Ukraine: Brands Update. March 2015

Last Updated: 13 April 2015
Article by Oleksandr Padalka and Oleg Klymchuk

DESIGNS: Old new means of fighting against patent trolls

The most recent court practice in disputes with bad faith owners of design patents is not setting in favor of the latter. Now bona fide rights holders and importers have an additional powerful legal tool for fighting against 'patent trolls'. Such court practice may have a positive effect on further practices of and approaches to combating this unfair practice.

Background

In 2013-1014, some individuals obtained design patents for trivial designs of rubber gloves, household scrapers, and clothes-pegs. Later IP rights in the designs were assigned to a Chinese company, which, in its turn, recorded the designs with the Customs Register of IP Rights.

At the end of 2014, a Ukrainian company (the "Claimant") imported household goods, including, inter alia, rubber gloves, clothes-pegs, and household scrapers. Customs clearance of the shipment was suspended due to an alleged infringement of IP rights. Further, the infringement of IP rights in the designs was confirmed by an expert opinion. As a result, customs officers executed a protocol on violation of customs regulations as set out in Section 476 of the Customs Code of Ukraine ("Movement of Goods Infringing IP Rights Across the Customs Border"), and issued a refusal to perform customs clearance of the goods.

The Claimant challenged the refusal to the administrative court. Having considered the case, the court satisfied the claim. The court agreed with the Claimant's arguments that the latter enjoys the prior user rights (Section 22 of the Law of Ukraine "On Protection of Designs"). In particular, the court stated that the design owner's IP rights are not infringed, and the decision on the suspension of customs clearance is unlawful. In particular, the court pointed out that (i) applications for design patent were filed in 2013-2014; and (ii) the Claimant has been importing the respective goods since 2007 according to the customs declarations, that is long before the dates of filing applications for the underlying design patents.

Likely impact

The discussed decision is of significant importance as it may have a substantial influence on further practice of combating against bad faith registrations of designs and discourage such registrations. In particular, it may have the following potential consequences:

  • There will be no ultimate need to seek invalidation of every offensive design patent through the court, as well as cancelation of its recordation with the Customs Register of IP Rights. This is even more important in the light of the fact that invalidation of a certain design patent does not usually preclude a further registration of similar design by 'patent trolls' (e.g. the situation with design patents for hanger where the offensive patent is obtained for the third time, despite invalidation of the previous two). Notably, usually the consideration of cases on invalidation of design patents, including the time for forensic examination, lasts for about six months.
  • Those importers that enjoy the prior user rights (Section 22 (1) of the Law of Ukraine "On Protection of Designs") can significantly save their costs and time for combating 'patent trolls'. The fact of importation of goods prior to the date of filing an application for design patent can suffice to prove prior user rights. Undoubtedly, the fact of import should not be the only good evidence. It seems admissible to present other evidences proving both creation and existence of such rights. Importantly, there is a mandatory requirement to prove the fact of pre-filing use of a specific design on the territory of Ukraine.

Seeking invalidation of the offensive design patents due to a lack of novelty will remain a primary solution for those importers who do not have the prior user rights. Statutory limitations on transfer of the prior user rights – i.e. either together with the whole enterprise or as a part of a certain business – contribute to this.

It is obvious that popularity of such practice will raise, given the support by the state authorities (for example, Informational Letter No. 6885/1/1-15of 04 March 2015 issued by Mr. Vyacheslav Kyrylenko, the Vice-Prime Minister and Minister of Culture of Ukraine).

The discussed court practice and the position of state authorities may significantly discourage 'patent trolls' to obtain design patents for ordinary (trivial) things, as their 'target audience' (well-known foreign manufacturers, their distributors and retailers) should not have problems with proving the fact of use of the relevant designs in good faith before design patent filing date.

COPYRIGHT: For rights holders to note

The judgments of the commercial courts rendered in February 2015 regarding copyright infringement of intellectual property rights in both the "Masha and Medved" (SK: to be translated as "Masha and the Bear") cartoon and its characters make one more contribution to the law enforcement practice for settling similar disputes. The rights holders ought to more thoroughly prepare for filing the claim, which is confirmed by the below mentioned judgments of the court:

  • Statutory damages below the statutory minimum.  The Kyiv Commercial Court satisfied a claim in part and ordered to recover statutory damages for copyright infringement in the amount of UAH 121 (about EUR 4). Notably the adjudicated amount is significantly lower than the statutory minimum (SK: 10 minimum statutory salaries, i.e. about EUR 400) as stipulated by the Law of Ukraine "On Copyright and Related Rights". The court found that general principles of civil law (fairness, reasonableness and good faith) constitute a good reason for awarding such amount. Moreover, the court also took into account the official explanations of the High Commercial Court of Ukraine. According to the explanations, in determining the amount of statutory damages the court should take into account the duration of the infringement and its volume (single or multiple use of the copyright); the estimated amount of damages of an aggrieved party; the amount of profit gained due to the infringement; a number of aggrieved parties; the respondent's intent; previous infringements (if any) of the claimant's IP rights by the respondent; and the ability to restore the rights of the claimant and efforts to be used. As far as we are aware, the claimant appealed the decision. The final decision in the dispute will be discussed in one   of  our next issues of the Brands Update. In any case, this decision confirms the need of more thorough substantiation of  the amount of statutory damages in case of copyright infringement.
  • Admissible evidences of goods sale.The High Commercial Court of Ukraine upheld the rulings of the lower courts and rejected a claim of the rights holder against a private entrepreneur on the recovery of statutory damages for copyright infringement. The court agreed that there are no good evidences that could prove the fact of purchase of goods containing the copyright infringement (unlawful exploitation of animated characters). The court pointed out that the provided delivery note cannot be regarded as a payment document within the meaning of the Law of Ukraine "On the Application of Payment Transactions Recorders in the Sphere of Trade, Public Catering and Services". Moreover, the delivery note lacks details of the respondent, including its seal. Therefore, the court came to the conclusion that the provided delivery note is not sufficient to prove the fact of sale of the goods by the respondent.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions