The main advantages of the unfair competition law
are flexibility and non-exhaustive list of practices that may actually be qualified as unfair
competition. Trademark law is more conservative in this respect.
The dispute addressed below may be a good illustration of defence
by producers of competing products against IP infringement claims
by employing the mechanisms of protection against unfair
competition. While the decision in the dispute is not yet final, a
round won by the competitors is a valuable contribution to the
development of alternative instruments and mechanisms of
TM owner wins the first round. Competitors win the second
The first round was in favour of the trademark owner. The court
has found that (i) the trademarked shape of a washup (3D mark, as
illustrated above) ("Trademark") is not
a form required to achieve a certain technical result; and (ii)
though the form points to natural (real) state of a product, it has
acquired sufficient distinctiveness due to its long use before
filing a trademark application.
In 2015, a group of Ukrainian legal entities
("Claimants") active in producing and
distribution of washups and Ukrainian large retailers received
cease-and-desist letters from the holder of exclusive license in
the Trademark ("Defendant"). The
Defendant was seeking ceasing the production and sale of the
washups because such production and sale allegedly infringed the
exclusive intellectual property rights in the licensed 3D mark. In
his C&D letters to the retailers, the Defendant also warned
about criminal liability that allegedly may arise if retailers
continue to purchase and sale washups produced by the
on competitors by the Defendant triggered filing of
six unfair competition claims by the Claimants to the Kyiv Regional
Office of the Antimonopoly Committee of Ukraine ("AMC").
The results of the unfair competition round were not favourable
for the trademark owner and holder of the exclusive license. The
AMC qualified the competitors' active enforcement of IP rights
in the said 3D mark as unfair competition.
What is wrong with IP rights enforcement?
Having reviewed the claims filed by the Claimants, the AMC
established the fact of unfair competition in the Defendant's
actions and recommended the Defendant to cease the unfair
competition practices. However, the Defendant refused to follow
written recommendations of the AMC claiming that they were
unjustified and unreasonable, mainly because it enjoys IP rights in
the Trademark. On this basis, the AMC launched a full-scale unfair
competition investigation against the Defendant.
Late in 2016, the AMC found the Defendant guilty of violating
Article 1 of the Law of Ukraine "On Protection against Unfair
Competition" that stipulates a general ban on any actions in
the competition when they contradict trade and other fair business
In its final decision the AMC pointed out that production of
washups does not fall within any type of actions qualifying as
exploitation of a trademark within the meaning of the Ukrainian
Trademark Law. The AMC referred to the decision of the Higher
Commercial Court of Ukraine in which it is stated that
"… The form of goods shall be protected as a
design. More specifically, a trademark shall not be simultaneously
a shape of the product and an image of the shape of the product for
which it was registered". The AMC's position was
supported by an expert evidence. The AMC also stated that
the same rights holder owns a design patent for the shape of the
washup, but it was not licensed to the Defendant
(SK: the trademarked shape differs from the shape
for which the design patent was obtained).
Since there is no infringement of intellectual property rights,
the AMC established that actions of the Defendant were actually
aimed at limitation of the competition on the respective market and
should be therefore qualified as unfair competition practices.
Having considered the case, the AMC imposed a fine on the
Defendant for the above unfair competition practices.
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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