Ukraine: Brands & Trends. June 2016

Last Updated: 3 July 2016
Article by Oleksandr Padalka and Oleg Klymchuk

IP PROTECTION: Gigantic step towards establishing IP courts in Ukraine

On 2 June 2016, it finally happened! This day the Ukrainian Parliament adopted a package of laws giving the green light to the long-awaited reform of judicial system in Ukraine. The anticipated judicial reform also introduces a new reality for consideration of intellectual property disputes. There are more questions than answers so far, but still a general framework is already in place.

New Structure. The restated version of the Law of Ukraine "On Judicial System and Status of Judges" (the "Law on Judicial System") provides for a two-pillar structure for IP disputes.

In particular, the Law on Judicial System suggests establishing the Superior Court on Intellectual Property (the "IP Court"). The IP Court will act as the court of the first instance. However, jurisdiction of the IP Court will be defined by the respective Ukrainian procedural laws.

The Law on Judicial System also provides for an opportunity to establish judicial divisions within the IP Court (e.g. patent disputes division, trademarks disputes division, etc.).

Court decisions of the IP Court will be appealed to the Supreme Court of Ukraine where a specialised IP Chamber will be established. The Supreme Court of Ukraine will act as the court of appeal and no cassation will be generally possible for IP disputes.

Who are the judges? In addition to general requirements, there are special requirements for individuals willing to become judges of the IP Court. An eligible candidate should have not less than three years of experience as a judge, or not less than five years of experience as a certified IP attorney, or not less than five years of experience as an IP litigator with the attorney at law status, or in total not less than five years of experience as a judge and / or a certified IP attorney and / or an IP litigator with the attorney at law status.

Who are the representatives? The reforms of judicial system also concerns establishment of attorneys' monopoly on representing clients in the courts. This monopoly will certainly cover the IP Court and IP courts of the upper level. Before, attorney's monopoly was limited to criminal cases only and, virtually, any individual could be engaged as representative of the client in IP litigation (even without legal education). The monopoly will be gradually implemented within several years.

When? The IP Court is expected to be established, and a competition on selection of IP judges is expect to be launched within twelve months after the effective date of the Law on Judicial System.

The Law on Judicial System has not entered into force yet. To take effect it should be signed into law by the Ukrainian President, as well as published in one of the official newspapers.

TRADEMARKS: Trademark invalidity heritage. Good news for buyers

Is non-use trademark invalidation risk inherited by a new trademark owner in your jurisdiction? It seems that we have at least a preliminary answer to this question in Ukraine. The Higher Specialised Court of Ukraine for Civil and Criminal Cases (the "Higher Court") disagreed with the lower courts and stated that non-use trademark invalidation risk should not be treated as an inherited risk.

In May 2015, a Michigan-based corporation (the "Plaintiff") filed a trademark invalidation claim against a Ukrainian individual (the "Defendant") who is the owner of MERRELL М trademark (the "TM").

The Plaintiff argued that the TM has not been used for three consecutive years. This three-year term included the respective period of time preceding March 2013 when the TM was owned by its initial owner – a Ukrainian LLC.

Both the court of the first instance and the court of appeal held that non-use trademark invalidation is not conditional on the trademark assignment. The lower courts further stated that when concluding a trademark assignment agreement, the new owner should have assessed the risk of trademark invalidation and taken proper actions to use the TM. The TM was partially invalidated for services in class 35.

However, the Higher Court had a different opinion. The Higher Court stated that the said three-year term should have been calculated from the date of publication of the assignment notice in the respective official newspaper and entering of the respective record into the Ukrainian Trademark Register with regard to change of the trademark owner. The Higher Court also stated that (i) the Defendant should not be liable for non-use of the TM by its previous owner; and (ii) Ukrainian Trademark Law does not stipulate that the period of non-use of the trademark by its previous owner is included into the said three-year term.

It should be also noted that the above situation seems to be only one side of the coin. The other side of the coin is that this court practice also can be intentionally used to avoid trademark invalidation. For the latter case, a proper injunction could be an equitable remedy.

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.

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