of knowledge of existing marks is also relevant in Opposition cases based on Article 6 septies of the Paris Convention for the Protection of Industrial Property, which stipulates that the proprietor of the mark shall be entitled to oppose the use of his mark by his agent or representative if he has not authorized such use. Commercial relations and agreements of the applicant with the proprietor of the mark prove such knowledge and the unfair intentions of the applicant when applying for the registration of the other person’s mark. Such commercial relations were established in the opposition to the mark WOLF PERFORMACE AMMUNITION & DEVICE, which was nearly identical to the applicant supplier’s earlier WOLF & DEVICE sign.  

However, numerous decisions of the Supreme Court of Lithuania as well as the Appellate Division have found that although one of the bad faith criteria is the applicant’s knowledge of another person’s right to the sign when filing a trademark application, that circumstance alone is not sufficient for a finding of bad faith. Instead all the circumstances at the date of trademark application filing  should be taken into account, including applicant‘s unfair actions vis-a-vis the opponent. 

Furthermore, according to the Supreme Court, the mere intention to obtain exclusive IP rights, including trademark protection, does not mean that there is unfair competition. 

In its jurisprudence the Supreme Court has also stressed that holding a trademark registration invalid based on unfair intention is a remedy of an exclusive nature (ultima ratio) when seeking to defend a third person’s rights to a trademark or prior used sign. The trademark protection instrument cannot “cover” or “include” all other trademark invalidation grounds covered by  Article 7 part 1 of the Law on Trademarks. (SCL June 25, 2008 judgment in Case No. 3K-3-160/2008 UAB “Restoran? grup?” v. AB “Ragutis”).   

Based on this judgment, the Appellate Division has been reluctant to issue a ruling of Unfair Intention in opposition cases where other legal grounds for trademark invalidation exist, such as confusing similarity with an earlier mark or a mark having a reputation.     

By Ausra Pakeniene, Partner, AAA Law

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The value of intellectual property (IP), such as trademarks and designs, is often underestimated, even in large corporations. Especially in small markets such as Slovakia, companies often realize the value of their IP only at a late stage, when unauthorized copies of their products are already on the market.

Imagine that you are a successful Slovakian business and you manufacture and sell your products under the brand “EXTREME”. You also own the registered trade mark “EXTREME”. Some time later, when your product has become sufficiently well-known, one of your competitors introduces a similar product and names it “X-TREEM”. Not only do you see the market flooded with parasitic products but you realise that your competitor has had the courage to apply for the registration of its new brand as a trademark. It may also happen that your competitor’s trademark application skipped your attention and “X-TREEM” already is a registered trademark.

Speed in trademark infringement cases is of the essence. This is because apart from creating a financial loss, the exclusivity and uniqueness of your “EXTREME” trademark is being tarnished by the existence of a copycat. You need to remedy this as quickly as possible, because unlike a loss of profit, loss of exclusivity can be recovered only with great difficulty (if at all).

How can you get “X-TREEM” off the market quickly?

Generally you need to do two things:

• You need to get the infringing goods off the market; and
• You need to prevent “X-TREEM” being a registered trademark. 

As a result, you will need to launch court proceedings (preferably via a request for a preliminary injunction) and initiate administrative proceedings at the Slovak Industrial Property Office to prevent trademark registration. 

Over the years, Slovakian courts in general have earned a reputation for being the slowest avenue of IP enforcement. The situation, however, is slightly better in IP litigation. One of the reasons is the existence of specialized IP courts (though not for copyright cases, however). Another distinctive feature of IP litigation is the possibility to request claims in preliminary proceedings which are not of a temporary character and could normally be requested only in proceedings on the merits. This typically includes a claim to cease using the trademark and remove the infringing goods from the market. This fact coupled with a 30-day deadline for granting preliminary injunctions is a recipe for a quicker remedy.

The Achilles’ heel of administrative proceedings before the Slovak Industrial Property Office (IPO) is the way such proceedings are handled. After launching trademark opposition or trademark invalidation proceedings, the IPO asks the counter-party (the alleged infringer) to comment on the matter. Unfortunately, although the infringer is officially allocated only two months to submit its reply, in practice the IPO often allows five or six extensions of this time period. As a result, the proceedings may stand still for more than one year. Therefore, the mushrooming of intentional infringers who exploit this unfortunate situation by ‘buying time’ is not surprising at all. With knowledge of this common practice by the IPO, a perverted business strategy of artificial extension of proceedings to tarnish and parasite on famous trademarks for months if not years has been created.

In Slovakia it is therefore advisable to launch court proceedings and proceedings before the IPO simultaneously. If the court grants a preliminary injunction, the remedy is immediate. Even if refused, strange as it seems, court proceedings on the merits may still be faster than trademark opposition or invalidation proceedings at the Office. A decision from the court concludes the proceedings before the IPO, even if they are not yet finished. On the other hand, decisions from the IPO do not award damages, so a court action will still be necessary.  

By Zuzana Hecko, Head of IP, Allen & Overy

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.