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Non-use is not that Simple

22 August 2022

Laws of many countries include a provision regarding non-use of a trademark. Article 1486 of the Russian Civil Code provides that a trademark may be invalidated for all or part of the goods if the trademark is not used during three years.

In that case an interested person shall send a request to the trademark owner and ask him either to assign the trademark to him or grant him a license. If the trademark owner ignores the request the interested person may initiate a court action at the IP court. The use of a trademark means the use by the trademark owner himself, by his licensee or by a person under control of the trademark owner. The last version of use must be carefully documented in order to be able to save the trademark from cancellation.

In practice however, overtones crop up in connection with the attempted non-use trademark cancellation. In one of the cases, “Alita” Ltd. sued an individual; entrepreneur seeking to cancel a trademark registration No 191159 for 7d1.jpg (7even days) in respect of goods in Class 42 – provision of food products. The plaintiff based his claim on the fact that he was selling daily food products and alcoholic drinks. He was active from 2007 and had a chain of outlets trading in food. Besides, he filed a trademark application No 2019720190 for 7d2.jpg  in Class 35, including supply services.

The respondent stated that his trademark was being used by his licensee to which the plaintiff responded that the licensee of the respondent carried on her business in a small faraway settlement in the middle of nowhere. The outer looks of the shop are characterized by minimalistic external design requiring no expenses. Thus, fictitious use of the service mark cannot confirm the use of the trademark, all the more that the license agreement was gratuitous and there was no purpose to receive financial advantages.

The court heard both sides and found that the plaintiff’s claim could be satisfied. The court explained its decision as follows:

The claim to cancel a trademark can be made by an interested person only. The court referred to a Decree of the Plenum of the Supreme Court No 10 which explained that in order to recognize a person interested in the cancellation of a trademark because of non-use it is necessary that the combination of circumstances point to the interest of the plaintiff to use identical or a similar designation in respect of similar goods.

A person interested in the cancellation of a trademark is a person whose rights are affected by a relevant right of another person’ trademark rights.

In order to prove his status of an interested person the plaintiff provided an extract from the Trade Register according to which his main business was sales of food products, a license for selling alcoholic drinks, etc.

The court found that the plaintiff indeed traded in food products and had a small chain of shops using the designation “7 days”. Existence of the disputable trademark is a bar to conduct business activity using the designation “7 days” because the respondent sued the plaintiff claiming compensation in the amount of 850 000 rubles for unlawful use of a designation similar to his trademark No 191159  7d1.jpg (7even days).

The trademark application 7d2.jpg filed by the plaintiff is indeed highly similar to the disputed trademark.

As a result the court recognized that the plaintiff was a person interested in the cancellation of the trademark.

On the other hand, the respondent has to prove that he uses his trademark, or, if he does not use it, he should prove that the trademark was not used because of the circumstances beyond his control.

The respondent provided some facts of use of his trademark however the court did not give credit to those documents because the plaintiff had provided a written original declaration of the licensee of the trademark owner. In that declaration, the licensee stated that she had been misled by the trademark owner regarding the purpose of use of the trademark. She placed the trademark on the signboard of her shop because the trademark owner paid her a certain sum and she was ready to return that sum of money to the trademark owner. She also stated that she conducted her business without coordination with the respondent and she knew nothing about the conclusion of the license agreement. She confirmed that a representative of the respondent had visited her shop and made a staged video of the interior of the shop and of its outside appearance.

Given the above the court concluded that the respondent tried to create false impression of use of the trademark during the required three year period.

Further, the court compared both designations and found that the claimed designation is confusingly similar to the registered trademark. It also concluded that the list of goods/services are also similar in both, application and the registration.

The court examined the documents of the licensee, e.i. invoices and other documents and did not find that the disputed trademark was ever mentioned in any of the documents which led to the conclusion that there was no actual use of the trademark. Additionally, the court noted that the license agreement did not contain a remuneration provision while license agreements are concluded for deriving profits in the first place.

As a result, the cancellation claim was satisfied and the respondent “licensor” was obliged to pay court expenses.